Banned firms eligible for federal tax dollars
http://www.washingtontimes.com/news/2013/sep/30/transportation-department-program-fails-to-root-ou/
By Phillip Swarts, September 30, 2013
Secretary of Transportation Anthony Foxx.
A Transportation Department program designed to help women, minority
and disabled owners compete for federal contracts, in fact, may be
disadvantaging the very people it is intended to help by failing to root
out bad actors.
The Transportation Department’s Disadvantaged
Business Enterprise program has continued to give money to contractors
in the process of being debarred or suspended for defrauding taxpayers,
depriving more deserving firms of millions of dollars, the agency’s
internal watchdog reports.
“Weaknesses in DBE program management and implementation have allowed
ineligible firms to win DBE contracts and have left the majority of DBE
firms without work,” the department’s inspector general said.
The
report shines a poignant light on Uncle Sam’s continuing inability to
punish wayward contractors or protect taxpayers from instances of
procurement fraud.
Federal agencies are supposed to suspend or
debar federal contractors who have tried to defraud taxpayers, thus
preventing them from getting new business.
But the Transportation
Department’s disadvantaged contracting program is so poorly managed that
contractors that have been debarred or in the process of being
suspended have won more funding, the report said. Nearly a third of the
Transportation Department’s inspector general fraud investigations
involve the program, the report said.
A sampling of the program’s
contractors on eligibility lists in 26 states found three firms that
were listed as permitted to receive contracts, despite being suspended
or debarred.
One company was on contracting lists 20 months after
it was disqualified for fraud and lying to government officials. A
second remained listed despite being debarred for violating federal wage
laws, and a third got an $8.1 million contract just weeks before its
suspension was supposed to take effect for attempted tax fraud.
Because
the inspector general sampled only some lists, it warned that the
problems could be far more widespread. “Instances like those we found
point to the possibility that other ineligible firms may be listed on
state DBE directories,” the report said.
The investigators blamed
Transportation Department officials for failing to provide “guidance and
training to safeguard against federally funded awards to firms that are
suspended or debarred.”
Agency officials brushed off the
criticism, issuing a statement highlighting the success of the program
instead of its red flags. “Thanks to the DBE program, small and
disadvantaged businesses were able to successfully compete for
contracting valued at more than $4.4 billion,” the Transportation
Department said.
“The department will continue to review existing
guidance and program implementation to determine whether there are
useful and cost effective means to make further improvements,” it said.
Investigators
remain unhappy, fearing the program is placing more emphasis on getting
businesses qualified for the program than screening them or finding
them work.
“Recipients focus most of their efforts on helping
firms complete the lengthy DBE certification process, leaving few
resources in place to help certified firms obtain DBE work on federally
funded projects,” the inspector general warned.
Private companies
are supposed to submit annual paperwork showing they haven’t been
banned, but the inspector general said it can be unreliable. One company
lied on its paperwork to show it was still eligible despite having been
suspended.
The
internal watchdog urged the Transportation Department to use far more
vigilance to stop bad actors from remaining eligible for contracts.
“Suspension and debarment actions are among the government’s strongest tools to deter unethical and unlawful use of Federal
funds
,”
the inspector general said. “Since DOT distributes several billion
dollars annually through its DBE program, it is important that the
Department strengthen its controls to ensure that suspended and debarred
firms — such as those identified in our ongoing review — do not
participate in the DBE program.”
