Tag Archives: waste fraud and abuse

SBA Lenders Make $692 Million In Duplicate PPP Disbursements To 4,260 Borrowers



“We determined SBA did not always have sufficient controls in place to detect and prevent duplicate PPP loans. As a result, lenders made more than one PPP loan disbursement to 4,260 borrowers with the same tax identification number and borrowers with the same business name and address. These disbursements totaled about $692 million for PPP loans approved from April 3 through August 9, 2020.


“We recommended in part that SBA:

  1. Review identified potential duplicate disbursements for eligibility and take action to recover any improper payments
  2. Review controls related to all PPP loan reviews to ensure that duplicate loans are not forgiven and not subject to an SBA guaranty, as appropriate
  3. Strengthen E-Tran controls for future PPP-type programs to ensure the controls align with program requirements and are active at all times
  4. Strengthen controls and guidance for lenders to ensure lenders meet program requirements for future PPP type programs
ThE Office of Inspector General (OIG) issued a Flash Report on PPP regulations and the Paycheck Protection Program and Health Care Enhancement Act, in addition to guidance published in SBA’s PPP Interim Final Rules and PPP Frequently Asked Questions. You may review the report by CLICKING HERE

How a “Small Business” Kingpin Wins Billions in Defense Contracts

Photos: Stephanie Hillier / Vimeo still; Eduard Marmet / Flickr; Getty Images; Illustration: Leslie Garvey / POGO)


On January 5, the Pentagon’s Defense Logistics Agency (DLA) awarded a contract worth up to $33 billion over 10 years to a privately held equipment supplier called Atlantic Diving Supply, Inc., or ADS. 

ADS’s gargantuan new award for work on a Pentagon logistics program landed after the company’s majority owner, Luke M. Hillier, personally agreed to pay $20 million in 2019 to settle civil charges that his company defrauded the same program by falsely claiming to be a small business, among other accusations.


“In the months before Hillier’s settlement, three non-ADS executives including a former state politician pleaded guilty in a felony scheme. According to the Justice Department, Hillier—referred to as “Person Y” in court records—allegedly created the scheme to allow ADS to benefit from contracts set aside by law for small businesses owned by socially and economically disadvantaged individuals, often women- and minority-owned ventures. Companies controlled by those non-ADS executives then allegedly would partner with ADS to perform work on the contracts. The arrangement allegedly allowed ADS to benefit even though ADS is mostly owned by Hillier and thus was not eligible to bid on the contracts directly.

Hillier was never criminally charged, though whistleblowers have alleged in a False Claims Act lawsuit that ADS has manipulated the small business contracting system for years. In addition to Hillier’s personal settlement, ADS itself paid $16 million in 2017 to settle civil allegations of small business contracting fraud, including unlawfully obtaining contracts intended for service-disabled veteran-owned small businesses, and bribery. Both settlements came without admissions of wrongdoing by the company or its owner, but the Small Business Administration’s inspector general, Hannibal “Mike” Ware, said in a 2017 Justice Department statement that “the actions of ADS and its affiliated entities deprived legitimate small businesses of valuable federal contracting opportunities.”

ADS’s general counsel Adam Casagrande told POGO that “no ADS employee was indicted or convicted of any crime associated with the broad and lengthy investigation by the Department of Justice” and “ADS was completely exonerated, both civilly and criminally,” even though the company’s civil settlement agreement states that it is not “a concession by the United States that its claims are not well founded.” ADS has maintained that it has “always complied” with Small Business Administration standards and that it settled to put “this matter behind us.”

Read more at POGO on this case study of the government’s struggle to police procurement fraud

Boeing’s Insitu Subsidiary Pays $25M In False Claim Settlement



“Insitu, a Boeing subsidiary that makes unmanned aircraft, has agreed to pay the federal government $25 million to settle charges that it tried to pass off used parts as new ones.

Taxpayers deserve to get what they paid for — especially in significant no-bid military contracts,” said U.S. Attorney Brian T. Moran. “Cases such as this one should be seen as a warning to defense contractors that false claims have no place in military purchasing.


