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[casi] Washington Post 'No cronyism in Iraq'

Washington Post article of interest 5 Nov 20-03


 No 'Cronyism' in Iraq

 By Steven Kelman

    There has been a series of allegations and innuendos
recently to the effect that government contracts for work
in Iraq and Afghanistan are being awarded in an atmosphere
redolent with the "stench of political favoritism and
cronyism," to use the description in a report put out by
the Center for Public Integrity on campaign contributions
by companies doing work in those two countries.

 One would be hard-pressed to discover anyone with a
working knowledge of how federal contracts are awarded --
whether a career civil servant working on procurement or an
independent academic expert -- who doesn't regard these
allegations as being somewhere between highly improbable
and utterly absurd.

 The premise of the accusations is completely contrary to
the way government contracting works, both in theory and in
practice. Most contract award decisions are made by career
civil servants, with no involvement by political appointees
or elected officials. In some agencies, the "source
selection official" (final decision-maker) on large
contracts may be a political appointee, but such decisions
are preceded by such a torrent of evaluation and other
backup material prepared by career civil servants that it
would be difficult to change a decision from the one
indicated by the career employees' evaluation.

  Having served as a senior procurement policymaker in the
Clinton administration, I found these charges (for which no
direct evidence has been provided) implausible. To assure
myself I wasn't being naive, I asked two colleagues, each
with 25 years-plus experience as career civil servants in
contracting (and both now out of government), whether they
ever ran into situations where a political appointee tried
to get work awarded to a political supporter or crony.
"Never did any senior official put pressure on me to give a
contract to a particular firm," answered one. The other
said: "This did happen to me once in the early '70s. The
net effect, as could be expected, was that this 'friend'
lost any chance of winning fair and square. In other words,
the system recoiled and prevented this firm from even being
considered." Certainly government sometimes makes poor
contracting decisions, but they're generally because of
sloppiness or other human failings, not political

 Many people are also under the impression that contractors
take the government to the cleaners. In fact, government
keeps a watchful eye on contractor profits -- and
government work has low profit margins compared with the
commercial work the same companies perform. Look at the
annual reports of information technology companies with
extensive government and nongovernment business, such as
EDS Corp. or Computer Sciences Corp. You will see that
margins for their government customers are regularly below
those for commercial ones. As for the much-maligned
Halliburton, a few days ago the company disclosed, as part
of its third-quarter earnings report, operating income from
its Iraq contracts of $34 million on revenue of $900
million -- a return on sales of 3.7 percent, hardly the
stuff of plunder.

  It is legitimate to ask why these contractors gave money
to political campaigns if not to influence contract awards.
First, of course, companies have interests in numerous
political battles whose outcomes are determined by elected
officials, battles involving tax, trade and regulatory and
economic policy -- and having nothing to do with contract
awards. Even if General Electric (the largest contributor
on the Center for Public Integrity's list) had no
government contracts -- and in fact, government work is
only a small fraction of GE's business -- it would have
ample reason to influence congressional or presidential

  Second, though campaign contributions have no effect on
decisions about who gets a contract, decisions about
whether to appropriate money to one project as opposed to
another are made by elected officials and influenced by
political appointees, and these can affect the prospects of
companies that already hold contracts or are
well-positioned to win them, in areas that the
appropriations fund. So contractors working for the U.S.
Education Department's direct-loan program for college
students indeed lobby against the program's being
eliminated, and contractors working on the Joint Strike
Fighter lobby to seek more funds for that plane.

 The whiff of scandal manufactured around contracting for
Iraq obviously has been part of the political battle
against the administration's policies there (by the way, I
count myself as rather unsympathetic to these policies).
But this political campaign has created extensive
collateral damage. It undermines public trust in public
institutions, for reasons that have no basis in fact. It
insults the career civil servants who run our procurement

  Perhaps most tragically, it could cause mismanagement of
the procurement system. Over the past decade we have tried
to make procurement more oriented toward delivering mission
results for agencies and taxpayers, rather than focusing on
compliance with detailed bureaucratic process requirements.
The charges of Iraq cronyism encourage the system to revert
to wasting time, energy and people on redundant,
unnecessary rules to document the nonexistence of a

  If Iraqi contracting fails, it will be because of poorly
structured contracts or lack of good contract management --
not because of cronyism in the awarding process. By taking
the attention of the procurement system away from necessary
attention to the structuring and management of contracts,
the current exercise in barking up the wrong tree threatens
the wise expenditure of taxpayer dollars the critics state
they seek to promote.

 The writer is a professor of public management at Harvard
University. He served from 1993 to 1997 as administrator of
the Office of Federal Procurement Policy. He will answer
questions about this column during a Live Online discussion
at 2 p.m. today at

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