Tag Archives: waste fraud and abuse

Army Carefully Considering Next Worldwide Logistics Contractors

Logcap Contractor

(Photo: U.S. Army / Summer Barkley)

“The United States Army is still deciding to which companies it will award a major contract that supports U.S. troops stationed around the world.

Past versions of the contract were plagued by contractor misconduct that resulted in waste, fraud, abuse, and consequent harm to service members.”

“The Army has delayed the award date multiple times, but one can hope it is to ensure the contract is granted to companies that will faithfully execute it.

The contract, called the Logistics Civil Augmentation Program (LOGCAP) V, is currently capped at $82 billion and will consist of four to six contracts lasting up to ten years­—a five-year base term followed by five one-year options. Contractors will provide services ranging from supplying food, water, and shelter to performing facilities maintenance and construction.

The previous version of the contract, LOGCAP IV, was awarded to DynCorp International LLCFluor Intercontinental, Inc., and Kellogg Brown & Root Services, Inc. (KBR). Two of the companies allegedly committed misconduct while working on it. Employees accused Fluor of retaliating against them after they claimed the company manipulated reports to hide lost government property. Firefighters on military bases accused KBR of denying them pay and benefits, and the company was disqualified from fulfilling part of the contract for refusing to take action after an employee viewed sensitive and proprietary information. KBR is the contractor that originally drew controversy to the LOGCAP contracts in 2001. KBR’s former CEO, Dick Cheney, was Vice President of the United States when LOGCAP III was awarded to the company. The government and employees sued the company numerous times for waste, fraud, and abuse. Most famously, KBR exposed thousands of troops stationed in Iraq to unsafe wastewater that the troops used when showering, washing clothes, brushing their teeth, and occasionally making coffee. Troops may have suffered health problems due to exposure. KBR was awarded LOGCAP IV despite its track record on LOGCAP III.

The other incumbent, DynCorp, has not been charged with misconduct while working on LOGCAP IV, but it too has a history of malpractice on other government contracts. Ecuadorians accused the company of causing extreme physical and mental harm as well as property damage after the contractor sprayed pesticides over Colombia and Ecuador to eradicate cocaine and heroin crops. DynCorp employees also pleaded guilty to overcharging the State Department for rent in Iraq.

LOGCAP IV expired in April 2018, but the Army has repeatedly delayed awarding LOGCAP V. According to LOGCAP V project manager Jerome Jastrab, the decisions will be announced around December 2018. In the meantime, services will continue to be provided by the three incumbents whose contracts were extended for up to two one-year terms. LOGCAP IV ended up costing approximately $22 billion prior to the extension, although the government capped it at $150 billion. The Army has not publicly disclosed the dollar amount of the contract extensions.

In October 2017, the Army hosted Industry Day, an event for companies that were interested in bidding on contracts and learning more about contract expectations. Representatives from LOGCAP IV incumbents Fluor and KBR attended; DynCorp was not present at the event. While the Army only allowed three representatives from most companies to attend the event, Fluor was allowed seven.

There are plenty of other companies also looking to come away with a piece of LOGCAP V. One such company is Pacific Architects and Engineers (PAE), once a subsidiary of Lockheed Martin. PAE has created two separate joint ventures with defense suppliers—one with Parsons Corporation and the other with Vectrus Systems—in hopes of increasing its chances of winning. The joint ventures are headed by Scott Welker, who was a senior official at the Army contracting headquarters three months prior to leading the ventures. All three companies were at Industry Day, with Vectrus being allowed six representatives despite the three-person limit.

The new companies have also had their share of alleged and proven misconduct while working on other government contracts. Most recently, PAE paid the government $5 million for failing to conduct, and falsely billing the government for, personnel background checks. Prior to this, PAE paid $1.15 million for bid-rigging on a services contract in Afghanistan. Vectrus, who is teaming up with PAE, retaliated against employees who were cooperating with an investigation into illegal activities at Bagram Air Base in Afghanistan. The jury awarded the employees $1.7 million in damages. Parsons, the other defense supplier partnering with PAE, failed to complete two thirds of the projectsassigned in a construction contract in Iraq, prompting the Army to ask the company to show cause for why it should not be debarred.