“The settlement with the Justice Department resolves a False Claims Act lawsuit that alleged that Insitu submitted false cost and pricing data for contracts with U.S. Special Operations Command and the Navy.

“We expect companies that seek to do business with the government to provide complete and accurate information so contract prices can be negotiated on a level playing field,” said Acting Assistant Attorney General Jeffrey Bossert Clark.

The allegations involve seven contracts that the company won between Jan. 1, 2009 and Dec. 31, 2017. Both were awarded without competition.

The government charged in part that the Navy and SOCOM overpaid Insitu because they believed the parts would be new parts. But the company allegedly planned all along to use “less expensive recycled, refurbished, reconditioned, and/or reconfigured parts,” the Justice Department said.

The case started when former Insitu executive D. R. O’Hara filed a whistleblower lawsuit in federal court. DOJ then took over the case and O’Hara will receive $4.6 million out of the $25 million settlement.

In a statement to Washington Technology, Insitu said it cooperated in the Justice Department investigation. Insitu said it fulfilled the requirements of the contract.

“At all times, Insitu provided superior ISR services to the Navy and Special Operations Command (“SOCOM”), a fact the government does not dispute. Insitu continues to provide mission-ready systems and supports the nation’s warfighters by providing world-class service,” the company said.

The settlement only involves the allegations and “there has been no determination of liability,” DOJ said.

But clearly the government sees this as a victory and a warning to government contractors.”

Federal Contractor Misconduct Data Base


The data includes government litigation records by company and accumulated fines. It is an excellent background check for those contemplating teaming relationships.


POGO’s Federal Contractor Misconduct Database compiles data on misconduct—and alleged misconduct—committed by the top federal government contractors from 1995 to the present.


“Current government databases do not provide the information necessary to make a genuine determination of whether a contractor is responsible or risky. The federal government’s contractor and grantee responsibility database, the Federal Awardee Performance and Integrity Information System (FAPIIS), is user-unfriendly and limited in the types of cases that it contains.

The federal government routinely awards contracts to companies with histories of misconduct, including contract fraud and other violations. Compiling such data results in better decisions about spending nearly $500 billion on goods and services each year and protects taxpayers from fraudulent or otherwise risky contractors.”


The Vital Role of PERMANENT Inspectors General



Inspectors general (IGs) are the people on the front lines investigating waste, fraud, and abuse in our government. 

They are our eyes and ears into what’s happening—or shouldn’t be happening—in our government.


“In fact, for every dollar invested in an IG office, they are able to identify about $17 dollars in potential savings to their agencies. But these essential watchdogs, until recently, weren’t the American public’s radar.

This video explains who IG’s are and why we should care.”

Bean Counters, Not Bullets, Are Key To Afghanistan’s Future


“The “first line of defense” in what follows any potential peace deal in Afghanistan isn’t likely to be grunts on patrol but soldiers who monitor the billions of dollars spent on projects aimed at holding the war-torn country together.”


“But a near blackout of information on the effectiveness of U.S. programs in Afghanistan is threatening to increase waste, fraud, abuse and malfeasance on projects intended to help the country when U.S. troops ultimately leave, John Sokpo, special inspector general for Afghanistan reconstruction, told members of the House Oversight and Reform Committee on Tuesday.

“Can the Afghan military fight? Well, you don’t know because they took away all of the metrics for success,” Sopko said. “And we don’t know.”

Sopko cautioned that without critical planning and oversight, any progress post-peace deal would be unlikely. As the number of troops are reduced, so is the number of people who oversee programs.

“Otherwise you might as well pile up all the dollars and euros in Massoud Circle in downtown Kabul and burn them for all the good they’ll do,” Sopko said.

Official estimates show that since 2002 the United States has spent $780 billion on combat operations and $137 billion on reconstruction efforts. More than 2,400 U.S. troops have died in the conflict, and at least 20,000 have been wounded.

Current troop levels hover at an estimated 13,000, down from about 100,000 at the height of the 18-year war. But as those troops and assets decrease, the programs put in place to rebuild Afghanistan are in jeopardy without sufficient oversight.

