[Senate Hearing 112-358]
[From the U.S. Government Publishing Office]




                                                        S. Hrg. 112-358
 
 WEEDING OUT BAD CONTRACTORS: DOES THE GOVERNMENT HAVE THE RIGHT TOOLS?

=======================================================================



                                HEARING

                               before the

                              COMMITTEE ON

               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE


                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                           NOVEMBER 16, 2011

                               __________

        Available via the World Wide Web: http://www.fdsys.gov/

                       Printed for the use of the

        Committee on Homeland Security and Governmental Affairs




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20402-0001



        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware           SCOTT P. BROWN, Massachusetts
MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana          RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri           ROB PORTMAN, Ohio
JON TESTER, Montana                  RAND PAUL, Kentucky
MARK BEGICH, Alaska                  JERRY MORAN, Kansas

                  Michael L. Alexander, Staff Director
                     Troy H. Cribb, Senior Counsel
               Carly A. Covieo, Professional Staff Member
               Nicholas A. Rossi, Minority Staff Director
           J. Kathryn French, Minority Deputy Staff Director
           Clyde E. Hicks, Minority Professional Staff Member
                  Trina Driessnack Tyrer, Chief Clerk
                 Patricia R. Hogan, Publications Clerk
                    Laura W. Kilbride, Hearing Clerk



                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Lieberman............................................     1
    Senator Collins..............................................     3
    Senator McCaskill............................................    17
Prepared statements:
    Senator Lieberman............................................    33
    Senator Collins..............................................    35

                               WITNESSES
                      Wednesday, November 16, 2011

Hon. Daniel I. Gordon, Administrator, Office of Federal 
  Procurement Policy, Office of Management and Budget............     5
William T. Woods, Director, Acquisition and Sourcing Management, 
  U.S. Government Accountability Office..........................     8
David M. Sims, Chairman, Interagency Suspension and Debarment 
  Committee......................................................     9
Allison C. Lerner, Inspector General, National Science Foundation    11
Steven A. Shaw, Deputy General Counsel for Contractor 
  Responsibility, U.S. Department of the Air Force...............    14

                     Alphabetical List of Witnesses

Gordon, Hon. Daniel I.:
    Testimony....................................................     5
    Prepared statement...........................................    37
Lerner, Allison C.:
    Testimony....................................................    11
    Prepared statement...........................................    59
Shaw, Steven A.:
    Testimony....................................................    14
    Prepared statement...........................................    68
Sims, David M.:
    Testimony....................................................     9
    Prepared statement...........................................    55
Woods, William T.:
    Testimony....................................................     8
    Prepared statement...........................................    45
    Response to hearing question for the Record..................    73

                                APPENDIX

Letter from Ethan Treese, VP, Government Solutions, Dun & 
  Bradstreet, dated December 1, 2011.............................    75
GAO report titled ``Suspension and Debarment: Some Agency 
  Programs Need Greater Attention, and Governmentwide Oversight 
  Could Be Improved,'' August 2011...............................    77


 WEEDING OUT BAD CONTRACTORS: DOES THE GOVERNMENT HAVE THE RIGHT TOOLS?

                              ----------                              


                      WEDNESDAY, NOVEMBER 16, 2011

                                     U.S. Senate,  
                           Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9 a.m., in room 
SD-342, Dirksen Senate Office Building, Hon. Joseph I. 
Lieberman, Chairman of the Committee, presiding.
    Present: Senators Lieberman, Pryor, McCaskill, Collins, and 
Brown.

