The Obama Administration has included language in the defense authorization bill that may allow senior Department of Defense (DoD) officials to secretly “blacklist” government contractors at their discretion and without notice to the contractor or accountability to the public.

Section 815 of S. 3454, the National Defense Authorization Act for Fiscal Year 2011, has drawn sharp criticism from advocacy organizations like the American Small Business League (ASBL), Tech America, and the members of the Acquisition Reform Working Group. (http://www.ndia.org/Advocacy/Resources/Documents/ARWGFY-11HouseSenateComments7-27-2010.pdf)

In particular, small business advocates have raised concerns that Section 815 represents a blatant power grab placing small businesses directly in the line of fire.  The ASBL believes the inclusion of Section 815 in S. 3454 may significantly harm America’s 27 million small businesses and could lead to the following:

1. The legislation will allow contractors to be secretly “blacklisted,” and excluded from DoD contracting programs. 
2. The blacklisting allowed under Section 815 could result in “de facto” debarments of federal contractors across the federal government without due process.
3. Section 815 does not require DoD to notify or justify its decision to blacklist companies.
4. DoD’s determinations regarding its secret “blacklist” would be protected from disclosure under the Freedom of Information Act (FOIA), protest at the Government Accountability Office (GAO), or action brought in the federal court system.
5. The legislation represents a reduction in competitiveness in federal contracting programs, and as a result could lead to increased costs of goods and services.
6. The legislation consolidates DoD acquisition authority on over $300 billion a year in defense contracts into the hands of a small group of high-level Pentagon officials.
7. The legislation will lead to a reduction in transparency, accountability and oversight in federal contracting programs and opens the door to unparalleled and perhaps unconstitutional abuse.
8. Could allow large contractors like Boeing, Lockheed Martin and Northrop Grumman with significant clout at the Pentagon to eliminate their competitors with more efficient and cost effective products.

“President Obama promised the most transparent administration in history, and now his administration is proposing the secret blacklisting of government contractors without due process,” ASBL President Lloyd Chapman said. “This legislation opens the door to unparalleled opportunity for fraud and abuse, and without question will be used to threaten and intimidate small businesses that take issue with DoD’s small business contracting practices."