December 08, 2002
Diane S. Witiak
(202) 639-6419

Report Shows Taxpayers Lose When Government Work Is Contracted Out

(Washington, D.C.)—“Companies hired by the government don’t appear able to provide the American people with the quality we need at a price we can afford,” stated Bobby L. Harnage, National President of the American Federation of Government Employees (AFGE), citing a report of contractor failures at the Defense Distribution Depot Warner in Robins, Georgia.

The investigation by the Defense Department’s Inspector General (IG) looked into a contract awarded to EG&G Logistics to perform material distribution services at the Defense Distribution Depot Warner Robins, Georgia, worth some $44 million at the start of the contract term. The study reviewed contract administration, a backlog of work, and reimbursement expenses.

“This audit shows how contractors take advantage of vaguely written contracts and illustrates the urgent need for agencies to be more aggressive enforcers,” added Harnage.

According to the IG, the contract did not adequately focus on the contractor’s performance, did not provide sufficient oversight and did not lower payments when the contractor failed to perform. The IG found that EG&G did not deliver its work on time, did not provide “acceptable performance levels over a 14-month period” and did not supply a quarter of its quality assurance reports. The audit also asserts that the Defense Logistics Agency (DLA) did not develop a specific quality assurance surveillance plan or an individual training plan for personnel to oversee the contract nor did DLA provide adequate guidance to manage the plan or the transition from the Defense Department to contractor performance.

“Where there’s smoke there’s fire, and this inferno isn’t out yet,” said Harnage. “Several questions remain unanswered, including why DLA repeatedly rejected draft documents that accurately described the work to be performed in favor of a misleading performance work statement that favored the contractor’s bid.” Harnage urged the IG to expand its investigation to also look for further cost overruns and service problems.

“The Bush Administration just announced its plans to privatize close to one million federal jobs. Yet, this investigation shows the system is broken. But rather than fix these problems President Bush wants to make them worse,” said Harnage. “Americans want to pay fair prices for quality work rather than giving big payoffs to poor performers. The entire competition process should be examined. If not, the IG’s office will be busy in the upcoming years as Bush’s new privatization scheme sees problems growing out of control.”

“Americans should be grateful for the hard work of three members of the Georgia delegation who requested this investigation in 2001—Senators Saxby Chambliss, Zell Miller, and Max Cleland. Their dedication brought these problems to light,” Harnage concluded. A copy of the full report (D-2003-016, Oct. 30, 2002) can be found at

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