“The first line of defense is that soldier who’s monitoring the contract or monitoring the Afghan government,” Sopko said. “If further troop reductions happen, who’s going to come back?“Are they gun toters or are they monitoring?”

He continued, “If [monitors] come back in the first tranche, who’s going to protect your money?”

Bombing missions reached a near-decade high last year. A recent U.S. Air Forces Central Command report showed that U.S. aircraft dropped 7,423 munitions in the country in 2019. Comparatively, when U.S. troops were at their peak in 2010 and 2011, the U.S. dropped 5,100 and 5,411 bombs respectively.

While bombing may be up, it appears troop numbers and assets supporting those troops continue to decline.

A December 2019 Pentagon report titled “Enhancing Security and Stability of Afghanistan” showed plans to cut UH-60 Black Hawk helicopters for Afghan forces from 159 to 53 and the AC-208 attack and reconnaissance aircraft from 32 to 10.

Despite repeated invitations, neither the Department of Defense nor the State Department sent representatives to update Congress on Trump’s Afghanistan plan, which drew bipartisan ire from committee members.

“If you didn’t exist, we would have nobody at this hearing today to give us any answers,” Rep. Thomas Massie, R-Kentucky told Sopko.

In response, the inspector general pushed Congress to get the answers they need to do their oversight jobs.

“You’ve got to force the administration to be honest,” Sopko said. “The administration has to come in and tell you, why are you spending this money, what do you expect to accomplish at the end?”

But it’s become increasingly difficult for both Congress and the U.S. public to know what is happening with the billions spent in Afghanistan as information is increasingly limited by Trump officials.

The Washington Post’s “Afghanistan Papers” project, released late last year, highlighted many instances in which officials misled Congress and the public with rosy pictures of progress in the 18-year war.

Sopko stopped short of pointing to specific people in current or previous administrations outright lying, instead noting that exaggerated claims of progress had become part of the culture of dealing with challenges in Afghanistan years ago.

“That’s the real dishonesty, we have been dishonest to ourselves,” Sopko said. “A number of people have come here and tried to tell the good story. We also have this hubris that we can turn Afghanistan into a little America or another Norway. We can’t.”

Sopko ticked off a list of waste that’s been uncovered, from $9 billion spent on counter-narcotics that had no real effect on the drug trade, $500 million spent on airplanes that can’t fly and millions more spent on buildings that melted in the Afghan sun.

“Every commander I’ve met, I’ve met six of them. Every one of them has said, ‘the summer fighting season, we won,” Sopko said. “If we won, what does defeat look like?”

House members probed Sopko for reasons why there have been changes in classifying previously public measures of progress in Afghanistan under President Donald Trump’s administration and the shift away from Taliban versus Afghan government controlled territories.

“I can’t give you an answer because there was never a real good explanation to us why district and population control was no longer relevant,” Sopko said.

He called the changes indicative of a larger problem, wherein every metric that Congress would find useful for evaluating successes or failures in Afghanistan is now “either classified or not being monitored anymore.”


‘Millions’ Stolen in Decade-Long Buying Fraud At Florida VA Hospitals

Image: “Projectriskcoach.com


At least 15 Department of Veterans Affairs employees and vendors in Florida were engaged in an “elaborate” fraud scheme that cost the government “millions” since 2009, two government agencies announced in a joint press conference .”


“Declining to give the exact amount allegedly stolen or say what tipped them off, the U.S. Attorney General for the Southern District of Florida and the Department of Veterans Affairs Inspector General said people affiliated with the Miami and West Palm Beach VA clinics were charged and arrested on charges including conspiracy to commit health care fraud, committing health care fraud and bribery.

Nine of the suspects were “low-level” procurement staff, officials said. They allegedly defrauded the VA by letting vendors charge inflated prices for products or saying vendors supplied an order that was completely or partially unfilled. The employees would then receive a kickback on what the VA paid those vendors, officials said.

“This fraud scheme was clearly carried out, not only by the VA employees but deceptively with those vendors. And both of them are equally culpable in this scheme,” district Attorney General Ariana Fajardo Orshan said.

