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A person who describes himself as a contracting officer with the Consumer Financial Protection Bureau (CFPB) filed an affidavit in the U.S. District Court for the District of Columbia, saying that widespread cuts to contracts amount to an event that is likely to disrupt the functioning of the bureau.
The affidavit was filed in a case brought by the National Treasury Employees Union (NTEU) against the bureau and its acting director, Russell Vought. The officer, listed by the pseudonym “Charlie Doe” due to fear of retaliation, described the wholesale cancellation of nearly 200 contracts — the majority of which are related to enforcement — as unprecedented during his time in the position across multiple presidential administrations.
‘Unlike anything I’ve ever seen’
“The events of the past few weeks are unlike anything I’ve ever seen at any agency during any change in administration (or at any other time),” the officer said. “The instructions to contracting officers did not reflect a change in policy direction, but rather a wholesale termination of the contracts needed to keep the CFPB running.”
Doe claims that on Feb. 11, all of CFPB’s contracting officers received an email directing them to “log in and begin terminating the vast majority of the CFPB’s contracts” across a variety of the agency’s functional areas.
The contractors were ordered to terminate 102 enforcement contracts — including 33 related to the office of the director, 20 related to consumer responses, 16 regarding supervision and three regarding external affairs. With the exception of two contracts related to “FD Online licenses and litigation data,” the bureau’s legal division was also ordered to terminate its contracts, Doe said in the affidavit.
Termination notifications were to be sent immediately, and contract officers were authorized for overtime to fulfill the directive, he said.
Between Feb. 11 and Feb. 14, notices of termination were issued for more than 100 contracts, which included “almost all of the contracts it had with vendors, including all contracts related to enforcement, supervision, external affairs, and consumer response,” the affidavit stated. “Among many other things, these contracts included contracts for storing, maintaining, and transferring data.”
Functionality impacted
Many of these contracts were focused on the functionality of CFPB’s consumer complaint database, a repository of information about consumer-submitted complaints to the bureau and the nature of any follow-up correspondence.
Impacted contracts terminated include those related to the database’s maintenance, privatizing consumer information submitted to it, and the enabling of database information for sharing with the public, states, localities and federal agencies.
Contracts aiming to bolster the database’s cybersecurity posture were also terminated, the officer said.
“All expert contracts, including contracts with experts in pending litigation, were canceled,” the affidavit stated. “Contracts for training examiners who supervise banks and for administering the test that employees must take to become examiners were canceled. Contracts for ensuring that the CFPB’s website and publicly available information is accessible as required under the Americans with Disabilities Act.
“Contracts related to “tools necessary for CFPB employees to do their jobs were canceled,” Doe added.
Prior to the termination notices, the bureau told its employees to assess which contracts were most critical for allowing the CFPB to continue performing its statutorily mandated functions, but this feedback was ignored, according to the officer.
While “a very small number of contracts have been reinstated” — including one that would effectively cancel the consumer complaint hotline — a contract that maintains the database was not restored. This is leading the database to “quickly” degrade alongside a backlog of complaints that have not been forwarded to financial institutions, according to the affidavit.
Not easy to undo
But even with some contract restorations, the cancellation process does not allow for the easy rescission of terminations.
“Federal Acquisition Regulations govern the process agencies must go through to requisition goods or services, and once a contract is fully terminated, procurement must go through that process,” the affidavit said. “Unless the agency can justify awarding the contract without having a competitive bidding process, it will need to go through that entire process again.”
This can take between six months and one year, he explained. Additionally, the bureau has not taken “any efforts to preserve CFPB data that is possessed by vendors whose contracts are terminated. Previously, when I issued a final contract termination, I would include a data preservation notice to ensure that Bureau data was not deleted.”
The officer contends that wholesale contract termination does not help prevent “waste, fraud and abuse.” Rather, he said, it ensures the government will or has already incurred “substantial expense because the government will have to pay contractors their costs to terminate a contract, and then pay them again the costs to re-start that contract.”
Leadership disputes plans to shut down
For its part, the bureau has pushed back on claims that the White House seeks to shutter the agency, according to a previous court filing. The CFPB’s “new leadership will run a substantially more streamlined and efficient bureau,” the attorneys quote Vought as saying in a letter to the Federal Reserve, which allocates the bureau’s operating budget.
In a subsequent filing on Sunday, CFPB chief operating officer Adam Martinez repeated these claims. He said that Vought and the agency’s chief legal officer have “focused on running a substantially more streamlined and efficient bureau, refocusing its priorities, and ‘right sizing’ the agency.” This is an indication that current leaders believe “there are substantially more employees than appropriate for a ‘right-sized’ CFPB,” according to Martinez
Similarly to the earlier filing, Martinez also cites the president’s nomination of Jonathan McKernan to serve as the bureau’s new director as evidence that the bureau will continue to function. This runs counter to claims from employees that he will facilitate its shutdown.
