Sunlight Foundation

We Can't Have Corporate Accountability Until We Have Corporate Identifiers

Corporate accountability can mean a lot of things. To some people, it's tracking the political influence of corporations via campaign contributions and lobbying (using Influence Explorer of course!). For others, it's monitoring how much the government awards a corporation in contracts, or tracking their EPA violations. For pretty much every definition of the phrase, you need some unique and reliable way to identify a corporation and its related subsidiaries. This is a much more complicated problem than it sounds. To help spread the word about this problem, we've created a new microsite that explores the issue. In homage to the great Kevin Bacon, we present, Six Degrees of Corporations.

Right now, the main way that the government tracks contractors is by using DUNS numbers. DUNS numbers are proprietary identifiers managed by Dun and Bradstreet, a business information services firm. By proprietary, I mean that you need to pay a hefty subscription fee to look up information about them, even if you're the federal government. By hefty, I mean millions of dollars. The federal government spends millions of dollars each year, just to have a company tell them how other companies are legally connected to each other. And what's more, this data isn't even sufficient for providing contractor oversight.

Although a contractor must get a DUNS number before contracting with the government, the parent company information is self reported by the contractor. This means that it is very easy for a company to create a new subsidiary with a new DUNS and just not report the parent company information. This makes it difficult or impossible to find out if this company's parent is on the Excluded Parties List (a blacklist for federal contractors). The GAO noted this in a report, and documents several instances of companies on the Excluded Parties List that get new contracts by using this exact method.

There is potentially another way that the government could keep track of corporate relationships. Each corporation files a form 851 when they file their federal taxes. This form requires them to detail their corporate affiliations, as well as the Employee Identification Numbers (EINs) of those affiliates. EINs are already public for publicly traded companies (via SEC reporting). If they were made public for all corporations, and the data on the form 851 was released, we would have a way for the public to reliably identify a corporation, even through its subsidiaries. This would greatly improve public accountability and government oversight of contracting.

But that's just one possibility. The truth is, we need to have a serious conversation about this problem and how it ties into better corporate accountability in general, and contractor oversight in particular. So head on over to the Six Degrees of Corporations and read up!

Lunchtime Link Round-Up

Some open government/transparency posts from around the web:

The Food and Drug Administration, in conjunction with their Transparency Task Force, launched a transparency blog to discuss ways to make their operations more open to the public.

The White House is asking for more help on the Open Government Directive. They are looking for people to tell them the "three most important pieces of information you think every agency should be required to disclose about its operations." Also, they are seeking input on how the private sector could help the government mash up data.

Utah launched a new state government web site that looks very cool. Let us know in the comments what you think about this as a state government portal.

And in today's least surprising news, contracting in Iraq is plagued by a lack of oversight and corruption.

New Subcommittee to Tackle Contracting Fraud, Waste

Senate Homeland Security and Government Affairs Chair Joe Lieberman just sent out a release announcing the creation of a new subcommittee to provide oversight of government contracting. The Ad Hoc Subcommittee on Contracting Oversight will be headed by Sen. Claire McCaskill, long a proponent of exposing fraud and waste in contracting.

“Management of federal contracts is one of the greatest operational challenges facing the federal government,” Lieberman said. “Spending on federal contracts rose to an astounding $532 billion last year. And for years the Government Accountability Office has listed government contracting on its list of programs at high risk of waste, fraud, abuse, mismanagement, or in need of comprehensive reform. This is a problem area that needs as much oversight as we can possibly muster.

“So, to more fully address the array of problems with federal contracting, I am establishing this new subcommittee with pride and great expectations. With her background as a prosecutor and state auditor, Senator McCaskill has unique investigative experience that will be crucial for this new subcommittee. I am certain that she will approach her new responsibilities with unmatched vigor to improve the value of all the taxpayer dollars devoted to federal contracting.”

McCaskill said: “Last year we made major strides in contracting accountability by establishing the Wartime Contracting Commission, and while I look forward to those investigations, we all know that outrageous contracting abuses occur in every facet of government. I can't wait to get to work saving huge money for taxpayers. They deserve it.”

