April 15, 2008

A summary of daily news relevant to the federal workforce produced by the Partnership for Public Service.

1. Kelman: The Not-So-Obvious Lesson
2. Federal Diary:  Online Confusion Prompts OPM to Restart Executive Search Process
3. Collectors Cost IRS More Than They Raise
4. Inspectors Fault FAA-Industry Partnerships
   

Kelman: The Not-So-Obvious Lesson

Federal Computer Week
By Steve Kelman
 
If you don't read the New York Times regularly, you may have missed a recent major investigative report on problems with an Army contract to provide ammunition to Afghanistan's  army. The Times story, headlined "Supplier Under Scrutiny on Arms for Afghans," was enormous -- 4,430 words that started on the front page and occupied an entire inside page.

The story concerned a small contractor that had won a major contract to supply the ammunition, and lots of what it delivered was inferior or nonfunctional, often coming from expired Eastern European stashes. The message was that the government had been ripped off by this unscrupulous firm, part of a general theme of waste, fraud and abuse in contracting. I am sure the lesson virtually all readers got is that we need more controls over contracting officials and unscrupulous contractors to prevent such fraud.

Unlike when it buys for itself, the story states, when the Army buys for a third party, it does not establish specifications in the contract. Rather, the Army leaves that to the customer, in this case, the Afghan army. And "the customer…did not set age or testing requirements," so the contractor could provide inferior product without violating the contract. The government has now suspended the contractor for a violation not of quality standards but of a provision against sourcing ammunition in China.

My reading of the story is completely different from the impression the writer was trying to create. What seems to have happened is that Army contracting officials followed the rules, but they didn’t show good business judgment.

They followed the rules: When the United States is procuring on behalf of a third party, the third party, not the United States, establishes specs for what it wants.

They showed poor business judgment: That normally is a sensible rule, but in the case of Afghanistan’s army, it didn't make sense because the Afghans don't necessarily know how to establish specs for such a contract. Contracting officials should have realized that the rule didn't make sense here, and they needed to take more responsibility for specs than the rule required.

The story reminded me of something I observed when entering government in 1993. Most agencies were then buying commercial software in shrink-wrapped packages rather than getting more economical site licenses. Here also, nobody was violating any rules. The contracts were competed, and government probably got the lowest prices anywhere for shrink-wrapped software. But government was following poor business practice.

What we tried to do during 1990s procurement reforms was encourage contracting folks to realize their job consisted of more than following rules.

My lesson from the munitions story is different from the one the Times suggests. The solution is not more controls.  

A control environment encourages people to think that their job is just to follow the rules -- which is the opposite of what we need here. Instead, we need more of a sense that contracting officials should be business advisers.

Online Confusion Prompts OPM to Restart Executive Search Process

The Washington Post
By Stephen Barr

Mix a little electronic confusion with good intentions and here's what you get -- a federal program put on hold.

That, more or less, is what happened to an Office of Personnel Management program that grooms talented federal employees to become government executives. The case illustrates the pitfalls of online processing of applicants and what it can mean for the government's commitment to administer elite programs fairly.

The OPM began operating the Senior Executive Service Federal Candidate Development Program, or Fed CDP, in 2004 to augment leadership training programs run by most large agencies.

Although the program is small -- the last class had 12 members -- the OPM hopes to turn it into a premier training ground for executives across government, especially for agencies that anticipate losing a significant number of career executives to retirement in coming years.

But the effort to put together the program's 2009 class hit a bump in late January, when a large number of applicants did not click the submit button on their applications or partially completed their application.

The OPM had announced it would take applications through Jan. 22 or until 500 applications were received. When Jan. 22 rolled around, 154 applications had been completed and submitted, far short of what the agency wanted.

Looking at the program's database, officials saw that 130 people had completed their applications but not hit the submit button, and an additional 100 had started an application but not finished it.

In the spirit of trying to expand the number of applicants, the OPM sent an e-mail encouraging the 230 to complete or submit their material.

Then, OPM officials began having second thoughts about sending out the e-mail reminder. After all, 154 people had followed the instructions without extra assistance.

On April 7, Linda M. Springer, OPM director, issued a statement announcing that the processing of applications had been stopped "because we now believe irregularities may have occurred [that] could have compromised the overall fairness of the process."

In an interview last week, Kay T. Ely, an associate director at OPM, said officials hope to restart the program in May, complete the selection of class members by August and start classes in September, with graduation in September 2009.

"We have sent back notification to everybody involved in the application process to let them know that we have had to stop this process and we plan to re-announce in May. Even those that applied in the past will have to apply again," Ely said.

After the e-mail went out, OPM officials began debating whether it raised questions of fairness and was in keeping with civil service principles, which call for evenhanded treatment of job applicants and employees. Officials concluded "it is just better to go back and start fresh," Ely said.

Although 154 people clicked on the submit button to send in their applications, Ely said officials will conduct a review to "see how well that submit button was highlighted" and whether other issues affected submission of applications.

Collectors Cost IRS More Than They Raise

The Washington Post
By Lyndsey Layton and Christopher Lee

The Internal Revenue Service expects to lose more than $37 million by using private debt collectors to pursue tax scofflaws through a program that has outraged consumers and led to charges on Capitol Hill that the agency is wasting money for work that IRS agents could do more effectively.

