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What they say about Beltway bandits is true

Updated on December 4, 2012

Beltway Bandits

Contractors have a bad reputation in Washington. Sometimes called Beltway Bandits, they are legendary for making huge profits off the federal government—and sometimes that is true.

There is another aspect of contracting that is often not revealed, the seamy underbelly of contracting: the subcontractors who actually do the work.

Let me describe one situation with which I am intimately acquainted and by which I have been affected. More clearly, I am not an impartial observer or disinterested in this, but I aim to be as honest and fair as I can, considering my bitterness and rancor.

For the past five years, The Collier Group, Inc. has held the contract for about two-thirds of the staff at the Near East South Asia (NESA) Center for Strategic Studies, one of five regional centers funded by the Department of Defense and administered by the Defense Security Cooperation Agency, DSCA.

Charles Collier, the principal of the Collier Group, had submitted a bid for the next five years, and he was generally expected to win. He knows NESA, he was responsive to NESA Center’s needs and recognized for treating his employees fairly, and his bid was reasonable.

When the Collier contract ended November 30, NESA employees were advised that there would be a delay in formally announcing that Collier Group had won because rival bidders customarily protest the award and DSCA wanted to be certain that “all the i’s were dotted and all the t’s crossed.” The staff were assured that no one’s job was at risk and that the worst that would happen would be a pay freeze.

Those assurances were repeated over the next three months as the announcement of awarding the contract was delayed again and again. Each time, the senior leadership reiterated that no one’s job was at risk; you’ll all have your jobs and the right of first refusal, no matter who wins the contract.

At a holiday luncheon in December, Dr. Collier announced that there would be no pay cuts, but neither would anyone get a raise.

Near the end of the third month, NESA contract staff, which meant almost everyone except about a half dozen senior leaders and a few faculty, were called to meet. At that meeting, Dr. Collier announced that he had lost the contract to a rival bidder, TransLang, Ltd., which had contested the original award on the basis that Collier Group was no longer a small business.

Dr. Collier announced that he would make good on unused holiday leave and do whatever he needed to do make the transition easy.

The room was silent.

The week before the Collier contract would expire, TransLang principal Beatrice “Betty” Boutros, sent an email to all contract staff, asking them to meet with her for 15-20 minutes over the next two days. She also asked that they bring job descriptions and resumes. The staff were uniformly anxious about expected pay cuts, even though Boutros’s bid was higher than Dr. Collier’s. Contractors get to keep whatever they don’t spend, so the lower staff salaries, the more profit for Ms Boutros.

The meetings were brief, casual and general: how do you like it here? What would you change? In some cases she asked how much people were paid. With her was a man introduced only as Mike Griffin, with no explanation of who he was.

NESA Center, Coast Guard Headquarters Washington, DC
NESA Center, Coast Guard Headquarters Washington, DC

As owner of TransLang, the company that had long held the contract for interpreters at NESA. Boutros, who sometimes accompanied interpreters when they traveled with NESA to the region,was known to most of the staff at NESA. As the interpreters seemed satisfied with working for her, no one was especially worried. The biggest concern was a complete lack of information about what was happening with contracts. Ms Boutros was silent until February 27, when she began inviting people to the office that she and Mike--who it turned out was Mike Griffen, vice president of Culmen International, LLC, a subcontractor brought on to help manage the NESA staff--were using.

One by one, staff learned of pay cuts, usually 10-15%, sometimes more. In a rare case or two, pay was slightly increased to compensate for additional duties as several managers were notified that they were being “let go” in two days. Their contracts would not be renewed.

In the case with which I am most familiar, Boutros told a 63-year-old man who had created, developed, and expanded the communications and media relations office, that she could replace him for “substantially less.” Never mind that he had been repeatedly commended for introducing social media and significantly expanding NESA’s visibility.

Another case, the registrar, a single mother of two credited with raising attendance in NESA seminar’s from struggling to fill courses to filling larger seminars with a waiting list left over…one day notice.

And of course, neither is left with a pension-or even the next paycheck.

NESA Energy Forum in Rome, December 2011
NESA Energy Forum in Rome, December 2011

Somewhere between eight and ten people lost their jobs that day, about 20% of the contract staff. At least one highly-valued employee left when she received her contract with a 30% reduction in pay. NESA senior staff said that they had nothing to say in the matter; they hire the contractor and the contractor decides how to fill the position.

