Misbehaving Contractors are Recovery Act Winners

The federal government has awarded about $17 billion in direct contracts under the various provisions of the American Recovery and Reinvestment Act (ARRA). Given the Administration’s commitment to accountability, one hopes that the contractors were chosen with the utmost care and that any companies with serious blemishes on their record were excluded.

If the timing had been a bit different, such a review could have been accomplished much more easily. The General Services Administration is in the process of implementing legislation passed by Congress last year that mandates the creation of a database on the integrity and performance record of federal contractors and grantees. In September GSA published a notice in the Federal Register about its plans for what is being called the Federal Awardee Performance and Integrity Information System, or FAPIIS. The comment period on the plan ended earlier this month. Perhaps the system will be operational before ARRA reaches the end of its two-year life.

Unfortunately, the public will never know the details of how FAPIIS is used to vet contractors for ARRA or any other program. The reason is that Congress caved in to pressure from the contractor community and prohibited public disclosure of the database, which will be available only to federal agencies for internal use.

Fortunately, the public still has access to the Federal Contractor Misconduct Database (FCMD), which was created and is maintained by the non-profit Project On Government Oversight (POGO). It served as the inspiration for FAPIIS, though POGO and other watchdog groups pushed for a public version of the federal database. The FCMD, which covers the 100 largest federal contractors, documents more than 700 cases of misconduct since 1995 that resulted in more than $26 billion in fines and penalties. It covers a wider range of misconduct than will FAPIIS.

Apparently, most federal agencies did not pay close attention to the FCMD in awarding their ARRA contracts. An examination of the national Recovery Act contractor spreadsheet shows that many of those companies appear in POGO’s database as having been involved in cases of misconduct. They account for more than $6 billion in Recovery Act contract awards.

There are 12 contractors with more than one instance of misconduct and ARRA contracts of at least $150 million.* Here they are (listed by volume of ARRA contracts):

• CH2M ($1.8 billion in ARRA contracts; 6 instances of misconduct with penalties of $2.8 million)
• URS ($737 million in contracts; 4 instances and $2.4 million in penalties)
• Northrop Grumman ($596 million in contracts; 29 instances and $821 million in penalties)
• Battelle Memorial Institute ($522 million in contracts; 7 instances and $1.3 million in penalties)
• Honeywell International ($472 million in contracts; 31 instances and $641 million in penalties)
• Fluor ($469 million in contracts; 23 instances and $198 million in penalties)
• SAIC ($312 million in contracts; 10 instances and $14 million in penalties)
• Bechtel ($270 million in contracts; 15 instances and $359 million in penalties)
• University of California ($270 million in contracts; 25 instances and $67 million in penalties)
• Lockheed Martin ($180 million in contracts; 50 instances and $577 million in penalties)
• University of Chicago ($163 million in contracts; 4 instances and $22 million in penalties)
• Jacobs Engineering ($161 million in contracts; 2 instances and $37 million in penalties)

When the nation’s largest contractors have track records such as these, it is not surprising that Congress chose to keep its misconduct database a secret.

* In the case of joint ventures, the amount of the contract award is divided equally among the companies or institutions involved.