            OPENING STATEMENT OF CHAIRMAN LIEBERMAN

    Chairman Lieberman. Good morning. The hearing will come to 
order. I thank everyone for being here.
    Today, we ask two vexing questions about Federal contract 
spending. One, why are contractors who are known to be poor 
performers, who have engaged in fraud or other misconduct, not 
being put on the Excluded Parties List System (EPLS), which 
would bar them from receiving Federal contracts?
    And two, why are some contractors who have been placed on 
the list of banned contractors still taking in millions of 
dollars from the Federal Government?
    As we show here this morning, the answers to both of these 
questions are unacceptable and costly for taxpayers, and that 
has to stop.
    Sometimes I think, who was it? Was it Andy Warhol who said 
15 percent of life is showing up? It was not Woody Allen, was 
it?
    Senator Collins. I believe it was Woody Allen.
    Chairman Lieberman. It could have been Woody Allen. Let us 
have a show of hands. [Laughter.]
    Anyway sometimes I think that some of the most effective 
things that we do in the Committee are to decide to hold 
hearings because it seems to generate reaction. I am not being 
critical of that. I appreciate it.
    So, that is why I say that perhaps it was a coincidence, 
but I was very glad to hear yesterday, the Director of the 
Office of Management and Budget (OMB) indicated that the Office 
of Federal Procurement Policy was issuing new guidelines to 
protect taxpayer dollars from waste, fraud, and abuse by 
Federal contractors. I look forward to hearing more about those 
guidelines during this hearing.
    Let me give some of the examples that motivates this 
hearing. These are factual, of course. The report issued by the 
Department of Defense (DOD) last month shows that over a 10-
year period DOD awarded $255 million to contractors who were 
convicted of criminal fraud, and almost $574 billion to 
contractors involved in civil fraud cases that resulted in a 
settlement or judgment against the contractor.
    Last year, the Department of Homeland Security's (DHS) 
Inspector General (IG) found 23 cases where the Department had 
canceled a contract because of poor performance but in none of 
those cases did DHS suspend or debar the contractor.
    That means not only other DHS component agencies were at 
risk of entering contracts with these poor performers, but 
agencies across the government might obviously do the same.
    After Hurricane Katrina, the Department of Justice found it 
necessary to set up a whole task force devoted to Hurricane 
Katrina fraud, and yet the Federal Emergency Management Agency 
(FEMA), over at least a 5-year period, never sent one name to 
the Excluded Parties List for a suspension or debarment. How is 
that possible?
    The Federal Acquisition Regulation gives Federal agencies 
broad discretion under suspension and debarment procedures to 
prohibit new contracts from going to companies or individuals 
who perform poorly, engage in fraudulent behavior or otherwise 
act, if responsible.
    But it is a tool that is used all too rarely, and that 
means that it enables millions, perhaps billions of dollars of 
waste, fraud, and abuse to continue.
    The Government Accountability Office (GAO) issued a report 
last month and found that over a 5-year period the Departments 
of Health and Human Services (HHS), Commerce, Labor, Education, 
and Housing and Urban Development (HUD), as well as FEMA and 
the Office of Personnel Management (OPM) initiated no 
suspensions or debarment actions against a contractor. Zero. 
Most of the other Federal agencies sent 20 or fewer contractors 
to the Excluded Parties List.
    To me, it strains the imagination to think that these 
agencies have not encountered more companies that have 
overbilled the government, engaged in fraud, or failed to 
perform or carry out their obligations.
    But, as I said earlier, even getting on the list does not 
seem to guarantee that bad contractors are banned from 
receiving Federal contracts. For example, the U.S. Navy 
suspended a company after one of its employees sabotaged the 
repairs of steam pipes on an aircraft carrier. But less then a 
month later that same company was awarded three new contracts 
because the Navy contracting officer failed to check the 
Excluded Parties List.
    Just last month the IG at the Department of Justice 
reported that over a 6-year period that department had issued 
77 contracts or modifications to contracts, to six separate 
suspended or debarred parties.
    Following the GAO report that I mentioned, the one that was 
issued last month, Senator Collins and I sent letters to the 
agencies identified by GAO as lacking the best practices that 
are common for those agencies that do make effective use of 
suspension and debarment, and we intend to monitor the response 
of those agencies.
    Today, we are going to hear from a panel of witnesses who 
are advocates of more active and aggressive use of suspension 
and debarment programs as a way of ensuring American taxpayers 
are getting their money's worth from these Federal contractors.
    Let me move on. This is not the first time this problem has 
been examined. In 1981, the Subcommittee on Oversight and 
Government Management, the Federal Workforce, and the District 
of Columbia of the then Governmental Affairs Committee, chaired 
by then Senator William Cohen of Maine, held a series of 
hearings on suspension and debarment and in words that still 
ring true today, Senator Cohen said, ``In this time of economic 
crisis and huge government deficits when both Congress and the 
Administration are looking for equitable ways to reduce 
government spending, we certainly welcome this opportunity to 
evaluate and propose mechanisms by which the government can 
protect itself from dealing with proven irresponsible firms. We 
have to ensure that the government's investment in hundreds of 
millions of dollars of Federal contracts is not jeopardized 
because of the failure to debar undesirable contractors.''
    Very well said by Senator Cohen. I think as I approach my 
retirement I probably will be citing former Senators more 
often, hoping that may happen.
    But those words were prescient and quite well spoken but 
not surprisingly because, as some of you may know, Senator 
Cohen was blessed with an extremely talented staff director who 
has remained steadfast in her commitment to see that the 
government takes every action necessary to protect taxpayer 
dollars and I now turn to that former staff director, the 
current Senator from Maine, Susan Collins.

