[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
REWARDING BAD ACTORS: WHY DO POOR PERFORMING CONTRACTORS CONTINUE TO
GET GOVERNMENT BUSINESS?
=======================================================================
HEARING
before the
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
MARCH 18, 2010
__________
Serial No. 111-78
__________
Printed for the use of the Committee on Oversight and Government Reform
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
index.html
http://www.house.gov/reform
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
EDOLPHUS TOWNS, New York, Chairman
PAUL E. KANJORSKI, Pennsylvania DARRELL E. ISSA, California
CAROLYN B. MALONEY, New York DAN BURTON, Indiana
ELIJAH E. CUMMINGS, Maryland JOHN L. MICA, Florida
DENNIS J. KUCINICH, Ohio MARK E. SOUDER, Indiana
JOHN F. TIERNEY, Massachusetts JOHN J. DUNCAN, Jr., Tennessee
WM. LACY CLAY, Missouri MICHAEL R. TURNER, Ohio
DIANE E. WATSON, California LYNN A. WESTMORELAND, Georgia
STEPHEN F. LYNCH, Massachusetts PATRICK T. McHENRY, North Carolina
JIM COOPER, Tennessee BRIAN P. BILBRAY, California
GERALD E. CONNOLLY, Virginia JIM JORDAN, Ohio
MIKE QUIGLEY, Illinois JEFF FLAKE, Arizona
MARCY KAPTUR, Ohio JEFF FORTENBERRY, Nebraska
ELEANOR HOLMES NORTON, District of JASON CHAFFETZ, Utah
Columbia AARON SCHOCK, Illinois
PATRICK J. KENNEDY, Rhode Island BLAINE LUETKEMEYER, Missouri
DANNY K. DAVIS, Illinois ANH ``JOSEPH'' CAO, Louisiana
CHRIS VAN HOLLEN, Maryland
HENRY CUELLAR, Texas
PAUL W. HODES, New Hampshire
CHRISTOPHER S. MURPHY, Connecticut
PETER WELCH, Vermont
BILL FOSTER, Illinois
JACKIE SPEIER, California
STEVE DRIEHAUS, Ohio
JUDY CHU, California
Ron Stroman, Staff Director
Michael McCarthy, Deputy Staff Director
Carla Hultberg, Chief Clerk
Larry Brady, Minority Staff Director
C O N T E N T S
----------
Page
Hearing held on March 18, 2010................................... 1
Statement of:
Scovel, Calvin L., III, Inspector General, U.S. Department of
Transportation; Richard L. Skinner, Inspector General, U.S.
Department of Homeland Security; Donald A. Gambatesa,
Inspector General, U.S. Agency for International
Development; Gregory H. Woods, Deputy General Counsel, U.S.
Department of Transportation; Elaine C. Duke, Under
Secretary for Management, U.S. Department of Homeland
Security; and Drew W. Luten III, Acting Assistant
Administrator for Management, U.S. Agency for International
Development................................................ 13
Duke, Elaine C........................................... 53
Gambatesa, Donald A...................................... 35
Luten, Drew W., III...................................... 60
Scovel, Calvin L., III................................... 13
Skinner, Richard L....................................... 27
Woods, Gregory H......................................... 47
Letters, statements, etc., submitted for the record by:
Duke, Elaine C., Under Secretary for Management, U.S.
Department of Homeland Security, prepared statement of..... 55
Gambatesa, Donald A., Inspector General, U.S. Agency for
International Development, prepared statement of........... 37
Issa, Hon. Darrell E., a Representative in Congress from the
State of California, prepared statement of................. 10
Kucinich, Hon. Dennis J., a Representative in Congress from
the State of Ohio, article dated October 10, 2005.......... 83
Luetkemeyer, Hon. Blaine, a Representative in Congress from
the State of Missouri, letter dated December 9, 2009....... 80
Luten, Drew W., III, Acting Assistant Administrator for
Management, U.S. Agency for International Development,
prepared statement of...................................... 62
Mica, Hon. John L., a Representative in Congress from the
State of Florida, followup question and response........... 77
Scovel, Calvin L., III, Inspector General, U.S. Department of
Transportation, prepared statement of...................... 16
Skinner, Richard L., Inspector General, U.S. Department of
Homeland Security, prepared statement of................... 29
Towns, Chairman Edolphus, a Representative in Congress from
the State of New York, prepared statement of............... 4
Woods, Gregory H., Deputy General Counsel, U.S. Department of
Transportation, prepared statement of...................... 49
REWARDING BAD ACTORS: WHY DO POOR PERFORMING CONTRACTORS CONTINUE TO
GET GOVERNMENT BUSINESS?
----------
THURSDAY, MARCH 18, 2010
House of Representatives,
Committee on Oversight and Government Reform,
Washington, DC.
The committee met, pursuant to notice, at 10:09 a.m., in
room 2154, Rayburn House Office Building, Hon. Edolphus Towns
(chairman of the committee) presiding.
Present: Representatives Towns, Cummings, Kucinich,
Tierney, Watson, Quigley, Norton, Speier, Driehaus, Chu, Issa,
Mica, Bilbray, Jordan, Chaffetz, and Luetkemeyer.
Staff present: John Arlington, chief counsel,
investigations; Aaron Ellias, staff assistant; Craig Fischer,
investigator; Neema Guliana, investigative counsel; Adam Hodge,
deputy press secretary; Carla Hultberg, chief clerk; Marc
Johnson and Ophelia Rivas, assistant clerks; James Latoff,
counsel; Leneal Scott, IT specialist; Mark Stephenson, senior
policy advisor; Ron Stroman, staff director; Gerri Willis,
special assistant; Alex Wolf, professional staff member;
Lawrence Brady, minority staff director; John Cuaderes,
minority deputy staff director; Frederick Hill, minority
director of communications; Adam Fromm, minority chief clerk
and Member liaison; Stephanie Genco, minority press secretary
and communication liaison; Seamus Kraft, minority deputy press
secretary; Stephen Castor, minority senior counsel; and Ashley
Callen, minority counsel.
Chairman Towns. Good morning and thank you all for being
here.
Today the committee continues its oversight of the Federal
Government's use of suspension and debarment, a process that is
supposed to prevent taxpayer money from going to the bad apples
of the contracting world.
Suspension and debarment can be an effective tool for
Federal agencies to ensure contractor performance.
Unfortunately, as we will hear today, the suspension and
debarment tool often goes unused, quietly rusting away in the
procurement tool box.
More than $500 billion of the taxpayers' money goes to
Federal contractors each year. It is a massive job to ensure
that billions of dollars in taxpayer money is spent effectively
and wisely, and that Federal dollars do not go to the
incompetent and the unproductive, the con men and the con
women.
Suspension and debarment is the last line of defense
against such abuse, and should only be used in the most
seriously cases. But suspension and debarment only protects our
Government if agencies use it.
In February of last year, we held a hearing on the
operation and use of the Excluded Parties List System. We found
that some Government agencies were ignoring Federal regulations
by awarding funds to businesses that had been suspended or
debarred. We also found that Federal agencies took far too long
to suspend or debar, if they did it at all.
Now, a year later, it seems little has changed.
In three separate reports, the Inspectors General of the
Department of Homeland Security, the Department of
Transportation, and the U.S. Agency for International
Development found that their respective agencies have failed to
use the suspension and debarment system or have been so slow in
using it that the poor performers raked in millions and
millions and millions in the time period.
For example, the DOT IG found that, on average, it took DOT
300 days to reach a suspension decision and 415 days to process
a debarment decision. These decisions are supposed to be made
within 45 days.
In one such delay, the IG found that one Kentucky company
committed contract fraud by bribing an official to receive bid
information. During the 10-months it took DOT to suspend this
company, they received $24 million in Recovery Act funds.
Similarly, at DHS, the IG found that DHS had only 10
debarment cases in 4 years, an incredibly low number for an
agency that spends an enormous percentage of its budget through
contracting. In one glaring example, there were no debarment
actions by FEMA, an agency that had well-publicized problems
with contractors during Hurricane Katrina. That, to me, is very
interesting.
Unfortunately, the news isn't much better at USAID. The IG
found that GA Paper International and Ramtech Overseas, Inc.
admitted that they had submitted more than 100 false claims for
reimbursement. Though they agreed to pay $1.31 million to the
Government, USAID never initiated a suspension or debarment
action.
If you aren't going to suspend or debar contractors for
fraud, what does it take?
As the old saying goes, ``Fool me once shame on you, but
fool me twice, shame on me.'' In this case, shame on our
Government for being fooled over and over and over again by the
same contractors.
It is way past time for agencies to suspend and debar bad
actors and for agency managers to aggressively enforce this
process.
As I have said before and I want to emphasize today, I am
not against contracting or contractors. I am against weak
management and poor contractor performance. I know that
responsible contractors and the witnesses today share this view
as well.
The failure to enforce the law against bad actors is unfair
to responsible companies and it is unfair to the taxpayers
whose money we are using.
I look forward to hearing from both management and the IGs
about what can be done to address this problem.
I will now yield to the ranking member of the committee
from California, Congressman Issa, for his opening statement.
[The prepared statement of Chairman Edolphus Towns
follows:]
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Mr. Issa. Thank you, Mr. Chairman, and thank you for
holding this hearing. As you recall, the first hearing held by
this committee after you became chairman was on substantially
the same subject. I will ask today that you join me in a letter
asking for the GAO to update their findings so that we can look
forward to not only having new facts, but, in all likelihood,
new enforcement.
Chairman Towns. Without objection, I will join you on that.
Mr. Issa. Thank you, Mr. Chairman.
The goal of today's hearing is not just to shed light on an
ongoing issue, but to make sure that the industry of both
contractors and the Government agencies that oversee those
contractors realize that the time, as the chairman said, is
long overdue to bring about quick and predictable debarment and
suspension.
Each of us may have different examples of those entities
which should be suspended or debarred. The truth is all of the
chairman's likely candidates should be scrutinized and either
cleared or taken off the rolls, and all of my candidates, I
suspect, should be either evaluated and cleared or taken off
the rolls. It is, in fact, in my opinion, every single
contractor's responsibility to live up to a high standard, and
if there is any question from any quarter as to their conduct,
it should be thoroughly investigated.
Just yesterday, at the chairman's directive, we reviewed
the question of both contractors and private individuals
either, employees or Government contractors, who were seriously
delinquent in their taxes, whether they should also be
ineligible for contract or even employment.
Although there is not bipartisan support on how to achieve
this, there is bipartisan recognition that bad actors make for
bad government.
