POGO Celebrates Sunshine Week with Expanded Misconduct Database

Telecom giant Verizon Communications and health insurer Highmark are among a dozen new entities the Project On Government Oversight added this week to its Federal Contractor Misconduct Database (FCMD).

POGO took the fiscal year 2011 data reported on the Federal Procurement Data System and came up with a new ranking of the top 100 federal contractors, which now includes Verizon (#69), Highmark (#93), and ten other of the largest suppliers of goods and services to the federal government. The new top 100 received 55 percent of the $537 billion in federal contracts awarded in FY 2011. Collectively, they have racked up 932 misconduct instances and $41 billion in monetary penalties since 1995.

The FCMD now contains the civil, criminal, and administrative misconduct track records of 172 contractors—some of the world’s largest military hardware manufacturers, information technology consultants, construction firms, education institutions, and energy companies.

Lockheed Martin continues its reign as the largest federal contractor. Lockheed’s share of the annual contract spending total grew by nearly 25 percent, from $34.4 billion in FY 2010 to $42.4 billion in FY 2011.

Lockheed, however, no longer leads FCMD contractors in number of misconduct instances: BP has captured the top spot with 63 instances since 1995. BP is also far ahead of the field in misconduct penalty total, with nearly $15 billion in fines, penalties, and settlements. Most of that comes from the recent record-setting criminal and civil settlements over the 2010 Deepwater Horizon oil rig disaster. BP was also suspended from federal contracting last year as a result of the incident.

Many of the top 100 contractors have relatively “clean” misconduct histories. For 21, POGO has not found any instances of misconduct. An additional 20 have only one instance, including new FCMD contractor Austal USA, an Australia-based shipbuilder participating in the U.S. Navy’s controversial Littoral Combat Ship project. Austal received more than $1.3 billion in federal contracts and was the 49th largest contractor in FY 2011.

In addition to BP, many other FCMD contractors were involved in newsworthy misconduct incidents over the past year:

• Booz Allen Hamilton’s San Antonio office was suspended from contracting for two months by the Air Force after employees at the office were caught sharing sensitive government data.
• The company formerly known as Blackwater entered into a deferred prosecution agreement with the Justice Department and paid a $7.5 million fine to settle criminal charges of illegally exporting weapons and making false statements to the government.
• KBR was hit with an $85.2 million verdict in a lawsuit filed by members of the Oregon Army National Guard who claimed KBR negligently exposed them to a toxic chemical while serving in the Iraq War.
• United Technologies and two of its subsidiaries paid $75.7 million to settle criminal and civil charges of illegally exporting sensitive military software to China.
• SAIC entered into a deferred prosecution agreement and paid more than $500 million to resolve alleged fraud occurring on the CityTime contract with New York City.
• McKesson paid a total of $341 million to the federal and state governments to settle a whistleblower lawsuit accusing the company of falsely inflating the prices of brand name drugs.
• CH2M Hill entered into a non-prosecution agreement with the Justice Department and paid $19 million in fines and restitution for widespread time card fraud at the Hanford Nuclear Site, which CH2M Hill managed from 1999 to 2008.

Since 2002, POGO has provided the FCMD as a free resource for the public to evaluate the ethics and integrity backgrounds of the federal government’s largest contractors. The FCMD helped inspire the federal government to create its own contractor responsibility database, the Federal Awardee Performance and Integrity Information System (FAPIIS), which became public in April 2011.

While the FAPIIS database marks a major advance in federal government transparency, it contains a limited range of misconduct data and is not very user-friendly. Thus, there is still a need for the FCMD. It has become an indispensable resource for government contracting officials, journalists, researchers, and anyone with an interest in corporate or contractor ethics and accountability.