DoD Inspector General Finds Playing Field Still Not Level


DoD Inspector General Finds Playing Field Still Not Level

By Defense Industry Daily
Defense Industry Daily
March 8, 2012

In February 2012 the Inspector General (IG) at the US Department of Defense released a report [PDF] finding that DOD had awarded hundreds of millions of dollars in Service-Disabled Veteran-Owned Small Business (SDVOSB) program funds to potentially ineligible contractors. The IG also found $1.3B worth of additional contracts that were inaccurately coded in the Federal Procurement Data System–Next Generation (FPDS-NG) federal procurement database. This reflects two sets of issues that have plagued federal and defense contracting for years.

The first issue relates to federal acquisition rules that start from good intentions but do not end up being fully enforced, in their spirit or letter. The US government has failed to meet its self-imposed goals on SDVOSB since they were put in place almost a decade ago, not to speak of the 1953 Small Business Act. The American Small Business League was noting very recently how large businesses keep being awarded set-asides they are not eligible for. One way to do just that often in use in the defense space is by contracting Alaska Native Corporations (ANCs). Overall, the FY12 report by the Small Business Administration IG shows some of amount of progress by bureaucratic standards that do not necessarily translate into “well now we actually stick to the rules we set for ourselves.”

The second issue is one of transparency and accountability. The federal government has piled up several databases over time to keep track of requests for proposals, contract actions, contractors et. al. To this the Department of Defense and the services have added their layers of poorly integrated software to track program costs, performance, and other overlapping data. Despite occasional claims to the contrary, these tools remain a morass of confusing, often poor data. It is not rare to find contract actions worth dozens of millions of dollars in FPDS-NG that have a missing or garbled description, if they have a description at all. Whether set-aside status is properly documented in FPDS is unfortunately not that database’s most pressing data quality issue.

In recent years the Obama administration has made compelling claims of transparency and did overhaul some of the websites that relay federal spending information to the public. However, behind the web 2.0 veneer of USAspending,org are the same old data sources. This gives the unsuspecting user the ability to easily generate nice maps and charts that can be quite misleading if not outright false. Development of FPDS-NG has stalled to version 1.4 about two years ago, while GAO’s funding of a consolidation effort known as the System for Award Management (SAM) seemed to have faced difficulties in recent months, despite a $74M award to IBM to consolidate federal acquisition databases (8 or 9 of them, it is hard to keep up without a database of databases). SAM’s rollout plan has already been delayed and it will take years before it reaches completion.

In the meantime, the same old endemic issues will keep resurfacing until fundamental changes are made. In short, while waiting for GAO’s SAM, DID tells DOD IG: GIGO.

Apparent disconnect on contractor lawsuit is business as usual


Apparent disconnect on contractor lawsuit is business as usual

By Alice Lipowicz
Federal Computer Week
March 7, 2012

It is a situation that has raised some eyebrows: the Coast Guard commandant last weekend honored a contractor accused of fraud by the Justice Department.

But several experts say the apparent disconnect between agencies is fairly common and reflects the complex realities of federal contracting. It is not unusual for an agency to continue work with a contractor who is being investigated or sued by another arm of the government, at least until the case is resolved, the experts said.

“It actually is business as usual and does happen on a fairly regular basis,” said Gary Therkildsen, federal fiscal policy analyst for OMB Watch watchdog group.

“It isn't unheard of for Justice, Congress, or the public to have a negative view of contractor operations and performance while the government continues doing business with that entity,” agreed Scott Amey, general counsel for the Project on Government Oversight, a watchdog group.

On March 2, Coast Guard Commandant Admiral Robert Papp praised contractor Bollinger Shipyards at a ceremony attended by about 500 people in Lockport, La. The event was held by the Coast Guard to accept delivery of the latest cutter built by Bollinger.

Meanwhile, the Justice Department in August 2011 went to court to accuse Bollinger of making false statements to the Coast Guard on a related contract. The DOJ’s unresolved False Claims Act lawsuit against Bollinger seeks unspecified damages expected to be in the millions of dollars from the company.

The U.S. attorney general claimed Bollinger made false statements about the eight patrol boats it was lengthening for the Coast Guard. The completed boats were rejected as unsound.

Nonetheless, the Coast Guard has continued to award contracts to Bollinger. The agency signed a $180 million contract with Bollinger for the production of four more fast-response cutters in September 2011.

“When DOJ brings a suit like that, it is kind of a big deal, but contractors are accused, and in process of working out claims, all the time,” Therkildsen said. Because of the “innocent until proven guilty” presumption, work generally continues until, and unless, the contractor is suspended or debarred.

The competitiveness of the market for the particular service or product is a major factor in how the situations are handled, he added.

“With a lot of these large contractors, they are ‘too big to debar,’” he said. “The government ends up relying on their services and no one else can provide the services that they can. The government is caught in a Catch 22 situation where, sure, they’d like to go after the contractor, but they cannot be too harsh because in the end they end up needing their services.”

“The fact that there is a False Claims Act case does not mean the company is guilty. In contracting, there is still a principle of ‘innocent until proven guilty,’” said Alan Chvotkin, executive vice president of the Professional Services Council.