The Army is taking steps to improve performance and to safeguard against contractor fraud and misconduct in the next LOGCAP contract. First, the contract will be awarded on a competitive basis in hopes that competition will improve contractor accountability. This was the approach implemented in LOGCAP IV and resulted in far fewer instances of misconduct than the previous, sole-source contract. Second, the Army will require contractors to create crisis action plans to prepare for unforeseen or sudden warfighter needs. These plans will be put to the test during the three planning exercises per yearnow required at bases in each region. In principle, implementing these measures will help contractors respond more quickly to troop needs.

In addition, the Army is learning from mistakes from past contracts. They agreed to implement in LOGCAP V all corrective actions suggested by the Department of Defense Inspector General in a LOGCAP IV audit to increase accountability and effective contractor oversight.

While nothing is certain about which companies will win the LOGCAP V contract, it’s good to see the government designing the contract with safeguards, such as requiring contractors to submit crisis action plans, to ensure they do what they’re supposed to and are held accountable when they don’t. Hopefully the extra time that was needed to amend LOGCAP V and to deliberate over who will win the contracts will result in improved decisions when it comes to the contractors the Army chooses and, ultimately, in improved logistical support for our troops.”




The 37 Year Tax-Day Impact Of The Project on Government Oversight (POGO)


POGO and Your Taxes


“POGO exposed the fact that the Pentagon was buying $7,600 coffee makers and $435 hammers.  [POGO works] with government insiders in order to sound the alarm on wrongdoing by government contractors and workers and to save taxpayer dollars—all on behalf of the public.

[POGO] investigations have found billions of dollars in actual and potential savings. Here are some of the highlights.”


“In a 1999 report, POGO pointed out that if contractors could inflate the price of everyday items like coffee makers and hammers, how much were they overcharging for things taxpayers didn’t understand, like high-tech weapon systems? Our investigations have found billions of dollars in actual and potential savings. Here are some of the highlights.

POGO publicized over $893 billion in improper payments.

The American taxpayers lose hundreds of billions of dollars every year because the federal government makes payments to the wrong people or institutions, or in the wrong amount. For example, the government sometimes sends benefits to individuals who are deceased, or FEMA pays fraudulent claims following disasters like hurricanes. Unfortunately, the government doesn’t do enough to address the problem. In 2016, POGO completed a set of reports that publicized $893 billion in improper payments between FY 2008 and 2015. In our reports, we provided recommendations to identify and recover improper payments that potentially could save the government billions of dollars. Currently, POGO is advocating for a bipartisan bill, the Stopping Improper Payments to Dead People Act. This act would allow the Social Security Administration to share its database of deceased people with many other government agencies to reduce inaccurate payments to dead people.

In 2001, POGO’s reporting causes military to stop two wasteful weapons projects, saving $49 billion.

In a blistering set of reports sent to the White House in 2001 on the defense weapon acquisition process, POGO exposed how multiple weapon systems wasted taxpayer money and ultimately made us less safe. One example was the Crusader howitzer cannon, which entered into the acquisitions phase before United Defense finished its preliminary design. Our analysis cited a Government Accountability Office report that found the Crusader weighed too much, underwent shortcuts in testing, and was behind schedule. Another example was the RAH-66 Comanche helicopter, which suffered from many of the same problems. While military planners designed the helicopter to be inexpensive, the cost quickly ballooned from $12.1 million to $58.9 million a copy as the development cost increased and the testing schedule was delayed.

POGO investigation into F-35 leads to $21 billion to $40 billion in taxpayer savings.

Multiple POGO investigations have found serious problems in the F-35 program. In one report last year, we discovered that the Air Force wanted to leave several older F-35s unfinished because paying to update them would make it harder to buy new fighters. The Air Force bought the F-35s while still designing and testing the aircraft—a decision POGOand the Government Accountability Office have independently labeled as a major driver of increased cost. After POGO published its report, the Air Force decided to stop the plan, preventing between $21 billion and $40 billion in waste.

POGO investigations help get the Deepwater contract cancelled, saving $24 billion.

In 2007, POGO investigated a $24 billion Lockheed Martin and Northrop Grumman project to update the U.S. Coast Guard’s equipment that resulted in millions of wasted dollars. To save money, the Coast Guard initially allowed the two private contractors to oversee and manage the project. Relying on private contractors to conduct inherently governmental functions ultimately cost the Coast Guard millions, because the contractors made numerous design and technical mistakes. After POGO’s investigation, media attention, and several high-profile disasters, the Coast Guard took back management of the project, and later asked for a $96 million refund.

