Preparation is in, panic is out

Former federal procurement official Angela Styles is getting a lot of calls these days from worried government contractors seeking her advice. With procurement investigations making the front page and more oversight promised by Rep. Henry Waxman, D-Calif., the new chairman of the House Oversight and Government Reform Committee, it's a time of heightened scrutiny and uncertainty.

Waxman has created a list of 142 allegedly wasteful government contracts totaling $764 billion to guide upcoming congressional hearings.

Styles was the administrator for federal procurement policy in the Office of Management and Budget from May 2001 to September 2003. Today, she's a partner at Washington law firm Miller & Chevalier.

"People are asking, 'Are we on the Waxman database? Should we be at the hearing? Should we go talk to his staff?'" Styles said. "Most likely, the answer is 'No.' You don't want to kick a sleeping dog."

Styles recently spoke with Washington Technology staff writer Alice Lipowicz about current federal contracting issues.

Q: What advice do you give to federal contractors who are concerned about being on Mr. Waxman's list or becoming a focus of a congressional investigation?

Styles: So many companies are on that list. The first thing you don't do is to go running to Waxman's committee. Don't make yourself a target. See if there is a problem. Make sure you understand why you might have ended up on the list and be prepared. Contractors should be looking at their own internal processes and looking from a compliance perspective to make sure they are not the next target.

We're looking at a serious oversight year for contractors. Most likely, 99.9 percent [of contractors] won't be involved in the Hill investigations.

Q: What will get the greatest attention?

Styles: The biggest focus will be on sole-source contracting. One of the first targets will be sole-source contracts for Iraq; secondly, for Hurricane Katrina. There will be a lot of time spent on those. Parts of the Clean Contracting Act of 2006 will pass. Sole-source contracting and the need for competition will be the focus.

Q: What areas should contractors review?

Styles: Trade agreements certainly have been a target of activity for the Justice Department and General Services Administration inspector generals. They are looking at U.S. companies that manufacture products in noncompliant countries with which we don't have a trade agreement, such as China or Malaysia. They are looking at whether there was a false claim of whether the item was made here.

Q: What's another area of major interest to Congress?

Styles: Commercial-item contracts [in which federal agencies buy the same items, such as software, that are available for sale commercially] are a very significant issue for Waxman's oversight committee. There have been a good number of concerns expressed that the designation has gone too far and that things that aren't really commercial items are being sold as such.

The designation is significant to technology companies. This exception allows them to provide their software under a commercial license rather than a government license.

Q: What other trends do you see in the federal contracting community?

Styles: If you have a federal contract with the government and fail to specifically disclose that software or other intellectual property belongs to your company, the government can claim it as its own. Many government agencies are compensated based on the number of patents they develop, so it's in their interest to write contracts to retain the rights to as many patents as possible.

Q: What's behind all of this?

Styles: The government is pushing for more rights. It's a philosophical push. People on the Hill believe they have spent federal dollars, so why doesn't the government have the rights?

On the other hand, at the Housing and Urban Development Department, contractors believed they owned the patent to the computer system that was created for the department. That is viewed as anti-competitive because no one else could work on it.

Q: What about the Democrats' statements that they will eliminate earmarks?

Styles: People have gotten a lot of contracts with earmarks in the last eight to 20 years. I have companies with $1 million to $100 million earmarks, and there are a lot of them. Some were from Democrats. The Democrats have had as much to gain from earmarks as the Republicans have. It's a bargaining chip. I think earmarks may be more difficult to get rid of than people think.

Q: What do you think of the growth in governmentwide acquisition contracts?

Styles: You'll see some scaling back of those, related to concerns about sole sourcing.

The theory is that you would go to all five contractors on the list for a bid; the problem is that you don't have to do that.

That is what makes these noncompetitive.