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Letter to the House Government Reform Committee urging them to oppose Share-in-Savings and the Digital Tech Corps Act


October 11, 2002


Oppose Share-in-Savings & the Digital Tech Corps Act
on the E-Gov Bill

Chairman Dan Burton
House Committee on Government Reform
2157 Rayburn House Office Building
Washington, DC 20515


Ranking Member Henry Waxman
House Committee on Government Reform
B350A Rayburn House Office Building
Washington, DC 20515

Dear Chairman Burton and Ranking Member Waxman:

We are writing to urge that you oppose two provisions that were recently added to the E-Government Bill in the Subcommittee on Technology and Procurement Policy.

Both contractor-giveaway provisions originally appeared in the Services Acquisition Reform Act (SARA), the bill best known for authorizing increases in government purchase cards, despite several Congressional hearings and extensive national media attention exposing hundreds of thousands of dollars in illegal charges on the cards. Just this week, ABC's John Stossel criticized the proposal to expand use of the scandalous cards in a "Give Me a Break" commentary.

Like purchase cards, the Share-in-Savings provision and the Digital Tech Corps Act would expose taxpayer dollars to waste, fraud, and abuse. They would open the federal cookie jar to private interests intent upon boosting their bottom line, at the expense of the public interest.

The Digital Tech Corps Act would allow federal employees on the taxpayer payroll to go work for private companies for up to two years. The Act appears to most benefit private contractors trolling for government-paid labor. Proponents claim the program will provide "training" and will increase the number of qualified federal employees. However, federal employees can surely be trained much cheaper than signing them away for two years to work for private companies.

Procurement expert and George Washington Law Professor Steven Schooner recently testified: "I do not believe it [Digital Tech Corps Act] will generate sufficient return on investment. Nor do I believe that it will, in more than a token fashion, help alleviate the current acquisition workforce difficulties...I would rather see Congress identify and earmark resources needed to hire additional personnel, grade the positions commensurate with experience and education, and invest in additional training."

The Act also allows employees of private contractors to work for the federal government, opening access to sensitive government information and decision-making processes. While providing no tangible benefits to the taxpayer, this Act unnecessarily gives big contractor lobbyists the upper hand in influencing agency decision-making.

The Share-in-Savings (SIS) provision would expand a pilot program that has been troubled at best. Under the provision, Congress would cede its authority to determine how tax dollars are spent by allowing these off-the-books financing schemes: "Because agencies get to retain funds saved and not paid to contractors, the proposal creates an environment for off budget financing of operations (Department of Defense Inspector General, March, 2002).

Under the program, contractors pay for up front capital financing of projects such as computer system upgrades, and then pocket dollars that they claim are saved later on. In the information technology realm, there is virtually no credible way to calculate these mythical savings, which are determined by the private contractors themselves. According to the Department of Defense Inspector General: "the DOD does not yet have the ability to determine the actual current costs of operations with any certainty." As a result, the provision would open federal coffers to looting by contractors.

Law professor Charles Tiefer, a widely recognized expert in government contract law and former deputy General Counsel to the House of Representatives, recently discussed the speculative nature of SIS: "SIS contracts could propagate problems similar to those that accompanied deregulation of government-insured savings-and-loans institutions or procurement of defense spare parts in the 1980s by sole-source contracts."

In testimony, the General Accounting Office has also been critical: "Almost 6 years after the Clinger-Cohen Act called for the creation of pilot programs to test the share-in-savings concept in federal information technology contracts, the government has not identified many suitable candidates for use of this technique. In large part, this is because use of this tool requires solid baseline data about the existing cost of an activity and a reliable method for measuring whether success has been achieved. Gathering reliable baseline data can be difficult. According to the GSA Assistant Commissioner of the Federal Technology Service, many of the projects GSA reviewed for a pilot share-in-savings contracting program were rejected because the agencies proposing the projects could not determine baseline costs."

An additional problem with SIS is that long term contracts of five to ten years, which provide job security for contractors, lock the government into obsolescence providing no incentive for contractors to upgrade technology. The Department of Defense Inspector General recently explained: "For example, by year 10 [of a SIS contract] the technology offered by the incumbent can be 7 years out-of-date but still cheaper than the original Government operation. A 10-year contract may provide little incentive for proposing significant improvements after the initial proposal to win the contract."

For these reasons, we urge you to oppose the Share-in-Savings and the Digital Tech Corps Act contractor giveaways.


Danielle Brian
Executive Director