POGO reporting helps shut down the wasteful Superconducting Super Collider, saving $11 billion.

POGO led the way in campaigning to cancel the Superconducting Super Collider, a grossly over budget project run by contractors that took advantage of weak oversight and permissive spending guidelines to overcharge the federal government. According to invoices obtained by POGO, the principal subcontractor charged the government $21,369 for office plants in a year and $1,107 dollars for Christmas cards, among other waste. POGO’s investigation turned the Super Collider into the largest government project ever cancelled at that time, saving taxpayers roughly $11 billion dollars.

Our investigation into Boston’s “Big Dig” helps save taxpayers roughly $11 billion.

Even before Boston’s Harbor Tunnel Project, known as the Big Dig, became a national embarrassment, POGO investigated the devastating impact of private contractors spending billions of tax dollars to build a highway project with little federal or state oversight. The Big Dig started with a $2.3 billion budget but, with contractors given a free rein, it ballooned to around $24.3 billion as the project suffered from delays, bad planning, and mismanagement. Initially, federal taxpayers were on the hook for 80% of the funding, but POGO’s investigation helped reduce losses by getting Congress to freeze federal spending at $8.6 billion, saving federal taxpayers roughly $11 billion.

POGO helps cancel the F-22, saving $4.268 billion in one year.

Much like the F-35, the F-22 cost much more than advertised and drained resources from other critical Air Force priorities—like training pilots. Also like the F-35, POGO campaigned heavily to end the program. After almost a decade’s worth of reportspress releases, and conversations with Members of Congress and their staff, POGO finally succeeded in helping get the program shut down—thanks in large part to Senators Carl Levin (D-MI) and John McCain (R-AZ). Cancelling the production of 240 F-22s saved taxpayers $4.268 billion that year alone.

POGO helps the government collect over $1 billion in additional oil royalties to date.

During the late 1990s, POGO investigators uncovered how the Interior Department ignored the fact that several oil companies chronically underpaid the Federal Treasuryon royalties they owed for oil they extracted from public lands. In 1997, POGO filed a False Claims Act lawsuit against 16 major oil companies. By 2001, the companies settled the lawsuit. The U.S. Treasury recovered nearly half a billion dollars in unpaid royalty revenue, and began collecting $67 million more per year in royalties owed to the public.

POGO reporting causes Air Force to suspend bad Hamilton Sundstrand contract, saving $664 million.

Every year, POGO warns the government about no-bid contracts fleecing American taxpayers. In 2006, POGO investigators published a previously not-public Department of Defense Inspector General report finding that defense and aviation contractor Hamilton Sundstrand raised the price of several mechanical parts by nearly 900 percent with no reasonable justification. We wrote to Congress showing how contractors were taking advantage of acquisition regulation loopholes to reduce oversight. Our work led the Air Force to suspend the 9-year, $860 million dollar contract, saving taxpayers $664 million dollars.

POGO advocates for bipartisan compromise to reduce contractor compensation, saving $200 million per year.

Prior to 2013, an outdated law that was used to determine contractor compensation packages allowed some companies to receive excessively high executive salaries and benefits—at the expense of taxpayers. This system allowed contractors to receive more money than comparable employees in the federal government. After years of work by POGO, a bipartisan group of legislators voted to reduce the cap from $952,308 to $487,000, saving taxpayers $200 million per year.

POGO investigation helps Air Force save $168 million on C-130J military airlift contract.

The C-130J was a mechanically flawed cargo plane that cost more than expected and the Pentagon didn’t want. A 2005 POGO report highlighted that the Air Force dubiously labeled the C-130J a “commercial” item in order to decrease oversight, a decision that ultimately led to many of the C-130J’s problems. After the Pentagon said they didn’t need the plane, a group of influential military contractors and U.S. Senators lobbied hard to preserve the unnecessary aircraft. POGO worked with Senator McCain and other Members of Congress to restructure the C-130J contract and save taxpayers $168 million.

POGO helps publicize $100 million in fraud by Northrop Grumman.

