ALERT: Government Contracts

Transcription

1 ALERT: Government Contracts November 2006 Federal Funding Accountability and Transparency Act of 2006 Information relating to over $340 billion in federal awards to government contractors will be publicly available on an easily accessible database FFATA specifically defines federal award information to include contracts, subcontracts, purchase orders, task orders, and delivery orders. As a result, government contractors must prepare to have information relating to their federal awards disclosed on a public website. On September 26, 2006, President Bush enacted the Federal Funding Accountability and Transparency Act ( FFATA ) to reduce wasteful and unnecessary spending by requiring the Office of Management and Budget ( OMB ) to establish a publicly available, online database containing full disclosure of entities receiving federal funding. 1 FFATA specifically defines federal award information to include contracts, subcontracts, purchase orders, task orders, and delivery orders. 2 As a result, government contractors must prepare to have information relating to their federal awards disclosed on a public website. Scope of Government Contractor Information Made Publicly Available FFATA requires the OMB to provide a single database that is accessible through a searchable website that permits users to determine the total amount of federal funding awarded to an entity by fiscal year, beginning with data for fiscal year FFATA authorizes the consolidation of three major financial assistance databases the Federal Procurement Data System (FPDS), the Federal Assistance Award Data System (FAADS), and Grants.gov. Any users, including competitor firms or watchdog groups, will be able to access information from all three databases in a single search. FFATA requires that the following information be made publicly available in the searchable database on the OMB website: 1 P.L Id. GREENBERG TRAURIG, LLP ATTORNEYS AT LAW

2 1. Name of entity receiving award 2. Amount of award 3. Type of award (e.g., grant, loan, contract) 4. Agency funding award 5. A North American Industry Classification System ( NAICS ) code of the recipient or a Catalog of Federal Domestic Assistance ( CFDA ) number (where applicable) 6. Program source 7. Award title that describes the purpose of the funding 8. Location of recipient 9. City, state, congressional district, and country in which award performance primarily takes place 10. Unique identifier for entity receiving award and of the parent entity of recipient, if one exists 11. Any other information specified by OMB FFATA requires agencies to post new information to the website within thirty (30) days of making an award. Further, FFATA enables the public to post feedback on the website and recommend improvements. Implementation of FFATA The database will be implemented in three phases: 1. By July 1, 2007, the OMB will begin a pilot program to test the collection of data about subgrants and subcontracts in order to determine how to implement a subaward reporting program across the Federal Government. 2. By January 1, 2008, the new database is required to provide information on entities that are awarded funds directly from the federal government. Entities covered in the first phase of the database include corporations, associations, partnerships, sole proprietorships, limited liability companies, limited liability partnerships, states, and localities. 3. By January 1, 2009, the database is required to include information on subgrantees and subcontractors that receive federal funds through a primary award recipient. Federal Funding Accountability and Transparency Act of 2006 Page 2

3 Legislative History - Failed Attempt to Protect Federal Contract Information The largest criticism of FFATA is the reliability of information taken from the FAADS, FPDS, and Grants.gov databases which are to be the primary sources of information for the new public database on the OMB website. The information concerning government contractors in FAADS and FPDS may be incomplete and inaccurate. Since the U.S. government spends over $340 billion in awards to government contractors, there was significant congressional debate whether to shield government contractor information from the public spotlight and public scrutiny. 3 FFATA originated in the House (H.R. 5060) and its companion bill (S. 2590) was introduced in the Senate by Senators Tom Coburn (R-OK) and Barack Obama (D-IL) on April 6, Both bills proposed the creation of a federal awards database. However, S required information on federal contracts to be made available to the public whereas H.R did not. Although there was a secret hold placed on S.2590 by Senators Ted Stevens (R- AK) and Robert Byrd (D-WV) in August 2006, S was passed unanimously in the Senate on September 7, 2006 and passed in the House on September 13, The CRS Report for Congress on FFATA reported that the leaders of both parties and an array of business, union, and watchdog organizations endorsed the intent of the legislation but the need to increase greater accountability and transparency in federal spending was paramount. 4 FFATA Raises Major Concerns for Government Contractors 1. Reliability of Information The largest criticism of FFATA is the reliability of information taken from the FAADS, FPDS, and Grants.gov databases which are to be the primary sources of information for the new public database on the OMB website. The information concerning government contractors in FAADS and FPDS may be incomplete and inaccurate. In 2005, a GAO report announced that FPDS users lacked confidence in the data on the FPDS database because there was no mechanism in place to routinely verify accuracy. In fact, the CRS Report on FFATA revealed: the Department of Defense which accounts for 60% of all federal contract actions is only beginning to feed information on its contracts into FPDS. Furthermore, the information contained on the Grants.gov database is currently unavailable to the public which brings into the quality of the data that was only viewed by the government. Human error, lack of control mechanisms, and minimal training of agencies and contractor personnel are other factors which can contribute to erroneous contractor information being input into the database. 3 Federal Funding Accountability and Transparency Act of 2006, Report of the Committee on Homeland Security and Governmental Affairs of U.S. Senate. September 8, Hatch, Garrett Leigh. The Federal Funding Accountability and Transparency Act: Background, Overview, and Implementation Issues, CRS Report for Congress. October 6, Federal Funding Accountability and Transparency Act of 2006 Page 3