Of course, the government employees with benefits and a pension and a subsidy for commuting were not in jeopardy. Their jobs (and the pensions they were earning as government retirees) were beyond the reach of the contractor. Subcontractors literally take what they are offered or leave it. In at least seven or eight cases here, there was not even the option to take it. It was a three-minute meeting and one or two days’ notice and out.

What about the promise that no one would lose his job? NESA’s deputy director David Lamm apologized.

He explained that he and DSCA had relied on Executive Order 13495, Non-Displacement of Qualified Workers Under Service Contracts. The order stated:

“When a service contract expires, and a follow-on contract is awarded for the same service, at the same location, the successor contractor or its subcontractors often hires the majority of the predecessor's employees. On some occasions, however, a successor contractor or its subcontractors hires a new work force, thus displacing the predecessor's employees.

The Federal Government's procurement interests in economy and efficiency are served when the successor contractor hires the predecessor's employees. A carryover work force reduces disruption to the delivery of services during the period of transition between contractors and provides the Federal Government the benefits of an experienced and trained work force that is familiar with the Federal Government's personnel, facilities, and requirements.

Therefore, by the authority vested in me as President by the Constitution and the laws of the United States of America, including the Federal Property and Administrative Services Act, 40 U.S.C. 101 et seq., and in order to promote economy and efficiency in Federal Government procurement, it is hereby ordered as follows:

Section 1. Policy. It is the policy of the Federal Government that service contracts and solicitations for such contracts shall include a clause that requires the contractor, and its subcontractors, under a contract that succeeds a contract for performance of the same or similar services at the same location, to offer those employees (other than managerial and supervisory employees) employed under the predecessor contract whose employment will be terminated as a result of the award of the successor contract, a right of first refusal of employment under the contract in positions for which they are qualified. There shall be no employment openings under the contract until such right of first refusal has been provided. Nothing in this order shall be construed to permit a contractor or subcontractor to fail to comply with any provision of any other Executive Order or law of the United States."

Ah, you saw the part that said that managerial and supervisory employees are not covered. That is as sad as it is mysterious. Why would managers not be protected? If they were government employees….let’s not go down that sad trail again.

However, not all who were released and replaced were managers. Faculty, for example, or a research associate or an entry level employee who had become known for hard work and industry.

The Department of Labor issued a final rule based upon the presidential order, which the Department of Labor Website summarizes as:

In this final rule, the Department of Labor … "mandates the inclusion of a contract clause requiring the successor contractor and its subcontractors to offer those employees employed under the predecessor contract, whose employment will be otherwise terminated as a result of the award of the successor contract, a right of first refusal of employment under the successor contract in positions for which they are qualified."

It didn’t matter. The contractor who already was making more than her predecessor feathered her nest by cutting salaries and replacing those who were the highest earners.

The president did his part, but who is in a position to take a stand against the contractor?

As usual, it is the subcontractors, the people who actually do the work that the contractor promises, who pay. Well, they are no longer paid.

It might be lawful, but it isn’t right or just, to the individuals or to the organization that is left with inexperienced staff, willing to work for “substantially less” money filling key positions in an organization that is so respected for its work in the most challenging region of the globe that its budget was protected when almost all others were being cut.

Ironic, yes?.


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    • profile image

      Someone probably 

      6 years ago

      While there is a definite emotional charge inherent to the structure of the article, the comment by a contractor also suffers inherently from what Reinhold Niebuhr would call the bias of the "privileged class". The clash between these visions is ironically classic: the disenfranchised and abused cry out in an appeal for social justice, while the protected and privileged enforce the status quo (in which he or she benefits) as though it were an unalterable historical fact. But a simple restatement of the facts is not enough to justify the contractor's position. Any thinker familiar with Hume's "is-ought" fallacy would immediately realize this. While the demerit of Donegal's article is that its meta-narrative is indeed obvious in its emotional origins, it is false that the contractor's echo of an institution other men created (other men just as intelligent as the victim) is sufficiently objective as to authoritatively condemn the author's subtextual motives. In the final analysis, the messenger is just as important as the message, and while the opinions of the powerful clearly side with a status quo in which he benefits, and the opinions of the victim side with a hope in which he receives due justice, it is up to the reader to determine which position is preferable.

    • profile image

      Angela M. Oddone MSW, LCSW (VA), LMSW (NYS) 

      6 years ago

      Great article reporting honestly on the challenging reality in today's employment marketplace. Change is inevitable. Nothing is certain. There are no guarantees. The impact of so much uncertainty and change must be challenging and stressful for agencies, government employees and contractors.


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