Last week, the House Committee on Oversight and Government Reform approved H. R. 3033 for consideration by the full House. Rep. Tom Davis was right in raising an alarm over the proposed Contractors and Federal Spending Accountability Act of 2007, as a careful reading of its provisions uncovers the potential for actions against government contractors similar to what former NY Governor and Attorney General Elliot Spitzer used against Wall Street firms.

The Act calls for the creation of a Federal Database "of information regarding integrity and performance of Federal contracts" and provides provisions for debarment, or the barring of companies from receiving Federal contracts or grant assistance. Specifically, the Act orders that the database include "information regarding civil, criminal, and administrative proceedings initiated or concluded by the Federal Government and State governments against Federal contractors or assistance recipients." [emphasis added]

While the provisions of the Act are aimed at barring companies and individuals from contracts due to criminal or fraudulant actions, one might expect that it would be difficult for a vendor to win any contract or task order while listed in the database, even if that listing referred to the initiation of an investigation into wrongdoing. Attorney General Spitzer demonstrated the power of initiating investigations to pressure very large companies into settlements, many times without the filing of formal charges or indictments. Could a zealous state or Federal official similarly use the threat of an investigation and listing in the CFSA Act database -- potentially the threat to shut down a vendor's ability to do business with the Federal government -- as a Spitzerian power play?

Section 5 of the proposed Act also requires disclosure of "all civil, criminal, and administrative proceedings against the person by the Federal Government or any State that occurred in the 5-year period preceding the date of submission" of proposals or bids. Depending on the definition of "administrative proceedings," vendors need to be aware of potential serious reporting challenges in their bid and proposal process. Will vendors be required to list every cure letter received in the past 5 years in every proposal?

Finally, the Act has detailed provisions about how the information can get into the database but nothing on the rights of companies and individuals that end up listed or provisions for ensuring that innaccurate or dismissed actions are removed in a timely fashion. Given the potential impact of this "Evil Contractor Watch List" on many companies, perhaps further investigation and thought is needed.