Capitol Hill seeks limits on the use of consultants

Consultants: Are they jargon-speaking sharpies or free-enterprise individualists bent on keeping bureaucracy trim? Either way, they are now under close scrutiny on Capitol Hill. Shocking accounts of misspent money, conflicts of interest, and corrupt practices by private consultants and federal officials who hire them are fueling efforts to reform this important but problem-prone relationship.

Consulting services, estimated to cost taxpayers $2 billion to $9 billion a year, are one segment of a huge private contracting industry designed to serve the government. This industry has mushroomed since World War II. Before the war, most government and business activity took place in separate spheres. But increasingly in the past 40 years, Washington has gone to private industry for ideas, equipment, services, and even personnel.

Numerous scandals have occurred in the process, notably rigged selection of contractors, bribes over bidding and procurement, cost overruns, and frivilous, government-funded projects of the sort singled out by Sen. William Proxmire in his "Golden Fleece" awards.

Many agencies, according to the General Accounting Office (GAO), rush to spend funds at the end of the year on questionable contracts. There have been some instances in which consultants have prepared agency budgets and even the regulations that eventually affect their industry.

While admitting to many abuses, industry defenders argue that without their services, bureaucracy would be even fatter, government would not benefit from outside analysis, and the US would lose the government-industry teamwork that brought about achievements in space and the military, as well as relatively successful social programs such as Head Start and health-care cost containment.

Last week, as the Washington Post concluded a five-part series detailing undisciplined spending by government agencies and abuses by consultants, Sen. David Pryor (D) of Arkansas and Rep. Herbert E. Harris (D) of Virginia introduced legislation in Congress intended to further illuminate the government-business relationship and clean up some of the abuses. Among reforms proposed:

* Require federal agencies to itemize the amount of funds for all procurement , including consulting services, in their annual budget request to Congress.

* Limit spending on procurement in the last two months of the fiscal year to no more than 20 percent.

* Require full disclosure of all information relevant to a potential conflict of interest when a contract proposal is submitted.

* Require that before a contract be initiated, the federal agency certify that the services are needed and not available in-house.

"There is a real danger of these recent headlines and sweeping statements misrepresenting the entire industry," says Gary F. Jonas, of University Research Corporation and a member of the Committee on Federal Contracting Practices (CFCP). "A lot of discoveries, a lot of basic research, is done under contract. These don't make headlines."

Christopher T. Cross of Abt Associates Inc. says many of the problems in the government-consultant relationship can be traced to management shortcomings in the federal government.

"The average procurement specialist," says Mr. Cross, "hasn't had money to hire a competent staff. There is no time for the continuing education of workers. And the contract load is enormous. Under these circumstances, the system can really break down."

The CFCP prepared an analysis of the congressional reform bills and pointed out that "the private sector can frequently perform certain tasks more cheaply and better than they can be performed in- house" by the government. Moreover, the CFCP report says, an across-the-board limit on funds available for consulting services could result in high unemployment among advance-degree specialists who work for consulting firms.At the same time, says the report, government departments could be expected to swell to make up for lost capabilities.

But Senator Pryor and Congressman Harris last week said "Congress can cut the fat in the federal budget by tightening controls over expenditures for consulting contracts" without severe side effects. Both said blame for abuses are shared by federal agencies for inadequate management and private consultants for profiting from their negligence.