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Saturday, March 14, 2015

Contractors to Procurement Law: You ain't my sunshine

In a hattip to Sunshine Week, and the obvious particular procurement focus of this blawg, I note the following couple of articles:

How Government Contractors Hide Public Information (Click link to article)
When governments outsource public services, contractors attempt to circumvent sunshine laws and shield important public information from disclosure using broad exclusions to the Freedom of Information Act and state open records laws that exempt "trade secrets" or "proprietary information" from public scrutiny. Contractors use those loopholes as justification to hide basic public information from taxpayers including the fees they charge the public, how they spend public funds, and the details on the quality of public services they are paid to provide.

For example:

• When the New York State Comptroller audited National Heritage Academies Inc.'s (NHA) Brooklyn Excelsior (charter) School in 2012, NHA staff refused to provide details on how the school spent its money, preventing taxpayers from knowing "the extent to which the $10 million of annual public funding benefited students." According to the audit, NHA staff refused to provide details on how the school spent $1.6 million, claiming that "the expenditures were private and proprietary."

• Recently, Connecticut public radio station WNPR submitted a records request for the billing rate of the state's health care exchange call center operator, Maximus Inc. In response WNPR received a heavily-redacted version of the contract with details of Maximus' costs blackened-out. Only after WNPR filed a complaint with the Freedom of Information Commission did the state release an un-redacted version of the contract allowing the public to see if Maximus' fees were reasonable for the service provided.

• In Florida, after transportation officials began linking design changes in highway guardrails to fatal car accidents, a consumer safety research firm requested documents and communications about the Florida Department of Transportation's (FDOT) contract with Trinity Industries, which manufactures the guardrails. In response, FDOT provided 13 files and explained that Trinity was reviewing more than 1,000 emails to redact confidential information before releasing them. According to FDOT, Trinity had obtained a protective order that prevented the release of "trade secret" records about the guardrail design.

• In Florida, the Department of Corrections (DOC) contracts with Corizon Correctional Healthcare to provide health care for inmates at 41 state correctional facilities. When an investigative news agency -- Broward Bulldog -- requested companies history of malpractice litigation from Corizon, the company refused to release the documents, claiming that the information was a "trade secret."

• Public pension systems -- government entities that manage retirements for public employees such as teachers and police officers -- contract with financial firms to invest pensioners' funds. In 2014, the Securities and Exchange Commission (SEC) expressed concern over the fees charged by buyout firms, prompting The Wall Street Journal to ask the Iowa Public Employees' Retirement System for information on the fees paid to private equity contractor KKR & Co. for a $70 million investment. In response, the IPERS conferred with KKR and released a heavily-redacted document that provided little information on KKR's fees. KKR's lawyer stated that disclosing the company's fees could cause "competitive harm."

Contractors may have legitimate reasons for keeping some company information private. But government contracting shouldn't create a black box that hides public information from public scrutiny.
Note that I have previously mentioned this topic, in other contexts:
Will FOIA be foiled by outsourced subcontracting?, and
Transparency is collateral damage when major work is contracted out
How Many Contractors Work for the Government? It’s a Mystery. (Click link to article)
How large is the U.S. government’s contract workforce? The answer could help gauge how much federal agencies are outsourcing work to the private sector. But no one has managed to nail down a definitive number to date. That includes the nonpartisan Congressional Budget Office, which took a crack at it after the top Democrat on the House Budget Committee requested an analysis.

“Regrettably, CBO is unaware of any comprehensive information about the size of the federal government’s contracted workforce,” the CBO said in a letter to Rep. Chris Van Hollen (D-Md.) on Wednesday. But, the CBO said government agencies spent more than $500 billion on outside products and services in 2012, based on the federal contracting database. The number represents a rapid increase over the past dozen years, with the costs growing more rapidly than inflation. Federal spending on contracts grew by 87 percent between 2000 to 2012, an average of about 5 percent per year. By comparison, inflation averaged less than 3 percent each year during that span. Contracting also grew as a percentage of total federal spending during that time.

The government may not have a handle on the size of its contract workforce, but the CBO analysis gives federal-employee advocates a sense of how much recent administration’s have relied on the private sector instead of their own personnel.

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