              OPENING STATEMENT OF SENATOR COLLINS

    Senator Collins. Thank you, Mr. Chairman.
    As the ghost author of those words, I was very pleased to 
hear them recited today. I want to thank you for holding this 
hearing on this important issue.
    Suspension and debarment are mechanisms by which the 
Federal Government protects taxpayers by avoiding the award of 
new contracts or grants to those individuals and businesses who 
have proven to be bad actors.
    Debarment is automatic upon conviction of certain crimes 
but Federal agencies also have the authority to suspend or 
debar an individual or business in cases where there has not 
been a conviction or an indictment but there is, nevertheless, 
ample evidence of unethical behavior or incompetent 
performance.
    The GAO has found that some agencies have failed for years 
to suspend or debar a single individual or business. For 
example, the GAO found that FEMA had no suspensions or 
debarments from 2006 to 2010, despite the fact that our 
Committee found numerous instances of contract waste, abuse, 
fraud, and nonperformance in the aftermath of Hurricane 
Katrina.
    In FEMA's disaster housing program alone, GAO identified 
approximately $30 million in wasteful and potentially 
fraudulent payments to FEMA contractors in 2006 and 2007, which 
likely lead to millions more in unnecessary spending beyond 
this period.
    In another example, the Department of Justice suspended or 
debarred only eight contractors from 2006 to 2010. Making 
matters worse, a recent Inspector General audit reveals that 
from 2005 to 2010, the Department actually issued 77 contracts 
and contract modifications to some of the exact same entities 
that the Department itself had suspended or debarred. I would 
join the Chairman in asking: How could this possibly happen?
    Now, the vast majority of individuals and businesses who 
participate in the Federal marketplace are honest and they do 
their utmost to fulfill the terms of their Federal contracts. 
It is not fair or ethical to competent government contractors 
when they lose government business to those who will not 
perform effectively and honestly.
    Our goal here is not to punish but rather to protect. 
Taxpayers deserve to know that Federal contracts and grants are 
awarded not to those who have acted dishonestly, irresponsibly, 
or incompetently.
    Having powerful suspension and debarment tools in our 
arsenal does little good if they are not being used. GAO found 
that civilian agencies with the highest numbers of debarment 
and suspensions shared certain characteristics.
    First, they dedicated staff full-time to the suspension and 
debarment process. Second, they have detailed guidance in 
place; and finally, they have a robust case referral process.
    GAO found that the U.S. Immigration and Customs 
Enforcement, the General Services Administration, the Navy, and 
the Defense Logistics Agency are actively protecting the 
Federal Government from unscrupulous and habitually 
nonperforming contractors.
    On the other hand, as the Chairman has pointed out, GAO 
found that the Departments of Commerce, State, Treasury, 
Justice, Health and Human Services, and FEMA must improve.
    The failure of agencies to use their suspension authority 
regrettably is not a new revelation. As the Chairman has 
mentioned, 30 years ago as the staff director of a Subcommittee 
of this very Committee, I was extremely involved in oversight 
hearings on suspension and debarment.
    Reading over the transcript of that hearing, I was struck 
by the exact same problems that were highlighted in GAO's 
recent report, especially the reluctance on the part of some 
agencies to exercise their suspension and debarment authority.
    Today, there is even less excuse than ever given the new 
tools available to agencies. One such tool is the Excluded 
Parties List, which allows for real-time listing of all 
contractors who have been suspended or debarred. And since that 
time, the suspension or debarment at one agency generally 
applies to all agencies.
    Since 1986, the Interagency Suspension and Debarment 
Committee has been established to facilitate the process of 
determining which agency should take the lead in suspending or 
debarring an unethical or incompetent entity that is doing 
business with more than one agency.
    This GAO report must be a wake-up call to agencies that are 
failing to protect the interests of taxpayers. Like the 
Chairman, I was pleased to see that the GAO report and this 
hearing prompted the OMB to issue new direction to agencies to 
strengthen their suspension and debarment procedures.
    But let us hope that this time it really will make a 
difference and that 30 years from now this Committee is not 
again holding yet another hearing examining why Federal 
agencies do not act more aggressively to protect taxpayers.
    Thank you, Mr. Chairman.
    Chairman Lieberman. Thank you very much, Senator Collins. 
Later we can talk about which one of our staff members we think 
will be a Senator 30 years from now. [Laughter.]
    Anyway, I appreciate your support and work on this over the 
long term.
    Our first witness is Dan Gordon, who is the Administrator 
of the Office of Federal Procurement Policy (OFPP) within OMB. 
I gather, Mr. Gordon, that you have announced recently that you 
are leaving OFPP to become an Associate Dean at George 
Washington University's law school. I want to take the 
opportunity to thank you for your service at OFPP and for your 
many years as an attorney at GAO.
    You have really worked very hard and pushed the envelope 
forward in every place you have worked and I appreciate and 
wish you well and assume that you will be helping to train the 
coming generations of government contract attorneys in your new 
position.
    Good morning.

