DoD IG Confirms POGO’s DARPA Concerns

In 2011, the Project On Government Oversight expressed concerns about contracts and grants and the effectiveness of conflicts-of-interest laws at the Defense Advanced Research Projects Agency (DARPA). POGO’s former Director of Investigations Nick Schwellenbach followed up with an investigation of the ties of the DARPA director and her family’s business, RedXDefense, a DARPA contractor.

In August 2011, POGO received a letter from DARPA stating that the Department of Defense Inspector General (DoD IG) had “initiated the first in a series of planned audits involving DARPA. The current audit will ‘determine the adequacy of DARPA’s selection, award, and administration of contracts and grants awarded in FY 2010 and FY 2011 for research and development projects.’” Additional investigations were opened into the “involvement of the DARPA Director in the sole source contracting matter” and other ethical issues, which found that DAPRA’s ethics policies were sufficient.

Today, the DoD IG released its latest audit, which found that DARPA personnel did not consistently adhere to the scientific review process and contracting regulations before awarding 35 out of 36 contracts. Specifically, DARPA did not prepare evaluation reports, obtain funding approvals, provide contract type selection support on cost-reimbursement contracts, or determine the adequacy of the contractors’ accounting systems on cost-reimbursement contracts. In reference to verifying the accounting systems, DARPA personnel stated that they “assumed they would not need to question the accounting systems of large defense contractors.”

Although he DoD IG did not “identify any contracts that DARPA personnel should not have awarded,” it found that “DARPA may not be able to justify that personnel adequately substantiated proposal selections” and that “contracting personnel increased DARPA’s contracting risks when issuing cost-reimbursement contracts.”

The DoD IG reviewed 36 contracts, with a total value of $426 million. DARPA, the government agency pursuing cutting-edge technology for our national security, awarded nearly $780 million in FY 2012. Despite no smoking gun, this audit highlights the fact that DARPA selects and awards grants and contracts without following the rules and, as a result, is at risk of wasting taxpayer funds.