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Commission decries DoD's inattention to contractors' poor performance

Mar. 1, 2011 - 06:00AM   |  
By SARAH CHACKO   |   Comments
Commissioner Charles Tiefer nicknamed five large companies that do business with the Defense Department -- including KBR, Agility and Louis Berger -- the "Flagrant Five" for receiving work despite claims of fraud, misconduct and poor performance.
Commissioner Charles Tiefer nicknamed five large companies that do business with the Defense Department -- including KBR, Agility and Louis Berger -- the "Flagrant Five" for receiving work despite claims of fraud, misconduct and poor performance. (University of Baltimore School of Law)

Members of the Commission on Wartime Contracting in Iraq and Afghanistan raised concerns that large defense contractors may get a pass on claims of fraud or poor performance.

Commissioner Charles Tiefer nicknamed five large companies that do business with the Defense Department including KBR, Agility and Louis Berger the "Flagrant Five" for receiving work despite claims of fraud, misconduct and poor performance.

"I'm beginning to get the picture that bad performance could be good business," Tiefer said at a commission hearing Monday.

The Project on Government Oversight's general counsel Scott Amey told commissioners that, with the influx of contracts since the war started, officials who make contracting decisions are at a disadvantage because they don't have time to assess a contractor's performance history.

Commissioner Robert Henke said that if officials don't have time to assess past performance, they don't have time to issue new contracts.

Amey agreed, but added that contracting officials are under pressure to keep the ball rolling. "Who wants to be the person who slows down the process?" he asked.

Amey also speculated that, given the government's reliance on large contractors, companies involved in misconduct are a "necessary evil" required to get work done. "This might be the contracting version of ‘too big to fail,'" he said.

For example, Amey said, the Air Force issued multiple waivers in order to continue business with Boeing in 2003, after Boeing unlawfully possessed and used a competitor's proprietary documents in connection for the competition for an Air Force contract. And MCI/WorldCom's suspension was lifted only three days before the expiration of the government's long-distance telephone contract with the company.

Amey complained that the Interagency Suspension and Debarment Committee, which oversees the federal process of suspending and debarring contractors, has not issued the annual reports it's required to produce about federal agencies' suspension and debarment activities.

The committee's chairman, Dan Blalock, who later testified at the hearing, said he would have the reports done by March 31.

Among 32 recommendations made in a report released last week, commissioners want agencies to:

Give a written rationale for not pursuing a proposed suspension or debarment.

Increase use of suspensions and debarments.

Revise regulations to lower procedural barriers to contingency suspensions and debarments.

The Professional Services Council, in a statement, raised concerns that the misunderstanding of the purpose and role of suspension and debarment could lead to their misuse.

"The fact that an incident, even a significant one, has occurred is not in and of itself cause for suspension or debarment," PSC President Stan Soloway said in the statement. "Equally important are the steps a company takes to correct and compensate for mistakes, and prevent against future, similar occurrences. That is key to determining ‘present responsibility.'"

Commission co-chairman Chris Shays said he agreed there needs to be a balance and that suspensions and debarments are not meant to be punishments.

"But right now, it happens too infrequently," he said.

Commissioners also questioned agencies about past performance data collection and argued with Dan Gordon, director of the Office of Federal Procurement Policy in the Office of Management and Budget, about whether agencies were reporting.

Gordon conceded that completion rates were low and not all reviews were being entered into the federal database.

"The current system is very, very flawed and incomplete," he said.

The commission has reported that past performance data is not recorded or taken into account when considering companies for work, meaning that companies that had defrauded the government in the past could continue to get work while others with clean records are shut out.

"Tools are no good if they are not used and behaviors will not change if consequences never appear," Shays said.

Commissioner Grant Green asked Richard Ginman, deputy director of the Defense Department's Contingency Contracting and Acquisition Policy, why DoD kept giving millions of dollars in business to contractors who had been found guilty of or settled on claims of fraud, abuse and waste, according to a preliminary report released earlier this month by the Pentagon. Green took issue with the report's conclusion that "the department believes that existing remedies with respect to contractor wrongdoing are sufficient."

Ginman responded that the department is still reviewing the figures cited in the report and does not consider it to be a final document.

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