TESTIMONY OF HON. DANIEL I. GORDON,\1\ ADMINISTRATOR, OFFICE OF 
  FEDERAL PROCUREMENT POLICY, OFFICE OF MANAGEMENT AND BUDGET

    Mr. Gordon. Thank you, Mr. Chairman. We will be training 
suspension and debarment officials to be more vigorous in their 
actions.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Gordon appears in the Appendix on 
page 37.
---------------------------------------------------------------------------
    Chairman Lieberman. Very good.
    Mr. Gordon. Chairman Lieberman, Ranking Member Collins, it 
is a pleasure to be here to discuss this very important topic 
of suspension and debarment in the procurement system.
    From the start of this Administration, we have focused on 
being sure that we have more fiscally responsible acquisition 
practices. I am happy to report that we have made significant 
progress over these past 3 years in buying less, in buying 
smarter, and in rebuilding the acquisition workforce.
    Our efforts have been reinforced by our commitment to 
increase the consideration of integrity in the award of Federal 
contracts and grants so that taxpayer dollars are not put at 
risk of waste or abuse in the hands of contractors or grantees 
who disregard laws and regulations and the commitments that 
have been made in their contracts.
    Suspension and debarment, as you have both said, are very 
important tools in that effort. Your invitation letter asked 
that I provide a brief overview of the suspension and debarment 
procedures and I will do that, although I must say I feel like 
I am speaking to two people who are very much expert and 
seasoned in the area. Let me try to be brief. But the request 
that I do a mini explanation is something that someone with 
somewhat professorial tendencies cannot resist.
    Suspension or debarment makes an entity, whether a company 
or an individual, ineligible for a Federal contract or grant. 
As Senator Collins said, they are not meant to be punitive. 
They are not punishment. They are there to protect the public 
interest if there is a determination made that the entity is 
not presently responsible, that is to say, there is an 
intolerable risk of dishonest, unethical, or otherwise illegal 
conduct or that the entities simply will not be able to 
satisfactorily perform the responsibilities if they are given a 
contract or grant.
    As you know Subpart 9.4 of the Federal Acquisition 
Regulation sets out causes for suspension or debarment but the 
decision to suspend or debar is a discretionary one.
    As Senator Collins pointed out, suspension and debarment 
now apply governmentwide and it is one of the improvements over 
these past 30 years that we do have the Excluded Party List 
System that Senator Collins had a role in promoting.
    It is a system that works governmentwide when it works 
appropriately and when we use it appropriately so that when a 
company or an individual is suspended or debarred by one 
agency, they cannot get a contract or grant from any agency.
    Suspension, as you know, is a preliminary step usually 
taken during a review or an investigation. Debarment is 
typically longer, often 3 years, and occurs only after the 
entity is given appropriate due process, essentially a chance 
to defend themselves.
    If I put this in terms of a cycle, I would point out the 
stages at which, over the past several decades, problems have 
developed. If someone engages in the problematic conduct, if 
you will, the matter may come to the attention of staff in an 
agency who look into possible suspension or debarment.
    Agencies' inspectors general play a key role in referring 
cases for possible suspension or debarment and that is why I am 
pleased that you will be hearing from Ms. Lerner, who will be 