4 2. Easy Access of Government Contractor Award Information to Competitors and Watchdogs The consequences of how the public will use this readily available information on federal contractors remains alarmingly uncertain. The CRS Report to Congress revealed: concern has been expressed by government officials and members of the public that issues surrounding implementation of the proposed database have not been adequately addressed. This is compounded by the fact that users may submit feedback on the website - a novel idea. Our chief concern is that competitors and unfriendly interest groups can easily gather detailed information on contracts and use this information to engage in campaigns to attack a particular contractor for alleged wasteful spending or contract performance problems. Adam Hughes, the Director of Federal Fiscal Policy for OMB Watch, a government watchdog group, recently foreshadowed this concern by stating that media outlets nationwide would like use the database to report on federal contracts and grants awarded to local companies, and bloggers would use the data to draw attention to abuse of federal funds. 5 How Government Contractors Can Best Prepare for Implementation of FFATA 1. Ensure that all information reported on FAADS, FPDS, and Grants.gov is accurate. 2. Monitor OMB website, FAADS, FPDS, and Grants.gov for accuracy. 3. Report any errors or inaccuracies immediately to OMB and contracting agency. 4. Check with Agency to determine who is responsible for updating their contractor Information. This Agency is required by FFATA to update information within thirty (30) days of making an award. 5. Be prepared for heightened public scrutiny --at the least--of your contractual dealings with the federal government, and the ability of your competitors to access and use financial information that was not readily available before and to such a broad extent. A cautionary thought on FFATA: Openness and public scrutiny are held to be good things, but liberty often results in license. It remains to be seen if FFATA creates more abuses than it seeks to eliminate. 5 Pulliam, Daniel. Senate Passes Bill Creating Federal Spending Database. GovExec Daily Briefing. September 8, Federal Funding Accountability and Transparency Act of 2006 Page 4

5 This Alert was written by Richard Moorhouse and Kate Bouquard in the Tysons Corner office. Please contact Mr. Moorhouse at (703) , Ms. Bouquard at (703) or your Greenberg Traurig liaison if you have any questions regarding the subject matter of this GT Alert. Albany Amsterdam Atlanta Boca Raton Boston Chicago Dallas Delaware Denver Fort Lauderdale Houston Las Vegas Los Angeles Miami New Jersey New York Orange County Orlando Philadelphia Phoenix Sacramento Silicon Valley Tallahassee Tampa Tokyo Tysons Corner Washington, D.C West Palm Beach Zurich This Greenberg Traurig ALERT is issued for informational purposes only and is not intended to be construed or used as general legal advice. The hiring of a lawyer is an important decision. Before you decide, ask for written information about the lawyer s legal qualifications and experience. Greenberg Traurig is a trade name of Greenberg Traurig, LLP and Greenberg Traurig, P.A Greenberg Traurig, LLP. All rights reserved. Federal Funding Accountability and Transparency Act of 2006 Page 5