Mr. Chairman, I will delve slightly into one partisan
example, but I do so for a reason. We in the Congress voted on
a bipartisan and overwhelming basis in the House and the Senate
to defund ACORN. Whether we agree with Federal court decisions
now pending or not, it is clear that some members of the court
believe that the Association of Community Organizations for
Reform Now [ACORN], in their opinion, cannot be defunded by
congressional fiat. That begs the real question: Why is there
were people repeatedly breaking laws, being indicted and even
convicted, and still operating within that organization? In
fact, funds still being received even after it was shown that
funds of the Federal Government had been embezzled and covered
up.
This is an example where, from this dais, we cannot bring
about effective enforcement. We should not, on a regular basis,
take up the question of any company or any organization. But in
order to live to that expectation that I think the chairman and
I want us to do, which is to never again have a House floor
vote or a Senate vote related to defunding an organization, we
must call on our agencies to do their job not only better, but
much quicker.
So, Mr. Chairman, my apologies for something which has
often been considered to be partisan, but I believe that
partisanship would have been completely unnecessary and tough
votes for people on both sides would have been unnecessary if
in fact the use of these tools had been aggressive. None of us
would have questioned if an organization or an individual had
been reviewed and properly cleared. But to not be reviewed, to
go on receiving additional funds by any organization, including
contractors and, quite frankly, even the continuation of
Federal employees, must in fact reach a higher standard, one
that the chairman made clear by having his first hearing on
this subject and is making clear today by having an additional
hearing.
So I join with the chairman in all of his remarks and yield
back the balance of my time.
[The prepared statement of Hon. Darrell E. Issa follows:]
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Chairman Towns. Thank you very much. I thank the gentleman
from California for his statement and also thank him for the
work that he has done on this issue as well. Thank you.
Let me first check if anyone else has an opening statement.
I yield to the gentleman from Florida for a 5-minute opening
statement.
Mr. Mica. Thank you very much, Mr. Chairman, for yielding.
As the Republican leader of the Transportation and
Infrastructure Committee, I take particular interest in today's
hearing, and thank you for holding it. I wish we were doing an
even better job in our committee, Transportation and
Infrastructure. We do have a lot of responsibility as the
largest committee in Congress and a lot of oversight. But I am
particularly interested in what you have found here, and it
does give me great concern. We have tried to conduct regular
overview of stimulus dollars, and I think that is very
important because it was a huge amount of money. I think now it
is scored at somewhere around $862 billion.
Today, the President is going to sign a so-called jobs bill
of $17 billion or $18 billion, however you figure it, and it
also has a high emphasis on infrastructure and T&I projects.
First of all, I am deeply concerned about getting that
money out. To date, as of March 3rd, the last report I had from
our committee staff, $48 billion in stimulus money that went
through the Department of Transportation of those $862 billion,
the $48 billion, only 18 percent had gotten out, which gives me
great angst about what the President is going to sign today, a
much smaller amount, even getting that money out and people not
having jobs. My State rose in unemployment in the January
report to one of the top 10.
But the difficulty in getting money out is one thing.
Oversight is another thing. But then to find out that the
Department of Transportation is not being a good overseer of
those contractors and those vendors who are getting some of
this money. And if you read the report--and, again, this is a
very shocking report that has come out by the Inspector General
of DOT--it takes so long to debar someone or find them
ineligible that we may have in fact already given--and I have
some reports and I am having our staff investigate it--we may
have given money to people who should not be participating in
this process.
So we aren't getting the money out. We are possibly giving
the money to people who shouldn't be eligible players in this,
and, again, it is deeply concerning and frustrating from our
standpoint.
But I thank you for conducting this hearing. We are going
to dedicate some of our investigative staff to going after
folks who, now we are learning, again possibly should have been
debarred or disallowed in this process from receiving money who
may have received that money; and we intend to also bring this
report to our DOT and T&I Committee, and we will continue to
follow this. But appreciate again your work, both the Inspector
General and this committee. Thank you.
Chairman Towns. I thank the gentleman from Florida for his
statement.
Now, at this time, we will introduce our panel of
witnesses: Mr. Calvin Scovel III, Inspector General of the U.S.
Department of Transportation. Welcome.
Mr. Richard L. Skinner, Inspector General for the U.S.
Department of Homeland Security. Welcome.
Mr. Donald A. Gambatesa, Inspector General for the U.S.
Agency for International Development. Welcome.
Mr. Gregory H. Woods, Deputy General Counsel for the U.S.
Department of Transportation.
Ms. Elaine C. Duke, Under Secretary for Management of the
U.S. Department of Homeland Security. Welcome.
And Mr. Drew W. Luten III, Acting Assistant Administrator
for Management, U.S. Agency for International Development.
Let me welcome all of you to the committee.
It is a longstanding policy that we swear all of our
witnesses in, so if you would stand and raise your right hands.
[Witnesses sworn.]
Chairman Towns. You may be seated.
Let the record reflect that the witnesses all answered in
the affirmative.
I would like to just go right down the line. As you know,
the procedure is that the light starts out on green; then it
goes to yellow, which means start winding down; then it goes to
red. Everywhere in America red means stop.
So, Mr. Scovel, why don't we start with you? Then we will
come right down the line, keeping that in mind.
STATEMENTS OF CALVIN L. SCOVEL III, INSPECTOR GENERAL, U.S.
DEPARTMENT OF TRANSPORTATION; RICHARD L. SKINNER, INSPECTOR
GENERAL, U.S. DEPARTMENT OF HOMELAND SECURITY; DONALD A.
GAMBATESA, INSPECTOR GENERAL, U.S. AGENCY FOR INTERNATIONAL
DEVELOPMENT; GREGORY H. WOODS, DEPUTY GENERAL COUNSEL, U.S.
DEPARTMENT OF TRANSPORTATION; ELAINE C. DUKE, UNDER SECRETARY
FOR MANAGEMENT, U.S. DEPARTMENT OF HOMELAND SECURITY; AND DREW
W. LUTEN III, ACTING ASSISTANT ADMINISTRATOR FOR MANAGEMENT,
U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT
STATEMENT OF CALVIN L. SCOVEL III
Mr. Scovel. Mr. Chairman, Ranking Member Issa, members of
the committee, thank you for inviting me here today to testify
on DOT's Suspension and Debarment Program.
Over the last 4 years, the Department contract and grant
obligations averaged $56 billion annually. Given the
significant dollars at stake, plus an additional $48 billion in
ARRA funds, it is imperative that parties who should be
suspended or debarred not receive Federal contracts and grants.
However, weaknesses in DOT's S&D program make these funds
vulnerable to unethical, dishonest, or otherwise irresponsible
parties.
Today I will focus on two major weaknesses: first, delays
in DOT's S&D decisions and reporting; and, second, the lack of
effective management controls and oversight. These weaknesses
were found at the Federal Highway Administration, Federal
Aviation Administration, and Federal Transit Administration,
which together represented more than 90 percent of DOT's S&D
activity over a recent 3-year period.
Over the past 2 years, we have reported on major delays in
DOT's S&D decisions and reporting. Our work found that, on
average, the operating administrations we reviewed took over
300 days to reach a suspension decision and over 400 days to
reach a debarment decision.
In one recent case, Federal Highways took 10 months after
receipt of our suspension referral to suspend individuals
charged with bribery, conspiracy, theft, and obstruction of
justice. Federal Highways' delay in making a suspension
decision resulted in the Commonwealth of Kentucky awarding $24
million in ARRA-funded contracts to companies that we believe
met the legal test to be considered affiliates of these
individuals.
Several factors contribute to these delays. First,
operating administrations generally do not rely on indictments
or convictions to establish the evidentiary basis for
suspension or debarment. Instead, they often perform extra,
time-consuming tasks such as researching additional information
on the case and analyzing the competitive impact of the case on
Federal aid programs. Such tasks are not required by
regulations.
Second, operating administrations have not assigned
sufficient priority to their S&D workload. Instead, staff
typically performs this work as a collateral duty. Attorneys,
for example, may be pulled from their S&D duties to perform
litigation and other assignments their administrations
determine to be a higher priority.
We also found that DOT does not support its S&D decisions
within timeframes required by regulation. Nearly half of the
S&D decisions we reviewed were not entered into the
Government's Excluded Party Listing System within 5 days of
making a decision. DOT's procurement office exceeded the 5-day
requirement by as much as 864 days and 14 cases took over 100
days. Such time gaps allow unscrupulous contractors to go
undetected by officials seeking to identify excluded parties
before awarding new contracts or grants.
The Department's lack of effective controls and oversight
exacerbates these weaknesses. For example, DOT S&D policy
requires officials to complete all necessary tasks for making a
suspension decision or proposing a debarment within 45 days.
Yet, the policy has been subject to interpretation and
operating administrations exceed the 45-day limit.
DOT's policy also assigns responsibility for monitoring its
S&D program to the Office of the Secretary and the Department's
nine operating administrations. Without clear accountability,
the Office of the Secretary is unaware of the many S&D-related
problems within the Department and cannot take appropriate
corrective action.
Finally, DOT lacks controls to ensure that data in the EPLS
are accurate. Unreliable data not only weakens contracting
officers' ability to confidently identify excluding parties, it
also weakens the usefulness of DOT's annual S&D reports as an
oversight tool. In fiscal year 2008 alone, the annual report
excluded 53 pending S&D cases, leaving the Department without
knowledge of those cases that most merited immediate attention.
Since we issued our January report, DOT officials have
stepped up their efforts to address our concerns. Specifically,
the Office of the Secretary and the administrations are working
to increase priority in handling S&D cases and clearly
identified responsibilities and timeframes. Continued vigilance
in these efforts will be critical to close oversight gaps.
I would like to take this opportunity to thank the
Department for its recent efforts to finalize its S&D order.
However, until our formal recommendation followup process is
completed, we don't feel it would be appropriate for me to
comment on the proposed order at this time.
This concludes my statement, Mr. Chairman. I would be happy
to answer any questions you or other members of the committee
may have.
[The prepared statement of Mr. Scovel follows:]
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Chairman Towns. Thank you very much for your statement.
Mr. Skinner.
STATEMENT OF RICHARD L. SKINNER
Mr. Skinner. Good morning, Chairman Towns, Ranking Member
Issa, members of the committee. Thank you for having me here
today to talk about the Department of Homeland Security's
Suspension and Debarment Program.
I think we can all agree that the private sector plays an
important role in assisting Federal agencies in the performance
of their basic missions. I also think that we can agree, for
the most part, contractors doing business with the Federal
Government are honest, ethical, and responsible companies and
persons. Unfortunately, there are those unscrupulous few who
choose to take advantage of its commercial or contractual
relationship with the Federal Government by behaving
dishonestly, unethically, or irresponsibly.