able to speak on behalf of the Council of Inspectors General on 
Integrity and Efficiency (CIGIE).
    But whether that referral takes place has historically been 
one of the weak links in the system. Too often we have entities 
that behave illegally or whose performance is absolutely 
unacceptable so that their contract is terminated for default 
and yet they are never referred for suspension or debarment.
    If there is a referral, the suspension or debarment 
official (SDO) may ultimately decide to suspend or debar. Where 
there has been criticism at that stage of the process, it is 
typically that it has taken us too long to investigate and then 
to decide so that in the interim the entity continues to get 
contracts and grants.
    Once the entity is suspended or debarred, their name goes 
into the EPLS, as you have said, which is maintained by the 
General Services Administration (GSA).
    Historically, going back several decades, we have been very 
bad about sharing information about suspension or debarment so 
that you could have one agency award a contract to an entity 
where another agency had found that entity one that should be 
debarred or suspended.
    Just before making the final decision about a contract or 
grant, the contracting officer, to use the procurement world's 
term, is required to check EPLS to see if that entity, which is 
about to get the contract is actually suspended or debarred.
    At that stage of the process, the problem, and there have 
been a good number of them reported by GAO and by the IGs, is 
that the contracting officer fails to check EPLS or did not 
check late enough to get current information or there was some 
problem with the spelling of the name of the entity, the entity 
uses a different name in its offer to the government, and the 
result was that entity that had been suspended or debarred 
again gets a contract or a grant while they should not be 
getting them.
    Because of the shortage of time, I want to sum up here and 
say that the bottom line, in our view, is that the procedures 
and the policies and the legal framework are adequate.
    The problem is that the tools are not being used properly. 
That is why OMB issued the memorandum yesterday. This is the 
first step in an effort to reinvigorate this process.
    We will be working with the Interagency Suspension and 
Department Committee, and I am pleased that Mr. Sims will be 
testifying shortly about the work of that committee.
    We will be providing much more detailed guidance at OMB to 
be sure that agencies are taking the steps that GAO pointed out 
as characteristics of more vigorous programs.
    We will be working directly with the agencies to ensure 
that we do, in fact, have more rigorous and more vigorous 
suspension and debarment actions.
    Thank you. I will be happy to answer questions afterwards.
    Chairman Lieberman. Thanks, Mr. Gordon. That is a good 
beginning.
    So, I take it that you are saying that there is not really 
a need for additional legislation here. This is really a 
question of implementing the current law.
    Mr. Gordon. Precisely, Mr. Chairman. I like the way that 
the CIGIE's workforce titled their report. They use words like 
``do not let the tools rust.''
    We have tools. What we need to be sure is happening is that 
we are using those tools, and GAO pointed at key steps, key 
characteristics that we will be pushing from OMB.
    Chairman Lieberman. Good.
    Next we will go to William Woods, who is the Director of 
Acquisition and Sourcing Management, a division at the GAO.
    Mr. Woods has done really outstanding work for our 
Committee on many reports including the latest report on 
suspension and debarment that I referred to.
    So, we thank you, Mr. Woods, and welcome you back to the 
Committee.

