Blog - Defense Bill Includes Secretive Contractor Blacklist

One of the bills that’s still likely to come up in the lame duck session is the 2011 Defense Authorization Act. It includes the “Don’t Ask, Don’t Tell” repeal language and it’s generally considered a must-pass bill (it’s been 48 years since Congress has failed to pass the annual Defense bill).

It’s a big bill — 981 pages authorizing about $725 billion in spending — and since it’s considered essential legislation to keep the Defense Department functioning there’s often a lot of controversial stuff that gets thrown into it without thorough vetting. The American Small Business League is raising a red flag on Sec. 815 of this year’s bill, which they say would “create ‘de facto’ debarments of small businesses across DoD federal contracting programs, with potential for these ‘de facto’ debarments to touch every corner of federal government contracting, thus creating a blacklist where businesses would be debarred from working with the government.”

The section is titled, “Reduction of supply chain risk in the acquisition of national security systems.” Basically, it empowers two people in the DoD — the Director of the Defense Intelligence Agency and the Assistant Secretary of Defense for Networks and Information Integration — to decide that a company poses “an unacceptable supply chain risk” and then block that company from being awarded government contracts. The bill specifically states that debarments under the provision would be exempt from disclosure under the Freedom of Information Act and review by the Government Accountability Office or federal court. Congress would be shown a “statistical summary” of how many companies have been blocked from working with the government, but they would not be told which companies have been blocked and why.

Now, there’s no doubt that reducing risk in the Defense supply chain is a necessary and worthy goal, but this particular arrangement seems absurdly ripe for abuse. It would establish a clear path for anticompetitive influence-peddling and bribery while at the same time restricting the public from the tools they need to hold government officials accountable.

When decision-making is centralized, like it would be here (at the “sole discretion” of two DoD officials), corporations that want to sway the decision makers know exactly where to focus their efforts and can play the influence game much more effectively. In this case, we have a small group of huge, politically-connected Defense contractors — Lockheed Martin, Northrop Grumman, Boeing, etc. — that have invested in lobbying policymakers as a major component of their business. These giant and savvy companies have a financial interest in convincing the Defense Department that their smaller competitors do low-quality work and that doing business with them would present “an unacceptable supply chain risk.” This provision makes it easier for them to do that and protects them from ever having the public find out.