To protect itself from such unscrupulous people, the
Federal Government has implemented a Government-wide Suspension
and Debarment Program. This is perhaps the most effective tool
in the Government's arsenal of enforcement devices.
Unfortunately, it is not always being used effectively or, in
some cases, not being used at all.
The under-utilization of suspension and debarment action is
by no means just a DHS problem, but appears to be a Government-
wide problem. Both the Department of Justice-led National
Procurement Fraud Task Force and the Council of Inspectors
General on Integrity and Efficiency have concerns that Federal
Suspension and Debarment Programs are not being fully utilized.
In particular, we believe that there may be a lack of
coordination between Federal prosecutors and investigators and
those officials charged with implementing Federal Suspension
and Debarment Programs. We believe the significant cause of the
ineffectiveness is the tendency of investigators and
prosecutors to not alert suspension and debarment officials
about a matter until the case is completed, and the reluctance
of many agency officials to take action in the absence of an
indictment or conviction.
A robust and transparent Suspension and Debarment Program
is needed at the Department of Homeland Security and other
Federal agencies. Contractors who have failed to perform or who
have willfully violated Federal criminal and civil statutes
should not be allowed to do business as usual with the Federal
Government.
Acquisition management is just not a matter of awarding a
contract, but an entire process that begins with identifying a
mission need and developing a strategy to fulfill that need
through a thoughtful, balanced approach that considers cost,
schedule, and performance. The intent of the process is to
ensure that the Government acquires goods and services that
represent a best value for taxpayer dollars.
As our recent audit report points out, although the
Department of Homeland Security has suspension and debarment
policies and procedures, it has been reluctant to apply them
against poorly performing contractors. We identified 23
instances where contracts were terminated for default or cause,
but were not reviewed to determine whether a suspension or
debarment referral was warranted. In fact, between 2004 and
2008, the Department initiated only one debarment case for
contractor performance, and only did so at the urging of the
Defense Contract Management Agency.
When asked to explain the absence of performance-based
suspension and debarment actions, senior procurement officials
throughout the Department said that they were reluctant to
initiate such actions because they were either too resource-
intensive or too punitive in nature, or they would have too
negative an impact on the contractor pool. Instead, Department
procurement officials said that they preferred to use other
administrative remedies, such as cure notices, not exercising
option years, and, in the most severe cases, termination for
convenience or cause or default.
The Department's components also were not always reporting
pertinent contract performance data for poorly performing
contractors in either DHS's contractor performance tracking
system or the Government-wide past performance information
retrieval system. The Department terminated 23 contracts for
cause between 2004 and 2008, yet only two were recorded in a
Government-wide Past Performance Information Retrieval System.
As a result, critical contract performance information has not
been disseminated to procurement officials within the
Department or across Government for use in making future source
selection decisions.
The Department recognizes these shortcomings and, as you
will hear, has taken positive steps over the past 6 to 9 months
to prove both its performance reporting in its review of poorly
performing contractors. Policies and procedures intended to
increase the Department's awareness of poorly performing
contractors are or will be in place in the near future and
steps are being taken to ensure that all pertinent contract
performance information is recorded in appropriate agency and
government-wide data bases.
Finally, the Department has advised us that it intends to
conduct an oversight review during the fourth quarter of this
year. Because we commend the Department for these actions and
because contracting is such a large part of the Department's
budget, my office also intends to continue to provide oversight
of the Department's acquisition management function, including
the Suspension and Debarment Program, over the months and years
to come.
Mr. Chairman, members of the committee, this concludes my
prepared remarks. At the appropriate time, I would be pleased
to answer any of your questions.
[The prepared statement of Mr. Skinner follows:]
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Chairman Towns. Thank you very much for your opening
statement.
Mr. Gambatesa.
STATEMENT OF DONALD A. GAMBATESA
Mr. Gambatesa. Good morning, Chairman Towns, Ranking Member
Issa, members of the committee. I am pleased to appear before
you today to testify on behalf of the Office of the Inspector
General for the U.S. Agency for International Development and
to be joined by my colleagues from other oversight
organizations and representatives of agencies with whom we
work. Today I would like to share our assessment of USAID's
activities related to suspension and debarment.
In October 2009, we concluded an audit of USAID's
suspension and debarment practices. We found that suspension or
debarment had not been considered in all cases in which those
exclusions might have been warranted. Consideration of
suspension and debarment was limited to cases investigated by
our office that included criminal or civil prosecution, and
action was not always taken in response to other types of
referrals. This limited approach to suspensions and debarments
resulted in actions in only nine cases during the period
covered by our audit, which was approximately 4 fiscal years.
When USAID took suspension and debarment actions, it did
not always do so properly. Some debarred entities were not
entered into the Excluded Parties List System and others were
listed late. Moreover, USAID sometimes failed to document that
it had checked the Excluded Parties List System to determine
whether firms were precluded from receiving Federal funds. The
agency could not establish that it had performed these checks
in 20 of the 54 contracts we examined. However, our audit did
not identify any instance in which USAID issued contracts or
grants to entities listed in the System.
We believe that USAID's organizational approach to
suspension and debarment reduces its ability to use these
exclusions effectively. At the time of the audit, the review,
approval, and implementation of suspensions and debarments were
managed by offices and individuals with many varied
responsibilities. Other Federal agencies we surveyed had
established units specifically dedicated to suspension and
debarment activities. We recommended that USAID consider
adopting a similar approach.
Overall, our report made 12 recommendations. We recommended
corrective measures to strengthen documentation related to
suspensions and debarments, as well as improvements in
policies, procedures, and guidance. We also recommended that
USAID consider alternative organizational approaches and take
steps to identify best practices. USAID managers agreed with
nine recommendations and planned steps to address them.
The agency is still considering recommendations to enhance
its organizational approach and identify best practices. As of
earlier this week, action had not been taken to close any of
the audit recommendations; however, I understand that
significant progress is being made in that effort.
Many skilled and capable employees are committed to USAID's
mission and the agency works with a host of implementing
partners that demonstrate a similar dedication to their work
and prove high-quality services. By excluding ineligible
entities, the suspension and debarment process reinforces the
credibility and effectiveness of the agency's efforts and those
of its implementing partners, and helps protect taxpayers'
dollars.
We look forward to continuing to work with USAID to
strengthen its suspension and debarment efforts.
Mr. Chairman, I thank you for the opportunity to address
the committee, and I appreciate your interest in our work. I
would be happy to answer any questions.
[The prepared statement of Mr. Gambatesa follows:]
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Chairman Towns. Thank you very much, Mr. Gambatesa.
Mr. Woods.
STATEMENT OF GREGORY H. WOODS
Mr. Woods. Thank you, Mr. Chairman. Chairman Towns, Ranking
Member Issa, members of the committee, thank you for the
opportunity to appear before you with Inspector General Scovel
to discuss the suspension and debarment procedures of the
Department of Transportation. My name is Greg Woods. I am the
Deputy General Counsel of the Department.
In the early years of my career, I prosecuted civil fraud
cases at the Department of Justice, and I know that fraud is a
real threat; it is not a hypothetical. The thousands of
contracts and billions of dollars funded by the Department of
Transportation annually are a tempting target, and I want to
assure you that the Department recognizes that threat and takes
seriously its responsibility to protect the public's funds.
Inspector General Scovel has identified real concerns
regarding the structure and implementation of our Suspension
and Debarment Program. The Department has taken too long to
process many suspension and debarment referrals. We are
fortunate that the Department has not identified any instances
where funds went to criminals who should have been suspended or
debarred. The Inspector General rightly observes, however, that
flaws in our procedure created opportunities that too readily
could have been exploited. We would much rather trust in good
systems than in good luck. The problems that he has identified
must be fixed and fixed fast.
Over the past year, the Department has implemented changes
that we believe will dramatically improve our suspension and
debarment process. In response to the Inspector General's first
advisory regarding this area in May 2009 in an ARRA advisory,
we met with suspension and debarment officials throughout the
Department to communicate the Department's heightened
expectations in this area. Our suspension and debarment
processes within the Federal Highway Administration, which is
highlighted in the Inspector General's report, have been
reconfigured to assign responsibility for tracking and managing
suspension and debarment cases to their Office of Chief
Counsel.
That change in management structure has already yielded
results. We created a new centralized, electronic tracking
system for suspension and debarment matters and, most recently,
as Inspector General Scovel notes, we finalized a new order
that will govern the Department's handling of suspension and
debarment matters.
That order puts in place a framework that will address the
concerns that we have identified in our program. It clearly
defines the role of our senior procurement executive to monitor
the Department's performance in this area; it clarifies the
responsibility of our operating administrations to take action
within 45 days of notification of an action that would justify
or warrant possible suspension or debarment; and it implements
a new data collection system that will help the senior
management of the Department monitor the performance of
suspension and debarment officials.
The Department is very thankful for the work of Inspector
General Scovel in this area. His examination identified issues
that should be and will be addressed promptly. We are.
I would be happy to answer any questions that you have, and
I ask that my written comments be placed in the record. Thank
you, sir.
[The prepared statement of Mr. Woods follows:]
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Chairman Towns. Without objection, so ordered. Thank you
for your statement.
Ms. Duke.
STATEMENT OF ELAINE C. DUKE
Ms. Duke. Good morning, Chairman Towns, Ranking Member
Issa, and members of the committee. Thank you for hosting this
hearing this morning. I am Elaine Duke, the Under Secretary for
Management and Chief Acquisition Officer for the Department of
Homeland Security.
Successful contractor performance is important in terms of
both mission success and sound business practices. As we seek
to use contracts to provide critical mission capability, we
must ensure that we are being good stewards of the taxpayers'
dollars. Contract oversight in the Department is a
collaborative effort between our program managers, contracting
officers, and contracting officer technical representatives. We
measure this contract performance in terms of cost, schedule,
and performance; and when a contractor fails to meet the terms
of the contract, we must take appropriate action based on the
specific circumstances which give us different remedies to
address the performance.
When failing to perform a contract results in termination
for default, the next step is evaluating whether the contractor
should be referred for suspension and/or debarment. Suspension
and debarment are intended to protect the Government from
continuing to contract with an irresponsible contractor. The
Federal Acquisition Regulation sets forth the criteria that may
result in suspension or debarment, including fraud, violating
antitrust statutes, bribery, falsification of records,
violation of Federal tax laws, violation of Federal equal
opportunity provisions, and other Federal statutes. Further, a
contractor's willing failure to perform, history of failure to
perform, or unsatisfactory performance may require a suspension
or debarment.
