Across the nation, local firms can expect to lose billions of economic stimulus dollars to large multinational corporations, thanks to a government contracting scheme that puts paperwork speed ahead of community recovery.
In Montana, that means qualified building firms such as Kalispell’s Swank Enterprises are out of the loop, while many millions in federal construction funding will go to a California company that recently earned a stern rebuke for its failures in Iraq — a war-profits scandal that cost taxpayers hundreds of millions of dollars.
“It’s a farce,” said Dewey Swank. “It stinks of politics and big special interests.”
Over the past several years, Swank has teamed with Montana-based CTA Architects to successfully design and build four federal border stations. Several more ports now are being built along the Montana-Canada line, thanks to the massive stimulus bill, but this time Swank and CTA weren’t even given a chance to bid.
That’s because the government is using a controversial contracting method that speeds bidding, but also tilts the playing field in favor of mega-companies. It’s called IDIQ contracting, which is shorthand for “indefinite delivery/indefinite quantity,” and it’s essentially an all-you-can-eat money buffet for big corporations.
An IDIQ is a broad and open-ended agreement, in which the government essentially creates a sort of long-term, all-purpose contract under which specific tasks can later be defined. The scheme moves projects quickly, which is a priority for economic stimulus jobs, but critics argue it’s anticompetitive, because only a handful of large firms can afford to engage on such undefined and unrestricted terms.
In Montana, where about $78 million is earmarked for border-station construction, that means Swank and CTA are out, while Parsons Corp., from Pasadena, Calif., is in.
Parsons, with 12,000 employees worldwide and revenues pushing $3.5 billion last year, is no stranger to IDIQ contracting, or to the controversy that comes with it.
The company entered Iraq in 2003, with just eight government contracts for reconstruction. But those few vague umbrella agreements eventually came to cover about 1,000 projects in 500 locations. Jobsite oversight was spread thin as the contracts and, when projects stalled, taxpayer money hemorrhaged.
By 2007, the man in charge of overseeing Iraq’s reconstruction issued a scathing report to Congress, charging that Parsons had failed to deliver. Hundreds of millions had been spent, Inspector General Stuart W. Bowen said, but 150 health centers did not get built and some work that got done was “substandard.”
The company, for its part, blamed the violence of an active war zone for its failures, although critics such as Bowen pointed out that other contractors continued to perform in Iraq despite the challenges.
“We were told the forces would go in, people would be happy we were there, it would be an easy place to work,” said company spokeswoman Erin Kuhlman.
Lawmakers grilled Parsons, castigating management, but in 2007 decided not to exclude the company from future government work, including stimulus contracts.
Swank, for one, wonders why someone with Parsons’ recent history is still winning government contracts, and then he answers his own question — “someone’s palm is getting greased.”
In fact, Parsons ranked third among the nation’s construction-services firms in terms of federal campaign contributions during the 2008 election cycle, donating about $600,000 split almost evenly between Republicans and Democrats. The company also spent more than $1.5 million lobbying federal lawmakers between 2004 and 2008, with $305,000 shelled out during the 2008 presidential election year.
“That,” Swank said, “tells me a lot about how things get done,” hinting at a tangle of war profits and campaign contributions and lobbying.
However things got done, Parsons and its IDIQ contracts have made their way from Iraqi scandal to Swank’s backyard, recipient of recovery act money designed to stimulate the domestic economy and create jobs.
Jobs over at Swank Enterprises have been trimmed by a third, victims of an economic recession fueled by firms deemed “too big to fail.” Jobs at CTA have been sliced by 10 percent.
And so before Swank hands over the financial keys to Montana’s Hi-Line, he suggests people “take a look at this company’s history of delivering the job in remote and difficult places.”
Because while he would never suggest that Scobey resembles a war zone, the builder does wonder whether a company not “in-country” has the local experience needed to succeed in such far-flung places.
Asking a Pasadena firm to work Montana’s northern border, he said, “is like asking me to work in a country where I don’t know the language.”
The Department of Homeland Security refused interview requests regarding its contracting methods, but Sahar Wali, at the General Services Administration, said her agency is choosing big firms with IDIQ contracts already in place because recovery funds must move fast if they are to stimulate the economy.
The money for Montana’s border stations, for instance, can hit the ground in August, whereas a competitive process involving qualified locals could delay spending until year’s end, she said.
“But it’s not all about speed,” countered Ken Richardson of CTA.
He says haste on Montana’s ports will mean breaking ground in winter, which ultimately creates more delay than momentum.
For stimulus to stimulate, Richardson said, it needs to reach all parts of the economy, and not just a few multinational firms.
“I mean, golly, I’m pretty sure Congress wanted that stimulus money to be spread around a little bit.”
That was surely the intention of Sen. Jon Tester, D-Mont., who in recent weeks has met with agency leadership to find stimulus-work opportunities for local firms.
His efforts have resulted in workshops for would-be government contractors and new language putting priority on hiring local subcontractors.
But as the IDIQ process becomes increasingly entrenched in recovery act projects, the trend is clearly toward locals losing to large mega-corporations.
Federal data show that job orders made through pre-existing IDIQ contracts (as opposed to individually bidding jobs) grew from 14 percent of total dollars spent in 1990 to 52 percent in 2005, and it’s growing faster than ever now that the stimulus puts priority on speed.
Speed is important, Tester said, but local firms must have the opportunity to compete if the jobs bill is to have its intended effect.