Bum Contractors Get the Boot

By Mark Micheli

September 21, 2012

More federal contractors than ever are being shown the door, says a new report. According to the Interagency Suspension and Debarment Committee, agencies have increased suspensions and debarments of contractors that fail to follow the rules, from just over 1,900 in fiscal 2009 to more than 3,000 in 2011.

Whether you think that is a significant amount might hinge on data gathered by the Government Business Council that shows the US government currently has 123,812 prime contractors. Either a lot of contractors are saints or this is just a drop in the bucket.

Joe Jordan, the administrator of the Office of Federal Procurement Policy, wrote on the OMB Blog that behind the crackdown on bad actors is an increased focus by federal managers on safeguarding taxpayer dollars and sniffing out bad apples and that we should expect the rate of debarments to steadily increase in the future.

"All of the 24 major executive branch agencies  -- which account for more than 98 percent of federal procurement spending -- reported having a senior accountable official in place...with responsibility for assessing the agency’s suspension and debarment program," wrote Jordan. "Steps taken have ranged from formally establishing or reestablishing suspension and debarment programs -- such as at the departments of Health and Human Services and Commerce, which together account for $22 billion in annual contract spending -- and increasing personnel resources for existing programs, to creating new internal monitoring mechanisms, to simplifying referrals for potential suspension or debarment, to implementing automatic referrals to the agency’s suspending and debarring official under certain circumstances."

According to Jordan, the increased attention from management in punishing bad contractors has resulted in quick turnaround on debarments. He offered the following two examples:

As a result of completely revamping its debarment and suspension program in 2009, the Department of Interior was able to suspend a contractor within a week of learning from one of its contracting officers that the contractor – who was about to receive a federal contract for demolition and removal of water monitoring stations -- had been indicted in the State of Indiana on charges of attempting to bribe a state official to get state contracts.  Upon conviction, DOI imposed debarment on the contractor.

The United States Agency for International Development (USAID), which, as of 2011 now maintains a dedicated staff focused on suspension and debarment activities, debarred 16 people in 2012 for their participation in a scheme to submit fraudulent receipts for the administration of federal foreign assistance to support public health, food aid, and disaster assistance in Malawi.  By working with its recipient organization to assure that the unlawfully claimed funds were not reimbursed, USAID was able to avoid waste and abuse of taxpayer funds designed to provide vital assistance to a developing country. 

Neil Gordon, writing for The Project on Government Oversight, did a deeper dive on the numbers and found the quantity of debarments proposed by some agencies to be surprising. 

That the Department of Defense (DoD) had the most actions in FY 2011 isn’t surprising, considering DoD awarded 70 percent of all federal contract dollars that year. Somewhat more surprising are the numbers reported by the Office of Personnel Management (OPM): 794 proposed debarments, 765 debarments, and 4 suspensions. The first two totals seem grossly out of proportion for the relatively tiny OPM, which awarded .28 percent of all federal contract dollars in FY 2011. Meanwhile, the Nuclear Regulatory Commission (NRC) and Social Security Administration (SSA) both reported goose eggs: zero suspensions, proposed debarments, debarments, and administrative agreements. Judging from the table in Appendix 2 of the report, NRC and SSA have the least comprehensive suspension and debarment policies and practices of all the agencies.

Speaking to the Government Business Council, John Palguta, president of the Partnership for Public Service, supported the effort to weed out those who don’t play by the rules but expressed concern over being too hasty in reducing the contractor workforce in this austere environment. 

“We're in a situation now though where [the attitude isn’t], ‘Okay, lets figure out how to get the job done best.’ it's ‘How do we get the job done and spend less money,’” said Palguta. “It's budget-driven. And that worries me, I'm a taxpayer too, so I want government to absolutely be as efficient and cost effective as possible. But if your goal is simply ‘We gotta reduce how much we spend’…and [we] reduce the contractor workforce and…find there’s a shortfall in the capability of the federal workforce [that] we can’t fill, I'm worried about things breaking.”

As a federal manager, have you seen increased scrutiny on federal contracts? Would your agency struggle to achieve its mission if the contract workforce were significantly reduced? 

Learn more about federal cost savings from GBC's "Cutting Costs" infographic here

(Image via James Steidl/Shutterstock.com)

By Mark Micheli

September 21, 2012