GAMING GOVERNMENT CONTRACTS

1399419480000-TURLEYBelow is my column in USA Today on the use of set aside categories based on race, gender, or other criteria for government contracts. While the set aside issue arose in the recent controversy over Braulio Castillo, there are legitimate questions that should be discussed over the efficiencies and equities of the system. There is also the question of self-identification on these issues. Veteran’s status is easier to confirm, though in the Castillo case we saw the definition can be wildly out of whack. However, we have seen controversies involving people who self-identify as having minority status based on questionable basis such as the controversy over Senator Elizabeth Warren who listed herself as a minority due to Native American blood. There is presumably some criteria for such claims when made in government contracts but I am not sure who where that line is drawn. The real question is whether it would not be better for Congress to directly fund programs to help minority groups rather than require special treatment in government contracting. Hopefully, we can have such a debate without rancor and personal recriminations. There are good-faith reasons to debate whether government contracting should be based solely on the best price and product determination in my view. It is not questioning the purpose of this policy but the means used to achieve it.

Braulio Castillo seemed exactly what the government was looking for. He was CEO of a Virginia company who was listed as a service-disabled veteran. That status allowed Castillo to secure $500 million in government contracts under special rules. Castillo described his terrible disability as just one of the “crosses that I bear due to my service to our great country.” Others now describe it as a shameless scam.

Castillo, 43, was a U.S. Military Academy Preparatory School student when he hurt himself playing football. Decades later, he filed for service-disabled veteran status with the Department of Veterans Affairs. Bizarrely, the VA granted it, even though Castillo went on to play football for the University of San Diego and never served in a military unit. With this status, he was awarded a half-a-billion dollars in contracts despite little experience.

Castillo is certainly not the sole measure of the programs that give preferential treatment in government contracting based on race, sex, geography, business size and disabled status. However, his case shines a light on the system’s darker side.

For years, contractors have complained that companies game the system by adding front owners with the right status. Such was the case of the Virginia company GTSI, which won contracts for IT and integration services in part because one of its partners was considered a “small business.” One e-mail, cited as from a GTSI vice president, revealed that the subcontractor was “very open to the concept of GTSI doing ALL the work” and just taking the money as a front.

The main reason for concern is not fraud, however. It is efficiency. The set-asides downgrade competence, performance and price in government contracts to focus competition for public money on the special status of corporate owners. In writing the laws governing government contracts, Congress simply threw in elements unconnected to the merit of government contracts while demanding reports on the percentage of contracts benefiting these groups.

For example, in 1994, Congress mandated that at least 5% of contracts go to businesses majority-owned by women. Today, roughly 3% of contracts are set aside based on the gender of the owner. Similar set-asides and preferences are accorded by race and service-related injuries. At times, the world of government contracting preferences has become so bizarre that set-aside groups have fought about preferences within preferences. In one case, 25% of the set-aside for small businesses were further set aside for minority-owned or women-owned businesses, but minority businesses objected that woman end up getting too much of the contracting pie.

Good intentions

There is no question about the laudable goals of these programs in expanding minority and women-owned business. Rather, it is the means used to achieve those goals that is the problem. Like special deals in the tax code, it is easy to create such preferences for particular groups without the need to appropriate any money directly to benefit a group. Laws and regulations stretching across dozens of federal departments and agencies have the special set-asides or preferences for “veteran-owned small business, HUBZone small business, or women-owned small business.” Agencies further mandate special treatment for “African Americans, Hispanic Americans, Native Americans, (American Indians, Eskimos, Aleuts, or Native Hawaiians); Asian Pacific Americans (persons with origins from Japan, China, the Philippines, Vietnam, Korea, Samoa, Guam, U.S. Trust Territory of the Pacific Islands, Northern Mariana Islands, Laos, Cambodia, or Taiwan, Asian Indian Americans; and members of other groups designated from time to time.”

Few are prepared to question the wisdom of such an approach out of fear of being called misogynistic, anti-veteran or anti-Samoan. Agencies are left dealing with a tangle of detailed rules while the public expects them to be quickly and efficiently carrying out government business. It is a recipe for inefficient government, a frustrated public and little accountability.

As for Castillo, his contracting days are over. Not because of any reform, mind you. Last month, police charged him in the death of his wife in his Northern Virginia mansion. Despite his classification as 30% disabled, police say he was able to use the other 70% to beat his wife to death and then hoist her to the ceiling to fake a suicide.

Jonathan Turley, a law professor at George Washington University, is a member of USA TODAY’s Board of Contributors.
May 7, 2014

94 thoughts on “GAMING GOVERNMENT CONTRACTS”

  1. Oh, Dredd.

    I do so love Lewis Black!

    Great choice. Thanks for the laughs.

  2. feynman

    rebecca,

    Well darned if I know how anyone could call Proxmire a libertarian. But somebody just did…. didn’t he?
    ==================

  3. Dredd, I noticed that too. Why do conservatives want to call themselves libertarians? They seem very closey aligned with the most conservative Republicans out there. They can call themselves libertarian but they certainly don’t resemble libertarians of 20 years ago.