Officials also announced a separate but similar alleged fraud scheme that they suspect involved disabled veteran Lisa Anderson, 48, of Delray Beach. The attorney general has charged Anderson with false statements on her Service Disabled Veteran Owned Small Business application, accusing her of selling her preferred VA contract status to businesses she was not connected to.

OIG and AG officials praised their work in apprehending the suspects, but they called the investigation “ongoing” and did not comment on whether there will be any more arrests.

Orshan emphasized those arrested in the alleged kickback schemes were not representative of the VA at large.

“However, that does not reflect on the many, many well-intended, hard-working individuals that work for the VA medical services, she said, “and I want to clearly state that so it’s just a couple of bad apples.”

The maximum prison sentence for the charges are as follows: 10 years for conspiracy to commit health care fraud, 15 years for bribery and 20 years for falsifying records.”


Congress Learns Pentagon Wasted $1 Trillion, Promptly Gives It Bigger Budget

Image: “Veterans for Peace” https://www.veteransforpeace.org/take-action/people-over-pentagon

The Washington Postpublished “The Afghanistan Papers,” thousands of pages of war documents that our government did not want us to see, and which the paper only secured after a protracted legal battle.

Those documents include nearly 2,000 pages of notes from interviews with generals, diplomats, and other officials who played a central role in waging America’s longest war.


“Here’s a fun little thought experiment: Imagine a “big government” bureaucracy embarked on a wildly ambitious project of social engineering — only to discover, almost immediately, that it had little hope of meeting its stated objectives. Reluctant to admit defeat, or jeopardize funding for its endeavors, this federal agency proceeded to deliberately mislead the public about how badly its project was going, and the likelihood of its ultimate success. Over an 18-year-period, these pointy-headed bureaucrats and their allied elected officials conspired to shovel roughly $1 trillion of taxpayer money into an initiative that exacerbated the very problems it purported to solve — and got 2,300 Americans killed in the process!

Now imagine that a major newspaper published a bombshell report meticulously documenting this bureaucracy’s conscious efforts to mislead the American people whom it claimed to serve, so as to ensure that it could carry on squandering our blood and treasure with impunity.

Would Congress reward that bureaucracy with a $22 billion budget increase hours later, with self-identified “small government” conservatives leading the call?

This week, we learned that the answer is “of course.”

Here is some of what the Post uncovered:

Several of those interviewed described explicit and sustained efforts by the U.S. government to deliberately mislead the public. They said it was common at military headquarters in Kabul — and at the White House — to distort statistics to make it appear the United States was winning the war when that was not the case.

Bob Crowley, an Army colonel who served as a senior counterinsurgency adviser to U.S. military commanders in 2013 and 2014, told government interviewers. “Surveys, for instance, were totally unreliable but reinforced thateverything we were doing was right and we became a self-licking ice cream cone.”

John Sopko, the head of the federal agency that conducted the interviews, acknowledged to The Post that the documents show “the American people have constantly been lied to.”

This campaign of deceit facilitated mindless misuses of public funds. The Defense Department was not directly responsible for all of this waste. And America’s civilian leadership bears primary responsibility for the war itself. But in routinely misrepresenting the state of the conflict, and lobbying for higher levels of funding for both military and aid operations in Afghanistan, the Pentagon is complicit in boondoggles like these:

During the peak of the fighting, from 2009 to 2012, U.S. lawmakers and military commanders believed the more they spent on schools, bridges, canals and other civil-works projects, the faster security would improve. Aid workers told government interviewers it was a colossal misjudgment, akin to pumping kerosene on a dying campfire just to keep the flame alive.

One unnamed executive with the U.S. Agency for International Development (USAID) guessed that 90 percent of what they spent was overkill: “We lost objectivity. We were given money, told to spend it and we did, without reason.”

… One unidentified contractor told government interviewers he was expected to dole out $3 million daily for projects in a single Afghan district roughly the size of a U.S. county. He once asked a visiting congressman whether the lawmaker could responsibly spend that kind of money back home: “He said hell no. ‘Well, sir, that’s what you just obligated us to spend and I’m doing it for communities that live in mud huts with no windows.’ ”

But no detail from our misadventure in Afghanistan may do more to validate the conservative critique of “big government” excess than this one: Before the U.S. invasion, the Taliban had almost completely eradicated the opium trade in Afghanistan. After 18 years of war — and $9 billion in U.S. funding for anti-opium programs in the country — the Taliban remains in power, only now, it presides over a country that supplies 80 percent of the world’s illicit opium.

