The Department of Interior (DOI) Inspector General (IG) released a report today that found that the Bureau of Land Management (BLM) "circumvented the procurement process by improperly issuing two 15-year cooperative agreements" for refining helium "without consulting appropriate BLM procurement officials" which could cost taxpayers more than $100 million. Echoing the problems we're hearing about contractors pressuring auditors at the Defense Contract Audit Agency (DCAA), the report also notes that BLM accommodated the private refiners' conditions "because it did not want to fight the refiners."
Among the concessions established for the the benefit of the private company—which the Washington Post identified to be Cliffside Refiners L.P.—were allowing the refiners' contractor to finance and build the equipment, adding a significant investment return fee to the cost structure that is not allowed under cooperative agreements, and having a 15-year agreement term so the refiners could earn this investment fee profit.
Unfortunately, this is not the first time that the DOI IG has found that Interior officials have been inappropriately close to industry. Numerous False Claims Act lawsuits also argue that DOI allowing companies to take inappropriate deductions is also nothing new. And as an upcoming POGO report reveals, DOI capitulation to industry is more habit than happenstance.
-- Mandy Smithberger
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