Bad Actors Still Get Government Contracts
One of the checks on federal contractors who misbehave by repeatedly overcharging, failing to deliver and such is government blacklist of sorts genteely known as the Excluded Parties List System.
The idea is great. If you mess up and take advantage of the taxpayers in a fraudulent or egregious manner, you get suspended or disbarred. You earn a place on the list. And that is supposed to mean you can't get federal contracts.
If only it were that simple.
A new review by the Government Accountability Office found that such companies often find a way to sidestep the prohibitions. That's in part because the list, run by the GSA, is poorly managed.
Details about the findings came out at a hearing led by Rep. Edolphus Towns, chairman of the Committee on Oversight and Government Reform.
Examples from the audit include:
"In July 2005, the Department of the Army debarred a German company and its president after the president violated German law and attempted to ship dual use aluminum tubes, which can be used to develop nuclear weapons, to North Korea. In the debarment decision, the Army stated that because the president 'sold potential nuclear bomb making materials to a well-known enemy of the United States,' there was a 'compelling interest to discontinue any business with this morally bankrupt individual.' Despite this debarment, the Army chose to continue to award the company task orders and paid it over $4 million during fiscal year 2006."
"The Department of Health and Human Services (HHS) debarred an individual in April 2003 for 5 years after he pleaded guilty to Medicare fraud. Because HHS did not debar the individual's company, he transferred ownership of the company to his wife in an attempt to continue receiving Medicare reimbursements. After HHS objected to this arrangement, he then sold the company to a neighbor. Two years later, citing financial difficulties, the neighbor sold the business back to the original owner's wife. The wife admitted to our investigators that she then legally changed her last name to her maiden name to avoid "difficulties" in using her husband's name. Using this scheme, the couple received Medicare payments for the remaining 3 years of the husband's debarment."
The GAO had this to say about their findings:
"Most of the improper contracts and payments we identified can be attributed to ineffective management of the EPLS database or to control weaknesses at both excluding and procuring agencies. Our cases and analyses of EPLS data demonstrate that no single agency is proactively monitoring the content or function of the database."
Oh, the shame of it.
Here's a link to testimony delivered at the hearing about the GAO report.
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