Inquiring government watchdog minds want to know: how effective has the new mandatory contractor misconduct reporting rule been?
This rule, for which POGO submitted a public comment when it was first proposed, requires contractors to report to the government any misconduct related to the award, performance, or closeout of a contract or subcontract that involves fraud, conflicts of interest, bribery, significant overpayments, gratuity violations or a violation of the civil False Claims Act. (Interestingly, the rule says nothing about misconduct that involves “deviant hazing and humiliation”, but that’s another story.) Government Executive recently reported that since the rule went into effect last December, disclosures have been “flowing” into the Department of Defense Inspector General’s (DoD IG) office.
Lynn McCormick, program manager for the DoD IG’s contractor disclosure program, told GovExec that her office has received 56 reports of violations under the new rule. Given that there are tens of thousands of defense contractors, “flowing” might be an overstatement, but if you consider that under the old voluntary disclosure system the DoD received only a handful of disclosures in any given year (about 5 to 8, according to a DoD IG official who spoke at a contracting seminar POGO attended earlier this summer), this is obviously a major improvement.
Most of the disclosures concern fairly trivial labor charge inaccuracies. Frank Albright, director of policy and programs at the DoD’s Office of the Deputy Inspector General for Policy and Oversight, told GovExec that the preponderance of disclosures relate to the misconduct of a single employee, “where someone was found not to have shown up to work or to have erroneously billed to one contract instead of another or the employee was found surfing the Internet for three or four hours a day for the last three months.” According to McCormick and Albright, the majority of the disclosures have been resolved through administrative actions such as contract and billing adjustments. Less than 10 have been referred for further investigation.
The contracting community’s take on the new rule, as reported in the article, gives POGO reason to be optimistic. One contracting lawyer said that contractors are trying to be careful and are erring on the side of disclosure (hence, the outing of the aforementioned Internet-surfing slacker). Another said her clients are “taking this seriously” and are strengthening their compliance programs and procedures.
In contrast to their gloomy mood last year before the rule took effect, contractors are now realizing that the sky isn’t falling. In fact, they see the rule as a boon. By requiring contractors to strengthen their ethics and internal compliance programs, the rule buys contractors a measure of leniency with government investigators if and when misconduct occurs.
POGO would love to hear how all the other federal agencies are faring under the new rule. Ideally, we would like to see the government release periodic progress reports containing such useful information as the number/percentage and types of disclosures that are being made, what actions were taken in response to those disclosures, whether any contractors have been suspended or debarred for failing to disclose misconduct, and how much money has been recovered (much like the Department of Justice does each year for the False Claims Act).
-- Neil Gordon