Government errors could mean big problems for contractors
November 17th, 2009 | Agencies Agency Management OMB Procurement | Posted by Elise Castelli
Contractors could face suspension, debarment or financial penalties if they fail to return and report an improper payment made by the government…even if the improper payment is the government’s fault.
That’s what an executive order meant to curb the government’s rate of erroneous payments will say, Peter Orszag, Office of Management and Budget director, told reporters during a Nov. 17 briefing on the value of improper payments made by the government in 2009.
Currently, contractors face no penalties when the government discovers an improper payment was made. All contractors have to do is pay back the sum without interest or penalty. The executive order, which will be issued in the coming week, will change that by allowing agencies to suspend, debar and fine contractors that fail to report these payments. That will create strong incentive for contractors to be vigilant in monitoring their government payments, said Danny Werfel, the controller of OMB’s Office of Federal Financial Management.
Werfel said:
The way it works today is if we give a contractor money that they have not earned and they never report it to us, but we just so happen to find it through an audit, all they have to do is make us whole. There are no additional damages on top of that. And that’s what the executive order would pursue as a way of incentivizing contractors to immediately tell us where we made an error, so they’re part of the solution and not part of the problem.”
Tags: Danny Werfel, improper payments, OMB, Peter Orszag
Curbing Contractor Conflicts
November 16th, 2009 | Procurement | Posted by Elise Castelli
Contractor employees supporting acquisition offices may soon be required to disclose their financial investments, personal relationships and other involvements that could constitute a “personal conflict of interest.”
The proposed rule, which was published in the Federal Register Friday, would only apply to contractor employees who support or advise the government in planning acquisitions, determining supplies and services to purchase, developing and approving contract documents, evaluating contract proposals, awarding contracts, administering contracts, terminating contracts and determining if costs are fair and reasonable.
Contractors must obtain assurances from employees in these roles that they don’t have financial interests that would bias their acquisition support duties. Some examples of personal conflicts of interest include:
- Having financial investments, such as stocks and bonds, in companies that do business with the office the contractor is supporting.
- Having family members employed by companies that do business with the office the contractor is supporting.
- Seeking employment opportunities with or holding a second job with a company that does business with the office the contractor is supporting.
The new rule would affect 250,000 contractor employees at 10,000 firms. It would also apply to subcontracts worth more than $100,000. Comments on the proposal will be accepted until Jan. 12.
Kuwaiti company indicted for fraud
November 16th, 2009 | Procurement | Posted by Elise Castelli
A Kuwaiti company was indicted for overcharging the government on an $8.5 billion food service contract to feed troops in Iraq, Kuwait and Jordan, the Justice Department announced today.
The company, Public Warehousing Company (PWC), faces criminal charges of conspiracy to defraud the government, committing major fraud against the government, making false statements to the government, submitting false claims to the government and wire fraud. The allegations stem from a series of false invoices the company submitted to the Defense Department between 2003 and 2005.
According to Justice, the company conspired with unnamed suppliers to inflate prices by hiding overhead costs in the prices the suppliers charged PWC. The contract did not allow the company to bill for overhead. In addition, PWC failed to pass along discounts from suppliers to the government, as required by the contract.
The company faces a sentence of probation and a fine of twice the losses to the government on the criminal charges. In addition to the criminal case, the Justice Department also announced today that it joined a civil whistleblower suit against PWC; its subcontractor, The Sultan Center Food Products Company; and PWC’s chief executive officer Tarek Abbul Aziz Sultan Al-Essa. The government could collect triple the damages under the civil suit filed under the False Claims Act.
Both the civil and criminal allegations are still under investigation and case files remain under seal.
Friday Fun: Odd News Roundup
November 6th, 2009 | Uncategorized | Posted by Elise Castelli
Happy Friday! As we all ready for the weekend, here are a few offbeat stories with a federal angle to brighten your day:
- Angry residents of Lantana, Fla. sent a not so subtle message to Post Master General John Potter about his plans to close their local post office: 1,000 coconuts. Potter, in turn, donated the produce to the D.C. food bank Bread for the City. [h/t: DCist]
- The Smithsonian uses the photo sharing Web site Flickr to remind us of an era in photography where you couldn’t instantly share an image with thousands of your closest friends around the world without ever making a print. [h/t: NPR]
- The TSA now allows you to bring ice through security checkpoints, provided it is not partially melted. [The TSA Blog]
- Sesame Street marks its 40th anniversary on Tuesday. The stars of the PBS show are frequently federal spokesmuppets, as seen most recently in these ads raising awareness about flu prevention.
