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"Disaster Profiteering Act (H.R. 3766)" Makes Its Debut Seeks to Waive Taxpayer Protections & Competition on Government Contracts

September 16, 2005 


Big federal contractors have scored a major victory with yesterday's news that House Government Reform Chairman Tom Davis (R-VA) and Representative Kenny Marchant (R-TX) introduced legislation that will waive meaningful taxpayer protections and competition in contracting whenever Congress or the President declares a national emergency or there is a disaster. It is rumored that the legislation will be included in a manager's amendment to the next Katrina relief bill. Project On Government Oversight (POGO) has dubbed the legislation (H.R. 3766) the "Disaster Profiteering Act."

The Davis legislation would allow agency heads across the federal government to treat all purchases related to national emergencies as "commercial items," meaning that contracts can be made under a no-bid process and that the government would not have the authority to audit purchases after they have been made. A second, unrelated provision deals with Katrina volunteers.

The President has at least a dozen current national emergencies according to annual filings made in the Federal Register including the national emergency which he renewed last week in response to terrorist attacks. Presumably, this would apply to all homeland security-related spending and broad swaths of national security spending.

Contracting officers already have enough authorities at their disposal to respond to the Katrina crisis. Senior procurement official David Drabkin underscored this after passage of the Homeland Security Act in a 2003 memo where he said: "Remember, you have many tools in your acquisition toolbox that allow you to respond to emergencies". Brigadier General Scott outlined the flexible procurement authorities as well in an October 2001 memo written to assist contracting officers working on the war on terrorism.

Of greatest concern is the prospect that homeland security and defense contractors engaged in billions of dollars in contracts on major systems designed to address the war on terror or some other declared national emergency abroad will avoid competition and auditing. These taxpayer protection provisions were established after the notorious era of defense contracting scandals in the 1980s. Government-wide, 84% of all contracting dollars are spent on a non-commercial basis, according to the Federal Procurement Data Center .

It is not speculative that agencies would attempt to waive taxpayer protections on weapons; it has occurred twice in recent years. The Air Force inappropriately maintained a commercial contract on the C-130J military aircraft until Senator John McCain protested the designation this year (click here for more info). A scathing Inspector General report credited the C-130J's failures to the commercial acquisition strategy, saying "the commercial acquisition strategy was unjustified" (click here to learn more).

As recently as 2001, at the urging of procurement official Darleen Druyun, the Air Force inappropriately attempted to make "commercial" the C-17 military aircraft which is built by Boeing. Darleen Druyun, who was hired by Boeing after leaving the government, later went to jail and disclosed that she had favored Boeing in making contracting decisions (see POGO's alert and POGO's report).

"This provision is not about helping Katrina's survivors, it is about helping major defense and homeland security contractors to loot the Federal Treasury," said Danielle Brian, Executive Director of POGO.


Founded in 1981, the Project On Government Oversight (POGO) is a nonpartisan independent watchdog that champions good government reforms. POGO's investigations into corruption, misconduct, and conflicts of interest achieve a more effective, accountable, open, and ethical federal government.

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