Public Confidence and Public Contracting: Must We Accept a Pay-to-Play System?

The Challenge

The public contracting process is regulated by strict rules obligating governments to award contracts to the lowest responsible bidder. But the process can be corrupted by inside deals, revolving-door lobbyists, and "creative accounting," which undermine the public's trust in its institutions.

What's at Stake

In today's high-tech world, many of the goods and services the public needs are so specialized that governments often do not have the expertise on staff even to write the specifications for complicated projects. More and more, officials are turning to lobbyists or even to the bidders themselves for help in defining project requirements. This insider participation, however, taints the subsequent bidding process, as companies can define a job in such a way that they become the only "responsible bidder." As Forbes magazine put it, "It's easy to win a contract when you're the only maker of thingamabobs and the specs call for thingamabobs." But the corruption of public contracting did not begin with high technology. The awarding of contracts-often on a no-bid basis-to political contributors is an old problem in government ethics. Outgoing New Jersey Governor James E. McGreevey, whose own administration was charged with engaging in such pay-to-play arrangements, issued an executive order in September banning campaign contributions to candidates for state and county office from any company that does business with the state. On the federal level, questions have been raised about fairness in awarding lucrative contracts for rebuilding Iraq, and whether bids should have been considered from companies in countries that opposed the war.

Critical Questions

• How does a public body ensure the integrity of its contracting process?

• How does a public body secure the needed expertise to request and evaluate bids for public projects?

• What role should lobbyists have in the contracting process? What about consultants? How are they different? When is it a good use of taxpayer money to hire an outside consultant?

• No-bid contracts are common, particularly in Pentagon contracting. Are such arrangements necessary in wartime? What about in a protracted conflict like the war on terror?

November 18, 2004

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