The Washington Post and New York Times aired all this dirty laundry on Monday morning. Hours later, Congress’s Armed Services Committee released a bipartisan draft of the 2020 National Defense Authorization Act (NDAA) that would give the Pentagon an additional $22 billion to play with next year, bringing its annual budget to $738 billion. Before Donald Trump took office, the U.S. was already spending more on our military than China, Russia, Saudi Arabia, India, France, the United Kingdom, and Japan spend on theirs, combined. The Defense Department’s budget is now $130 billion larger than it was the day Trump was sworn in. Meanwhile, nearly 2 million Americans are still living in places that do not have running water.

Shortly after the Trump administration released its first budget in 2017, OMB director Mick Mulvaney defended the White House’s proposed cuts to Meals on Wheels by saying, “I think it’s fairly compassionate to … say, ‘Look, we’re not gonna ask you for your hard-earned money, anymore, single mother of two in Detroit … unless we can guarantee to you that that money is actually being used in a proper function.’” In a subsequent statement, the administration said that it had an obligation to cut spending on programs and agencies that had “failed to meet their objectives.”


Government Contract “Bad Actor” Awarded $400 Million Border Wall Contract


UPDATE: The Number 2 – Historical “Bad Actor” in terms of government contract fines and violations cited in this “Project on Government Oversight” article earlier this year has now been awarded a $400 Million Contract for border wall construction.

Time for the competition protests; but none of them have a clean slate either.

Image: Matassii.com


“The past conduct of three contractors—Caddell Construction, W.G. Yates & Sons, and Fisher Sand & Gravel—should concern contracting officers and prompt stronger oversight in future contracts to ensure that these companies play by the rules.”


“Caddell Construction and W.G. Yates & Sons

“While Customs and Border Protection (Border Patrol) invited four companies to design one border wall prototype, Caddell Construction and W.G. Yates each designed two—one made of concrete and the second of other materials—giving them half of the prototypes that Border Patrol assessed. Both Caddell and Yates are currently the subjects of an unreported years-long whistleblower lawsuit alleging that they, through a joint venture, fraudulently misrepresented their use of small business subcontracts for a 2009 Camp Lejeune project. The government partially intervened in the case, securing a guilty plea from the owner of the subcontractor involved—Pompano Masonry. She pleaded guilty in 2015 to lying to investigators and received a 30-month prison sentence.

The lawsuit, filed by former Pompano Masonry employee Rickey Howard, alleges that Caddell and Yates, while engaged in a $190 million construction project for the Navy at Camp Lejeune, encouraged Pompano to create a sham small business that they would then use to route Pompano’s payments through. Doing so would allow Caddell and Yates to count the work done by Pompano (a large business) as if it were being done by a small business, helping them fulfill their small business subcontracting plan. For this service, the lawsuit claims, they offered and paid Pompano an additional 2 percent of the subcontract’s almost $15 million value—over $250,000.

Aside from the creation of a fake small business that existed only on paper, Caddell and Yates appear to have regularly used “pass-through” small businesses on that project. The lawsuit alleges a dozen different instances where Caddell and Yates chose large, trusted contractors to perform the work, and then paid small businesses one to two percent of the subcontract value to act as middlemen so Caddell and Yates could meet their small business subcontracting goal of 77 percent. This resulted in some rather unusual arrangements, such as Caddell and Yates routing a $1.4 million subcontract for food service equipment through a small landscaping company called Power Mulch—for a 1 percent fee.

Don’t write Howard off as just a disgruntled employee. After leaving his job at Pompano Masonry and filing the lawsuit, Howard went to work at Harper Construction. Within a few short months, he discovered that Harper was using sham small businesses as well. A much shorter lawsuit ensued, and in June 2016, Harper Construction paid the government $5.4 million to settle those allegations. “This type of fraud siphons taxpayer dollars and takes away opportunities for legitimate small businesses for which this money was set aside,” said then-U.S. Attorney Laura Duffy in a press release.