Furthermore, for specialty work in fields with few alternatives, federal agencies often continue to work with accused contractors, Chvotkin added.

In Bollinger’s case, “I suspect there is not a lot of competition, so it would not be unusual to continue to do business unless they are suspended or debarred for future work,” Chvotkin added.

Furthermore, since False Claims Act cases often take several years to resolve, activities can continue as normal for quite a while under the cloud of an accusation, he said. For example, the ceremony that Papp attended to accept delivery of the cutter that Bollinger built is a standard ceremony performed upon delivery of such vessels, and it would be typical to hold such a milestone ceremony.

The DOJ typically gets involved in only about a dozen large False Claims Act cases a year, Therkildsen said. Even so, work continues for the contractor until the case is resolved.

Watching a federal official honor a company accused of fraud can be off-putting. “When you see these things, it is jarring,” Therkildsen said. “As far as the question of ‘When is it going over the line?’ It’s subjective.”

And other factors may be in play, said Amey, of the project on government oversight group, which maintains an online database of federal contractor misconduct.

For example, the agency may be satisfied with previous work by the contractor, or may not want to jeopardize the timing of a program by starting over, Amey said. Also, a key lawmaker may wield influence over agency funding while also striving to support an important employer in a particular district, he suggested.

Despite all those factors, in the best case scenario the government agencies should consider misconduct allegations when awarding contracts, said Amey.

“When it comes to contract-related fraud or misrepresentations, the government should think twice about providing any new taxpayer dollars to those abusing the public trust,” Amey said.

Federal Executive Bonus-Docking Bill Panned by Vendor Group


Federal Executive Bonus-Docking Bill Panned by Vendor Group

By Nick Taborek
March 7, 2012


(Updates with House committee’s approval of bill in ninth paragraph.)

(Bloomberg) -- The largest advocacy group for federal service contractors is opposing a bill that would eliminate bonuses for government executives whose agencies don’t meet small-business goals.


The Professional Services Council, an Arlington, Virginia-based organization that represents government vendors such as Lockheed Martin Corp. and Raytheon Co., criticized the measure in a letter yesterday to Representative Sam Graves, a Missouri Republican who chairs the House Small Business Committee. Graves introduced the bill in January.

The legislation would prevent all senior government executives, even those who aren’t involved in acquisition, from receiving bonuses the year after their agencies miss targets for small-business contracting. Eleven of 24 agencies didn’t meet those goals in fiscal 2010, according to the Small Business Administration.

“It would be the equivalent of you not getting a bonus because one of your other colleagues wasn’t doing a very good job,” said Roger Jordan, vice president of government relations at the contractor group.

More than 20 business groups, including the U.S. Chamber of Commerce, support Graves’ bill, committee spokesman Darrell Jordan said in an e-mail yesterday to Bloomberg News. “We respect the opinion of groups who represent large contractors, but the focus of our committee is to advocate for small businesses,” he said.

Boost Awards

The bill would also boost the share of contracts that the federal government aims to award to small businesses to 25 percent from 23 percent.

The government shouldn’t increase the goals because it doesn’t yet have a clear picture of how much work small businesses actually do for federal agencies, the organization said in its letter.

“Accurate data about small business participation at the subcontracting level has remained elusive and there is little confidence in the accuracy of the limited subcontracting data that has been reported to date,” Stan Soloway, the group’s president, said in the letter.

Graves’ committee approved the bill today by a voice vote, according to a statement from the panel. The committee also approved five other bills that deal with small business contracting.

No Incentives

Small companies received $98 billion in federal contracts in 2010, or 22.7 percent of eligible awards, according to the Small Business Administration. Graves’ legislation seeks to increase the share of contracts that are considered eligible for small businesses.

The bill is “a step in the right direction,” said Brian Reeder, communications director for the American Small Business League of Petaluma, California. The organization supports increasing federal awards to small companies.

“As far as we know, before now there was not really an incentive to hit these goals,” Reeder said of the provision that would withhold government executives’ bonuses.

There were 7,893 senior executives in the federal government as of December 2010, according to a Congressional Research Service report published last April. They include chief information officers and strategic advisers for intelligence and space programs.

Top-Earning Executive

The executives, who act as links between political appointees who lead federal agencies and the civil servants who staff them, earn between $119,554 and $179,700 a year and may be eligible for performance bonuses of as much as 20 percent of their salary.

A top-earning executive would be eligible for performance pay as high as $35,940. The maximum annual amount an executive is permitted to receive, including special recognition such as a Presidential award, is $230,700, according to the CRS report.

The government’s definition of small business varies. For example, highway construction companies are allowed to have annual revenue as high as $33.5 million to be considered small businesses, while the maximum for life insurance carriers is $7 million.

Graves introduced a similar bill in January 2010, when the Democrats controlled the House. The full chamber didn’t vote on the proposal.

The bill number is H.R. 3850.

To contact the reporter on this story: Nick Taborek in Washington at

To contact the editor responsible for this story: Stephanie Stoughton at