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Project on Government Oversight

President Bush Signs Law Creating Contractor Responsibility Database; POGO's Database Extended to Top 100 Contractors

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October 15, 2008

Yesterday afternoon, President Bush signed into law the Fiscal Year 2009 National Defense Authorization Act (S. 3001), which includes a provision to establish a database of information regarding the integrity and performance of federal contractors and grantees.  Coinciding with the signing of the new law, the Project On Government Oversight (POGO) is announcing the release of its updated Federal Contractor Misconduct Database (FCMD) www.contractormisconduct.org.  The government database is modeled after POGO’s database, which was originally released in 2002. However, the new government database will not be accessible to the public.

POGO’s updated FCMD features various format changes, new search and sort features, and an expanded list of contractors that now includes the top 100 federal contractors.  The FCMD now includes over 750 instances of misconduct including fraud, antitrust, environmental, securities and labor law violations since 1995. With 47 instances, Lockheed Martin remains the company with the most instances of misconduct. Exxon Mobil and General Electric leapt to the 2nd and 3rd slots, with 32 and 30 instances respectively, beating out Boeing and Northrop Grumman, which held those positions in POGO’s FCMD last year.

"POGO applauds the government database as a positive step toward greater contractor accountability, even though it will be less comprehensive than POGO’s Federal Contractor Misconduct Database and, more importantly, it is not accessible to the public,” said Scott Amey, POGO General Counsel.

Equally important to note in the FCMD is that 25 of the top 100 contractors do not have any known instances of misconduct in the database. The fact that one quarter of the government’s top 100 contractors have no known instances of misconduct belies the myth that any company big enough to do business with the government will inevitably have multiple instances of wrongdoing. Additionally, 14 of the contractors only have one instance in the database, which means that 39 of the top 100 government contractors do not show a pattern of misconduct.

POGO has also compiled the most common myths surrounding a federal contractor misconduct database. Critics of contractor accountability have provided false impressions about our intent and the current state of government contracting.

The National Defense Authorization Act mandates that within the next year, the Office of Management and Budget and General Services Administration design and maintain a federal contractor responsibility database for recipients of federal contracts and grants of over $500,000. The government-wide database will include civil, criminal, and administrative misconduct pertaining to the award or performance of a state or federal contract or grant for the most recent five-year period.

Federal acquisition rules require that the hundreds of billions of taxpayer dollars awarded every year in contracts go to companies that are presently “responsible.” Currently, the government does not adequately define “responsibility” to include a company’s total record of responsibility, integrity, and performance. Government contracting officers must have at their disposal as much information as possible about the backgrounds of prospective vendors in order to make decisions that are in the best interest of the public to curb waste, fraud, and abuse.

Some disturbing examples from POGO’s new FCMD include:

KBR -- An audit report by the Department of Defense Inspector General found that the Navy paid approximately $4.1 million for meals and services that should have cost $1.7 million, and inappropriately paid a markup on material and equipment that cost an additional $7.2 million. The report recommended the Navy seek a $1.4 million refund from KBR for the inappropriate payments.

United Technologies Corporation -- Pratt & Whitney (a division of UTC) and its subcontractor,PCC Airfoils LLC, agreed to pay $52.3 million to the federal government to resolve False Claims Act allegations that they knowingly sold defective turbine blade replacements for engines used in F-15 and F-16 fighter aircraft.

GlaxoSmithKline -- An Alabama state court jury found GlaxoSmithKline liable for misrepresentation by overcharging the state Medicaid program for medications. GlaxoSmithKline was ordered to pay the state $80.9 million.

IBM -- IBM agreed to pay $20 million to settle a shareholders lawsuit that claimed the company misled the public about employee stock-option expenses in 2005.

POGO applauds the leadership of Representative Carolyn Maloney (D-NY) as well as the work of Representatives Henry Waxman (D-CA), Tom Davis (R-VA), and Edolphus Towns (D-NY) and Senators Claire McCaskill (D-MO), Barack Obama (D-IL), Carl Levin (D-MI), John McCain (R-AZ), and Hillary Clinton (D-NY), who promoted improved contractor accountability. 

Founded in 1981, the Project On Government Oversight (POGO) is a nonpartisan independent watchdog that champions good government reforms. POGO’s investigations into corruption, misconduct, and conflicts of interest achieve a more effective, accountable, open, and ethical federal government.

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