Tags: Friday Fun
Industry issues Recovery Act report card: B-
November 5th, 2009 | Agencies Economic Stimulus Procurement | Posted by Elise Castelli
Government averages a B- when it comes to managing Recovery Act spending. At least according to the grades issued today by market research firm INPUT, in its second report card on the Recovery Act.
Here is how government performed, according to the INPUT report card:
Speed of Spending: B+ (Previous Grade: B+)
Reviewer’s Comments: “The federal government has continued to show unusual adeptness in dispensing a tremendous amount of money very quickly…At its current spending pace, the federal government will achieve 87 percent of the goal set by the president of having $350 billion spent by Sept. 30, 2010”
Contracting Effectiveness: B (Previous Grade: C-)
Reviewer’s Comments: “Federal agencies significantly improved in the use of fixed-price contracts and the percentage of contract awards made to small businesses…The federal government has awarded 48 percent of reported contract obligations using fixed-price contracts, a 30 percent increase over INPUT’s initial report card.”
Transparency and Reporting: C- (Previous Grade: D)
Reviewer’s Comments: “Each new report has been late…and the data quality of each new report has been poor upon release. However, overtime the quality and completeness of reports have improved. INPUT expects this will continue to be the case with the new recipient reports…A major area of disappointment continues to be the lack of transparency surrounding grant applications for many of the grant programs funded by the Recovery Act.”
Jobs Created: Incomplete (Previous Grade: Incomplete)
Reviewer’s Comments: “While the efforts to count jobs created or saved is a laudable goal, INPUT believes that accurate reporting of job creation is ultimately unknowable because of the number of recipients reporting, the complexity of the reports and the vagueness in the definition of a saved job.”
Tags: INPUT, Recovery Act
Fun Facts about the 2008 presidential election
November 5th, 2009 | Politics | Posted by Elise Castelli
Yes, Election Day was two days ago. And the presidential election was 365 days ago. But the Election Assistance Commission only released the results of its 2008 Election Administration and Voting Survey and its 2008 Uniformed and Overseas Voting Act Survey today.
The commission took the last year to quiz election officials, academics, community groups and voters from the 50 states, four territories and the District of Columbia. It found:
- More than 190 million Americans were registered to vote, a 14 million voter increase since 2004.
- Nearly 700,000 Americans used an online form to register to vote.
- More than 878,000 poll workers staffed approximately 132,000 polling places nationwide.
- Approximately 61 percent of voters cast their ballots in person at the polling station on Election Day; 17 percent used domestic absentee ballots; 13 percent voted early; 1.3 percent cast provisional ballots; and 0.7 percent sent in absentee ballots from overseas. (The balance falls into the very informative “other” and “not categorized” categories)
- Approximately 1 million ballots were sent to military personnel and citizens overseas. Of those, 69 percent were returned and 93.6 percent of those returned were counted.
- At home, 26 million absentee ballots were distributed and 91 percent were returned and counted.
- Electronic touch-screen machines were the most common type of voting equipment used in 2008, with 23 states reporting 218,370 touch-screen machines in use. However, the optical scan voting systems are more widespread, with 43 states using them. However, there were only 107,519 optical scanners in use.
GAO to report on GSA
November 4th, 2009 | Congress General Services Administration Procurement | Posted by Elise Castelli
The Government Accountability Office will report on the General Services Administration’s management of its supply schedules in the spring,said John Needham, a director of acquisition and sourcing management for the watchdog agency.
The report will look at whether GSA’s reorganization improved management of the Multiple Award Schedules program and the effectiveness of the management tools GSA has in place, he said. Mismanagement of the schedules program led to a series of contracting scandals five years ago. The scandals prompted GAO to add interagency contracts to its High Risk List.