In 2014, POGO investigators made public a Defense Department Inspector General report that found Northrop Grumman knowingly overcharged the federal government around $100 million for an anti-terrorism program. The U.S. Army contracting agency tasked with overseeing the contract was not conducting proper oversight—until whistleblowers, POGO, and the Defense Department Inspector General got involved. We highlighted how Northrop Grumman and its subcontractor DynCorp defrauded the government in multiple ways. They billed the government for more labor hours than there are in a day and for employees who lacked required education qualifications. They also classified one employee for seven different positions including “depot aircraft mechanic, a senior general engineer, an integrated logistics manager, a quality assurance manager, a program manager, a senior pilot, and a senior technical writer.”

POGO’s investigations into waste, fraud, and abuse of power by the federal government are a core part of the organization’s mission.”








U.S. A Haven for Global Corruption Profits, Panelists Say

POGO Anti-Corruption

Danielle Brian, POGO Executive Director, speaks at a panel, “Democracy Defenders in Dialogue: Sharing Lessons from Investigative Journalism and Anti-Corruption Advocacy Partnerships Around the World,” December 14, 2017.












“Global Witness, an anti-corruption nonprofit that focuses on how corporate secrecy in developed countries facilitates corruption in developing ones, regularly highlights how criminals make use of anonymous American companies.

In one such example, Mexico’s largest drug cartel “used an anonymous Oklahoma company in a scheme to launder millions of dollars of drug money into the United States.” In another, a Russian mobster “allegedly set up a network of anonymous companies stretching from Eastern Pennsylvania to the United Kingdom to cheat the stock market and steal over $150 million from investors.”

“Last fall, the Miami Herald and a freelance journalist who works for Transparency International’s Russian chapter worked together to reveal how a Russian bureaucrat, ostensibly making the equivalent of $75,000 a year, was secretly buying multi-million dollar condos in South Florida. While Transparency International brought the individual’s corruption to the attention of the Russian government, the Miami Herald was able to focus its stories on the systemic problem of corrupt Russians (and others) using American real estate to hide and launder money.

The case is a prime example of how American journalists and advocates can work with their peers overseas to highlight the systemic problems that allow corruption to flourish and to help bring the individuals to justice in their own country. By working together and sharing information with international civil society groups, journalists can significantly amplify the impact of their stories. American regulatory, law enforcement, and intelligence agencies are better at their jobs because they regularly work with other countries. Journalists and advocates should do the same.

Danielle Brian, the Project On Government Oversight’s executive director, participated in a panel discussion in December examining how American journalists and anti-corruption nonprofits can partner with other groups around the world to more effectively address international corruption.

Panelists shared numerous instances when the impact of a story was amplified around the world as a direct result of organizations working together. The competitive media environment in the United States, however, means that such cooperation is rare here despite the potential benefits. With everybody looking to distinguish themselves, journalists are unlikely to share valuable records and risk having someone else publish the story first. International cooperation has also been hampered by technological barriers, although new platforms and tools are making it far easier to manage those partnerships. Despite the barriers, American journalists are beginning to take advantage of opportunities for cooperation.

Panelist Marina Walker Guevara, deputy director of DC-based International Consortium of Investigative Journalists, pointed to the Panama Papers and the more recent Paradise Papers projects to highlight the benefits of cooperation. The projects were based on massive leaks of information from firms that facilitate tax evasion and avoidance by the rich and powerful. The original recipient of the leaks, a German newspaper, decided that the sheer volume of records and the global scope required a global investigation. By partnering with a global consortium of trusted journalists, investigators were able to share access to records and help each other put various pieces of the puzzle together. All of the participating organizations had time to make sense of the records, and they then broke the news on the same day, creating a massive media wave that grabbed the world’s attention. As a result, approximately 80 countries have launched a total of nearly 150 audits, investigations, prosecutions, and arrests. One such investigation in India encompasses over four hundred entities. Iceland’s Prime Minister resigned, Pakistan’s former Prime Minister has been indicted, and the founders of the law firm whose records were leaked have been arrested.

Another organization that was featured on the panel is the Organized Crime and Corruption Reporting Program, led by Drew Sullivan and Paul Radu. Organized crime, they say, can only be defeated by an organized opposition. When that crime crosses national borders, the opposition must do so as well. Their organization is dedicated to conducting cross-border investigations, and they help teach other organizations how to maximize their impact through international reporting.