Since 2007, DHS has initiated suspension or debarment
actions against more than 240 contractors or individuals. The
majority of DHS actions are for immigration statute violations.
In addition, DHS has recently put additional procedures in
place to improve our execution of existing policies regarding
terminations, suspensions, and debarments.
Some of the recent actions we have taken include requiring
contracting officers to assess all contract terminations for
default or suspension possibility; a mandatory review by the
senior component suspending and debarring official of every
contractor that is terminated for default or cause to determine
if suspension and/or debarment is appropriate; notifying our
DHS chief procurement officer of any termination exceeding $1
million to ensure the Department reviews the components
decision on these terminations; and requiring all DHS
contracting personnel to input performance reviews into the
contract performance data base.
I look forward to working with our Inspector General, Mr.
Richard Skinner, in going forward to continue to improve our
administrative controls over the termination, suspension, and
debarment process, and I look forward to answering questions
from this committee this morning.
[The prepared statement of Ms. Duke follows:]
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Chairman Towns. Thank you very much, Ms. Duke, for your
statement.
Mr. Luten.
STATEMENT OF DREW W. LUTEN III
Mr. Luten. Chairman Towns, Ranking Member Issa--when he
returns--and esteemed members of this committee, thank you for
extending the invitation to appear before you today. I am
pleased to provide you with an update on USAID's progress to
strengthen processes and procedures related to suspension and
debarment, and to report on our implementation of the
recommendations from our Inspector General.
We found the October 2009 report from the USAID Inspector
General to be very timely. While we had made some progress
since the period covered by the report, which went up to 2007,
we recognized that there were a number of things that we needed
to do to improve our capacity and our processes for handling
suspensions and debarments. We need to do this in order to put
USAID in a better position to be more proactive in overseeing
contractor performance and compliance, and taking action as and
when appropriate.
We take very seriously our duty to suspend and debar those
parties who seek to defraud the Government or abuse the
privilege of receiving taxpayer funds. We have taken steps to
address all of the IG's recommendations. Corrective action on
six has been completed and will be formally reported back to
the IG shortly, and the rest are in process, in varying stages
of completion.
The biggest change that we have made was to approve the
establishment of a separate division within our Office of
Acquisition and Assistance that will be responsible for partner
compliance and oversight. We made this decision after surveying
several Federal agencies. This division will be separate from
the units that are responsible for soliciting and awarding and
administering Federal contracts and grants. It will report
directly to the senior procurement executive, who is the
suspension and debarment official.
The new division will have a dedicated staff to focus on
suspension, debarment, and other oversight matters. It will
develop case files, evaluate facts, make recommendations for
action, as well as track the overall status and progress of its
case load. An experienced procurement officer was assigned to
build the division, and recruitment of staff will occur over
the coming months.
One of the other things that we have done is increase our
interagency engagement on suspension, debarment, and compliance
matters, looking for information about firms and organizations,
as well as lessons learned from other agencies. We now have
regular representation at the Interagency Suspension and
Debarment Council and also serve on the EPLS Committee at GSA.
In the meantime, we are managing an expanding workload of
compliance matters. We are finding that the new Federal
Acquisition Regulation provision on contractor business,
ethics, and conduct which became effective in December 2008, is
expanding our reach in the area of compliance oversight. This
clause provides for contractor self-reporting of potential
criminal violations, false claims, overpayments, and other
misconduct. We have developed standard procedures for reviewing
and making decisions with regard to such disclosures from
contractors. Each case is vetted by a panel of specialists from
multiple disciplines who review the reported information and
the severity of the wrongdoing.
Each potential suspension and debarment or other compliance
action, however it is identified--by IG referral, through
contractor self-reporting, through interagency collaboration,
or other sources--is considered on its own merits under the
criteria set forth in the Federal Acquisition Regulation and
our agency's own non-procurement regulation with respect to
suspension and debarment.
As an agency, in appropriate situations, in addition to
seeking suspension and debarment, as appropriate, we also find
that there are appropriate situations where an administrative
compliance agreement is the best practice to be applied under
particular circumstances, considering the nature of the
wrongdoing and, very importantly, considering the response of
the contractor or grantee. All of these are taken into
consideration.
In pursuing our foreign affairs mission, USAID works in
more than 80 developing countries around the world, often in
difficult conditions or in environments with underdeveloped
financial and governance systems. In appropriate circumstances,
the compliance agreement is a tool that allows us to help
willing organizations, both U.S. organizations and non-U.S.
organizations, deal with problems, improve their capacity to
operate effectively, and become accountable and recipients of
U.S. funding.
In closing, I will just say again that our IG's report was
very timely and has focused us on taking actions that we know
that we need to take. With improved policies, with a dedicated
unit, with better interagency collaboration, we are putting
ourselves in a much better position to proactively protect the
taxpayer dollars that are entrusted to us.
Thanks for the invitation to be here today. I would be
happy to take questions that you may have.
[The prepared statement of Mr. Luten follows:]
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Chairman Towns. Thank you very much.
Let me begin by first thanking all of you for your
statements.
This would be to you, Mr. Woods, and to Ms. Duke and to Mr.
Luten. All of you, I am sure, know what is happening in your
agencies. Why aren't bad actors being suspended or debarred, is
it the red tape? What is the problem? Because you seem to know
what is going on.
We can start with you, Mr. Woods, and come right down the
line.
Mr. Woods. Thank you, Chairman Towns. Respectfully, what
the Inspector General identified in his report was that the
Department was taking too long in dealing with referrals that
were made primarily by his office regarding people who had been
indicted of crimes, and, sir, we agree with the findings in his
report that in many instances we simply took too long, and
thanks to his advisory in May 2009 and his recent report, we
have been taking steps to try to speed up the processing of
those suspension and debarment procedures.
For us, thankfully, we haven't yet seen instances where
people have gotten our money who should have been suspended or
debarred, but as I said in my introductory remarks, sir, that,
I think, in some ways is due to some luck. We have taken too
long from the referral to suspension or debarment, but so far
we have been fortunate to not find instances where somebody got
money, a bad actor got our money that should not have. We need
to improve our systems to make sure that doesn't happen.
Chairman Towns. But that is too much money to leave up to
luck.
Mr. Woods. I completely agree, sir. Our systems have to be
improved and the Inspector General's advice and advisories have
been taken well to heart.
Chairman Towns. Ms. Duke.
Ms. Duke. I believe within DHS, and the data shows, it is
part of our startup. When the Department started, we merged 22
agencies and struggled with the administrative stand-up of the
Department. Our contracting workload doubled early on in the
Department, and this was one of the programs in the contract
management acquisition management that we needed to put the
building block in place.
Now, the good news is our data does show the building
blocks are starting to work. For instance, as an IG report is a
report of the past, the data is correct in the IG's report, but
our data does show we are increasing our suspension and
debarments. In fact, we doubled in 2009 the debarments we did
in 2008, and this year, in fiscal year 2010, so far, just in
the first half of the year, we have nearly double what we have
done in fiscal year 2009. We do have to still make more
systemic administrative controls, but I think our data shows we
are getting this situation administratively under control.
Mr. Luten. I think our issues have been similar to other
agencies. In our case, expansion of mission and expansion of
program without adequate building of the infrastructure for
stewardship, of which this is a part, is part of the cause.
Part of it, as our IG has pointed out in his report, was
lack of focus and lack of organizational focus on this, which
we are remedying. In fact, since the period covered by the
report, but even before the issuance of the report, we were
devoting more attention to this. I think the report indicated
that there were only nine actions taken.
We now have 26 actions, suspension and debarment actions
that we have taken since 2003. We have 18 more active cases
that are under various stages of review. So it was increase in
the program, need to have the stewardship infrastructure catch
up with the increase in the program. We are increasing the
number of suspension and debarment actions really since the
period of the report that was covered, and the new
organizational changes will help us do this more effectively.
Chairman Towns. The restructuring, when did that take
place?
Mr. Luten. It has been approved and it is in the process of
being staffed now, so we approved it in January. I approved it
in January and we moved an officer to build the division. And
even before that we are just devoting more attention to
suspension and debarment.
Chairman Towns. Thank you very much.
I yield 5 minutes to the gentleman from California, the
ranking member, Congressman Issa.
Mr. Issa. Thank you, Mr. Chairman.
Where to begin sometimes is hard on these, but, Ms. Duke,
do you need additional tools in order to hold FEMA or any other
part of Homeland Security accountable?
Ms. Duke. Two things. One is at the Federal level there is
a new system that is being deployed next week, it is the
Federal Awardee Performance and Integrity Information System.
This is going to be very helpful to DHS and all the other
departments. What it does is brings past performance and
integrity and debarment information all together in one data
base. This is a Federal initiative that will be helpful.
Within DHS, I think the additional tool we need--and Mr.
Skinner and I have talked about this--is just a better system
to control and bring visibility. We do not have a single
authority in DHS right now, and that is something we gained
from the IG report and are looking at, is how can we bring the
administrative processes together under one leader. But in
terms of authorities, I think we have the appropriate
authorities; we just need to fine-tune the administrative
controls.
Mr. Issa. Let me ask an old businessman's question. I will
just run down each of you. In business, if I have a contractor
who performs poorly, if I have a contractor who is under
indictment, if I have a contractor who has had three people
arrested for selling coke on the premises and I become aware of
it, I look at my purchasing agent and I say this all scores,
this all scores into the question of this company or this
vendor.
If I have a contractor who fails their, in our industry,
ISO 9000 or 9001, the actual quality, it scores. Do we have to
give you authority to use scoring like that so that at least
while somebody has these documentable events--not tried in
every court and appealed all the way through the men and women
here across the street in black robes, but at least these are
legitimate markers. Do we need to give you the authority to say
we are going to score that so these individuals fall lower on
their success rate of getting new contracts and renewals?
Mr. Scovel, start right down.
Mr. Scovel. Good morning, sir. Sir, we think the Department
of Transportation has every tool that they need and every----
Mr. Issa. Well, clearly you are not using the tools. So
that is the question, if in fact we gave you an overt tool that
said these analyticals, maybe unproven, may be weighted in a
renewal? Let's face it, at DOD, one of the biggest problems is
you have a contractor who does a bad job and they get an
automatic renewal. They get to do a bad job on what they are
doing and they often say, well, but he met the minimums.
So I ask you again do you have that tool? Do you want that
tool, the tool to be able to use these kinds of performances--
some extraneous, but in the consideration not of debarment, but
of the question basically--it is more of a suspension
question--of do they win the new grant, do they win the new
aware?
