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Collins: Protect taxpayers from fraud, waste and abuse in federal contracts

By U.S. Senator Susan M. Collins


Protecting taxpayers’ hard-earned money by ensuring that federal contracts are awarded only to ethical, competent businesses or individuals should be a congressional priority. After all, the federal government awards nearly a trillion dollars in contracts and grants each year.

Some 30 years ago, when I served as subcommittee staff director to Senator Bill Cohen, we held a series of Senate hearings to investigate bad actors in federal contracting.

Unfortunately, it seems that he more things change, the more they stay the same. Back then, Senator Cohen said: “In this time of economic crisis and huge government deficits, when both Congress and the administration are looking for equitable ways to reduce government spending, we certainly welcome this opportunity to evaluate and propose mechanisms by which the government can protect itself from dealing with proven irresponsible firms.” Those words still ring true today.

Federal contracts should always be awarded based on the best value to the taxpayer—whether it’s a contract for a Navy destroyer or a services agreement to cut the grass in front of a federal building.

The federal government is supposed to protect taxpayers by avoiding the awarding of new contracts or grants to those individuals and businesses that have proven to be bad actors. If a business or individual is convicted of certain crimes, demonstrates unethical behavior, or performs incompetently, the government can suspend or debar that entity to prevent it from being awarded additional federal contracts or grants.

Suspension is a temporary prohibition from getting federal work, usually pending the outcome of a legal or procedural action, while debarment means a company cannot receive any more government contracts or grants for a period of time, usually at least three years.

These processes should ensure that bad actors don’t get government deals, and they should also help make sure that good and reputable companies don’t lose out to dishonest or incompetent contractors. The same standard should hold true for federal grants too. If an unethical researcher diverts federal grant money, it means society is not benefiting from the advances in Alzheimer’s, diabetes or cancer treatment that a top-notch researcher would pursue.

Suspension and debarment are critical tools, but what good is a tool that isn’t used? The Government Accountability Office (GAO) recently found that some agencies have failed for years to suspend or debar a single individual or business. For example, the Federal Emergency Management Agency (FEMA) had no suspensions or debarments from 2006 to 2010, despite the fact that our Homeland Security and Governmental Affairs Committee found numerous instances of contract waste, abuse, fraud and non-performance in the aftermath of Hurricane Katrina, which hit the Gulf Coast in August of 2005.

In FEMA’s disaster housing program alone, the GAO identified approximately $30 million in wasteful and potentially fraudulent payments to FEMA contractors in 2006 and 2007, which likely led to millions more in unnecessary spending beyond this period.

In another example, the Department of Justice suspended or debarred only eight contractors from 2006 to 2010. Making matters worse, a recent Inspector General audit reveals that, from 2005 to 2010, the department actually issued 77 contracts and contract modifications to some of these same entities the department itself had suspended or debarred. How could this possibly have happened?

The vast majority of individuals and businesses who participate in the federal marketplace are honest and do their utmost to fulfill the terms of their federal contracts. It is not fair to honest and capable government contractors when they lose business to those who cheat the taxpayers. Our goal here is not to punish, but rather to protect. Taxpayers deserve to know that federal contracts and grants are not awarded to those who have acted dishonestly, irresponsibly or incompetently.

In preparation for a recent hearing on this topic, I read over those transcripts from Senator Cohen’s hearings 30 years ago. How disappointing it was to see the exact same problems highlighted in GAO’s most recent report, especially the reluctance on the part of some agencies to exercise their suspension and debarment authority.

Today, there is even less excuse than ever for these shortcomings, given the new tools and technology available to federal agencies. Current law provides flexibility to agencies when deciding how to use the tools Congress provided to protect taxpayers from funding bad actors. After decades of uneven performance across the government in using these tools, it is time that Congress examines how the suspension and debarment process is meant to work in order to require agencies to put these tools to good use.

Let us hope that this time, it will make a difference and that, 30 years from now, the Senate is not holding yet another hearing examining why federal agencies are not acting more aggressively to protect taxpayers.


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