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25-year-old ‘test program’ shields federal contract data, blocks fines

By   /   January 20, 2015  /   News  /   No Comments

American Small Business League

BAD DEAL: Lloyd Chapman of the American Small Business League says a “test program” is failing U.S. taxpayers by stifling competition for defense contracts.

By Kenric Ward | Watchdog.org

While government agencies snoop into the private lives of Americans, Congress maintains a stone wall around trillions of dollars in public contracts.

Just before their Christmas break, lawmakers quietly renewed the Comprehensive Subcontracting Plan Test Program, a oxymorically titled law that blocks disclosure of Pentagon spending.

The only thing “comprehensive” about the program is its blanket blockade of subcontractor data. With its latest renewal, the aging “test program” will turn 27 years old in 2017.

“It eliminates transparency and eliminates penalties” for noncompliance, said Lloyd Chapman, president of the California-based American Small Business League.

Chapman, in an interview with Watchdog.org, estimated that “taxpayers were cheated out of $2.5 trillion over the last 25 years.”

Chapman acknowledges that critics only have guesstimates because CSPTP is as dark as a black box.

“The public needs to know, but the government has not been forthcoming. A lot of money is not being reported,” said Ashok Mehan, CEO of Fedmine, a government data collection company in Maryland.

In 2004, the U.S. Government Accountability Office zeroed in on foreign subcontractors.

“Without accurate and complete information on subcontracts to firms performing outside the U.S., (the Department of Defense) cannot make informed decisions on industrial base issues,” the GAO report said.

In 2011, U.S. Rep. Hank Johnson, D-Ga., introduced H.R. 3184 to redistribute $200 billion a year from large corporations that receive federal small-business contracts to small businesses that Chapman says are supposed to receive the money. The measure went nowhere.

Congress first approved CSPTP in 1990, ostensibly to relieve contractors of burdensome government record-keeping rules.

“I don’t know that it’s overly cumbersome,” Mehan said of the accounting requirements.

Despite a 9th Circuit Court of Appeals ruling that small-business contractor data on taxpayer-funded projects cannot be kept secret, subcontractor information on helicopter maker Sikorksy Aircraft Corp. was delayed before Congress renewed CSPTP last month.

Sikorsky is scheduled to release a report Thursday, but Chapman isn’t counting on it.

With the test program extended, he said, “Loopholes will continue to allow the government and prime Pentagon contractors to cover up.”

In addition to shielding data, CSPTP protects contractors from fines for failing to achieve small-business subcontracting goals.

Ironically, the program’s stated objective is to “increase subcontracting opportunities for small businesses.”

“Who in their right mind could possibly believe eliminating all transparency and penalties in Pentagon small business subcontracting would ever increase subcontracting opportunities for small businesses?” Chapman asked in an op-ed article for The Hill.

This article was updated at 2:05 p.m. Jan. 22.

Kenric Ward is a national correspondent for Watchdog.org and chief of its Virginia Bureau. Contact him at (571) 319-9824. @Kenricward




Kenric Ward is the San Antonio-based reporter for Watchdog.org. A California native and veteran journalist who has worked on three Pulitzer Prize-winning newspapers, he received a BA from UCLA (Political Science/Phi Beta Kappa) and holds an MBA. He reported and edited at the San Jose Mercury News and the Las Vegas Sun before joining Watchdog.org in 2012 and previously reported from Virginia. Kenric can be reached at [email protected]