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Posted on Monday, April 18, 2016

Reports of New Balance’s “Bribe” Claim Are Off Balance

As government contractors are well aware, media efforts to accurately report government procurement issues are often unsuccessful. A Washington Post article inaccurately reported in 2013 that “Fewer than 15” GAO  protests, about 1% of the roughly 1600 GAO protests filed in 2010, resulted in the protester winning the contract. However, detailed studies by government contract experts put the number much higher at approximately 20-29%.This week, several media reports have suggested that shoe manufacturer New Balance decided to publicly oppose the U.S. government’s proposed trade deal, the Trans-Pacific Partnership (TPP), because the Department of Defense (DoD) has so far refused to award New Balance a contract for military shoe business. One story led with “The Obama administration offered the American shoe company New Balance government contracts so that they wouldn’t call foul on the Trans-Pacific Partnership.” Another referred to the Obama Administration “bribing” New Balance with the promise of a DoD contract in exchange for New Balance not opposing TPP.

In reality, New Balance had specifically denied that there had ever been any bribe. The reported stories grew out of a press conference New Balance CEO Rob DeMartini held on April 12th at which he discussed New Balance’s recent opposition to TPP. However, unreported is his statement denying any bribe: “There was no quid pro quo deal. We didn’t want an earmark contract,” DeMartini said at the press conference. “We wanted to compete for a piece of business we’re very confident we can win.”

So the “bribe” part of these reports is fiction.

Other outlets added helpful context. Although DeMartini expressed an interest in competing for the work, Fox News reported that New Balance has in fact competed – unsuccessfully so far. Fox quoted an Obama administration trade official saying that New Balance “has not yet been able to provide a model that meets DoD’s requirements for our servicemembers.” Another outlet reported that “none of the three New Balance shoes offered for consideration met the agency’s cost requirements and one did not meet durability standards.”

In sum, New Balance has had the opportunity to compete but few media outlets discussed the procurement concepts of best value to the government and war fighter. The complexity of the procurement process makes our profession an easy target for sensational claims. Where are the fact-checkers when we need them?

Terrence O’Connor is the Director of Government Contracts for Berenzweig Leonard, LLP, a business law firm in the D.C. region. Terry can be reached at toconnor@berenzweiglaw.com.

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