And I am thinking in my mind of ACORN, and I am thinking of
ACORN because I can understand why somebody would say, look,
they already have the grant, they have already hired the
people. While they are going on their appeal on voter fraud,
maybe we won't do it. But the question of new money. And we
switch to Lockheed Martin, we could switch to Boeing. We could
switch to any company; fill in the blank. Do you have that
tool? I think the answer is no, you don't.
Mr. Scovel. No, we do not.
Mr. Issa. Would you like to have that tool? And if not, why
not? That is the entire question and I just want those
questions answered by each of you, if I could, please.
Mr. Scovel. Sir, from the point of view of my office, the
Inspector General----
Mr. Issa. I am talking about the agency each oversees more
than anything else.
Mr. Scovel. From the Department's point of view you are
asking.
Mr. Issa. Yes.
Mr. Scovel. I must leave that question officially to the
Department. From my point of view, sir, to the extent that
discretion, unfettered discretion enters into the analysis, we
would probably find that problematical. And I am sure our work
would result in findings of disparate treatment from case to
case.
Mr. Issa. OK. Mr. Skinner.
Mr. Skinner. Yes, I agree.
Mr. Issa. And obviously I am not suggesting that we invent
discretion, but, rather, we document criteria that would allow
for that, such as indictment, such as adverse reporting. There
would have to be a list. But right now it appears as though
groups that would fail under that don't meet the threshold for
400 days to get suspended or debarred.
Mr. Skinner. And my time is up, so if we could just be as
quick as possible.
Mr. Skinner. Yes, I agree with Mr. Scovel. Right now, it is
very, very subjective. However, there are certain bars or
parameters that should be established. Indictments, arrests
should weigh in very, very heavily into your decision as to
whether you want to proceed. Right now, if you are convicted,
you are prohibited unless there is a waiver, and it has to be
justified. But there are performance measures below that. You
may not be convicted, you may not be indicted; you may be
terminated for cause. Those things I think should have a
greater weight than some of the other factors.
Mr. Issa. They currently do. Yes, sir.
Mr. Gambatesa. Yes, sir, I agree with Mr. Skinner that the
convictions and indictments are obviously something that has
more weight. But in areas where there is an agreement or some
sort of settlement agreement to avoid prosecution, I think
those should be scored in some way, or under-performance should
be scored in some way.
Mr. Issa. Mr. Woods.
Mr. Woods. Sir, quickly, just to note, the majority of our
funds are passed through grants to the States, so the States
are entering into contracts with the direct contractors. I do
believe that States use information of that sort in order to
determine the present responsibility of contractors using our
funds.
Mr. Issa. Ms. Duke, the person I really wanted to start
with.
Ms. Duke. Within DHS, I think the biggest tool we have is
our people. Recording past performance information is time-
consuming, but it is absolutely important. So, as we seek to
buildup our contracting and our program management staff, I
think the biggest thing we could use is support in the budget.
I know that is difficult in such a tight year, but this is an
important function, but it is time-consuming to do this well;
and I think throughout the Federal Government that type of
information is not recorded appropriately, so it is not
available for use----
Mr. Issa. Yes, but I am only speaking--and I apologize, we
have really gone over--the tool of selectively not granting
extensions or new contracts or grants to individuals who have
adverse reporting, allowing that to be formally weighted in the
process. And the reason I think the chairman and I probably are
both interested in this is we clearly want to get a tool that
is easier to use than the 400-day that we seem to never be able
to get down, or the 300-some day. That tool is all I wanted an
answer on.
Ms Duke. Yes, I believe the tool is there, and we need to
use it.
Mr. Issa. Mr. Luten.
Mr. Luten. We absolutely need to use the tools that are
currently available and keep doing what we are doing to focus
on staffing and paying more attention. But the idea of
additional criteria and criteria that are differentiated
depending on which each one is would be welcome, I think. I
mean, I am not sure how it would work, but it is a discussion
that is probably worth having.
Mr. Issa. Thank you.
Thank you, Mr. Chairman.
Chairman Towns. The gentleman's time has expired.
I now yield 5 minutes to the gentleman from Illinois, Mr.
Quigley.
Mr. Quigley. Thank you, Mr. Chairman.
Lady and gentlemen, I guess I am inclined to ask about
specific issues such as once an entity has been suspended or
debarred, they must be entered into the EPLS system within 5
days. That doesn't include those that are terminated, which
seems to be a shortcoming here.
But listening to you and the fact that we are here the
second in a year going over the exact same things, I guess I
wonder, to an extent, if you were in my place, what difference
does it make? You begin to get the impression that the
agencies, if they don't like something, they are not going to
do it anyway; they are not going to file data within the
prescribed period, they are not going to pursue issues on a
timely basis.
And here is my personal favorite: Department procurement
officials characterize the process as being too resource-
intensive, punitive, and negatively impact the size of the
contractor pool. That is my favorite. We want a large pool so
even if we have inept, corrupt people, we will have a larger
pool. It is exactly what we are dealing with in SELPA. So if
someone could help me here explain, if you are in my shoes, why
bother if the agencies are going to act as independent victims
anyway?
Mr. Skinner, if you want to jump in.
Mr. Skinner. May I respond? Yes, the responses that we
received--and this was from procurement officials throughout
the Department--concerning the procurement pool or being too
punitive or we just don't have the resources, it is too
resource-intensive is something I think cannot be explained.
First of all, and I agree, if you are not performing and
you have a history of not performing, then you should be
eliminated from the pool. What I would suggest is, when I hear
those types of responses and I look at these contracts, I think
the problem lies in the contracting officer or the contracting
rep is not comfortable with the way the contract was written to
begin with, so they feel that they may be vulnerable. That is,
if we are going to terminate you for lack of performance and a
continued lack of performance, then we have to demonstrate that
we clearly articulated in the terms of that contract that this
is what we wanted as an end result. Unfortunately, we cannot
always do that, so, therefore, they feel we may be partially at
blame for not clearly articulating the terms of the contract
and what goods and services we wanted at the end of the road;
and I think therein lies part of the problem.
The other thing I think is in fact a resource issue. The
Department, at least in the Department of Homeland Security, we
had to dig the Office of Procurement throughout the Department
and all the components had to dig themselves out of a hole.
They were grossly understaffed. The urgency of the mission
trumped good business practice in the early days. That is
starting to change and we are starting to see evidence of that
now as we buildup and have a better training program, increased
staffing, more experienced staffing to address these other
issues.
The third point that I would like to make is we have to
hold these people accountable. Like you said, why bother if you
are not going to be held accountable? And one of the ways of
doing that I would suggest is that--and we have discussed this
throughout the Department--is to start putting these types of
performance indicators in your performance evaluation plan for
the individual contracting officer, for the individual
contracting technical rep, for the project manager. Hold them
accountable for their actions when things cannot be explained.
Mr. Quigley. Just with yourself, sir, the issue of whether
the entity has been suspended or debarred has to be entered
into the data base, would you add terminated as well?
Mr. Skinner. In the----
Mr. Quigley. Into the EPLS.
Mr. Skinner. Oh, that is a separate data base. I think that
data base should be held exclusively for those that have been
in fact suspended or debarred. I think there are other ways
through the Government-wide tracking system and through the new
system--well, the new system will capture this, but through
Past Performance Tracking Retrieval System, that information
should be clearly articulated in that system.
Mr. Quigley. But we have already heard and read that
agencies aren't even reading what is on this system, EPLS, in
evaluating and going forward with these entities. Is a separate
system now just going to confuse the issue; it is one more
thing to check?
Mr. Skinner. No, I don't think--and I have yet to take a
very close look at it. I am sure my cohorts that are involved
in the procurement acquisition or those in the community have.
This is not a new system. Well, it is a new system, but what it
does, it collects all the information from the various systems.
So this new tracking performance and integrity system will--it
is one-stop shopping, so to speak, is my understanding. So when
you go in and put in a DUNS number or a company name or an
individual name, you should be able to extract information that
are in all these other systems that are being maintained.
Mr. Quigley. Thank you.
Mr. Tierney [presiding]. Thank you, Mr. Quigley.
Mr. Mica, you are recognized for 5 minutes.
Mr. Mica. Thank you.
You know, one of the things we have been trying to do is
get the stimulus money out. I am thinking maybe it is good we
aren't getting it out, because we probably are giving it to as
many bad actors, since the system doesn't seem to work to catch
or stop them.
In the Kentucky case it took 300 days, Mr. Scovel, to reach
a suspension, and then a debarment was 400 days, is that
correct?
Mr. Scovel. Almost, Mr. Mica. It took about 10 months from
the time of my office's referral of the indictment of
individuals to the Federal Highways Administration for Federal
Highways to make the suspension decision.
Mr. Mica. In the meantime, they had given $24 million in
contract to a firm that had been indicted, I guess, or charges
against some of the principals.
Mr. Scovel. Twenty-four million dollars in recovery funds
were awarded to three companies. Well, a couple of the
contracts were awarded before the suspension decision was made
and one after.
Mr. Mica. Well, there is obviously not a system to alert
people when prosecutorial action is taken, but when the
suspension or debarment takes place, do we notify the States
immediately? Is there a State alert? Since most of these folks
we heard a lot of the money is passed through, like the
stimulus, to the States. There is an alert system?
Mr. Scovel. Yes. The have access as well to the Excluded
Party Listing Service.
Mr. Mica. OK.
Mr. Woods. That is correct, sir. In fact, our systems
require that each of the States, before they award a contract,
check the EPLS system and certify they haven't been excluded.
Mr. Mica. But the problem we have is getting the money out
in a hurry, which we want to do. Mr. Oberstar and I tried to
get it out in a year. If it is 365 days and it takes 400 days
for this process, we could be in fact awarding and people could
have contracts that really are bad actors. So we do have a
problem. And some of the remedial action may not cure the
problem that has been mentioned today.
Ms. Duke, Homeland Security. OK, I have a bad actor
question for you. We are talking about contractors. I want to
talk about employees. I notified your agency when one of my
sheriffs got me, when I was back home some months ago, and said
what the hell is going on in Washington? TSA is hiring people
that we fired as bad employees.
One sheriff told me three employees, one was a good guy and
two were bad guys. Two shouldn't be working anywhere for the
misconduct that they found them guilty of. They were hired by
TSA, working in TSA at one of the airports; he got information
back. And none of the three were ever checked or vetted. He
went back to his personnel office and they checked; they never
had a call, a comment from TSA or Homeland Security. We are
hiring people in sensitive security positions in your agency
who are bad actors. What is the problem?
