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CIA Watchdog Finds Abuses in Use of Independent Contractors

The Central Intelligence Agency (CIA) broke the law in its use of independent contractors, according to a four-year-old internal review that was declassified and approved for public release in March. The contents of the June 2012 CIA Inspector General (IG) audit report were revealed last week by VICE News reporter Jason Leopold.

The heavily redacted report concludes the CIA violated federal laws and regulations by improperly hiring and utilizing independent contractors and not adequately documenting the cost of their services. (The report distinguishes independent contractors, who are self-employed individuals, from industrial contractors, which are corporations or similar entities and their employees.)

“The CIA relies heavily on [independent contractors] to accomplish important facets of its mission,” according to the report. The depth of this reliance is difficult to determine, however, as all dollar amounts and other numerical data have been redacted.

The IG found that “a significant number” of independent contractors were being utilized in a manner that made them appear to be government employees, a big no-no under CIA and federal regulation. Additionally, the CIA acquired their services under labor-hour contracts. The IG noted that this type of contract is “least preferred,” because it provides no incentive for cost control and furthers the perception of an employer-employee relationship.

The IG discovered instances of independent contractors working without a valid contract in labor arrangements known as unauthorized commitments, or non-binding agreements made by personnel who lack the authority to enter into contracts on the government’s behalf. The CIA is under no obligation to fulfill the terms of unauthorized commitments, and personnel who create them could be subject to disciplinary action and legal liability.

The report lists some of the functions independent contractors have been performing for the CIA: translation services, protective services, research and analysis, instruction and lectures, and interviews of applicants for CIA employment. The latter function raised the IG’s eyebrows, because regulation explicitly prohibits the use of contractors for “[t]he selection or non-selection of individuals for federal government employment, including the interviewing of individuals for employment.” This is considered an inherently government function, which must be performed by a government employee. Other independent contractors were supervising federal employees, another inherently governmental function.

Lastly, the IG determined the CIA was not adequately documenting the reasonableness of the prices paid for independent contractors’ services. As a result, the CIA could be paying independent contractors—many of whom are former CIA employees—more for their services than it should.

Despite the staleness of its findings and the copious redactions, we felt compelled to blog about this report. It’s not often that the public gets a glimpse inside the vast bureaucracy of the CIA, and we believe that excessive secrecy makes the intelligence agencies particularly vulnerable to corruption and waste.

By: Neil Gordon
Investigator, POGO

Neil Gordon, Investigator Neil Gordon is an investigator for the Project On Government Oversight. Neil investigates and maintains POGO's Federal Contractor Misconduct Database.

Topics: Contract Oversight

Related Content: Government Secrecy, Contractor Accountability, Risky Contract Vehicles, Inherently Governmental Functions, Inspector General Oversight, Federal Acquisition, Intelligence, Government Privatization, Transparency in Contracting

Authors: Neil Gordon

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