home political and economic essays Re-Negotiate War and Other 'Emergency' Government Contracts

Re-Negotiate War and Other 'Emergency' Government Contracts

by David Brin, Ph.D.

However they are first justified, these arrangements should be converted to normal competitive bidding after the first year or so. Extending "emergency" contracting for six or seven years, far beyond any rational need, creates an aroma of cronyism and waste that — at minimum — should be subjected to close scrutiny.

Re-Negotiate War and Other 'Emergency' Government Contracts

Elsewhere, I spoke of how, under normal conditions, the federal government is supposed to offer contracts in ways that maximize opportunities for competition among a wide range of manufacturers or service providers. Moreover, another goal is to ensure that the field is left with at least several players who can bid for future contracts. These policies aim at preventing crony-favoritism and spurring creative efficiency. It is also in keeping with fundamental premise of capitalism. That competition is the best way to avoid corruption and to get the most out of every tax dollar.

But these same rules allow a president to make exceptions for cases of "national emergency." As I've already mentioned several times, exceptional "emergency" bypasses during the last eight years have amounted to tens of billions, all the way to hundreds of billions of dollars.

Of course, some of these executive decisions were legitimate, under a perceived dire threat after the 9/11 attacks, or when our troops needed rapid deliveries of protective vests and up-armored vehicles, to safeguard them from new types of urban warfare. In other cases — e.g., huge field-services contracts to support semi-permanent bases in Iraq — these "urgent" deals were granted directly to Bush-Cheney friends and business partners. Vice President Dick Cheney's old firm, Halliburton, benefited so prodigiously that it recently moved its corporate headquarters to Dubai.

However they were first justified, these arrangements should have been converted to normal competitive bidding after the first year or so. Extending "emergency" contracting for six or seven years, far beyond any rational need, created an aroma of cronyism and waste that — at minimum — should be subjected to close scrutiny.

Note to the Obama Administration: Watch out for this failure mode, when awarding "emergency recovery" contracts in the coming economic stimulus programs!

When the government offers to pay for grand infrastructure projects in order to get unemployed men and women working, there is a serious danger of (1) rushing to accept uncompetitive bids, and (2) having urgency contracts extend far into the future, when the terms won't seem to be such a good deal anymore.

One idea is to limit the hurry-contracts to just one year, in order to hire workers and get them started at tasks that don't need extensive planning (or implementing already existing plans). It should be required that the one-year contractor cooperate fully with all potential future competitors, eliminating any advantage when it comes to the followup work. (One method: insist that the government own the work site and all equipment bought during the hurry-year, and that employee contracts be easily transferable. In that case, the first-year contractor would have little long term advantage.)

Is there a general way to ensure that "emergency" clauses are never again abused as a way to reap outrageous profit under some trumped-up pretext? Well, By the very logic of the word "crisis," any company that seeks such a contract ought to be patriotic! Hence, they should be proud to accept terms severely limiting war-time profit — the way big corporations did during World War II — to a maximum of 5%, with no bonuses and with executives receiving no more than 10x the lowest paid employee. Not only is this patriotic, but it would ensure there is no lucrative incentive to over-use the term "emergency."

But lets get back to the wartime "emergency" contracts set up under the Bush Administration. However legally binding these deals might appear on the surface, there ought to be plenty of ways to apply leverage. These companies might be pressed into renegotiation, rebidding, cancellation and even fee-recovery, if this practice of abusing emergency overrides can be shown to have a stench of collusion. The possibility of recovering tens of billions of dollars in graft or overcharges should not be overlooked. Moreover, offers of safety and rewards for whistleblowers may put the US government in an unfamiliar position of actually holding the high cards. For a change.


Re-Negotiate War and Other 'Emergency' Government Contracts

about this article

"Re-Negotiate War and Other 'Emergency' Government Contracts" (published in full here) was one of a series of 21 "Unusual Suggestions" Brin posted following the election of 2008, when it seemed that everybody — columnists, political sages, bloggers and citizens — wrote missives about "what I'd do if I were president."

Copyright © 2009 by David Brin. All rights reserved.

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cited in this article

William D. Hartung, How Much Are You Making on the War, Daddy?: A Quick and Dirty Guide to War Profiteering in the Bush Administration (book #ad)

David Pallister, "How the US Sent $12bn in Cash to Iraq, and Watched It Vanish"

Adam Weinstein, "The All-Time 10 Worst Military Contracting Boondoggles"

wikipedia, Allegations of misappropriations related to the Iraq War

who profits from war?

letting others have their say

Liaquat Ahamed, Lords of Finance: The Bankers Who Broke the World

David Vine, Base Nation

Chalmers Johnson, Blowback: The Costs and Consequences of American Empire

Nouriel Roubini and Stephen Mihm, Crisis Economics

John J. Mearsheimer, The Tragedy of Great Power Politics

Andrew J. Bacevich, Washington Rules: America's Path to Permanent War

Daniel Immerwahr, How to Hide an Empire


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