Ms. Duke. Well, we do do suitability checks on our
employees from a security standpoint. I will check----
Mr. Mica. How about just checking the previous employer? I
mean, that is the first thing I would do. I don't have the
biggest personnel human resources operation in the world, but
that is the first thing we do. And I still don't even know the
resolution, because I am not sure if you even responded to my
question yet.
Ms. Duke. I do agree with you, Mr. Mica, that reference
checks in employment are very valuable, and I will look into
that.
Mr. Mica. OK.
Finally, Mr. Luten, you were talking about additional
criteria there and all that, but it has been brought to my
attention that one of your contractors or guarantees is engaged
in false claims at litigation with your agency and the
Department of Justice. The Department of Justice and USAID,
according to court filings, believe that a company called
Disaster Relief Construction, Inc. submitted approximately $40
million in false claims. Has USAID taken any action to suspend
or debar that company?
Mr. Luten. I must say that I am not specifically familiar
with that case.
Mr. Mica. I don't think they have. And if they haven't, why
not, if that is the case?
Mr. Luten. Could we respond to you after this hearing?
Mr. Mica. Yes, I would like to see a response.
Mr. Luten. We will answer that.
Mr. Mica. And I will ask unanimous consent that his
response be made part of the record.
Chairman Towns [presiding]. Without objection, so ordered.
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Mr. Mica. Thank you.
Chairman Towns. I thank the gentleman from Florida.
Ms. Chu.
Ms. Chu. Mr. Gambatesa, in your testimony you stated that
your department had surveyed six other Federal agencies with
active suspension and debarment programs, and that four out of
six had established divisions or offices that were especially
dedicated to these activities. What are these six Federal
agencies and what were the respective agency track records with
regard to S&D before establishing these special divisions and
afterwards, and should all agencies have divisions or offices
that are separate, just concentrating on this?
Mr. Gambatesa. Well, we surveyed a large group in the
Government, pretty much all agencies, and the six that
responded were I believe the Department of the Navy--I have
them here somewhere--the U.S. Air Force, the Defense Logistics
Agency, GSA, and EPA all responded back to us.
And, I am sorry, the second part of your question?
Ms. Chu. The second part of my question is whether there
should be separate offices that handle suspension and
debarment, and whether that would make the process more
efficient.
Mr. Gambatesa. Obviously so. Our report recommended just
that, that USAID establish such an office, and my understanding
from Mr. Luten is that they are in the process of doing just
that.
Ms. Chu. OK. And I am wondering, with the other agencies,
are you in the process of establishing a separate office?
Ms. Duke. Within DHS, we are looking at it. We have three
separate, very separate ways we have to consider debarment: one
is under grants or financial assistance, the second is under
procurements; and the third is under immigration law. We
believe now, to be efficient and make sure that this is done
quickly, that a decentralized look at it--because they are done
by very separate groups in DHS--is important, but we are
looking at where in DHS, under a centralized authority, should
the three pieces come together. So we are working with our
Inspector General on seeing what is best for our Department.
Mr. Woods. Like DHS, we have a number of operating
administrations within the Department of Transportation, each
of which has both procurement, buying things, and non-
procurement grant authority; and for each of those there is a
separate suspension and debarment official. What we have
implemented now, and are strengthening, have been strengthening
over the course of the last year, is centralizing
responsibility for oversight of all of the suspension and
debarment activities within the Office of the Secretary, which
sits astride the operating administrations and we have
designated our Office of Senior Procurement Executive to fit
that function.
Ms. Chu. Well, let me then concentrate on transportation,
Mr. Woods. The Inspector General found that your annual report
is intended to be an oversight tool, but that the annual report
was riddled with incomplete and inaccurate information, such as
excluding open cases from prior years, incorrect action dates,
and duplicate entries. How do you anticipate moving the agency
forward and having annual reports that really close this
oversight gap, and do you have the resources to do this
overhaul and piece together information going back to 2005?
Mr. Woods. Thank you. The Inspector General did identify
deficiencies in the annual reports that were submitted for
those years. What we are doing in order to correct that is we
are implementing a new electronic system that will allow each
of those operating administrations to input information to a
centralized data base.
The system that we are putting in place will ultimately
allow the Inspector General to input the initiation of a
suspension or debarment proceeding or a referral into that
system, and that will allow the Office of Senior Procurement
Executive that I mentioned earlier to have direct visibility on
a real-time basis to what each of the operating administrations
is doing.
So we are hoping we are both going to have more
transparency regularly and, because we are going to have more
regular visibility into the information that is being placed
into the system, it will be easier for them to compile the
annual report, rather than going back to the operating
administrations and asking them to deliver up the components
that would comprise it. And I think that was a big source of
the failures in the reports that General Scovel pointed to.
Ms. Chu. And you----
Mr. Woods. Sorry, in response to the second part of your
question, a lot of this, again, as General Scovel pointed to,
is really a question of management and a need to focus the
people that we have working on this area more on their
responsibilities and educating them in what those are. We are
working on the process of that and we are hoping that with the
resources we currently have, with enhanced management oversight
and clearer procedures, we will be able to get that done.
Ms. Chu. And you think you will be able to go back to 2005
and correct the mistakes of the past?
Mr. Woods. I believe that we can, yes, ma'am.
Chairman Towns. The gentlewoman's time has expired.
I now yield to the gentleman from Missouri, Mr.
Luetkemeyer.
Mr. Luetkemeyer. Thank you, Mr. Chairman. If there is no
objection, I would like to add to the record a copy of the
letter that Mr. Mica was referring to during his questioning of
Ms. Duke with regards to the two sheriff's employees.
Chairman Towns. I am sorry, I didn't hear that.
Mr. Luetkemeyer. Mr. Mica referred to a letter that he was
talking about with Ms. Duke. He would like to just add that to
the record, if there is no objection to that.
Chairman Towns. Without objection.
Mr. Luetkemeyer. Thank you, sir.
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Mr. Luetkemeyer. Thank you, Mr. Chairman.
As I have been listening to the comments this morning and
going through the testimony and some of the summaries, it is
very troubling to see what is going on here. One of the
comments was, additionally, the DHS IG reported that on at
least 21 occasions the agency failed to record a termination
for default or cause in Government-wide past performance data
bases. DOT: The staff, with responsibility for suspension and
debarment, viewed it a secondary to their duties. Debarment and
suspension decisions were not timely. USAID: The actions the
agency did take were poorly executed.
As I have sat here on this committee over the past several
months, it seems as though--and this morning is symptomatic of
this--that we have an almost blatant disregard sometimes for
the rules; we have a lack of will to enforce the rules that are
there; and if not just totally incompetent. And it is very
disturbing to me because there should be oversight over all of
this. I mean, when you get moneys to be distributed, there
should be a process in place for oversight immediately. That
should be a part of the process of distribution of the money.
And this morning we talk about now we are going to take
action here, now we are going to take action here, now we are
going to do this. Where were you? Why didn't we do something
before? Why did we have to come here? This should have been
done months, if not years, ago in all of these situations. This
is ridiculous. You guys are the first caretakers of the
dollars, not us. We are the secondary group here. You are the
first caretakers.
I would like to ask how many of you are taxpayers? Show of
hands, anybody a taxpayer? All of you?
Chairman Towns. If not, we are going to invite IRS to our
next hearing. [Laughter.]
Mr. Luetkemeyer. Remember, you all are under oath now. How
many of you are outraged about what is going on by a show of
hands? Any of you outraged about what is going on? Some of you
no? You are not upset that there are taxpayers' dollars being
wasted here, that people are getting contracts that shouldn't
be given contracts? There are some of you that are not
outraged? I didn't see six hands. So you don't really care, Ms.
Duke, is that right?
Ms. Duke. I very much care, yes.
Mr. Luetkemeyer. You are not outraged by what is going on?
Ms. Duke. I am outraged if a company that should be
debarred is getting Federal dollars, yes.
Mr. Luetkemeyer. Why hasn't something been done before? Why
is it not? Why does it take a hearing like this to raise this
issue?
Ms. Duke. In DHS, in both the IG review and our review, we
have no records of a company that should have been debarred
not--or contract dollars going to a company that has been
debarred or is proposed for debarment. So I do agree that there
are more things that need to be done.
Mr. Luetkemeyer. Well, in one of these descriptions here, a
summary of the report indicates that some individuals in the
Department or the staff felt that the suspension or debarment
was viewed as secondary to their duties. Now, I have served in
the private sector and I have served as a division director in
the public sector as well, and I can tell you that whenever you
have this sort of attitude, it tells you one of two things:
either you don't care or you have way too much money and they
are willing to waste it; and that has to stop.
Mr. Chairman, I yield back the balance of time.
Chairman Towns. The gentleman from Missouri yields back.
I now recognize the gentleman from Ohio, Mr. Kucinich.
Mr. Kucinich. Mr. Chairman, thank you very much for holding
this hearing. I would like to ask some questions of Ms. Duke.
And I would ask you if you would pull the mic close so that we
can hear your responses.
You expressed in your testimony the importance of
contractor performance and mission success and sound business
contractors. Yet, the DHS IG found that between 2004 and 2008,
a time period that includes Hurricane Katrina and the well-
publicized contractor malfeasance that ensued, DHS had only 10
debarment cases. An article in The Nation magazine, which,
without objection, I would like to submit for the record----
Chairman Towns. Without objection, so ordered.
Mr. Kucinich [continuing]. Reported that the number of
private security companies registered in Louisiana jumped from
185 to 235 within 2 weeks of the hurricane. Former Department
of Homeland Security Spokesperson Russ Knock told the
Washington Post, he ``knew of no Federal plans to hire
Blackwater or other private security firms that worked for New
Orleans.'' Yet, days later Blackwater announced they were hired
by DHS to guard reconstruction projects in Louisiana.
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Mr. Kucinich. When asked by Mr. Scahill, the reporter, on
what authority Blackwater employees were operating in New
Orleans, they replied, ``they were under contract with the
Department of Homeland Security. We can make arrests and use
legal force if we deem necessary.''
Now, does Blackwater still have a contract with Homeland
Security, or their predecessor renamed company known as ``Xe?''
Ms. Duke. I would have to check to see if any, but I do
know that they are on the list, so they wouldn't have any new
contracts. I would have to check and get back to you for the
record.
Mr. Kucinich. So you don't really know. I mean, this
company is infamous, but you really don't know if they are
working for you or not.
Ms. Duke. I would have to check to see if there are any
residual contracts before I gave you a precise answer.
