USA: Outsourcing the Defense Budget

Defense contractors are writing the president's defense budget
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First published July 29, 2004

WASHINGTON, July 29, 2004 - Private defense contractors have been given the authority to help prepare the president's national defense budget-another job the Department of Defense has outsourced.

The Center for Public Integrity has found that at least three private-sector contracting firms have advertised employment positions for analysts to work in the development of America's defense budget.
According to a job listing posted on the Web site of McLean, Va., defense contractor Booz Allen Hamilton, the company is looking for a senior budget analyst to work in a Department of Defense or military services budget division to "prepare the agency's President's Budget, Budget Estimate Submission and Program Objective Memorandum."

The position is being advertised based on a contract that Booz Allen Hamilton expects to receive, according to the company's spokesperson George Farrar. He said the company has been performing such services for several years.

"This is not a contract we have now, but we do anticipate a request," Farrar told the Center. "The job comes out of the company's financial management service offerings, which is used by the Department of Defense."

Despite the wording of the advertisement, Farrar said his company does not write America's defense budget, for which Congress last year authorized $400.5 billion, but has been paid by the government in the past to "assist with analysis to support budget requests."

Shortly after being contacted by the Center for Public Integrity for this story, Booz Allen changed the language of the job description to: "provide budget analysis and supporting documentation to government client staff´┐Ż"
Farrar would not specify what contracts in the past have been connected to the vacant position, and said the company has "routinely provided financial management analysis to a variety of government agencies under a host of government contract vehicles."

Department of Defense spokesperson Glenn Flood said it does not present a conflict of interest to involve a contracting company in the preparation of the president's budget, under which the same company could be awarded contracts.

"I don't think that is a conflict of interest because it is not guaranteed [the contracting company] will get another contract in the future," Flood told the Center.

Flood said he could not comment on individual contracts because they are the responsibility of the individual Defense Department agencies.

"It might not look right, and appearances are an issue," defense contracting expert Gordon Adams said of the practice of allowing a private contractor to work on the analysis for the national budget.

Adams, director of security policy studies at The George Washington University, said the possibility of a conflict of interest exists depending on the areas for which the contractors are doing the budget analysis, but the contracting position advertised by Booz Allen Hamilton did not seem to present one.

Booz Allen Hamilton, the Center found, has received more than $3 billion in contracts during the last six years from the Department of Defense, with contracts increasing by an average of almost $100 million per year.

"Whenever you are not allowed to hire civil servants, you have to hire someone else to do the work of the government," said Dan Guttman, a government contracting expert who serves as a consultant to the Center for Public Integrity. Given the federal policy over the past decade of reducing the number of direct government employees, Guttman characterized this DOD outsourcing of budget positions as "predictable." "The question is the extent of government oversight. What is the budget if not analysis?"

Two other defense contracting firms, Perot Systems Government Services and Miltec Systems Co., also have advertised budget-development positions similar to that of Booz Allen Hamilton.

Perot Systems Government Services, a Plano, Texas-based information technology company whose chairman is former Reform Party presidential candidate Ross Perot, advertised recently for a senior budget analyst who "supports the Army Program Office as a functional analyst/budget officer in the development of the Programming Objective Memorandum, Budget Estimate Submission and President's Budget."
Like Booz Allen's, the advertised position is for a "standing job" that the company fills on an as-needed basis, Perot Systems spokesperson Ian Stewart said. The company removed the listing but Stewart said the company would repost the advertisement when another opening occurred.
Perot Systems, which the Center has found has received nearly $70 million in defense contracts over the past two years, works specifically with the Army Human Resources Command, said Jim Ballard, the chief operating officer of Perot Systems Government Services.

"We do the spreadsheet work," Ballard said. "We do the analysis to help the government decide what the budget is going for. We do not do allocations."

The job comes out of a contract on the General Service Administration's Consolidated Products and Services Schedule that Soza & Co. Ltd. won before the company was acquired by Perot Systems in 2003, Ballard said.

According to an Army spokesperson the person filling the position at Perot would assist the Human Resources Command "in the initial development of its internal programming and budget process (and supporting automated system) that feeds the Army's overall development of the [Programming objective Memorandum], [Budget Estimate Submission] and [President's Budget]."
"Contractor personnel are not involved in 'inherently governmental' activities such as validation of requirements or funding and prioritization decisions; furthermore, contractor access to this 'pre-decisional' information is very limited," the Army spokesperson wrote in an e-mail to the Center.
Miltec Systems Co., an aerospace and defense engineering company based in Huntsville, Ala., also advertised a similar position for a senior program analyst to work with a Department of Defense agency to "support agency planning, programming, and budgeting process, specifically development of the Program Objective Memorandum (POM) and President's Budget [and] support efforts to defend and explain the Program to OSD, OMB, and Congress." The company received $47.6 million from the DOD from 1998-2003, the Center for Public Integrity has found.

Thomas Johnson, Vice President for Miltec's Washington Division, said his company's listing will be removed because the company did not receive the corresponding contract.

Johnson told the Center the company would have "built parts of the program's budget process, providing input wherever necessary" had it received the contract.
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