  4. rebecca,

    Well darned if I know how anyone could call Proxmire a libertarian. But somebody just did…. didn’t he?

  5. Dredd,

    Yep. Libertarians are mighty comfortable with the Tea Party.

    And few ‘normal’ old school Republicans, would align themselves with the today’s Republicans. Ike and Dirksen come to mind. Colin Powell is having some difficulty understanding his Party these days.

  6. Feynman,
    Proxmire certainly was a Democrat. How anyone could try to call him a libertarian is beyond me. I’ve lived in Wisconsin all my life, he was loved by Democrats and served Wisconsinites as a Democrat Senator for many years.

  7. Prox supported regulation as do Democrats. Prox believed that banks were obligated to extend credit to less affluent communities – sounds like a Democrat to me. Prox believed that powerful industries needed to be regulated. I don’t think Libertarians take that position. . He was a supporter of government social programs….Social Security and Medicare. That’s a Democrat – certainly not a Libertarian. He believed consumers needed protection from banks……sounds like Elizabeth Warren to me.

    Proxmire’s very first vote as a Senator was for the Civil Rights Act.

    Libertarian? Helll, no! He was a Democrat.

  8. “Libertarians” e.g. R.Paul – (R-Bullshitistan) are nearer to t-baggers than old-school republicans or democrats.

  9. We had a crazy aunt who used to scream “You’re dead to me!” We just laughed at her when she left our house in a huff, then our mother and father explained that those with a mental illness were truly ill and we should be kind to them.

  10. First the holier than thou took the Hebrew Bible, then they came after democratic Senator Proxmire, now they want the no-bid contracts to get rid of fraud …

    Calling on Lewis, calling on Lewis …

  11. He was a libertarian by ANY legit standard. He was against all waste in govt. a BEDROCK of libertarianism. He did not want govt. intruding on people’s lives. He financed his own elections, not wanting private or govt.[that would be taxpayers] money. It’s tough to have any type of intellectually honest conversation w/ you Keebler/Feynman. You’re about to get Dredd treatment, that being “dead to me.”

  12. Sen. Wm. Proxmire was a fine Senator and he was member of the Democratic Party. He always focused on waste in government. He also was an early supporter of campaign finance reform, played an important role in the plan for saving NYC from bankruptcy, and always supported dairy price supports.

    I doubt that Senator Proxmire would call himself a libertarian – especially not a libertarian like those found today.

    But I guess anybody can label the guy whatever he wants. Maybe I should call Ronnie a Democrat.

  13. One this date some five years ago contracts for murder were discussed.

    They were no-bid contracts of course, because no minorities would bid on that kind of extermination, seeing as how they had some “experience” in that regard.

    On this date back then a very strong advocate for proper contracting policy graced us out:

    For many people around the world, it is a sign of the decline of American moral leadership that we continue to debate whether the government should prosecute those involved the Bush torture program. Their confusion is understandable. Under our existing treaty obligations, we agreed to prosecute such crimes and we have prosecuted others for precisely the same acts for decades. The real question should be: Should the United States violate international law to shield individuals accused of war crimes? Our answer to that question will define or redefine this country for generations.

    (Noonan’s Grace of Torture Murder, quoting Johathan Turley). And some other grossed us out.

  14. YES!! You would have hated Proxmire, he bucked Dem sacred cows like abortion on demand and cushy govt. jobs and pensions. The man walked the walk, holding military and ALL govt. agencies and contractors to task. He was tough on junk science projects, the love of liberals. You would have never voted for him.

  15. The great US Senator, William Proxmire, was a libertarian who held contractors, particularly military contractors, accountable w/ his Golden Fleece Awards. I had the honor of voting for Proxmire the last time he ran. I’m glad he’s not alive to see how voracious and cozy our govt. and big contractors have gotten. There are many Dems here who would have never voted for Proxmire.

  16. Persona, Correct. But, here’s the problem, the govt. officials have little concern for efficiency, it’s not their money. They have a steady stream coming of the money tree called US Taxpayers. The only time this stuff comes to a the attention of people is when shit like the Obamacare website fiasco occurs. That was a no bid contract. I guarantee you, that company will bide their time, maybe change corporate name, grease some palms, and will be feeding off the trough once again.

  17. The tyranny of good intentions strikes again.

    In a perfect world government contracting would be based solely upon merit and not whether you’re a veteran, a minority, a woman or a small business (etal).

  18. Yep. All those people in the UK are just clamoring to get rid of NIH. I bet you can hear those screams all the way to Phoenix.

    But that’s all to the good for the people of Phoenix. Beats listening to the cries and moans of those housed in Sheriff Joe’s Tent City as the temperature creeps past 110.

    Whatta humanitarian, that Joe. Is his crack investigative team in Hawaii still working on the birth certificate? That report ought to come out any day now.

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