Mr. Kucinich. Well, we know that they were awarded a
contract with DHS, despite their reputation for complete
disregard for lives of people in Afghanistan and Iraq. I mean,
it was so bad that they ended up having to change their name to
``Xe.'' What I would like you to find out if they are still
working for DHS.
What would a contractor have to do, what kind of conduct or
behavior would rise to the level of debarment?
Ms. Duke. Well, there are several criteria. One is willful
nonperformance; violations of integrity; violations of statute,
such as immigration law, drug-free workplace, environmental
law. So there are many different areas. The predominance
throughout the Federal Government debarments are for violations
of key statutes, not for nonperformance.
Mr. Kucinich. One of the things that the Inspector
General's report says, ``The Department is reluctant to apply
the policies and procedures against poorly performing
contractors. Department procurement officials characterize the
suspension and debarment process as being too resource-
intensive, punitive, and as negatively impacting the size of
the contractor pool, and that the agency prefers to use what
the Inspector General called other administrative remedies.''
Now, would you agree that the suspension and debarment
procedure is intended to be punitive and that there are cases
in which contractors ought to be punished for egregious
violations of law?
Ms. Duke. The suspension and debarment system is to protect
the Government, and that is what I think it is----
Mr. Kucinich. Is what?
Ms. Duke. Is to protect the Government and the taxpayers'
dollars.
Mr. Kucinich. Well, I know that, but I am trying to get
some response from you about do you feel you have enough
resources to pursue debarment, or are you not able to do it
because you just can't get into debarment cases because they
are so costly? What is your philosophy on that? Would you
rather not get into debarment issues and just use
administrative discipline?
Ms. Duke. No, that is not true. In terms of--I think what
Mr. Skinner said earlier about the startup of the Department of
Homeland Security and the shortage of the resources did
contribute significantly. It is very time-consuming to record
past performance and to do the full complement of contract
administration, and I think we are working toward two things:
one is getting resources on the management side. I think the
second area we are looking for is focusing not just on speed,
but doing business well, as Mr. Skinner said.
Chairman Towns. The gentleman's time has expired.
Mr. Kucinich. Mr. Chairman, my time has expired, but I
would ask the Chair this, that if the Chair would join me in a
request for information about the status of Blackwater and/or
Xe with respect to Homeland Security.
Chairman Towns. Without objection, I would be delighted to
do so.
I now yield 5 minutes to the gentlewoman from California,
Congresswoman Speier.
Ms. Speier. Thank you, Mr. Chairman. And I want to applaud
you for holding this hearing today. I think if this committee
dedicated the next 6 months to really improving the response by
these agencies, we would have done a great service to the
American people.
I believe that this is simply scandalous. To think that a
company that actually pled guilty in 2005, pled guilty in 2005,
continued to receive payments by the Federal Government for 2
additional years before any action was taken to debar it is
absolutely unacceptable. There is no way that you can justify
that under any set of circumstances.
Now, I believe that part of the problem is that the
Inspector Generals don't have any teeth. I think, based on what
I have heard today, you make recommendations and the various
agencies can take you up on those recommendations or not take
you up on those recommendations. For instance, Mr. Luten said
that he agreed with most of the recommendations by the
Inspector General, but not all of them.
So I have a question for you, Mr. Gambatesa. What
recommendations did they not embrace and do you think that
those recommendations should be embraced and, if so, what
should we do about it?
Mr. Gambatesa. Thank you. Obviously, we think all the
recommendations should be embraced or we wouldn't have made
them. The three that they hadn't reached management decision on
so far had to do with the restructuring of the office,
establishing a permanent office and consultation with the
oversight board. To say that the IGs don't have teeth, our
teeth, I think, is our ability to press the agency and forward
our reports to the Congress if the agencies don't respond to
final action within the allotted period of time that is
required by the Inspector General Act. So I think in that way
we do. We also have the ability to elevate recommendations to
the head of the agency if they are not responded to.
Ms. Speier. Well, with all due respect, this is a very busy
place, and we will hold a hearing and we will kind of flush it
out, and we will put a spotlight on it, and then we go about
working on any number of other issues; and another year passes
by and then maybe there is another hearing.
So I really believe that this committee needs to, one,
introduce a bill that requires that each of these agencies have
an office of compliance, debarment, and suspension so that they
are solely focused on looking at these contractors to see if in
fact they have complied with the law, complied with their
contracts. I don't think that is going to happen otherwise.
There will be some effort made by some of these agencies to
do a little bit, but unless you have someone dedicated to this
function, it is not going to take place. And based on your
comments, it sounds like USAID is not all that interested in
complying with that recommendation.
And to you, Mr. Luten, I was just in Pakistan and I met
with one of your representatives there who was bemoaning the
fact that one of the contractors, a U.S. contractor, who had a
large sum of money was expected to build X number of schools
and--I think the number was 30, but don't hold me to it--and,
in fact, over the course of the contract they had only built 5.
Now, I don't know how you rank that. Is that nonperformance or
is that circumstances beyond their control? But, to me, that is
nonperformance. That person should no longer be a contractor
with the United States of America.
If this excluded party system is not even observed by the
agencies, then it is not working, and we have to come up with a
better system; and that is why I think it is going to require
Congress to do some of the heavy lifting here in order to have
some accountability, because the Inspector Generals can
recommend, but you can choose not to take them up on their
recommendations, and you might get a slap on the hand here, but
that may be the end of it. So to you, Mr. Luten, if you would
just comment on whether or not you think building 5 schools
instead of 30 schools has met the performance requirements.
Mr. Luten. I would like to comment on the comments earlier
to Mr. Gambatesa. We accepted all of the recommendations that
they have provided. What the issue was that at the time the
report was issued, we immediately agreed to take nine
recommendations and needed to go make some management decisions
on how to implement the remaining three. So we have completed
action on six and the action on the remaining six are in
process.
Ms. Speier. Well, let me interrupt you. In your testimony
you said, as such, management agreed with the majority of OIG's
12 recommendations offered through the audit process. That is
what you said in your testimony, your sworn testimony this
morning.
Mr. Luten. OK, then that is in error. That was the written
testimony.
Ms. Speier. That is what you also said.
Mr. Luten. I did? OK. We are acting on all of them and six
have been completed. We have taken the steps to establish a
separate unit to focus specifically on contractor and grantee
compliance and oversight that will improve our work with the
EPLS system, as well as engage better with the interagency to
gather more information and do compliance oversight better, and
we take this very seriously.
On Pakistan, I would have to go and get specific
information. The security conditions in Pakistan and
Afghanistan are big factors that may be an issue in that
matter; I just don't know the details of that. But 5 out of 30
does sound----
Chairman Towns. The gentlewoman's time has expired.
Mr. Luten [continuing]. Does sound like it is clearly
something that needs to be looked at from a performance
perspective.
Chairman Towns. I yield now 5 minutes to the gentleman from
California, Congressman Bilbray.
Mr. Bilbray. Thank you, Mr. Chairman.
Lady, gentlemen, let me just say, as a former mayor and
chairman of a county of over a million, I take a look at this
and I just can't fathom how we would ever allow this in local
government. I mean, this is almost like the government version
of too big to fail is too big to be effective or even decent. I
mean, some of this stuff at a local level would just be nailed
down really quick. There is not a city manager that would
survive with this kind of lack of response to a problem. There
is not a building inspector or a public works director that
would survive 6 months with this kind of thing. And I hate to
say it, it sort of really reinforces the argument of a lot of
people in this town that Washington spending money has a built-
in inefficiency that we should avoid like the plague.
Now, Ms. Duke, when we got into Katrina--and I am going to
let you work on this because I am going to shift over to the
gentleman next to you. But I looked at Katrina. I was down
there. My wife's family is from New Orleans and we have a place
in Mississippi, and I saw the way that was handled. How many
people that were in that fiasco of abuse and money switching
and everything else, how many of them have been debarred and
restricted from access? I mean, I understand when you work with
Louisiana you have a State half under indictment and half under
water, but this thing is the Federal Government's
responsibility, not Louisiana's responsibility.
Ms. Duke. The DOJ Procurement Fraud Task Force has indicted
and convicted several contractors and individuals. FEMA has not
debarred anyone, to my knowledge; it has been handled through
the DOJ Procurement Fraud Task Force to this point.
Mr. Bilbray. So, in other words, you have to be convicted
before FEMA is going to restrict your access to any more
contracts?
Ms. Duke. You do not have to be convicted. I mean, there
has been a conservatism that----
Mr. Bilbray. Well, who has been restricted who hasn't been
convicted by FEMA?
Ms. Duke. No one to this point.
Mr. Bilbray. OK. That is what I mean. You may say that, but
in results----
USAID, one of the untold stories, in my opinion, after
going to Afghanistan and talking with people, is one of the
great untold stories. Everybody has talked about the for-profit
abuses in Iraq under the Bush administration. No one seems to
be talking about the so-called non-profits and their abuses and
their corruption in the system in Afghanistan during the Bush
administration.
And I think if there is one place that this committee
should be able to find bipartisan effort is to find out why
have we totally ignored the abuses of the non-profits in
Afghanistan at a time when we all are very aware of the for-
profit violations in Iraq?
Do you have any comments about the handling of those grants
and those programs in Afghanistan with the non-profits?
Mr. Luten. They are subject to the same basic set of rules
and approaches. I would have to get back to you separately on
what actions have been taken with respect to non-profits. Some
of our suspension and debarment actions are with respect to
non-profits, but I don't have the data specifically for
Afghanistan. We also work with organizations on compliance
agreements. Sometimes compliance agreements are done in
conjunction with investigations by the Department of Justice or
actions by the Department of Justice and entered into in
settlement cases; in some cases they are done apart from a
legal setting.
Mr. Bilbray. OK. And let me just take--all of us should be
responsible for this, but wouldn't you admit that Congress, the
oversight agencies, the media have not given the same attention
to corruption or abuses in the non-profits, especially
Afghanistan, that has been focused on the for-profits in other
countries? Wouldn't you agree that, culturally, at least the
major appearance is that the same hard standard is not being
applied to the non-profits as it has been, at least from the
media and the attention by Congress, if not by the agencies
themselves, that we have done with the for-profits?
Mr. Luten. I am doing sort of a quick mental scan of news
articles and so on, and there may be that impression, but that
is not our approach with respect to--we should be treating them
the same. It is Federal dollars----
Mr. Issa. Would the gentleman yield?
Mr. Bilbray. Yes, I would yield.
Mr. Issa. Just a quick followup. Ms. Duke, if I understood
you correctly, as of 2007, 768 people were convicted, far more
were charged, and yet, related to Katrina, FEMA has zero
debarments.
