Taking Contractor Accountability to the Next Level

Since coming into office in 2009, President Obama has made great strides in making government more accountable to the American people, pursuing tough reforms to cut waste and act as responsible stewards of taxpayer dollars.  In the area of contracting, this Administration has slashed billions in spending and taken aggressive steps to hold contractors accountable and ensure that we don’t do business with those who seek to abuse or misuse Federal funds. 

Last fall, former OMB Director Jack Lew reminded agencies of their ongoing responsibility to do business with contractors who place a premium on integrity, performance, and quality--and not do business with firms who are proven bad actors and put Americans’ hard-earned dollars at risk for waste, fraud, and abuse.  In a November 2011 memorandum to federal agencies, he called on agency heads to make sure they are fully equipped to suspend or debar contractors whenever necessary to keep federal missions out of harm’s way. The ability to debar or ban a certain company from doing business with the U.S. government is an important tool we have to protect taxpayer dollars from waste, fraud and abuse.  

Today, a new report shows the results of the Administration’s stepped up accountability efforts. The new report from the Interagency Suspension and Debarment Committee (ISDC), a coordinating body of Federal representatives, found that in each of the past three years, agencies have collectively increased suspensions and debarments of companies that fail to play by the rules, going from just over 1900 in FY 2009 to more than 3000 in FY 2011.  While the vast majority of government contractors compete fairly to deliver the best value to the American people, it is critical that the government take a hard line against those who would defraud taxpayers. The report shows the Obama Administration has made significant progress in cracking down on bad actors.  Just as significant as the progress are the management actions that underlie it, and indicate an increased agency commitment to protecting taxpayer resources. 

• 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, as called for by last November’s memorandum, with responsibility for assessing the agency’s suspension and debarment program. 
• These same agencies reported taking decisive steps to address resources, policies, or both, to ensure appropriate consideration of suspension and debarment when warranted.  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.

Through this increased management attention and building capability where it did not exist before, agencies are now better equipped to protect the public from wrongdoers before critical agency resources are unnecessarily wasted.  For instance:

• 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. 

Strengthening agency suspension and debarment capabilities is just one of a number of ways the Obama Administration has attacked waste and abuse to get better value from our contractors.  Restoring competition to its rightful place as the cornerstone of our acquisition system is another.  There is no greater every-day remedy than competition for curbing fraud, improving contractor performance and promoting accountability for results.  With concerted agency efforts, we have seen the amount of contract dollars competed over the last three years  rise to 64 percent, the highest average level of competition in Federal contracting we have seen over any three year period in the last quarter century and 8 percent higher than the average level of competition reported during the last Administration. 

The Obama Administration’s intensified focus on contractor accountability will continue to drive even better results as agencies continue to build the skills of their workforce.  With more than one out of every six dollars of Federal government spending going to contractors, that is good news for America’s taxpayers.

Joe Jordan is Administrator of OMB’s Office of Federal Procurement Policy