Among the examples cited by the commission was a $40 million prison built in Iraq that the Baghdad government “did not want and that was never finished,” Shays and Thibault wrote.
In Afghanistan, the United States spent $300 million on a power plant in Kabul that the Afghan government cannot afford to sustain and lacks the technical experts to run, the panel found.
Another report out Monday found the Pentagon has almost tripled funding for no-bid contracts since the attacks of September 11, 2001, from $50 billion in 2001 to $140 billion in 2010.
The lack of competition in contracting has resulted in waste, lower quality services and fraud, according to the investigative report by the non-profit Center for Public Integrity.
In one case, a Tucson-based company, Applied Energetics, won over $50 million in funding for a futuristic “lightning weapon” that is supposed to detonate roadside bombs, even though it had failed some tests.
There is a lot of misunderstanding about so-called “no-bid” contracts. I have written government contracts, work orders, requests for bids, and been on a contractor selection board.
First, there is no such thing as “no-bid” contracts except in rare circumstances because congress has made bidding a requirement for all contracts. So-called “no-bid” contracts save the government money. Here’s the way it works:
Suppose you are a large real-estate investor buying and selling an average of ten properties a month. One place you can cut expenses is in the escrow fees you pay. You do this by listing your requirements for escrow services and ask three companies to bid on a two-year contract. You pick the cheapest one and sign a contract. Here is the key: each time you need escrow services within the performance period [two years], you are contractually obligated to use the contractor you signed with, and he is obligated to provide the service and charge you only the contract price. You send over the paperwork, and he processes it. In the government it is called a work order. This is what people are referring to when they say “no-bid” contracts. Of course the work order is no-bid because it has already been bid within the overall contract. This saves from having to go through the expensive and time-consuming bidding process each time you need something done.
I mentioned exceptions. The most common is the sole-source justification. Suppose you are the Air Force and you need a fighter plane that can climb faster than it can dive, and there is only one aircraft builder who can design and build it. You write a sole-source justification [not easy], and if it gets approved, you have a contract.
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