  TESTIMONY OF WILLIAM T. WOODS,\1\ DIRECTOR, ACQUISITION AND 
   SOURCING MANAGEMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Woods. Thank you, Mr. Chairman and Senator Collins. It 
is a pleasure to be invited to appear before the Committee 
today to talk about the report that we issued on August 31 for 
this Committee.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Woods appears in the Appendix on 
page 45.
---------------------------------------------------------------------------
    Also Senator McCaskill was a co-requester on that in her 
role as the Chairman of the Subcommittee on Contracting 
Oversight.
    You both have mentioned the report and summarized it 
accurately. Let me just cover very briefly what our three 
objectives were.
    First of all, you asked us to take a look at the Excluded 
Parties List System and to see what that list consisted of.
    We found that there were some 24,000 cases on that list 
dating back over the 5-year period that we looked at. Much to 
our surprise, however, at least to my surprise, not nearly all 
of those cases are related to Federal procurement.
    In fact, a small percentage, only 16 percent, are related 
to Federal procurement. The other 84 percent are as a result of 
statutory exclusions.
    For example, if someone was found to be in violation of the 
Clean Air Act or the Clean Water Act, there are statutory 
provisions that require that the entity be listed on EPLS.
    Medicare fraud is another example where the Department of 
Health and Human Services has a very significant number of 
exclusions on the EPLS.
    Contrast that, however, with Health and Human Services, 
which does a fair amount of government contracting but, as has 
been pointed out earlier, had zero suspensions or debarments 
related to Federal procurement over the 5-year period that we 
looked at.
    You asked us also in your request to take a look at the 
factors that might contribute to some agencies being relatively 
active in the area and some agencies being relatively inactive.
    And as Senator Collins pointed out, there were three 
factors that we found. The first was that agencies have 
dedicated staff. The four agencies that we found to be most 
active had full-time staff.
    That is not necessarily required in all instances, but what 
we found and what we think is required is that the agencies 
devote sufficient resources. They can be part time. They can 
have other responsibilities but people need to know that 
suspension and debarment is their area of responsibility.
    The next thing that contributed to the active programs were 
detailed policies and procedures. The Federal Acquisition 
Regulation (FAR) is quite detailed in terms of providing for 
the causes and the reasons why an entity might be suspended or 
debarred.
    But what we found made a difference at the agencies with 
active programs is that they went beyond the guidance in the 
Federal Acquisition Regulation and provided additional detail 
to the people who were actually responsible for carrying out 
the functions.
    They laid out the roles and responsibilities of those 
people. They identified the approval process within an agency. 
They defined the role of their counsel in terms of approving 
suspension and debarment proposals.
    It is that kind of detail that we found separated the 
agencies with the active programs from the agencies with the 
relatively inactive programs.
    And the third area that we found was an active referral 
process; the suspension and debarment officials worked closely 
with their inspectors general.
    As has been pointed out, very often the contracting 
officers may take action against a contractor in terms of a 
termination for default.
    In the agencies with active programs, those would get 
referred rather routinely to the suspension and debarment 
official for consideration of action at that level.
    These were the three factors that separated out the active 
agencies from the relatively inactive agencies.
    We made three recommendations in our report.
    First of all, we wanted to see the six agencies with the 
inactive programs, take a look at those three factors and 
incorporate those into their programs.
    We also made a recommendation to the Office of Federal 
Procurement Policy within the Office of Management and Budget 
to make those three factors known governmentwide, to use their 
forum to provide additional guidance to all agencies to 
incorporate those three provisions.
    And then we also asked OMB and the Office of Federal 
Procurement Policy to provide some support for the interagency 
committee in terms of asking all agencies to cooperate with the 
very good work of that committee.
    With that, let me stop there and I will be happy to take 
any questions.
    Chairman Lieberman. Thank you very much for all of your 
work on the report and your very helpful testimony.
    Next we have David Sims, who is before us today as the 
Chair of the Interagency Suspension and Debarment Committee. He 
is also the debarment program manager at the Department of the 
Interior, previously served in the suspension and debarment 
office of the Environmental Protection Agency (EPA).
    Mr. Sims, we welcome you to the Committee this morning.