In addition, the report will address concerns raised by the congressionally charted Acquisition Advisory Panel in a 2007 report, Needham said. The panel found that agencies weren’t competing orders placed through established interagency, multiple awards contracts. In addition, the panel raised concerns that there were too many interagency contracts competing with each other and hampering the government’s abilities to get a good price.
Needham spoke at the Coalition for Government Procurement’s fall conference today.
One step closer to OFPP, TSA administrators
November 3rd, 2009 | Congress Homeland Security OMB Procurement Transportation Security Administration | Posted by Elise Castelli
The Office of Management and Budget’s prospective procurement policy chief, Daniel Gordon, will face his first confirmation hurdle one week from today.
The Senate Homeland Security and Governmental Affairs Committee will quiz Gordon on his vision for the Office of Federal Procurement Policy at 10 a.m. on Nov. 10. Gordon is slated to have his confirmation quiz alongside the president’s choice to lead the Transportation Security Administration, Erroll Southers.
Check in with FedLine and FederalTimes.com that day for complete coverage.
Tags: Daniel Gordon, Erroll Southers, OFPP, TSA
GAO: Agency use of cost contracts is down?
October 30th, 2009 | Procurement Uncategorized | Posted by Elise Castelli
Agency use of risky cost-based contracts has dropped over the last six-years, but the number of contracts coded as “combination contracts” is on the rise, the Government Accountability Office found in a report released today.
Between 2003 and 2008, the value of cost-reimbursement contracts, which pay vendors for their actual costs to perform the work, grew from $120 billion to $136 billion. But as a percentage of overall dollars spent through the procurement process, use declined. In 2003, the $120 billion represented 34 percent of the $298 billion spent. In 2008, the $136 billion was just 26 percent of the $528 billion spent, GAO found.
The report comes in the same week as the Office of Management and Budget told how agencies they should reduce the use of these contracts by another 10 percent by Oct. 1, 2010.
“However, this overall downward trend is misleading,” GAO said in the report. “A significant increase has been reported for obligations using the ‘combination’ contract type, a category that based on GAO’s analysis of 2008 data, includes many contracts with cost-reimbursement obligations that are not recorded as such.”
In fiscal 2004, agencies spent less than 1 percent — or $1.3 billion — of government obligations on “combination” contracts. In 2008, use swelled to 8 percent or $39 billion of total contract spending. Defense was the largest user of the contracts in 2008, spending $34 billion of the $39 billion in “combination” contracts, GAO found. In addition, billions in contracts had no contract type designated for fiscal 2008, the report said.
Regardless of how much agencies spent through cost-reimbursement methods, as opposed to less risky fixed-price contracts, agencies were not monitoring the contracts carefully, GAO said.
Of 92 cost-based contacts GAO reviewed for the report, only half of the contractors had accounting systems government auditors found were accurate in tracking costs, GAO found. Twenty had no evidence that systems were adequate and 20 more had outdated determinations of accuracy, GAO said. Outdated accuracy determinations and inadequate systems put government at risk for making improper payments, the report said.
Tags: cost-based contracts, GAO
Update: Martha Johnson's nomination…still on hold
October 30th, 2009 | Uncategorized | Posted by Elise Castelli
Sen. Christopher “Kit” Bond, R-Mo., rose to speak on the Senate floor yesterday to inform everyone he’s not lifting the hold on Martha Johnson’s nomination to lead the General Services Administration until the GSA explains…again…why it decided to build a federally owned building to house 1,200 feds in downtown Kansas City, rather than taking the more costly lease-construction route. (A lease-construction project is when a contractor builds a space to government specs then leases it to the government.)
In the Oct. 29 floor statement, Bond expressed frustration that GSA decided to “pull the plug” on the lease-construction project that he and local leaders had worked with the Bush administration to get.
Bond claimed he was waiting for GSA’s response as to the future of the project, even though GSA did so in an Oct. 9 letter to Bond and other Missouri congressional delegates. GSA Public Building Service Commissioner Robert Peck wrote that the agency would take the less costly route of constructing a building GSA would own outright.
Bond said he hoped to lift the hold soon, possibly in “a matter of a couple of days.”