As international corruption increasingly crosses America’s borders, the oversight community needs to play catch-up.

“While the rest of the world provides the transparency that the U.S. demanded, the U.S. is rapidly becoming the new Switzerland,” the Bloomberg Editorial Board wrote in December. Despite requests from the previous administration, Congressional inaction on the issue has prevented the reporting of information like account balances and the names of beneficial owners—the same information that other countries provide to us. “A Russian billionaire, for example, can put real-estate assets in a U.S. trust and rest assured that neither the U.S. tax authorities nor his home-country government will will know anything about it.”

Corporation secrecy laws in Delaware, Nevada, Wyoming, and other states facilitate transnational crime, according to a Transparency International report from January 2016. Complex webs of anonymous shell companies can make law enforcement’s job much more difficult and allow foreign organizations to get away with defrauding Americans and committing crimes.

The bad news is that too many investigations into international corruption lead to American companies. The good news is that while corruption can transcend borders, the work of watchdogs can too. POGO is looking forward to working more closely with international groups in the months and years to come.”




Big Data At Its Best – POGO Federal Contractor Misconduct Data Base




POGO Misconduct


“We encourage you to visit our Federal Contractor Misconduct Database, which currently contains 412 resolved and 121 pending instances of workplace-related misconduct by the federal government’s largest contractors.

The government’s top vendors have paid a collective total of $2.7 billion in fines, judgments, and settlements since 1996 for a wide variety of labor violations, including discrimination, health and safety hazards, unpaid wages, and whistleblower retaliation.

The vast majority of the labor misconduct instances in our database did not involve the federal government. About 54 percent were lawsuits filed by private parties, while another 7 percent were enforcement actions by local, state, and foreign governments. One instance we recently added is KBR’s $3.75 million settlement of a lawsuit brought by construction workers who alleged the company stiffed them on wages and meal breaks at a California mining facility.

The Trump administration’s efforts to roll back worker protections and oversight of contractors’ business practices could further shrink the percentage of labor instances involving Uncle Sam in our database. Nonetheless, at least for now, federal enforcers are still on the job. A few weeks ago, the National Nuclear Security Administration hit National Security Technologies, the managing contractor of the Nevada Test Site, with a proposed $112,500 fine for violations of worker safety and health requirements. In May, the Occupational Safety and Health Administration fined Exxon Mobil $164,775 for violations related to a November 2016 Baton Rouge refinery explosion that injured four workers.

A list of all resolved and pending labor misconduct instances in our database can be found at this link.”




Corporate Crime Crackdown



Photo Credit: Derek Key / Flickr


“In the 72 days between Election Day last year and the inauguration, federal agencies obtained more than $20 billion in penalties and settlements from dozens of companies accused of defrauding consumers or risking public health and safety.

That’s the key finding of the nonprofit watchdog Good Jobs First, which expanded its Violation Tracker database of corporate misconduct this week. Among the new cases added to Violation Tracker are the flurry of high-dollar settlements announced in the final days of the Obama administration:

  • Deutsche Bank ($7.2 billion): misleading investors in its sale of residential mortgage-backed securities
  • Credit Suisse ($5.3 billion): making false and irresponsible representations about residential mortgage-backed securities
  • Volkswagen ($4.3 billion): conspiracy to cheat US emissions tests
  • Takata Corporation ($1 billion): fraudulent conduct relating to the sale of defective airbag inflators
  • Moody’s ($864 million): providing flawed credit ratings for residential mortgage-backed securities and collateralized debt obligations
  • Western Union ($586 million): failing to maintain an effective anti-money laundering program and aiding and abetting wire fraud

“Given the Trump administration’s focus on deregulation rather than enforcement, the Obama administration’s wave of case resolutions may represent Uncle Sam’s last hurrah against business misconduct for some time,” Good Jobs First Research Director Philip Mattera said in a press release.

Violation Tracker, launched in 2015, now contains 120,000 enforcement actions by 39 federal agencies in cases ranging from accounting fraud, consumer scams, and public health and safety hazards, to false claims, price fixing, and bribery. The database also added whistleblower retaliation cases handled by the Occupational Safety and Health Administration.

Violation Tracker is a good complement to POGO’s Federal Contractor Misconduct Database, which tracks fewer companies but covers a longer time period and isn’t limited to cases initiated by the federal government.

