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
I think it is "feel good" b.s. It does nothing about the real problems we're having with government procurement while providing the appearance of doing something. To that extent, I think it is worse than doing nothing.
In fact, all these whistle blower laws really seem to do is create a class of misfits who do nothing all day long but report perceived wrong doings. The mere fact that they've filed a report prevents them from being appropriately fired for not doing their jobs, but because of whistle blower protections they are exempt from the rules that cover the rest of the contributing workforce.
Go ahead and work on crap like this if you want, but if you ever decide to really do your job, you'll be a welcomed ally.
Posted by: Dfens | Sep 10, 2009 at 03:36 PM
The point I was trying to make in this blog is that this new mandatory contarctor misconduct reporting rule is a good thing because it forces contractors to improve their ethics and compliance systems and to be more proactive in reporting and fixing contracting misbehavior. Stamp out the small problems before they grow into big ones.
The extent to which this rule will compel contractors "to provide a good product at a reasonable price and in the agreed upon time" reamins to be seen. But you can't deny that it's at least a positive step in the right direction.
Posted by: Neil Gordon | Sep 09, 2009 at 04:22 PM
You think it was "mischarging" that boosted the F-22 and F-35 into the cost stratosphere? You just don't get it, do you?
Posted by: Dfens | Sep 09, 2009 at 03:32 PM
Well, yes there are some pretty big "elephants" out there that this new rule probably came too late to fix, but let's hope this rule proves successful and can prevent these kinds of problems from occurring in the future. A minor labor mischarge today can balloon into millions of dollars in cost overruns years down the road. Let's hope the rule can nip that in the bud.
Posted by: Neil Gordon | Sep 09, 2009 at 02:48 PM
Like hell. You're talking about trying to sweep up the peanut shells as the elephants go out the gate. Oooh, did someone mischarge their labor? Let's get them. Meanwhile F-22 cost $70 BILLION and took 25 years to develop and the $140 BILLION F-35 cost is making F-22 look like a bargain. Hell, F-22 cost twice as much to develop, cost twice as much per pound to build, and took twice as long to develop as the B-2. What are you doing about that? Oh yeah, nothing as usual.
Posted by: Dfens | Sep 09, 2009 at 01:16 PM
Up until now, the cart always WAS after the horse. Without a mandatory reporting rule, small errors were allowed to fester until they became big False Claims Act-worthy matters. The new rule requires contractors to be more proactive, to catch the small stuff and fix it before it becomes a big problem for everybody -- the government, the contractor and the whistleblower.
Posted by: Neil Gordon | Sep 09, 2009 at 11:42 AM
It seems to me like the cart should go after the horse. That is, we should change the rules so it is in the contractor's best interest to provide a good product at a reasonable price and in the agreed upon time first. Obviously not every contractor will behave in own best interest, so then we would naturally want to provide protection for those of their employees who point out their rule breaking as a secondary method of keeping contractors in line, not as the primary method. But that's just me, thinking.
Posted by: Dfens | Sep 09, 2009 at 09:37 AM