TESTIMONY OF DAVID M. SIMS,\1\ CHAIRMAN, INTERAGENCY SUSPENSION 
                    AND DEBARMENT COMMITTEE

    Mr. Sims. Thank you, Chairman Lieberman, Ranking Member 
Collins, and Members of the Committee. I appreciate the 
opportunity to appear before you today in my capacity as the 
Chair of the Interagency Suspension and Debarment Committee 
(ISDC) to offer observations on the role of the Federal 
procurement and non-procurement suspension debarment's system.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Sims appears in the Appendix on 
page 55.
---------------------------------------------------------------------------
    I have submitted a full statement for the record, for the 
written record, but I would like, if I may, to summarize the 
testimony.
    The ISDC is an interagency body that provides support for 
the implementation of the governmentwide system of suspension 
and debarment. Each of the 24 agencies covered by the Chief 
Financial Officers Act is a standing member of the ISDC. Also 
nine independent agencies and government corporations 
participate.
    The ISDC provides an important support structure to help 
agencies in their debarment and suspension programs. It serves 
as a forum for agencies to share best practices, lessons 
learned, and through our monthly meetings which are well 
attended, to discuss issues of common interest.
    We also assist agencies in efficiently identifying the 
appropriate agency to act as the lead on particular suspension 
debarment matters.
    The ISDC's activities are overseen by OMB, which works 
closely with the ISDC to identify where refinement of current 
policies or practices may be needed.
    The specific functions for the ISDC include encouraging and 
insisting Federal agencies to achieve operational efficiencies 
in the governmentwide, resolving issues regarding lead status 
and coordination among interested agencies, recommending to the 
OMB for consideration possible changes to the government 
suspension and debarment system, and reporting annually to 
Congress on agency debarment and suspension activities.
    As has been said by Mr. Gordon, debarment is a 
discretionary decision by the government as a consumer of goods 
and services, serves the purpose of protection, not punishment. 
The action is forward-looking. It is prospective in application 
and really serves best to head off participation of problem 
actors in new Federal awards. It is a potent remedy for the 
government as a consumer, perhaps one of the most important 
remedies.
    It is my observation, formed from experience in this 
debarment field spanning more than 20 years, that the rules, as 
currently stated, provide agencies and departments with a 
highly effective toolkit for the application of this remedy.
    In fact, those agencies with robust programs demonstrate 
that the current rules provide an effective framework for 
protection of government procurement and non-procurement award 
interests. The challenge really is to ensure that all agencies 
have appropriate programs in place to use these tools 
effectively.
    As chair of the ISDC, I certainly agree with the overall 
conclusions by GAO in its recent report on the elements 
necessary for an effective program. The factors that promote an 
active agency discretion in the suspension and debarment 
program are having a defined implementing guidance, practices, 
and procedures that encourage the referral and action-taking 
process, staff dedicated to do the program and commitment from 
upper management.
    I would just add that I believe hearings such as these, IG 
program reviews, and efforts by OMB such as the memo that just 
came out today directed to agency heads are really key tools to 
encourage and promote effective use of this remedy and focus on 
it.
    Additionally, in addition to commitment from upper 
management, a collaborative working relationship with the 
agencies Office of Inspector General is important. So, 
collectively these factors are relevant to suspension debarment 
programs whether they are operating under the FAR or the non-
procurement rule.
    The ISDC has taken a number of actions to assist agencies 
in suspension to debarment proceedings. Over the past 2 years, 
ISDC has used its collective expertise to provide to more than 
10 agencies example policies and procedures, sample action 
documents, to aid in the development and implementation of new 
or strengthened existing programs.
    We have also recently created a standing subcommittee to 
evaluate methods and opportunities for training government 
personnel on the suspension debarment remedy, to increase 
awareness of the remedy, promote its use, and provide us 
practices and assistance to agencies to develop robust 
programs.
    In addition, we have evolved an informal collaborative 
process for the lead agency which utilizes an email 
notification, broadcast to the membership, that a particular 
agency is considering action inquiry whether another agency has 
an interest and setting a prompt response time.
    The ISDC has this month created a workgroup to also explore 
and evaluate possible practical mechanical alternatives for the 
existing mechanism. We have also supported governmentwide 
efforts to enhance information systems designed to protect and 
strengthen the integrity of the program, particularly the GSA's 
effort on the Federal Awardee Performance Integrity Information 
System (FAPIIS), in regard to the terms of debarment program 
elements and working with GSA on improving the EPLS.
    So, as the ISDC chair, it is my observation that the key to 
successful use of the EPLS is timely and accurate entrance of 
names on the list and use of the list by contracting and award 
personnel prior to award to preclude ineligible parties.
    The existing rules already imposed these requirements. 
Compliance can be enhanced through internal management 
directives stressing the importance of using the list and the 
training of personnel, both debarment and award officials, to 
use the list.
    We look forward to working with this Committee, other 
Members of Congress, GAO, and the Council of Inspectors General 
for Integrity and Efficiency in the ongoing efforts to 
strengthen the governmentwide debarment and suspension remedy.
    This concludes my remarks and I am happy to answer any 
questions you may have. Thank you.
    Chairman Lieberman. Thank you, Mr. Sims. It was very 
helpful.
    Now, we welcome Allison Lerner, IG of the National Science 
Foundation, and also the co-chair of the working group on 
suspension and debarment of the Council of the Inspectors 
General on Integrity and Efficiency. That is quite a title.
    We appreciate your being here and helping us to hear the 
perspective on this problem from the IGs. Please proceed.