Ms. Duke. That is correct, Mr. Issa.
Mr. Issa. OK. Then on behalf of the committee, why wouldn't
we author a bill that created immediate and automatic debarment
at the time of a conviction? You have discretion at the time of
an accusation; you have discretion at the time of the
indictment.
But why would the chairman and I not author a bill that
would simply create automatic debarment so that your failure of
your agency years later, and I have 2007, but you have made it
clear that you haven't done anything as of 2010. This is not
400 days, this is zero response. Do you have any answer for why
the chairman and I shouldn't simply author a bill and take it
out of your hands at least as to criminal convictions?
Ms. Duke. It has to be dealt with either way. It is
something we will deal with. Such a bill would not be--no, I
can't say anything about why----
Mr. Issa. You wouldn't oppose it, since obviously FEMA
hasn't done anything about these 768 people that have been
convicted?
Ms. Duke. No, I would not oppose it at this point.
Mr. Bilbray. To reclaim my time, it would sure be
convenient not to have our contracts being administered out of
a Federal penitentiary cell, right?
Chairman Towns. The gentleman's time has expired.
I now yield 5 minutes to the gentlewoman from California.
Ms. Watson. Thank you so much, Mr. Chairman. Since I am
just now getting here, I don't know if some of these questions
have been asked, but I will go over them too.
Since 1975, USAID has experienced a gradual downsizing of
its staff. For instance, in 1990, USAID had nearly 3,500 people
administering $5 billion a year in aid, but as of 2009 there
were only 2,200 people overseeing more than $8 billion
annually. And during the Secretary's confirmation hearings,
Secretary of State Hillary Clinton, she highlighted this issue,
stating that USAID has half the staff it used to have, while
foreign aid and reconstruction efforts have been increasingly
privatized.
How would you say the decrease in staff has affected
USAID's ability to optimally implement Federal acquisition
regulations? And let me ask Mr. Gambatesa if you can respond.
Mr. Gambatesa. Yes, thank you. In other audits also that we
have performed over the last few years, we found that there was
a lack of staffing in the contracting area and we have made
recommendations to the agency for that improvement, and they
have taken action to hire contracting officers and contracting
officer technical representatives and others to oversee
contracting problems. There was also a problem with training of
contracting officers, we found in a previous audit report--not
this one with suspension and debarment--and they have taken
action on a number of those issues.
I won't speak for Mr. Luten, but in this specific audit of
suspension and debarment, it wasn't specifically brought out
that the problem was lack of staffing; however, the way the
office is structured with a small number of individuals doing a
number of different jobs, one would have to say that they need
more people to do the job more effectively. Even though we
didn't really look at that specifically in the audit, one could
draw that conclusion.
Ms. Watson. Mr. Luten.
Mr. Luten. Yes. We have, in recent years, received the
funding and focused our attention on hiring additional staff,
particularly foreign service officers. This will include a
substantial number of foreign service officers in what you
might call the stewardship backstops, contracting officers,
financial controllers, administrative managers, as well as in
technical specialties, because they are involved in procurement
and grant making as well. This is going to put us in a better
position to manage the process of planning and executing
programs, engage more directly, provide better oversight.
There are a number of components to oversight in Federal
procurement and grant making. Suspension and debarment is part
of it, but the rest of it is really important too, and we are
putting ourselves in a better position to manage the increase
in program resources that have been provided in recent years.
So it is something that has received attention in the last 3
fiscal years and we are acting on that to build the capacity
back toward where it should be.
Ms. Watson. The developing work that USAID undertakes in
Afghanistan is critical to this administration's mission in the
region, and the military alone cannot achieve long-term
stability for the Afghan people. One important USAID program is
the Accelerating Sustainable Agriculture Program to combat the
cultivation of opium poppies and to provide long-term economic
opportunities to Afghans. The program was started in November
2006 under a $102 million contract for Chemonics International.
Unfortunately, a 2008 audit reported by USAID's Inspector
General revealed that, 2 years into the program's
implementation, the contractor could not prove that it had
fulfilled any of the program's eight project goals.
Mr. Luten, again, after the release of the IG's audit
report, did USAID increase their oversight of the program and
is there documented proof that this contractor has since
improved their performance? And has Chemonics received any
additional USAID contracts?
Mr. Luten. If you would permit, I would like to respond
separately on the Chemonics contract. I will comment that the
challenges in Afghanistan are significant, particularly
security-related. But if it is acceptable, we will provide you
a separate response on that contract in Afghanistan and your
questions.
Ms. Watson. I would like to have it in writing.
Let me ask Mr. Gambatesa has the Office of the Inspector
General continued to review USAID's Accelerating Sustainable
Agriculture Program and their contractor?
Mr. Gambatesa. Yes, we continue to do a number of oversight
activities in Afghanistan. I would have to get back to you with
the specifics on that program after the 2008 audit. I know we
have done some other work, but I don't have it right here with
me, but I certainly can get that to you.
Ms. Watson. Do you think----
Chairman Towns. The gentlewoman's time has expired. Would
you like an additional minute?
Ms. Watson. Just 30 seconds. I just wanted to----
Chairman Towns. All right. I would be delighted to yield an
additional 30 seconds.
Ms. Watson. OK.
Do you believe that USAID has the resources it needs to
adequately monitor this contractor's performance and the grant
recipients? That was the basis of my original question.
Mr. Gambatesa. In most of our audits we will look at
reasons why something isn't working satisfactorily and, as I
said earlier, oftentimes we come up with lack of oversight by
contracting officers or those responsible. There could be a lot
of reasons for this, but to say they do or don't at this point
is very difficult to say.
We have to attribute these things to something, and it is
easy to say they don't have enough people to do it, but is that
always the reason? Sometimes it is lack of training; sometimes
it is lack of oversight of the contractors or grantees; or
sometimes it is lack of oversight by the contractors or
grantees of their subs. And without getting into a specific
audit, it is difficult to generally say what the problem is,
but those problems all exist in many of the audits that we have
done in Afghanistan.
Chairman Towns. Thank you very much.
Before we close, the ranking member asked a question or
raised an issue that I think I want to sort of explore a little
further. He asked what do we need to do from a congressional
standpoint; do you need additional tools in order to make this
work? And the reason I want to stay with this is that I
remember a couple of years ago a gentleman at the airport, who
indicated that he had been in Washington working in Government
for 40 years--he went back to the Carter administration--he
went on to tell me, in terms of how long he had been involved,
and he said that there is something that we do not look at when
we come to these kinds of settings and talk about waste and
fraud and all of that. He said that some contracts require the
contractor purchasing special kinds of things. He says maybe it
is a kitchen, he used the example.
And he said you buy all this equipment for this particular
company, which is paid for out of government dollars in many
instances, and then they do not perform. And rather than go to
somebody else, the fact that you have invested all this money
in this particular item, you say, well, we will ignore their
behavior because it will cost us too much to move to somebody
else at this particular time.
Is this an issue? Let me go right down the line. Is this a
problem in any way? Does this kind of thinking go into it as a
reason why sometimes there is not movement?
Unidentified Speaker. The cost-benefit of debarment.
Chairman Towns. Yes, the cost-benefit of debarment. That is
what we are really talking about.
Ms. Duke. There are provisions that if you suspend or debar
a contractor, that you can re-procure and actually charge those
costs back. So if it is happening, it should not be happening
that way because we do have the ability to both deal with that
contractor terminate, that contract for default and recoup the
taxpayers' dollars in an effective way.
Chairman Towns. But the fact that it is a long process,
does that come into play as to why you don't do certain--I am
trying to get a picture here why certain things are not
happening.
Ms. Duke. Mr. Chairman, I will have to say that I think
that the acquisition work force Federal-wide is under-resourced
and there was an indication or a question earlier that I didn't
get a chance to answer--is it incompetence? I believe we have
an extremely competent acquisition work force in DHS.
There is a shortage of people. In the 1980's and 1990's we
cut the acquisition work force and increased contracting
dollars, and we are suffering from that. The Department and our
appropriators have helped us to start to recover, but I think
we and the Federal Government are digging themselves out of a
hole in that whole area and not just on suspension and
debarment, but about effectively managing contractor
performance in general.
Chairman Towns. Anyone?
Mr. Woods. Mr. Chairman, as you said, suspension and
debarment is the last line of defense. I think within the
Department of Transportation, we are actively trying to keep
fraud from happening before you get to this. From my
information, for example, we only had 24 suspension or
debarments during the course of 2008, but that doesn't mean
that we are not focused on stopping fraud before people enter
into contracts.
So 24 of the number of contracting actions that we are
involved in is a relatively small part of our activity. What we
need to do is focus more attention on that last line of defense
in addition to all the steps that we have been taking up to
that point.
And to answer your question, I think that your involvement
in this process, along with the effective oversight of our
Inspector Generals, has been very helpful in helping us to
sustain management oversight of the program.
Chairman Towns. Mr. Luten.
Mr. Luten. Sorry, out of order here. I don't think that the
concerns about taking action and then needing to reprogram or
re-procure are behind the delays or behind the weaknesses in
the approach to suspension or debarment; I think it has been a
lack of focus. I think it has been a lack of resources devoted
specifically to suspension and debarment, and that is why we
are in the process of refocusing and resourcing the effort.
I do absolutely agree with Ms. Duke's comments that the
Federal procurement work force is solid, but the volume of
dollars that have gone through Federal contracts and grants in
recent years has escalated dramatically, and the
infrastructure, the human infrastructure and the system's
infrastructure to keep up with that has not caught up yet. So
that is the overarching issue. Suspension and debarment is a
portion of that and, specific to this hearing, we are going to
do our part to focus our efforts on better suspension and
debarment activities.
Chairman Towns. Well, let me thank you for your testimony
this morning and to say to you that we really need to do
better, and we are willing to work with you to do better. If
there is something that we need to do, I know a couple Members
mentioned possible legislation, and I am not there yet, but the
point of the matter is that we have to make certain that tax
dollars are not wasted. We have an obligation and
responsibility to make certain that the money goes to do the
kinds of things that we are saying they are going to do.
So I want to thank you again for your testimony and let you
know that we will be following up on this, because we see it as
being very, very serious; and the fact that not too much is
happening. So when you have a situation where not too much is
happening, people continue to do whatever it is, and without
any corrections. So the point is that we need your help in that
regard and, of course, the inspectors, when they make
recommendations, I think we should take them very, very
seriously.
So thank you again for your testimony.
The committee will adjourn for 2 minutes.
[Whereupon, at 11:53 a.m., the committee proceeded to other
business.]
[Additional information submitted for the hearing record
follows:]
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