A spokesperson for Yates responded to our questions about the case with the following statement:

“Yates Construction believes that the plaintiff’s qui tam case against it is baseless. Plaintiff’s allegations are just that—allegations—untested and prove nothing. The government declined to join the case after conducting its own inquiry into this matter. Moreover, the Navy gave Caddell-Yates an outstanding rating for the construction project at issue. Yates Construction is vigorously defending the case, and is seeking summary judgement. Yates Construction fully expects to prevail in the matter.”

On a different contract in 2011, Caddell was caught abusing two different small business programs to defraud the government. Ironically for a border wall contractor, the fraud was discovered during a joint General Services Administration and Department of Laborinvestigation of a Caddell subcontractor that was hiring immigrants who were working in the country illegally. Caddell ended up paying $2 million in criminal penalties and $1.15 million in civil penalties.

As the investigation progressed, investigators found that Caddell was billing the government for time spent “mentoring” a Native American small business it subcontracted with, when in reality there was no mentoring going on. In fact, this small business, Mountain Chief Management Services, wasn’t even doing any work. Caddell was using the small business as a pass-through entity to claim incentive payments and boost their small business contracting goal statistics.

The investigation found that this wasn’t the only project in which Caddell had been found to have defrauded the government. According to a report obtained by POGO, Caddell claimed over $1.2 million from the two programs by “citing Mountain Chief as a subcontractor on various U.S. Army Corps of Engineers projects from 2003-2005.”

In 2014, after the investigation was complete and the settlement agreed to, the U.S. Army Corps of Engineers still sent the Army’s Procurement Fraud Division a recommendation to debar Caddell, according to documents obtained by POGO through FOIA. The referral asserts that “it is in the Government’s interest to debar Caddell Construction Co. … based upon the submission of numerous false statements and/or false claims to obtain payment.” Debarment—which prevents a company from extending, renewing, or bidding on government contracts—usually lasts at least three years. It would have been a major problem for Caddell, which has received over $5 billion from the federal government in the last decade. In the end, Caddell escaped debarment, receiving only a warning.

The Caddell employee deemed most responsible for the fraud, Mark Hill, pleaded guilty to lying to investigators and was debarred in 2015. His debarment will end July 1, 2018, but debarring individuals only prevents them (or a company they run) from bidding on and receiving a federal contract or grant. It does not prevent them from working on federal contracts as an employee. Despite the wrongdoing, a company news article appears to indicate that Hill remains employed with Caddell as the Director of Operations for Caddell Power, a subsidiary of Caddell Construction.

Caddell has had a previous run-in with the debarment process. In 1999, the U.S. Air Force officially proposed to debar Caddell, making them immediately ineligible for any government contracts and giving them a chance to argue against it before it became final. The details of the proposed debarment are unclear, but in the end Caddell was ineligible for just eight days.

Caddell told POGO that it does not comment on its government contracting work. Caddell also did not respond to POGO’s request to verify Mark Hill’s continued employment. However, the 2017 article showing a picture of Mark Hill accepting an award on behalf of Caddell was removed the day after the request for comment was sent.

Fisher Sand & Gravel

Fisher Sand & Gravel has a rap sheet that is too long to list here, racking up around two thousand violation notices from city, county, state, and federal regulatory bodies, many relating to the company’s disregard for air pollution standards. Completely aside from the then-owner of the company being sent to prison for tax fraud in 2009, the city of Phoenix reportedly filed 467 criminal charges against the company in 2010, stemming primarily from violations at one facility’s asphalt plant. The company ended up shutting down the offending plant a month later and paying the city at least $243,000 in fines. Early the next year it settled a lawsuit with Maricopa County for $1 million, stating that it was “relieved to finalize this settlement and to move forward with a clean slate.”

