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Rep. Henry A. Waxman

JUNE 19, 2006
11:27 AM

CONTACT: Rep. Henry A. Waxman
Karen Lightfoot /Molly Gulland, 202-225-5051

Dollars, Not Sense: Government Contracting Under the Bush Administration

WASHINGTON - June 19 - Rep. Henry A. Waxman today released a new report on government contracting under the Bush Administration. Under the Bush Administration, the "shadow government" of private companies working under federal contract has exploded in size. Between 2000 and 2005, procurement spending increased by over $175 billion dollars, making federal contracts the fastest growing component of federal discretionary spending.

This growth in federal procurement has enriched private contractors. But it has also come at a steep cost for federal taxpayers. Overcharging has been frequent, and billions of dollars of taxpayer money have been squandered.

At the request of Rep. Henry A. Waxman, the new report is the first comprehensive assessment of federal contracting under the Bush Administration. The report reaches three primary conclusions:

  • Procurement Spending Is Accelerating Rapidly. Between 2000 and 2005, procurement spending rose by 86% to $377.5 billion annually. Spending on federal contracts grew over twice as fast as other discretionary federal spending. Under President Bush, the federal government is now spending nearly 40 cents of every discretionary dollar on contracts with private companies, a record level.

  • Contract Mismanagement Is Widespread. The growth in federal contracts has been accompanied by pervasive mismanagement. Mistakes have been made in virtually every step of the contracting process: from pre-contract planning through contract award and oversight to recovery of contract overcharges.

  • The Costs to the Taxpayer Are Enormous. The report identifies 118 federal contracts worth $745.5 billion that have been found by government officials to include significant waste, fraud, abuse, or mismanagement. Each of the Bush Administration's three signature initiatives - homeland security, the war and reconstruction in Iraq, and Hurricane Katrina recovery - has been characterized by wasteful contract spending.
There is no single reason for the rising waste, fraud, and abuse in federal contracting. Multiple causes - including poor planning, noncompetitive awards, abuse of contract flexibilities, inadequate oversight, and corruption - have all played a part. The problems are widespread, undermining such major initiatives as domestic spending on homeland security, the rebuilding of Iraq, and the recovery from Hurricane Katrina.

Federal procurement spending is highly concentrated on a few large contractors, with the five largest federal contractors receiving over 20% of the contract dollars awarded in 2005. Last year, the largest federal contractor, Lockheed Martin, received contracts worth more than the total combined budgets of the Department of Commerce, the Department of the Interior, the Small Business Administration, and the U.S. Congress. The fastest growing contractor under the Bush Administration has been Halliburton. Federal spending on Halliburton contracts increased over 600% between 2000 and 2005.

Dollars, Not Sense is based on a review of over 500 reports, audits, and investigations by government and independent bodies, such as the Government Accountability Office, the Defense Contract Audit Agency, and agency inspectors general. It also draws on interviews with experts, the Special Investigation Division's own extensive investigations, data from the Federal Procurement Data System, and investigative reporting.

In addition to analyzing the mammoth increase in federal contract spending, Dollars, Not Sense provides the first government-wide estimate of the number and value of "problem contracts" under the Bush Administration. These 118 contracts - worth more than $745 billion - will soon be posted as part of a searchable database with Internet links to government audits.

The full report is available at The searchable database will be posted to the site later this week.


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