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Increased suspensions part of broader trend

I’ve been ruminating on this Government Accountability Office report tracking the sharp rise in suspension and debarment actions by government agencies.

The rise is not an isolated case, but rather a part of a larger trend of increased scrutiny and pressure on contractors. Other factors included insourcing, increased aggressiveness by inspector generals, the rise of lowest price contracting and a more critical Congress.

Some may tie these actions to a supposed anti-business attitude by the Obama administration, and there is probably some truth to that, but that might be too simple an explanation.

I think there are multiple factors, and none are going to go away anytime soon.

The increased pressure on contractors starts with the explosion in spending in the years following the Sept. 11, 2001, terrorist attacks.

This increase in spending came following the Clinton years, during which the government workforce shrank, including a lot of people working in acquisition and procurement.

The increase also occurred during the George W. Bush administration, which had a strong belief that the private sector was more efficient and effective than the government, so we saw a sharp increase in outsourcing and the rise of a large contractor workforce.

The result was increased spending with contractors, and at the same time, there was a weakened oversight capability.

The increases in spending peaked around 2008, and then the counter pressures of tighter budgets and finally sequestration kicked in.

A lot of the so-called anti-contractor activities we are seeing today are part of the pendulum swinging back. The budget pressures aren't going to go away anytime soon, so we should expect more scrutiny of how dollars are spent.

Another factor that needs to be layered on here is how commonplace technology is. Everyone it seems has a smartphone, or at the least access to the Internet. We shop, bank and communicate online.

Because of this, we have little patience when things go wrong like Healthcare.gov, even if shopping on Amazon is infinitely less complex that creating and operating a health insurance exchange.

We look at the $80 billion IT budget and we want to ask are we getting our money’s worth. And we should ask those questions.

Are government contractors good actors or bad? Also an appropriate question.

But I still have an issue with the suspension and debarment process, and how it has been applied. When I look at the results of two of the higher profile suspensions in recent years – GTSI and MicroTech – I’m just not sure the enforcement effort was worth the result.

In the case of GTSI, the company was suspended when the Small Business Administration launched an investigation into how it used its small business partners to win business.

The accusations were serious but never really panned out. A month letter, the suspension was lifted, and GTSI had to live under a monitoring program, but no wrongdoing was ever proved.

Similar with MicroTech. The company was suspended because of questions that it improperly portrayed itself as a small business. In the end, the suspension was lifted and MicroTech had to admit it made a paperwork error on its 8(a) application a decade ago.

Again, none of the serious allegations were ever proven.

Coincidentally, both the GTSI and MicroTech investigations were kicked off following Washington Post articles that were very critical of the two companies.

Anyway, my problem is that the suspensions came before the investigations. Send them a show cause letter, subpoena documents, put them on notice, interview employees and managers, launch an audit, but don’t suspend them until you know they’ve done something wrong.

Why put the cart before the horse?

The financial damage that was done far exceeded any alleged wrongdoing in these cases.

The other question I have is, what is the benefit of the sharp rise in suspension and debarment activities?

GAO needs to address that question and whether the suspensions and debarments are appropriate. What’s the process for deciding to take these actions?

I’m all for holding contractors accountable, and the government needs to know it is working with responsible companies, but we also need balance and due process. And right now, I question whether we are getting it.

Posted by Nick Wakeman on May 23, 2014 at 7:56 AM


Reader Comments

Wed, May 28, 2014 Proud American

I think we all understand the need to ensure companies doing business with the Federal Government are ethical, reputable and honest and are playing by the rules but this sure sounds like job justification. When you have agencies targeting small businesses because Robert O’Harrow, a tabloid style reporter at the Washington Post thinks Veteran and Minority owned businesses have been too successful, manipulates the facts to make it look like they did something wrong without actually saying they did anything wrong, and then baits the Government into taking action is unethical and probably even illegal. We all now know that Jimenez, the owner of MicroTech, has a history with O’Harrow and that O’Harrow spent three years stalking Jimenez and turning his life upside down, but after several interviews with Jimenez, hours of stalking him and taunting him all O’Harrow could not come up with was Jimenez lives in a nice house, drives a nice car, gives back to the Veteran community and has friends high up in the Republican Party. So O’Harrow takes the half-facts, manipulates them in a way that makes it sounds like Jimenez might of or could have done something wrong and then beats up the SBA till they eventually do something to prevent themselves from landing on the front page of the Washington Post. What’s even worse is the fact that Jimenez got no due process despite the fact that the basis for SBA’s investigation was a bigoted and obviously discriminatory article in the Washington Post. Donald Sterling made some pretty bigoted and discriminatory comments about Magic Johnson and Blacks so does the SBA start an investigation on Magic? He is after all a very successful minority entrepreneur who lives in a nice house, drives a nice car, gives back to the African American Community and I am sure he has friends high up in the Government as well. Let’s go back ten years and see what we can dig up on him!

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