Get serious about contractor fraud, GAO tells agencies

Watchdog outlines 3 critical characteristics to fight poor contracting

Agency officials have failed to devote adequate resources to efforts to suspend or debar contractors for improper activities in the past six years and thereby risk giving the impression that they’re lenient about fraud, according to a government auditor's findings.

Bill Woods, director of acquisition and sourcing management at the Government Accountability Office, said today that four of the 10 agencies GAO reviewed are the most active in issuing suspensions and debarments and have three characteristics that the other agencies lacked.

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Those four agencies — the Defense Logistics Agency, the Navy, the General Services Administration, and Immigration and Customs Enforcement — have:

  • Resources dedicated to suspensions and debarments.
  • Detailed policies and procedures.
  • An active case referral process that tells officials how and when a company could face a penalty.

“One point is clear: Agencies that fail to devote sufficient attention to suspension and debarment issues likely will continue to have limited levels of activity and risk fostering a perception that they are not serious about holding the entities they deal with accountable,” Woods said in testimony before the House Oversight and Government Reform Committee’s Technology, Information Policy, Intergovernmental Relations and Procurement Reform Subcommittee.

Officials at agencies that need improvements are willing to make the changes, he added.

For fiscal 2006 through 2010, about 4,600 cases — 16 percent of all cases in the Excluded Parties List System — involved suspension and debarment actions taken at the discretion of agencies against firms and individuals for bribes, theft, fraud and similar offenses. The other 84 percent were excluded for prohibited conduct, such as drug trafficking and health care fraud.

To get a closer look, GAO reviewed a mix of 10 agencies from those that had more than $1 billion in contract spending in fiscal 2009.

Besides individual agencies’ offices, the government’s Interagency Suspension and Debarment Committee is responsible for governmentwide oversight and coordination among agencies.

However, the committee has no dedicated staff or budget, and it struggles to run its operations as a result, Woods said. The committee’s president and vice president use their own staff members to handle much of the committee’s work.

Woods acknowledged that agencies are not in a position to hire new people for this work. But he recommended that officials adjust duties among current employees to handle the committee’s work on a part-time basis.

The committee also needs help from the Office of Federal Procurement Policy. Woods said OFPP should tell agencies to participate in the committee’s work, offer their resources and comply with the committee’s requests for information.

He also told the subcommittee that legislation isn’t the way to bring more attention to the need for enforcement. Instead, OFPP officials should release guidance on how to establish active suspension and debarment programs.

GAO’s new report has raised concerns among members of the House and Senate oversight committees. Sen. Joe Lieberman (I-Conn.), chairman of the Homeland Security and Governmental Affairs Committee, said today that “eliminating the bad actors would help wring waste from government spending and begin to restore taxpayers’ trust in Washington’s ability to spend their money wisely.”

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

Reader Comments

Mon, Oct 10, 2011

It’s very important that government agencies suspend and debar --- or take any other punitive actions against --- contractors who engage in improper activities. Those firms and individuals who commit fraud, bribery, influence-peddling, and other equally unacceptable activities cast long, dark shadows which can envelope those contractors whose operations are above-board.
Not only is it good for the U.S. government to identify and weed out --- or, at least suspend or debar --- the misbehaving firms and individuals, it’s good for B2G contractors. In the end, government agencies should have a better pool of contractors from which to choose. And, contractors should have a more level field on which to compete.

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