Over the past few years various senators have attempted to create a committee or a commission both in the form of the famous Truman Committee, which investigated fraud and waste in World War II defense contracting. Sen. Byron Dorgan was in favor of the creation of a committee with full subpoena power, while Sen. Jim Webb and McCaskill sought the creation of commission with more limited powers. The Webb-McCaskill commission, named the Wartime Contracting Commission, was eventually established last year, but has yet to hold hearings.

The establishment of this new subcommittee, with oversight over more than just defense contracts, marks a huge step forward in the efforts by many to maintain a government contracting system that is free of waste, fraud, and corruption.

Cunningham Figure's Revelations May Imperil Other Officials

The chief witness in the investigation into former Rep. Randy "Duke" Cunningham may have spilled the goods on more lawmakers than the now imprisoned San Diego Republican. According to Seth Hettena, the author of a book about Cunningham's crimes, Mitchell Wade's sentencing memo contains new revelations about his cooperation with federal authorities:

A 42-page sentencing memo filed by Wade’s attorneys says he aided the government in its investigation “of at least five other members of Congress” who were under investigation for “corruption similar to that of Mr. Cunningham.” These no doubt include Virgil Goode and Katherine “Pink Sugar” Harris. Wade wanted to open facilities in their districts and made $78,000 in “straw” contributions  to grease the wheels. Neither Harris nor Goode has been charged with wrongdoing.

Prosecutors drop tantalizing hints about an even bigger, ongoing investigation. Wade was debriefed in 2006 and provided “moderately useful” background information in another “large and important corruption investigation” that also has not yet resulted in any charges.

Who are the other 3 members of Congress? And what is this "even bigger, ongoing investigation"? Ken Silverstein has some speculation on who the 3 unmentioned members of Congress are.

Of particular interest is the way in which Wade revealed the information to law enforcement: he released a searchable, electronic database of 150,000 documents.

Revolving Door Study Finds Pentagon Contractors at the Turnstiles

Via IEC Journal comes word of this Government Accountability Office report written up in this Government Executive article by Elizabeth Newell on the post-employment trends of 400 top former Defense Department officials -- all of whom were subject to a one-year ban on lobbying their old colleagues. Newell offers this staggering finding:

Approximately 65 percent of those former officials were employed by one of seven contractors: Science Applications International Corp. (SAIC); Northrop Grumman Corp.; Lockheed Martin Corp.; Booz Allen Hamilton Inc.; L3 Communications Holding Inc.; General Dynamics and Raytheon Co. All but one of those companies, Booz Allen Hamilton, ranked in the top 10 of Government Executive's Top 200 Contractors list in 2007. Booz Allen Hamilton was 24th on that list.

USASpending.gov, maintained by Office of Management and Budget, ranks all of those seven contractors in their top 20 for 2007. Newell quotes Cristina Chaplain, the report's author, as saying, "Our results indicate that defense contractors may employ a substantial number of former DOD officials on assignments related to their former DOD agencies or their direct responsibilities."

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Investigating What Went Wrong in Iraq (and Congress' Blissful Indifference)

Some $9 billion managed by the Coalition Provisional Authority and intended for the rebuilding of Iraq has gone missing, journalists Donald L. Barlett and James B. Steele report in Vanity Fair, and the U.S. government doesn't seem particularly interested in finding out where it went. Barlett and Steele describe the Wild Wild Middle East atmosphere, in which two guys with no experience can get millions from the C.P.A. to protect civilian flights in and out of Iraq, and Bahamanian P.O. Boxes are the business addresses of choice for those supposedly keeping the books. Perhaps the most disturbing bit among many was just how out of touch Congress was on the doings in Baghdad during the C.P.A.'s tenure starting in 2003:

Over the next year, a compliant Congress gave $1.6 billion to Bremer to administer the C.P.A. This was over and above the $12 billion in cash that the C.P.A. had been given to disburse from Iraqi oil revenues and unfrozen Iraqi funds. Few in Congress actually had any idea about the true nature of the C.P.A. as an institution. Lawmakers had never discussed the establishment of the C.P.A., much less authorized it—odd, given that the agency would be receiving taxpayer dollars. Confused members of Congress believed that the C.P.A. was a U.S. government agency, which it was not, or that at the very least it had been authorized by the United Nations, which it had not. One congressional funding measure makes reference to the C.P.A. as "an entity of the United States Government"—highly inaccurate. The same congressional measure states that the C.P.A. was "established pursuant to United Nations Security Council resolutions"—just as inaccurate. The bizarre truth, as a U.S. District Court judge would point out in an opinion, is that "no formal document … plainly establishes the C.P.A. or provides for its formation."
"Confused members of Congress" seems like both a phrase that should be far more common in news coverage, and an inappropriately charitable description. In any case, it's an incredible story from two of the best investigative reporters in the business -- well worth reading (and don't miss the Q&A

