The federal government spent more than $535 billion on goods and services in 2010 — making it the world’s biggest single customer. But do federal agencies behave as responsible consumers when it comes to using fraudulent or criminal contractors?
It depends on the agency, according to a new report due out Thursday.
As Congress focuses more intently on federal spending this year, congressional oversight committees are pushing to ensure that agencies are doing what they can to root out fraudulent or lax contractors and to block them, if necessary, from doing more government work.
Federal agencies and departments have the right to suspend or block contractors from receiving government work if the firm or individual breaks the law or reneges on aspects of a business deal. Agencies are precluded from receiving new work or soliciting new work from blocked contractors.
Between 2006 and 2010, about 4,600 firms or individuals were added to a list of suspended or debarred firms by agencies that discovered cases of fraud, theft or bribery, or instances where the firms failed to perform aspects of a contract, according to the Government Accountability Office. Tens of thousands more firms were added to the list for violating other statutes or regulations, including health-care fraud, export-control violations or drug trafficking.
GAO took a closer look at the work of 10 agencies with more than $1 billion in contracts in 2009 — the Defense Logisitics Agency, the Department of the Navy, the General Services Administration, the U.S. Immigration and Customs Enforcement, the departments of Commerce, Health and Human Services, Justice, State and Treasury, and the Federal Emergency Management Agency.
Of those agencies, the DLA, Navy, GSA and ICE referred the highest number of contractors for suspension or debarrment. Why? Because they employ full-time staffers seeking out bad contractors and enforce detailed policies and procedures and practices that encourage officials to refer bad contractors for review.
The other six agencies had few or no suspensions or debarments of federal contractors — partly because they do not have enough staff policing contractors and are not actively encouraging officials to report bad actors, GAO said.
Several agencies told GAO that they would do more to root out bad contractors — if they had the money.
The Treasury Department’s senior contracting official told investigators that he has eight staffers working on all federal contracting issues, but with the ongoing federal budget crunch, “there appears to be little probability of obtaining additional resources.”
At the Justice Department, “It is impractical to hire new staff at this time,” a top official told GAO. Besides, the department already strives to use upstanding contracting firms — and the impending budget crunch means it will likely have to scale back its contracting anyway, the official said.
Regardless, the report proves that agencies can do much more to root out bad contractors, according to House Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif.).
The report, Isaa said in a statement, “sends an unmistakable message to federal officials still turning a blind-eye to bad actors who defraud taxpayers.”
Sen. Joseph I. Lieberman (I-Conn.), whose Senate Homeland Security and Governmental Affairs Committee requested the report along with Issa, agreed, and called on agencies to crack down hard. “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,” Lieberman said.
A subcommittee that is part of Issa’s panel will review the report’s findings on Thursday.
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