Three months later, in April 2011, the company paid $312,000 to settle a civil case brought by the State of Arizona for air and water quality violations that spanned six counties. That settlement covered issues such as illegally dumping waste into a river, operating for up to 16 hours a day instead of the permitted 3.3 hours, and having exhaust stacks that were half as high as they were required to be. Instead of requiring Fisher Sand & Gravel to pay the full amount to the state, the settlement allowed them to put two-thirds of the fine towards an Environmental Management System that would prevent future problems. In 2013, however, the state found more violations and the company was forced to pay $500,000.

Also in 2013, the Environmental Protection Agency (EPA) fined Fisher Sand & Gravel $150,000 for “failing to comply with dust mitigation regulations” at three sand and gravel producing facilities in 2010. “Some nights there was so much [dust] in the air, it looked like fog outside,” a nearby homeowner told azfamily.com. “If you took a deep breath, it would make you cough.” That fine also included a requirement to install water spray bars in and around the machinery at one Phoenix area plant to help control the dust. While the dust problems at that location appear to have been addressed, the county air-quality department issued a $2,160 citation related to dust control as recently as January 2017 over a different Phoenix facility.

Other federal bodies have fined Fisher Sand & Gravel for additional issues. The Equal Employment Opportunity Commission fined them $150,000 in 2011 for discrimination and retaliation, the EPA fined them again in 2016 for $18,654, and there are several fines from the Mine Safety and Health Administration ranging from $5,000 to $10,000 between 2008 and 2016. Azcentral.com also reports that the company has faced environmental complaints and violations in other states including Michigan and Montana.

“Fisher Sand & Gravel Fisher is a good environmental steward and we take environmental responsibility very seriously,” the company wrote in a 2018 statement to Fox News. “We complied with all orders and everything has been resolved.” Given the company’s history of recurring violations and the recent county-level citations, however, it would be wise to take these words with a grain of salt.

Fisher did not respond to POGO’s request for comment.

Contractor Misconduct Rarely Leads the Government to Meaningfully Debar Companies

Unfortunately, contractor misconduct is not rare, and the government does little to punish frequent abusers—especially when they are large companies. POGO’s Federal Contractor Misconduct Database is full of contractors that have together paid out over $100 billion for various kinds of misconduct but continue to receive hundreds of billions each year in taxpayer funds. If the government ends up awarding one of these three contractors a future contract, it would be wise to build in additional safeguards and oversight.

What future contracts they might be involved in remains unclear. The Trump Administration appears dedicated to fulfilling the campaign promise of a “big beautiful wall,” but both Congress and Mexico have so far declined to pay for it. While the recently passed appropriations bill includes $1.6 billion in funding for border security, the vast majority of that funding is specifically dedicated to additional fencing, personnel, and border security technology. None of the fencing funds can be spent on new designs (aka “the wall”), and only $38 million is allocated towards border wall “planning and design” (Section 230, starting at p. 673). That is far below the $18 billion that Border Patrol requested from Congress in January for the first phase of the wall. President Trump, however, remains committed to the project and has requested that the states deploy the National Guard to bolster security—despite the fact that the Guard is prohibited from performing civil law enforcement duties. “The Guard will provide air support, reconnaissance support, operational support, construction of border infrastructure, and logistical support,” according to an Arizona National Guard statement. Exactly how involved they will be in “border infrastructure” is unclear, although California Governor Jerry Brown made clear that “this will not be a mission to build a new wall.” Adding to the uncertainty, California yesterday rejected the Trump Administration’s proposed duties for the troops because they were too closely related to immigration enforcement.

There has been speculation that President Trump might attempt to divert military funds to build the wall, but that would be a complicated process requiring Congressional approval. It is far more likely that the Administration will simply wait and request more funding for the wall in the next appropriations bill, which is due this October.

Despite President Trump’s early statements that he will personally select the winning border wall design, the Department of Homeland Security (DHS) “does not anticipate that a single prototype design will be selected,” according to an email from Southwest Border Branch Chief Carlos Diaz. “Rather, the eight different prototypes are each anticipated to inform future border wall design standards in some capacity.” As far as the DHS is concerned, the “contract for [prototype] construction has been completed” and agency leadership is evaluating potential next steps.

