Holding Contractors Accountable

As guardians of the taxpayers’ dollars, we have an 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. Having an effective suspension and debarment program to exclude bad actors is an important part of making sure we live up to our responsibility to maximize the return on every dollar spent and deliver a higher quality of service to the American people. 

From the start of this Administration, President Obama has been committed to making sure agencies cut contracting costs and better protect taxpayers from cost overruns and poor performance. Today, we are taking our commitment to protecting taxpayer resources to the next level by directing agencies to ensure they are fully equipped to suspend or debar contractors and other recipients whenever necessary to protect the government’s interest. For far too long, Americans’ tax dollars have been put at risk in the hands of bad actors and as part of the Campaign to Cut Waste we are stepping up accountability. For years, agencies have had the discretion to suspend or debar contractors and other recipients from doing business with the Federal government for a specified period of time in order to protect the government from future harm from bad actors who put tax dollars at risk – such as by knowingly selling counterfeit parts, billing for work not performed, destroying records, or committing other offenses that demonstrate a lack of business integrity or business honesty. Despite the important protection that suspension and debarment provide, too many Federal agencies have, for too long, failed to adequately use these tools.  

In order to ramp up accountability for bad actors and reduce risk of waste, fraud and abuse, OMB Director Jack Lew is directing departments and agencies to take a number of steps to ensure they are properly considering the merits of suspension and debarment when use of such tool is warranted. Agencies must appoint a senior accountable official, if one has not already been designated, to assess the agency’s suspension and debarment program – including the adequacy of available training and resources – review internal policies and procedures, ensure databases such as Excluded Parties List System (which identifies parties that have been suspended or debarred) are checked before grants and contracts are awarded, and take corrective action if an award is improperly made to a suspended or debarred contractor.

OMB is also directing agencies to regularly participate on the Interagency Suspension and Debarment Committee (ISDC). This interagency body plays an important role as a support structure for helping agencies build and maintain their suspension and debarment programs. OMB will work with the ISDC and agencies to develop guidance to help ensure all agencies have suitable suspension and debarment programs, taking into consideration the agency’s mission, organizational structure, and level of procurement and grant-making activities.   

Some of our agencies have well-established and robust suspension and debarment programs. One good example is the Defense Logistics Agency (DLA), which recently used its discretionary debarment authority to protect the Department of Defense from a contractor who willfully failed to perform in accordance with the terms of its contracts. In July 2010, DLA debarred the contractor for 12 months for providing nonconforming vehicle parts. Last month, DLA extended the debarment for an additional 10 years due to the contractor’s submission of falsified documentation and willful delivery of non-conforming aviation “locknuts” that are critical to the safety of military aircraft. DLA explained that the follow-on debarment was necessary to ensure these nonconforming items are destroyed and not redistributed in the supply chain. By taking these actions, DLA has helped to protect the government from future harm caused by contractor misconduct and, even more urgently, our warfighters from the physical harm that malfunctioning aircraft parts can cause. 

Today’s guidance is consistent with GAO recommendations and builds on a series of Administration efforts to increase accountability for federal contracts and grants so that taxpayer dollars are not put at risk of waste and abuse by contractors  and grantees who disregard laws and regulations. For example, President Obama cracked down on tax delinquent contractors, issuing a directive to agencies in 2010. Under this Administration we recouped record tax debts from contractors – more than $110 million in FY 2010 alone. We are also tracking spending at the subcontractor level on USASpending to ensure unprecedented transparency.    

As part of the President’s Campaign to Cut Waste, we will leave no stone unturned when it comes to rooting out waste and ensuring we take the steps needed to protect Americans’ hard-earned tax dollars from waste, fraud and abuse.

Daniel I. Gordon is Administrator of OMB’s Office of Federal Procurement Policy