Outsourcing the Pentagon

Published — September 29, 2004 Updated — May 19, 2014 at 12:19 pm ET

The Pentagon’s $200 million shingle

Defense data shows billions in mistakes and mislabeled contracts

Introduction

Beltz Newtech specializes in roofing, exterior commercial painting and even does some waterproofing. Beltz said he started the company 30 years ago after working as a school teacher and operates it with his wife, Karen, who is the company’s vice president.

Beltz told the Center for Public Integrity he was unaware that the Pentagon reports his company as the recipient of a $245 million, cost plus contract that calls for working on large blast thermal simulators while providing “nuclear effects services” at White Sands Missile Range in New Mexico.

“I guess they made some type of mistake,” Beltz told the Center. “Either that or they got me mixed up with another company.”

Beltz’s contract listing by the Department of Defense is indeed a case of mistaken identity—one of hundreds of errors the Center found while going through the Pentagon’s database of awarded contracts.

A Center analysis of the Defense contracts database found there have been more than 2.2 million records entered during the past six years detailing more than $900 billion in Pentagon spending. But these records often have minor errors that are attributable to the Defense Department’s antiquated system that was set up decades ago.

In the case of Beltz’s company, the Pentagon confused the small roofing contractor with the New Mexico Technology Group, LLC, which is located on an Army base in White Sands, N.M., rather than in a house near a golf course in Hilton Head, S.C. But both companies do share similar shortened company names: Newtech and Newtec, respectively.

The case of mistaken identity was repeated 100 times during the course of four years, and the Pentagon listed Beltz Newtech, rather than New Mexico Technology Group, as winning more than $200 million of contracts.

“That’s a lot of roofing,” quipped Deidre Lee, Director of Defense Procurement & Acquisition, about the mistaken listings. Lee, though surprised by the case, said that she is aware that some mistakes occasionally get inputted. But she said she is confident Defense’s data is an accurate reflection of the more than $150 billion that is spent through Pentagon contracts per year.

“The data is just as good as the people that put it in,” Lee said about the tens of millions of transactions that her department documents. “Are there going to be data entry errors – absolutely. But the data is a pretty good reflection of what we are doing.”

Among these records the Center found almost $35 billion in contracts where Defense personnel misidentified the correct parent company. Out of the $715 billion worth of contracts identified for the project, the mistakes amounted to an error rate of approximately five percent.

For instance, more than $700 million in contracts with Westinghouse Electric were mistakenly connected with National Amusements Inc. — a movie theater chain – instead of Bechtel Group and British Nuclear Fuels Ltd.

Lee believes that many of the mistakes in the Pentagon’s contract database occur because of its decentralization. Currently, the data is provided by the person writing the contract, which is then sent to their larger organization, then to another, and then it is sent to Defense’s Washington Headquarters Services, which then feeds the information into the Federal Procurement Data System.

The General Services Administration plans to implement a new system for contracting in 2005 that will consist of a direct feed from the person writing the contract with the data into the Federal Procurement Data System, Lee said.

Lee believes that the new system will decrease the number of mistakes and allow the data to have a more fluid process.

“That is pretty direct,” Lee said. “Can I guarantee you that all the 20,000 people in the field inputting data are never going to make a mistake? No. But they know it is important.”

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