Key Trends in POGO’s Revamped Contractor Misconduct Database

Energy companies BP and Exxon Mobil, pharmaceutical producers GlaxoSmithKline and Merck, and defense/aerospace titans Lockheed Martin and Boeing are tops in misbehavior among Uncle Sam’s leading sellers of goods and services. This and many other intriguing trends can be found in the Project On Government Oversight’s Federal Contractor Misconduct Database.

POGO’s redesigned and upgraded database now profiles 206 of the federal government’s largest contractors. Recent additions include multinational holding company Berkshire Hathaway; petrochemical giants Compañía Española de Petróleos, S-Oil, and Total; private spaceflight company SpaceX; and health insurer UnitedHealth Group.

The database contains nearly 2,500 resolved and pending misconduct instances dating back to 1995. Over these 20 years, the entities in POGO’s database have paid at least $92 billion in fines, settlements, and court judgments. We say “at least” because many instances were settled confidentially or were resolved among multiple wrongdoers without a clear breakdown of how much each paid.

A relative handful of contractors are responsible for the majority of the instances and penalties. BP alone accounts for more than 37 percent of the penalty total, most of which stems from government and private legal actions over the 2010 Deepwater Horizon explosion and oil spill in the Gulf of Mexico. Pharmaceutical manufacturers GlaxoSmithKline, Pfizer, Merck, and Schering-Plough (which merged with Merck in 2009) account for almost 27 percent of the total with a combined $24.6 billion in misconduct penalties in cases alleging unsafe drugs, financial irregularities, and illegal marketing practices.

Misconduct by fossil fuel and pharmaceutical contractors now outpaces that by military hardware contractors in terms of penalty amount and number of instances. Exxon Mobil leads all contractors in the database with 84 instances of misconduct, and BP, Glaxo, Chevron, and Royal Dutch Shell rank among the top 10. But defense manufacturers still rank high on the instance count. Lockheed Martin and Boeing have the second and fourth highest number of resolved misconduct instances with 79 and 63, respectively. General Electric ranks fifth with 59.

It should be noted that many contractors in the database have relatively “clean” misconduct histories. POGO has not found any instances of misconduct for 57 contractors. An additional 29 have only one instance. By contrast, the other 120 contractors—nearly 60 percent of the entities in our database—are recidivists.

Of the 17 different types of misconduct included in the database, labor and environmental violations are the most common, accounting for a combined 40 percent of the resolved instances. Violations relating to government contracts—fraud, cost/labor mischarging, poor performance, and defective pricing—account for 22 percent of the instances.

Another fascinating trend revealed by our data is the relative scarcity of criminal actions involving federal contractors. Less than 7 percent of the instances are criminal prosecutions. This is in line with the findings of government watchdog group Transactional Records Access Clearinghouse, which caused a stir last month when it reported that federal criminal prosecutions of corporations declined by nearly one-third over the past 10 years. Hopefully, this will change with the Justice Department’s new corporate crime-fighting policy.

Many of the contractors in POGO’s database have landed in the news recently for admitted or alleged misconduct:

• Boeing paid the United States $18 million to settle allegations that it submitted false labor charges on contracts with the U.S. Air Force to maintain the C-17 Globemaster aircraft at its depot in Long Beach, California. A year earlier, Boeing paid $23 million to resolve allegations of similar fraud at its facility in San Antonio, Texas.
• BP reached an $18.7 billion agreement in principle with federal, state, and local governments to settle all civil claims stemming from the 2010 Deepwater Horizon oil rig explosion and oil spill in the Gulf of Mexico.
• General Motors paid $900 million to settle a criminal investigation into a defective ignition switch in some of its vehicles that caused the air bag to not deploy in a crash. The defect was linked to at least 124 deaths and numerous injuries.
• The Indian government fined GlaxoSmithKline the equivalent of $9.4 million and Sanofi-Aventis $475,000 for market collusion involving the sale of a meningitis vaccine.
• United Technologies’ Sikorsky Aircraft unit (recently purchased by Lockheed Martin) paid $3.5 million to settle allegations that it charged the federal government inflated prices for Blackhawk helicopter spare parts.
• UPS paid the federal government $25 million and nearly $5 million to several states and localities to settle claims that, for ten years, it defrauded its government customers out of refunds for late package deliveries.
• Verizon Wireless will pay up to $70 million in customer refunds and an indeterminate amount in federal and state fines to settle allegations of “cramming,” or billing customers for unauthorized third-party charges, between 2004 and 2013.

These are among the thousands of instances in the database, most of which have downloadable source documents. In addition, with a single mouse click or finger tap, you can export misconduct data into a spreadsheet-ready file. We encourage you to dive into the data and take full advantage of the site’s features. You may be surprised by what you find.