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Grounds for debarment or too big to fail?

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Suspend a Big Government Contractor. “Too big to fail” is a term thrown around the financial world quite a bit these days, but apparently it applies to the government contracting industry as well. As it stands right now, there are large contractors that would never make it on the suspended or debarred list, simply because they do so much business with the government. There are a few examples of large contractors being suspended for a short period of time, but never anything that leaves a mark. If this administration really wants to make a stand on contracting ethics, it would give a serious suspension to a large contractor that commits a violation to show that no company is above the law. ~Government Contractors Gaming The System, Ethisphere

POGO has recently posted  two articles with more details on the latest procurement fraud scandal to hit the defense contracting industry, this time it is Booz Allen Hamilton on the hot-seat.  Before you click on those links, let’s take a trip back in time to February 2009.

Almost three years ago to the day of the Booz Allen incident another similar incident came to light which resulted in a mere slap on the wrist for the offending contractor and their program manager, who also happened to be a retired military officer.
The incident:

The record reflects that at 6:35 p.m. on September 23, 2008 (prior to the issuance of these RFPs), the cognizant contracting officer sent an e-mail entitled “Past Performance Clarification” to KBR’s LOGCAP IV contracts manager and to KBR’s LOGCAP IV program manager.  The intent of this e-mail was to “communicate adverse past performance information to KBR, and provide that company with an opportunity to comment.” Agency Report (AR), Tab 7, Agency Memorandum for Record by Army’s LOGCAP Contracting Chief (Oct. 28, 2008), at 1. However, the contracting officer inadvertently attached to this e-mail a file entitled “Cost Price Evaluation Summary Document,” which contained source selection sensitive information as well as proprietary information of KBR, Fluor, and DynCorp. The record evidences that this summary included relatively detailed information regarding, for example, the labor, material, equipment, and subcontract costs, as well as award fees and fixed fees proposed by KBR, Fluor, and DynCorp, for the performance of another LOGCAP IV task order.

AR, Tab 7, Cost Price Evaluation Summary. The summary, in addition to including information regarding the relevant independent government cost estimate, also included information regarding KBR’s, Fluor’s, and DynCorp’s proposed general and administrative costs, indirect costs, and labor hours for U.S. citizens/expatriates, host country nationals, and third country nationals. Id. The cost price summary further included the narrative agency analysis of the offerors’ proposed cost elements.

The contracting officer realized the mistake and immediately attempted to recall the message and followed up with a phone call:

The contracting officer, “[u]pon viewing the sent message approximately a minute after its transmission . . . realized that he had attached the wrong file,” and “immediately sent a recall instruction through the . . . server.” AR, Tab 7, Memorandum for Record by Army LOGCAP Contracting Chief (Oct. 28, 2008), at 1. The contracting officer then placed a phone call to the KBR LOGCAP IV contracts manager, and “instructed [the KBR LOGCAP IV contracts manager] to immediately delete and destroy all copies of [the contracting officer’s] e-mail addressed to [the KBR LOGCAP IV contracts manager and program manager]

The program manager was none other than the infamous Maj. Gen. Larry J. Lust (Ret.).  After the email was sent KBR assured the contracting officer that the information was not disseminated or reviewed:

KBR LOGCAP IV Contracts Manager’s Initial Statement; KBR LOGCAP IV Contracts Manager’s Affidavit (Oct. 6, 2008). KBR’s LOGCAP IV program manager responded the next morning by e-mail that he too had complied with the contracting officer’s request to delete the e-mail and its attachment without opening, saving, downloading, or printing it.

Oops the program manager’s recall wasn’t quite spot on:

KBR’s LOGCAP IV program manager’s statement continued by explaining that later that day he remembered that the contracting officer’s 6:35 p.m., September 23 e-mail and attachment remained on the program manager’s Blackberry. The program manager’s statement reports that he forwarded the contracting officer’s 6:35 p.m., September 23 e-mail and attachment to his “laptop because [he] was curious as to what [the contracting officer] had sent out.” AR, Tab 7, KBR LOGCAP IV Program Manager’s Statement. The program manager stated that he opened the contracting officer’s 6:35 p.m., September 23 e-mail and attachment, but shortly thereafter “had second thoughts about reading the document and did not read it.”

I blogged about this when it happened, it looked like KBR was about to finally get their just deserts and be disqualified from bidding on any of the LOGCAP IV Task Orders.  Unfortunately that was not the case, instead of recommending debarment the DoD and the Government Accountability Office disqualified KBR from bidding on two tasks orders for LOGCAP IV.

That is, although KBR complains that the agency’s disqualification of KBR from these competitions was unduly severe, the record reflects that this action was taken by the agency only after KBR refused the agency’s request to isolate the program manager.

Given the circumstances, which include KBR’s initial refusal to isolate its LOGCAP IV program manager from these open LOGCAP IV task order solicitations, we find the agency’s elimination of KBR’s proposals from these task order competitions to be reasonable and within the discretion granted to the contracting officer.

LOGCAP is the crown jewel of DoD contracts indefinite-quantity/ indefinite-delivery contracts with 1 base year and 9 option years, each contract has a maximum value of $5 billion per year in taxpayer cash, that’s a lot of temptation for a company whose industry isn’t known for putting integrity above profit.

LOGCAP IV contract is valued to a maximum of $150 billion, a total of $15 billion each year for a period of performance of one base year and nine option years. ~ Military Logistics Forum

Is it just me or does anyone else have a problem with the DoD and the GAO trusting a company with competitors information to do the right thing on a pinky swear and a promise, when the company has 5 billion reasons not to?

After all of the reported violations worthy of debarment, why is KBR still in the government contracting game?

When will the government stop the coddling and cut off the cash to these companies that specialize in fraud and malfeasance?

Booz Allen Suspension: A Successful Failure
NEIL GORDON – (POGO) – February 10, 2012 – POGO has learned more details about the Air Force’s proposed debarment of Booz Allen Hamilton’s San Antonio office. This new information raises a troubling prospect about the revolving door between government and private contractors. Namely, that stopping its abuses often isn’t as easy as it seems.

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One Comment

  1. Comment by ITT Watch:

    ITT is currently on a suspension from debarrment and has a Qui Tam case lodged that the DOJ still are waiting to investigate, yet ITT continue to get contracts while having cases pending for ghost guards, bid rigging, collusion, charging for buildings empty as if occupied, not having proper insurance, pocketing overtime pay, holiday pay of their employees.

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