Good Jobs First maintains other useful corporate and government accountability resources. Its Subsidy Tracker database, about which we’ve blogged before, collects information on local, state, and federal economic development subsidies and other financial assistance to businesses. The organization also compiles corporate “rap sheets” on dozens of the world’s largest and most controversial companies.”


Government Fraud Recovery Bounces Back in 2016




“It is  a substantial increase over last year’s total.

A large number of recoveries came from contract fraud cases involving some of Uncle Sam’s most prominent suppliers of goods and services.

The Justice Department announced on Wednesday it had recovered for taxpayers more than $4.7 billion through settlements and judgments from False Claims Act cases in fiscal year 2016. According to the announcement, it is the third highest annual recovery in False Claims Act history. It is also a substantial increase over last year’s total.

Of the $4.7 billion recovered, $2.5 billion came from health care fraud cases. An additional $1.7 billion came from settlements and judgments in cases alleging false claims in connection with federally insured residential mortgages.

  • Boeing: $18 million to settle allegations that it overcharged the US Air Force for aircraft maintenance services at Boeing’s Long Beach, California, depot. (In 2014, Boeing paid $23 million for allegedly overcharging maintenance work at its depot in San Antonio, Texas.)
  • Centerra Services International: $7.4 million to resolve a lawsuit accusing the company of overbilling the Army for firefighting services in the Middle East
  • Computer Sciences Corporation: $1.35 million for billing the Defense Information Systems Agency for subcontract workers who lacked the required security clearances
  • Deloitte Consulting LLP: $11.38 million to resolve overbilling claims on a General Services Administration contract
  • DRS Technical Services: $1 million to settle charges that employees billed the Army for hours they did not work
  • L-3 Communications: $25.6 million to settle claims of selling the government defective weapon sights
  • Lockheed Martin: $5 million for allegedly misleading federal and state regulators about noncompliance with environmental regulations at the Paducah Gaseous Diffusion Plant in Kentucky
  • SRA International: $1.1 million for alleged false billing on military contracts
  • United Technologies: $11 million in penalties, interest, and disgorgement of profits for overcharging the Air Force for jet engines in the 1980s
  • URS Corporation: $9 million to settle allegations that a subsidiary defrauded the government into awarding it construction contracts that it was not eligible to receive. In a different case, URS paid $580,000 for allegedly overbilling labor rates on a bridge reconstruction project.

The False Claims Act is the government’s primary tool to redress fraud in the areas of health care, defense and national security, food safety and inspection, federally insured loans and mortgages, highway funds, small business contracts, agricultural subsidies, disaster assistance, and import tariffs. In 1986, Congress strengthened the Act by increasing incentives for whistleblowers to come forward with allegations of fraud. Most false claims actions are filed by whistleblowers in qui tam lawsuits. Since 1986, the government has recovered slightly over $53 billion, awarding more than $6.3 billion of that to the whistleblowers who filed the lawsuits—often at great risk to their careers.

On the same day the Justice Department announced its annual fraud recoveries, it also announced it had collected nearly $15.4 billion in civil and criminal cases in FY 2016, one-third less than last year’s total. This amount includes recoveries in all civil and criminal enforcement cases (including those involving the False Claims Act), fines imposed on individuals and corporations for violations of federal financial, health, safety, civil rights, and environmental laws, and collected debts owed to the federal government.

How will the False Claims Act fare under the Trump administration? At least one expert foresees very little change.

Taxpayers Against Fraud acting president Patrick Burns recently observed that Senator Jeff Sessions (R-AL), President-elect Trump’s choice for Attorney General, “has never winked at companies that harm American workers and consumers” and “understand[s] the value of whistleblowers and whistleblower laws when it comes to fighting corporate theft and crony capitalism.” He noted that Sessions has supported strengthening the False Claims Act and has a good relationship with Senator Chuck Grassley (R-IA), the law’s key champion in the Senate.

Burns’ prediction gives us hope that active enforcement of the False Claims Act—and billions of dollars in annual recoveries—will continue for years to come.”


Intelligence Watchdog Finds Contractor Abuses




“Dozens of instances when contractor employees fudged their timesheets, billing the government for time they were not at work or when they engaged in activities either personal in nature or outside the scope of the contract.

38 substantiated cases  – loss to the government of more than $2.5 million.