When asked about the potential for military funding for the wall, White House Press Secretary Sarah Huckabee Sanders declined to provide details, instead stating that “the continuation of building the wall is ongoing, and we’re going to continue moving forward in that process.”


Millions In Federal Small Biz Cash For Banned Entities

(Illustration: CJ Ostrosky / POGO)


“The inspector general found that federal agencies awarded more than $80 million in contracts to entities found to have engaged in conduct indicating a lack of responsibility, including fraudulently obtaining contracts though the use of pass-throughs, and submitting false certifications of business size, while an entity excluded because of a Clean Water Act violation received a loan valued at $2.9 million.


Suspension and debarment are remedies that are meant to protect the federal agencies and taxpayers from individuals and companies who lack the integrity and business ethics required for receiving government contracts, grants, and loans. The Project On Government Oversight (POGO) has long pushed for strengthening and improving these remedies as a means of safeguarding taxpayer money and ensuring the success of federal programs and missions.

If the Small Business Administration does not improve its suspension and debarment process, how much money will be lost to fraud, waste, or abuse is anyone’s guess.

Those who are suspended, debarred, or proposed for debarment are supposed to be banned—or “excluded”—from doing business with the government. These individuals or companies are supposed to be excluded for a set period of time: while they are under investigation or are involved in a pending legal proceeding (suspension), or after the investigation or proceeding results in a finding that they did something that shows they can’t be trusted with federal funds (debarment). But, as we have known for many years, excluded individuals and companies sometimes slip through the cracks and improperly receive federal funds.

This was most recently highlighted in an audit report released last month by the Small Business Administration’s inspector general. According to the report, suspended and debarred entities were awarded millions of dollars in federal contracts and loans between 2012 and 2018 because of deficiencies in the agency’s oversight.

The inspector general found that federal agencies awarded more than $80 million in contracts to entities found to have engaged in conduct indicating a lack of responsibility, including fraudulently obtaining contracts though the use of pass-throughs, and submitting false certifications of business size, while an entity excluded because of a Clean Water Act violation received a loan valued at $2.9 million.

The inspector general found two key problem areas. First, officials are not always checking the list of excluded recipients—maintained in the System for Award Management database—prior to making awards, nor are they consistently documenting that they have checked the database. Out of 14 loans, the watchdog found that files for 11, worth a total of $3.8 million, lacked documentation confirming that officials had checked the database prior to approving the loan.

Second, the Small Business Administration is taking too long to process suspension and debarment referrals. Referrals are commonly made in connection with a legal proceeding, such as a criminal or civil judgment. The watchdog found 15 referrals that had been awaiting review for an average of 620 days—almost two years. Furthermore, the Small Business Administration often fails to document the reasons for declining suspension and debarment referrals; or, when an exclusion is imposed, the agency fails to promptly update the award management database so that all other federal agencies will know not to do business with these individuals and companies.

The inspector general made several recommendations to improve the oversight and management of the agency’s suspension and debarment program. Failing to adopt the recommended corrective actions could be a costly mistake. The watchdog warned that inadequately documented referral decisions could expose the government to adverse legal action by those claiming they were unfairly suspended or debarred.

Increasing workers

Explore the Federal Contractor Misconduct Database

The federal government routinely awards contracts to companies with histories of misconduct, including contract fraud and other violations. POGO maintains this database to improve contracting decisions and increase public knowledge of how the government spends billions of taxpayer dollars each year.Explore the Database

But much more is at stake—potentially billions more. According to the report, in just one year federal agencies awarded over $105 billion in small businesses contracts, while the Small Business Administration managed a loan portfolio worth $132 billion. If the agency does not improve its suspension and debarment process, how much of that money will end up in the hands of risky individuals and companies and lost to fraud, waste, or abuse is anyone’s guess.

That’s why POGO has kept on top of this issue for so many years. Whether through working with policymakers to improve the suspension and debarment system, maintaining a Federal Contractor Misconduct Database tracking the integrity and ethics of the government’s largest contractors, or pressing the government to create its own data resources to better track fund recipients, this area is a worthwhile focus for achieving a more effective, ethical, and accountable government.”