CSA in the News

CSA President Chris Jahn Appears on CNBC's "Street Signs"

September 26, 2005

Ron Insana:  To discuss no-bid contracts, Chris Jahn, President of Contract Services Association, he says the most qualified companies are being chosen and, Freedom Works Policy Director, Max Pappas who says there isn’t enough competition.

Insana:  Chris, let’s start with you.  With respect to these no-bid contracts…people has a somewhat jaundiced view in the wake of what transpired in Iraq.  They worry that these are political favors being billed out to companies that may have been more generous to campaign that others.  How much of this do we have to worry about?

Chris Jahn:  I don’t think we have to worry about it very much at all, to tell you the truth.   What we are talking about are a handful of companies that were hired because of their specific capabilities that they have to manage a project of this size and scope.   The fact of the matter is competition is not a viable option right now.  We need to get help to those people right now.  We don’t have six months to go through the normal Federal Acquisition Regulation process, and wait around to determine who the best contractor is.

Insana:  Now Max, Chris has a good point, but is there some way to achieve both ends here that not only offers competition but also deals with the clear and immediate needs of the region that was hit hardest?

Max Pappas:    Yes, sure, I think you can determine which of those things need to be done immediately, like pumping the water out for example, and if that needs to be done immediately, get it done immediately.  But, certainly what we are talking about here is a lot more than pumping out water.  We have a whole region of the country which needs to be rebuilt and when you are talking about things like rebuilding roads and bridges that are going to take years to do, I think you can wait a few extra weeks to make sure the best company does get the contract.  As he said, these companies are the best ones.  If they are the best ones, then they will get the contract in the end.

Insana:  Now Chris, let me ask you about the process itself.  Former California Governor Pete Wilson, a Republican, had written an op-ed piece in the Wall Street Journal a couple of weeks ago, saying that after the Northridge earthquake, they came up with a rather ingenious set of proposals to put the work out to bid, which was also an immediate need after several freeways collapsed, homes had fallen, apartment complexes had pancaked.  They put out these contracts and they said, if you finish on time and under budget, we’ll give you a bonus.  If you finish over budget and late, we’ll penalize you.  It turns out the companies involved in the reconstruction made more money from their bonuses than they made from the actual contracts.  Why aren’t those types of programs applicable here?

Jahn:  Well, I think you would have to ask FEMA about that. First, what we are looking at is an emergency situation where you need folks to come in and stabilize things.  For long term rebuilding, CSA and its members fully support open competition to make sure that the taxpayers get the best deal it possibly can.  So, I don’t think we are that far apart here and I think incentivizing contractors to do a great job and get done early and under budget is a super way to go about it and we’d stand arm in arm with those who want to do that.

Insana:  Max, would you go along with that?

Pappas:  Yes, certainly.  I think what you are hearing is that competition does work and incentives do work, and that’s what we need to keep in mind here…is that when you have no-bid plus costs incentive structure, there’s not really a whole lot of incentive to spend the taxpayer dollars as wisely as possible.

Insana:  What about supervision, Max, with respect to who should oversee a situation.  Do we need yet another in a series of czars to watch over this process?

Pappas:  Well I think you should always be wary of creating any new government bureaucracy because they are riddled with their own problems.

Insana:  All right gentlemen.  Thank you for being with us.