In a $741 million contract to hire 60,000 screeners for the TSA, $303 million of NCS Pearson’s expenses were unsubstantiated and largely due to a lack of subcontractor oversight, according to a Defense Contract Audit Agency audit cited in the Washington Post. One of the major subcontractors, Eclipse Events Inc., received a no-bid contract before it was even incorporated and could not provide documentation for $15 million of its $24 million in expenses. It turns out that Eclipse Events Inc. spent money on a $5.4 million paycheck for its president, as well as cash advances, dry cleaning, and first-class plane tickets for employees.
The dilution of accountability via subcontracting has become increasingly common in recent years. The federal government is awarding larger and larger contracts to private companies, necessitating the use of subcontractors. Most contractors do not exercise sufficient oversight over their subcontractors because they are not legally required to do so, and there are far too few DHS contract officers to perform a supervisory role. A manager of one of Pearson’s screener-assessment centers told the Washington Post that he “never saw any government people” during his employment.
Fortunately, measures are being taken to better ensure accountability. A proposed revision to the Federal Acquisition Regulation would require agencies to consider how their contractors manage subcontractors when awarding future contracts. Additionally, the DHS Financial Accountability Act should help hold the Department of Homeland Security accountable once implemented.