Last week brought news that another Booz Allen Hamilton employee was accused of improperly removing sensitive material from the National Security Agency (NSA). Harold Thomas Martin III was charged with theft of government property and unauthorized removal and retention of classified materials. The government alleges Martin took documents and digital files containing information that, if disclosed, “reasonably could be expected to cause exceptionally grave damage to the national security of the United States.”

It was another black eye for Booz Allen, which was NSA surveillance program whistleblower Edward Snowden’s employer. It was equally embarrassing for the U.S. intelligence community, which pays contractors like Booz Allen billions of dollars each year to help run its global operations and keep a tight lid on our country’s more sensitive secrets.

Just days after the Harold Martin story broke, U.S. intelligence contractors were again in the spotlight. On Sunday, VICE News reporter Jason Leopold posted hundreds of pages of Intelligence Community Inspector General (ICIG) investigative reports. The documents contain the juicy—and occasionally disturbing—details of misconduct investigations conducted by the ICIG, the watchdog office that oversees the federal intelligence agencies. Most of the cases involved employees of Booz Allen and other prominent contractors.

Specifically, the documents contain dozens of instances when contractor employees fudged their timesheets, billing the government for time they were not at work or when they engaged in activities either personal in nature or outside the scope of the contract.

The ICIG also found that some contractor employees, while working on extremely sensitive intelligence programs and operations, risked exposing classified information by using non-secure networks and computers. They did so while working for some of the government’s most trusted private sector partners: Booz Allen and SAIC are among only a handful of private firms that collectively employ nearly all of the intelligence community’s contractor workforce.

The implications of the VICE News revelations are enormous. Not only did the contractor employees rip off taxpayers, they also compromised national security. The ICIG reports bolster POGO’s concern that contractor timesheet fraud is especially rampant among intelligence programs due to a lack of transparency and insufficient contract oversight. However, they also give us a reason to be optimistic: they show that the intelligence watchdog takes its role seriously and doggedly pursues allegations of wrongdoing.”




Air Force Contractors Reap Taxpayer-Funded False Profits Windfall




“The U.S. Air Force might have paid contractors tens of millions of dollars in unwarranted profits, according to a new report by the Inspector General.

Boeing, Northrop Grumman, and Honeywell were paid between $9.6 million and $24.9 million in questionable profits and fees.

The report concluded that the Air Force did not effectively negotiate labor profit and fees with contractors providing depot maintenance services on F-15, C-5, C-130, and C-17 aircraft at Robins Air Force Base.

The IG reviewed only a small subset of Robins depot maintenance contracts—3 out of 33—so the overall amount of questionable or excessive contractor profit payments could be much higher. The three reviewed contracts are sole-source, public-private partnership (PPP) awards with an estimated value of more than $590 million through fiscal year 2019.

The IG found that Air Force contracting officials did not properly assess the relative difficulty of the work. It determined that the contracts entailed a relatively low performance risk to the contractors, which would have justified a reduced profit.

Contracting officials also did not eliminate profit and fees for “non-repair costs” (costs that did not directly support maintenance work, such as office supplies, depreciation of buildings, and salaries). Doing so would have netted the largest savings, since non-repair costs accounted for 69 to 78 percent of the profit and fees paid to the three contractors, according to the report.

“We believe that the contractor should earn a reasonable profit or fee on the depot’s work if they are responsible for a depot’s performance,” the IG reported. “However, contracting officials missed an opportunity to reduce or eliminate profit and fees for work performed by the WR-ALC [Warner Robins Air Logistics Complex] depot.”

The IG recommended ways the Air Force could improve management of the program. It did not recommend recovering any of the questionable payments.

This is not the first time the Pentagon’s watchdog has highlighted waste and mismanagement in Air Force depot maintenance PPPs. In 2010, the IG discovered serious problems in this program at several bases. For example, at Robins it found that lax Air Force oversight left Boeing owing the government $3.1 million in C-17 maintenance expenses.

We hope that the Air Force has learned from its mistakes and will make the necessary changes to ensure it can effectively collaborate with its contractor partners while keeping costs under control.”



Federal Fraud Recoveries Drop Over 38 Percent


Fraud Recoveries


“Earlier this month, the Department of Justice (DOJ) announced that it obtained more than $3.5 billion in settlements and judgments from civil cases involving fraud and false claims against the government in fiscal year 2015.

