Clinton provision would clamp down on award fees

Sen. Hillary Clinton (D-N.Y.) added language to the Senate's Fiscal 2008 Omnibus Appropriations spending package to tighten controls on contractor award fees at the Homeland Security Department, she said in a news release today.

The spending bill, which now includes Clinton's award fee provision, was approved by the Senate last night and is to go before the House for final passage before being sent to President Bush for his signature.

Clinton's provision bars DHS from giving award fees or bonuses to contractors without regard to performance. It requires the department to pay such fees and bonuses only when the contractors meet specific outlined stipulations related to cost, schedule and performance in their contracts.

If a contractor receives a poor performance evaluation, exceeds costs specified in the contract or does not meet deadlines specified in the contract, then the contractor will not receive an award fee or bonus from DHS, Clinton said.

Clinton said the measure addresses abuses in award fees at the department and improves accountability.

"This measure will prevent the Department of Homeland Security from awarding generous bonuses to contractors who haven't earned them," Clinton said. "In a time when high-risk areas like New York are fighting for scarce homeland security funds, we cannot afford such undeserved giveaways."

Clinton cited several reports on award fees as evidence of abuses at DHS. For example, she quoted an inspector general report criticizing a Transportation Security Administration award fee of $44 million to Boeing Co. in 2005. Also, this year, the Government Accountability Office reported problems in schedule, performance, cost control and contract administration for the Coast Guard's Deepwater contract. At the same time, Deepwater's contractor, a joint venture between Lockheed Martin Corp. and Northrop Grumman Corp., received a "very good" performance rating and an award fee of $4 million, GAO said.

Last month, Clinton wrote to the DHS inspector general requesting an investigation of award fees at the department. Her request noted the inspector general's recent criticisms of a $475 million Customs and Border Protection sole-source contract in 2003 with Chenega Technology Services Corp. of Alexandria, Va., an Alaska Native Corporation. The inspector general found that the contract was awarded with improper coding and likely did not result in best value for taxpayers.

But Clinton's press release today does not mention the Customs and Border Protection contract. Further information was not immediately available today about the apparent discrepancy.