Since 2006, the agency has used three companies to go after a $1 billion slice of the nation's unpaid taxes. Despite aggressive collection tactics, the companies have rounded up only $49 million, little more than half of what it has cost the IRS to implement the program. The debt collectors have pocketed commissions of up to 24 percent.

Now, as Americans file their 2007 taxes, Democratic leaders want to end the effort.

"This program is the hood ornament for incompetence," said Sen. Byron L. Dorgan (D-N.D.), a leading critic who has introduced a bill to stop the program. The measure has 23 co-sponsors, all but one of them Democrats. "It makes no sense at all to be turning over these tax accounts to private tax collectors that end up costing the taxpayers money."

Defenders say the program adds muscle to IRS efforts to close the gulf between what taxpayers owe and how much the IRS collects. In 2001, the "tax gap" was an estimated $345 billion.

"The real choice is whether we use private collection agencies or let these tax debts go uncollected," said Rep. Jim Ramstad (Minn.), the ranking Republican on the Ways and Means oversight subcommittee. "I hope we don't take an enormous step backward in our efforts to close the tax gap by eliminating a program that's working."

After years of lobbying by the private collection industry, the Republican-controlled Congress created the program in 2004. The goal was to use collection agencies to close the relatively easy cases the IRS said it did not have the staff to handle: instances in which the taxpayer is not disputing the debt and in which the amount owed is relatively modest. Supporters hoped that the program would eventually be expanded to take over more of the agency's debt-collection duties, and the IRS predicts that the program will break even by 2010.

Three firms were awarded contracts: Pioneer Credit Recovery, based in the western New York district represented by Rep. Thomas M. Reynolds (R), who supported the program and recently announced his retirement; the CBE Group of Waterloo, Iowa, the home state of Sen. Charles E. Grassley (R), who helped create the program; and Linebarger Goggan Blair and Sampson, a law firm based in Texas, home to President Bush.

Pioneer Credit employees have given congressional candidates and political action committees $117,450 since 1995, including $16,250 to Reynolds. CBE Group employees have given $9,372 during that period, including $2,500 to Grassley.

Linebarger Goggan, one of the nation's largest collection agencies, has extensive government ties. The firm, its employees and their spouses have given PACs and federal candidates in both parties $423,260 since 1995.

The Austin-based firm was dropped from the program last year for reasons that the IRS declined to make public. Its workload was doled out to the two other companies. Mike Vallandingham, a partner at the firm, said Linebarger Goggan met IRS expectations for collection results and "received high marks for regulatory and procedural accuracy, timeliness and professionalism."

The firm had been under scrutiny since 2002 because of some of its municipal contracts. A partner went to prison in 2002 for conspiring to bribe two San Antonio City Council members. Last year, the city of Mansfield, Tex., ended its contract with Linebarger Goggan after the firm made a $2,000 donation to the mayor a month after he was elected.
 
To read the entire article, click here.

Inspectors Fault FAA-Industry Partnerships

Federal Times
By Gregg Carlstrom
 
Two years ago, a Federal Aviation Administration inspector discovered safety violations on a Boeing 737 and notified his supervisor.

But a week later, after apparently being notified by the FAA, the airline self-disclosed the problem under one of the agency's "partnership programs" and avoided a fine. That was a violation of FAA rules, which prohibit airlines from self-disclosing a safety problem when the agency identifies the problem first.

Legislators and former FAA employees say this incident wasn't a one-time problem, but one of many that stem from the agency's collaborative relationship with airlines.

The FAA has struck partnership programs with the airlines it is charged with overseeing. They allow airlines and repair stations to self-report their safety violations.

But critics say these partnership programs make it difficult for inspectors to do their jobs. And a string of high-profile safety lapses has brought the programs under scrutiny.

Earlier this month, Southwest Airlines disclosed it flew more than 60,000 flights on planes that were not properly inspected. The airline even kept flying those planes for more than a week after it self-reported the problem under its partnership program with FAA.

And in recent weeks, Delta, American Airlines and United Airlines have grounded thousands of flights to catch up on missed safety inspections.

Other examples of the FAA's cozy relationship with airlines abound, according to Tom Brantley, president of Professional Aviation Safety Specialists, the union representing FAA inspectors. In 2007, an inspector found 11 different problems on American Eagle planes in Fort Worth, Texas. But his supervisor refused to send letters of warning to the airline.

And in Hawaii, managers at Aloha Airlines complained about random inspections, claiming they disrupted flight schedules; the agency responded, according to Brantley, by banning them.

"[They're] get-out-of-jail programs," said Rick Andrews, a former FAA safety inspector who recently retired after 31 years on the job. "The original idea was, they would let us find out about things we wouldn’t find out about otherwise. But the problem is … we're forced to keep taking repeat self-disclosures, even if the fixes that the company is submitting turn out to not be adequate. And that’s a big problem."

Now, FAA's partnership programs may be in for some changes.

Legislators have called for high-level firings at the aviation agency and pushed the FAA to implement changes proposed by the Transportation Department's inspector general. Those changes include conducting a secondary review of airline self-disclosures of safety problems, ensuring that airlines abide by the rules of the partnership programs and periodically rotating supervisors to avoid cozy relationships with airlines.

To read the entire story, click here.