After the passage of the H.R. 3033 in the House of Representatives late last month, certain provisions are making progress in the Senate. This bill created a section of the Government Funding Transparency Act of 2008 calling for the creation of what is now generally called the Contractor Misconduct Database, which would track instances such as defaults, debarments, suspensions or other proceedings related to contractor malfeasance. Federal officials would be required to consult the database prior to making an award and justify any award to anyone found there. Many voices criticized this database as a potential blacklist, and due to this criticism a "two strikes" provision, which would have brought suspension or debarment proceedings onto any firm with two judgments or convictions of the same offense in any 3 year period, was removed from the bill.

This week the database provision is getting watered down in the Senate as Senator Claire McCaskill tries to attach it to the Senate FY09 Defense Authorization bill (S.3001) via an ammendment. The Senate version would restrict use of the database only to government employees and would require officials to consult it only for awards greater than $500,000. The Senate version would also include settlements in the list of proceedings that warrant capture. The bill now rests in Armed Services Committee.

Pardon me for asking, but are the firms that are able to tackle the bigger deals really the ones we are worried about here? Don't firms -- from multi-billion dollar public entities to $50MM small businesses -- have adequate checks against such skullduggery such as shareholders, the media, and brand reputation? Often firms like CSC will settle issues, as they recently did with Justice, in order to end the distractions for everyone. Are these resolutions now to be used as tools to bar them from the market?

An aide to Senator McCaskill explained, "The fundamental purpose of this legislation is to empower suspension and debarment officials and contracting officers in making better decisions on how to spend government money. The intent of the database is not to be a one-stop shop for embarrassing contractors for their negative actions." (Source: GovExec.com) That is good news, but we worry that future circumstances may overcome this intent as IBM's recent experience might demonstrate. Passage of this database provision seems imminent, but the critical questions will still be around the rules for managing it and using it to avoid unfair treatment of contractors and unnecessary disruptions in government missions.