By Kimberly Kindy
Washington Post Staff Writer
Thursday, October 29, 2009
President Obama and members of Congress told federal agencies earlier this year to avoid awarding funds under the American Recovery and Reinvestment Act to contractors with troubled histories of work for the federal government.
But that isn't happening at numerous agencies, a Washington Post analysis shows. So far, 33 federal departments and agencies have awarded more than $1.2 billion in stimulus contracts to at least 30 companies that are ranked by one watchdog group as among the most egregious offenders of state and federal laws.
Government records show that as a group, these contractors have sold defective products, manufactured safety tests, submitted false travel claims and padded contracts with fraudulent fees.
"Even a simple Google search could raise red flags about some contractors' performance," said Rep. Carolyn B. Maloney (D-N.Y.).
Honeywell International, for example, is defending itself against a Justice Department lawsuit accusing it of selling defective shields for bulletproof vests to the Defense and Homeland Security departments, costing the federal government tens of millions of dollars. But that did not prevent the company from winning $2.9 million in stimulus contracts from the Air Force.
On a larger scale, UT-Battelle, a partnership of the University of Tennessee and Battelle Memorial Institute, has been awarded 43 Recovery Act contracts worth more than $331 million by the Department of Energy for work at the Oak Ridge National Laboratory. In every instance, competitive bidding rules were waived, but officials said the contracts were largely extensions of competitively bid work that was already underway at the site.
Obama explicitly warned against awarding contracts without competitive bidding in a memo released to agency heads weeks after he signed the act, saying they create "a risk that taxpayer funds will be spent on contracts that are wasteful, inefficient, subject to misuse." (So far, half of the $16 billion awarded under the stimulus has gone to contractors that did not have to compete for the work.)
The administration followed up on Obama's memo Tuesday, instructing agencies to cut contract spending by 7 percent in the next two years and hire at least 5 percent more contracting officers in the next five years to manage the large contracts. Agencies must also cut 10 percent of their "high risk" or non-competitive contracts this fiscal year.
UT-Battelle was cited in 2005 for serious nuclear safety violations at the former Cold War site. And last year, the inspector general cited the company for using $600,000 in federal money for unapproved expenditures on cigars, wine and gifts, including a pen with a built-in USB flash drive, given to guests at a scientific conference. Officials said the firm has resolved past problems and believes the Recovery Act awards were appropriate.
"UT-Battelle has worked with the Department to address any previous concerns that have been raised about the company," Michael Bradley, a UT-Battelle spokesman, said in a statement.
The Project on Government Oversight, a government watchdog group, compiled data on Honeywell, Battelle and other contractors that have had legal or regulatory issues with federal agencies. For its analysis, The Post compared a list of companies receiving stimulus grants with POGO's data and examined reports from the Government Accountability Office, court records from the Justice Department and other public documents.
In an attempt to curtail contract awards to companies with prior problems, Maloney last year authored a law that requires creation of a government database to track past performance.
The database would include civil and criminal actions in which the contractor lost. None of this information, however, would be made publicly available, and government officials would have to only log and check information. Nothing in the law compels them to use it when awarding contracts.
Honeywell and other large government contractors said using such databases to shape decision-making is simplistic. Business relationships, they said, are uneven. "From time to time, as in all commercial relationships, there are misunderstandings or even disputes between parties that are inevitably resolved," said Honeywell spokesman Peter Dalpe.
Government contract officials said many factors must be considered when awarding work, including a company's expertise. Concerns over federal contracts are acute now because even before the stimulus bill passed, taxpayers in 2008 financed $500 billion in such work, a doubling of the amount spent in 2001.
That figure is expected to climb to at least $525 billion for 2009, and oversight of those dollars will heavily rely on whistleblower reports. With Recovery Act contracts in particular, the public is asked to report any abuse of funds by calling a hotline or filling out an anonymous online form.
Whistleblowers said that for the hotline to work, contractors need to feel a sharper sting when they are caught.
Judith Neal called a hotline and exposed Honeywell for fabricating tests on at least $7 million in ammunition it manufactured and sold in 1987, according to a court finding. She's watched as similar incidents have continued for two decades.
At the time, both Neal, who worked in the company's personnel department, and the Justice Department prevailed in court against Honeywell. However, the federal government secured $2 million from the company and $400,000 in ammunition, not even half the value of the faulty ammunition, records show. Such disparities in cost recoveries continue and are common.
"It is not punitive at all," said Neal, now director of the Tyson Center for Faith and Spirituality in the Workplace at the University of Arkansas. "When you talk about repeat offenders, there are too many profits involved to stop them from doing it again. They just get their hands slapped."
Database editor Dan Keating and staff writer Ed O'Keefe contributed to this report.