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Small Business Shafted Again

The New York Times today broke a story that I first learned about nearly two years ago – that the federal government’s annual accounting of federal contracts going to “small businesses” is routinely overstated, with much of that money actually going to large corporations.

I stumbled onto the story while analyzing six years of Pentagon contracts for the Center for Public Integrity. I’d been tipped off to the practice by a Defense Department analyst who’d been working with the contract data for years. He told me – and I subsequently documented it in the records – that under the contracting rules, if a small business is bought by a larger one, the contract is still counted as going to small business.

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The Business of Business is Government

We do not know whether Congress will pass an overhaul of the nation's immigration laws; we do not know whether such a bill would follow the House's preference for border enforcement or the Senate's preference for amnesty for those already here plus increased ceilings on the number of legal immigrants for those aspiring to come. We do not know how the debate over this contentious and emotional issue will be resolved--to date the conventional wisdom has proven to be a bit off target, to say the least.

One thing that apparently has been resolved, however, is that whatever results from the immigration debate, the solution will be implemented by a private company:

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The Business of Business is Government

Muckraked! (second item) notes a Government Executive report that tells us that auditors are going to look into the FAA's outsourcing of operations at 58 FAA flight centers around the country to Lockheed Martin. Already, the Transportation Department has realized that $500 million of the supposed $2.2 billion in savings will, well, not be realized.

Among other issues, the IG office plans to look into changes in projections for how much the agency expects to save. When the contract was awarded, FAA announced that private sector performance would save the government $2.2 billion over the life of the contract, based on a 10-year estimate for the 5-year base period with up to five extension years. In its announcement of the audit this week, the inspector general's office quoted an anticipated savings of $1.7 billion.
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Lies Make Baby Jesus Cry:

Yesterday news broke that President Bush's Housing and Urban Development Secretary Alphonso Jackson became a lightening rod after it was reported that in a speech he stated that he believes that he should only give contracts to supporters of President Bush. Jackson made his point by telling an anecdotal story about a contractor trying to obtain a contract from HUD. The contractor, for some inexplicable reason, told Jackson that he did not like President Bush, at which point Jackson decided that he wouldn't give this man the contract because, as Jackson himself says, "Why should I reward someone who doesn’t like the president?"

Now, Jackson is retracting his statement by saying that he made up the story. The HUD spokeswoman stated, "The secretary's story was anecdotal. He is not part of the contracting process. He was trying to explain to this group how politics works in D.C." Josh Marshall says, "This doesn't sound like a particularly exculpatory explanation. That story was made up. Jackson was just how explaining how he does business?"

Think Progress offers two points about why this explanation is a bit unbelievable:

1) That excuse isn’t just difficult to swallow — it also contradicts the spokesperson’s first response in which she indicated Jackson was referring to a real contract: “On May 3, Tucker told the Business Journal that the contract Jackson was referring to in Dallas was ‘an advertising contract with a minority publication,’ though she could not provide the contract’s value.” It looks like Jackson is changing his story as criticism builds. 2) Bidding for a government contract isn’t ‘asking for money.’ It’s not Alphonso Jackson’s money to give away to his buddies. It is the taxpayers’ money. It should go to whoever can do the best job, regardless of their political views.

So, either Jackson lied by making up his "anecdotal story" or he is lying to cover up the story. Either way the real issue is not with the factual accuracy of Jackson's story but whether he was factually representing his own belief when he stated: "Why should I reward someone who doesn’t like the president?" It seems that Jackson wanted to make this very point and then crafted a story to fit his predetermined belief/actions. Jackson needs to come clean on whether he is breaking the law by only distributing contracts to supporters of President Bush. Doesn't he know that lies make baby Jesus cry? (georgia10 at Daily Kos has more dirt on Jackson)

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