This is a sharp decrease from last year’s total of $5.7 billion, although, as the DOJ pointed out, it is the fourth consecutive year that recoveries exceeded $3.5 billion. Whether fraud was less prevalent or governmental enforcement was less vigorous during FY 2015, the DOJ provided no explanation for this decrease.

The False Claims Act (FCA) is the government’s primary tool for recovering funds stolen from federal programs: Medicare and Medicaid, contracts and grants, housing programs, disaster relief loans, and agricultural subsidies. Since 1986, when Congress strengthened the FCA, the DOJ has reclaimed $48.4 billion from companies and individuals accused of fraud.

Of the $3.5 billion recovered in FY 2015, $1.9 billion came from cases involving health care fraud. The second largest amount—$1.1 billion—was recovered in contract fraud cases.

According to the DOJ’s press release, the government recovered $2.8 billion in FY 2015 thanks to lawsuits filed by whistleblowers under the qui tam provisions of the FCA, which entitles them to a 15 to 25 percent share of the recovery. These whistleblowers—who took great personal and professional risks in filing suit—were awarded $597 million, or about 21 percent of the total.

According to the press release, whistleblowers filed 638 qui tam lawsuits in FY 2015. Unfortunately, the DOJ was mum on the number of FCA and qui tam lawsuits that are currently pending. Lawsuits can sometimes languish for years while the DOJ decides whether or not to intervene in them.

On the same day the DOJ heralded its annual fraud recoveries, it also announced that it had collected $23.1 billion in civil and criminal actions in FY 2015. This amount includes recoveries in civil and criminal enforcement cases (including those involving the FCA), fines imposed on individuals and corporations for violations of federal financial, health, safety, civil rights, and environmental laws, and collected debts owed to the federal government. This number also declined over the last year, although not as dramatically as the fraud recovery total.

Not everyone likes the FCA. For years, business groups have been trying to weaken the law. We were reminded of the precarious state of the FCA last month when the influential D.C. think tank the Center for Strategic and International Studies hosted a panel discussion on the law. The contracting industry-dominated panel disparaged the FCA in favor of alternative anti-fraud remedies less damaging to corporate earnings, such as self-policing.

The FCA should be strengthened, not eviscerated. The law incentivizes companies to adopt stronger corporate ethics practices and more rigorous oversight of their dealings with the government. Improving corporate behavior while helping the government recover billions of dollars every year is a win-win for taxpayers.”


DoD Task Force Blew $150 Million in Afghanistan on Posh Digs

Task Force Villas in Kabul

Task Force Villas in Kabul


“The $150 million was spent on world-class accommodations for contractors, visitors, and between 5 and 10 Task Force staff.

Almost all of the money was awarded to three contractors—Triple Canopy ($57 million), Defense Group Incorporated ($51 million), and Muscogee Nation Business Enterprise ($40 million)—to provide an array of creature comforts.

Last week, Special Inspector General John Sopko sent a letter to Secretary of Defense Ashton Carter requesting information about the Task Force’s decision to spend nearly $150 million—20 percent of its budget—between 2009 and 2014 to rent luxurious private villas around Afghanistan.

SIGAR’s preliminary findings are alarming. The IG estimates that the government could have saved tens of millions of dollars if Task Force personnel had instead lived at DoD facilities or the U.S. Embassy. SIGAR also surmises that while living in private enclaves enabled the Task Force to move around the country and conduct its business more freely, it also might have diminished its effectiveness by hindering coordination with other agencies.

So far, DoD has ignored all of SIGAR’s inquiries about the Task Force, which shut down in March. SIGAR currently has several ongoing criminal investigations related to the Task Force.

The Senate has also jumped into the fray and is demanding answers. Senator Chuck Grassley (R-IA) requested records related to the Task Force’s operations and plans to seek a DoD Inspector General audit. Last week, Grassley wrote to Secretary Carterabout Army Colonel John Hope, who led the Task Force during its final months. Hope claims he has been singled out for retaliation for speaking out about the lack of accountability at the Task Force.

During its nine-year existence, the Task Force spent hundreds of millions of dollars on economic development projects in Iraq and Afghanistan. We look forward to these investigations shining additional light on how this program operated, what it achieved, and how this money was spent.”