House and Senate appropriators want the Defense Department to produce a report on the payment of fees and bonuses to contractors with "documented performance issues."
The report, which will be produced by the under secretary of defense for acquisition and sustainment, is due to Congress within the next six months and must cover the previous two fiscal years for each military service and defense agency, according to a joint explanatory statement accompanying the fiscal year 2022 defense appropriations bill, part of an omnibus spending package signed into law by the president this week.
At minimum, the report must include: “an analysis of the number of contracts that have paid awards or bonuses to a contractor documented to be delivering unsatisfactory performance; the amount of awards or bonuses that have paid out under such circumstances; the total percentage of such awards and bonuses paid out, as a portion of total awards and bonuses over the same timeframe; an analysis of the department's policy governing payment of awards and bonuses under such circumstances; and recommendations for any changes to authorities or policy that would eliminate payments under such circumstances to implement any recommendations.”
Roy Lowenstein, a spokesman for Senate Appropriations defense subcommittee Chairman Jon Tester (D-MT), told Inside Defense the reporting requirement was proposed by Senate appropriators seeking increased transparency.
“The Senate defense appropriations subcommittee proposed this report in order to gain more transparency on how the Department of Defense uses award fees, especially on programs that are over budget or behind schedule,” Lowenstein said.
Each president’s budget request, he said, typically includes estimates of how much profit that a defense contractor could earn for satisfactory performance.
“However, there is not a regular reporting process on whether the funds set aside for contractor fees are used for that purpose, or something else,” Lowenstein said. “This report is an effort to gain insight on how the department evaluates the work done by defense contractors, and to what degree these companies are held to account for performance.”