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Report: DoD awarded billions to firms despite fraud

Feb. 3, 2011 - 06:00AM   |  
By SARAH CHACKO   |   Comments
A preliminary report says that the Defense Department awarded billions of dollars worth of contracts between 2007 and 2009 to companies accused of defrauding the Pentagon.
A preliminary report says that the Defense Department awarded billions of dollars worth of contracts between 2007 and 2009 to companies accused of defrauding the Pentagon. (Defense Department)

The Defense Department awarded billions of dollars worth of contracts between 2007 and 2009 to companies accused of defrauding the Pentagon, according to a preliminary report.

According to the report by the Pentagon's office of the undersecretary for acquisition, between 2007 and 2009:

$682.1 million in contracts were awarded to 30 Defense contractors who had been convicted of criminal fraud, resulting in judgments including fines, restitution, suspensions or debarments.

$280 billion in contracts were awarded to 91 contractors who had incurred civil judgments, and 120 contractors who had settled charges of fraud.

$992.5 million in contracts were awarded to 43 contractors who had been suspended from contracting with the Pentagon. They were awarded more than $3.8 million while they were suspended.

$4 billion in contracts were awarded to 164 contractors who had been debarred. They received $15 million in contracts after they were debarred.

Some companies questioned the accuracy of the report while others said they made strides to correct known problems as quickly as possible.

Karen Whitney with Weston Solutions Inc., which DoD said received $333 million in contract awards after a criminal fraud conviction, said in an e-mail that the information in the report is false and the company "will take appropriate action" to have the information removed.

The Boeing Co. spokesman Dan Beck said his company's officials are still reviewing the report but it appears to be a summary of previously reported information, "including some instances where a settlement was reached with the government despite our insistence that we acted appropriately in the performance of our contracts."

General Dynamics spokesman Rob Doolittle said the two instances where the company was cited in the report were self-reported by the company, which took corrective action to prevent reoccurrence. GD settled in both cases.

Alan Chvotkin, executive vice president and counsel of the Professional Services Council, said in an e-mail that the overwhelming majority of companies doing business with DoD and other federal agencies take their compliance obligations seriously.

But when actions are taken against companies, they "are not permanent preclusions from government contracting and should not be used by the government as punishment," he said.

When those companies take corrective actions or pay fines, "it is appropriate for the government to lift any ban so it may avail itself of every possible solution on the market to meet its missions," Chvotkin said.

Sen. Bernie Sanders, I-Vt., ordered the report in a provision he added to last year's defense spending bill. The measure also directed the Pentagon to recommend ways to punish fraudulent contractors. But the report concluded that "the department believes that existing remedies with respect to contractor wrongdoing are sufficient."

"It is clear that DoD's current approach is not working and we need far more vigorous enforcement to protect taxpayers from massive fraud," Sanders said in a news release.

The administration is obliged under another law to make publicly accessible by April 15 a governmentwide contractor fraud database. Today, that database called the Federal Awardee Performance and Integrity Information System is accessible only to federal acquisition officials and some members of Congress.

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