TESTIMONY OF ALLISON C. LERNER,\1\ INSPECTOR GENERAL, NATIONAL 
                       SCIENCE FOUNDATION

    Ms. Lerner. Thank you, Mr. Chairman, Ranking Member 
Collins, and other Members of the Committee. I appreciate this 
opportunity to discuss the efforts of the suspension debarment 
working group of CIGIE.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Lerner appears in the Appendix on 
page 59.
---------------------------------------------------------------------------
    Steve Linick, Inspector General at the Federal Housing 
Finance Agency, and I are co-chairs of that working group as 
part of the CIGIE Investigations Committee.
    As our Nation faces pressing economic challenges, it is 
imperative that we effectively and vigorously use every tool 
available to us to ensure that the billions in taxpayer dollars 
that go to Federal contractors, grantees, and other awardees 
every year are spent for their intended purposes, that 
unscrupulous individuals and companies are prohibited from 
obtaining government funding, and that hard-earned tax dollars 
are safeguarded.
    Suspension and debarment are two key tools the government 
has to protect public funds. However, too often those tools go 
unutilized, quietly rusting away, as has been noted, in the 
government's toolbox.
    Since its formation in June 2010, the working group has 
focused on raising the profile of suspension and debarment by 
educating the IG community about the suspension and debarment 
(S&D) process, by busting myths about suspension and debarment 
that may have impeded their use in the past and by identifying 
successful practices across the IG community that could be 
emulated by offices new to S&D so they do not have to reinvent 
the wheel to develop an effective referral process.
    The group is also working to promote an active dialogue 
between Offices of Inspectors General (OIGs) suspension and 
debarment officials, and prosecutors as a way to enhance the 
overall effectiveness of the S&D process.
    To increase awareness of suspension and debarment, the 
working group has provided training to various members within 
the IG community. With support from the Recovery Accountability 
and Transparency Board, it has also sponsored two 
governmentwide S&D workshops attended by approximately 750 OIG 
and S&D staff from 74 different agencies.
    My testimony will focus on the working groups September 
2011 report, which built upon information about suspension and 
debarment practices obtained in an informal survey of the IG 
community.
    Mr. Chairman, the working group survey results reflected a 
view within the IG community that suspension and debarment 
could be used more frequently and more effectively.
    To further the use of these important tools, our report 
sought to dispel three common misconceptions about S&D.
    With regard to the first, some OIGs and prosecutors resist 
seeking suspension or debarment under the mistaken belief that 
pursuing such actions could compromise ongoing civil or 
criminal prosecutions by requiring the disclosure of sensitive 
investigative information.
    Our report identified many ways in which contemporaneous 
actions can be protected while suspension and debarment are 
pursued. Perhaps the best way OIGs, prosecutors, and SDOs can 
resolve their concerns about the effect of suspension and 
debarment on ongoing proceedings is to engage in staff-level 
training and to communicate frankly and continuously regarding 
all evidence sharing issues.
    Second, as the report notes, some agencies and OIGs 
mistakenly believe that suspensions and debarments must be tied 
to a prior judicial finding such as an indictment, civil 
judgment, or conviction.
    In reality, actions based on facts developed through 
investigations, audits, or inspections are a less traveled path 
that can be followed to exclude non-responsible parties from 
doing further business with the government and may be viable 
options in many circumstances.
    The third misconception that limits the number of S&D 
referrals made by OIGs is the idea that an action can only be 
based on facts developed during an OIG's investigation.
    In reality, suspension and debarments can also arise from 
facts discovered during OIG audits or inspections. Because 
referrals of this type are uncommon, it is important to lay 
some groundwork to help ensure their growth and success.
    In particular, focused training for auditors and inspectors 
on how their work can produce and support suspension and 
debarment opportunities would be beneficial. Our working group 
is working with the Investigator Training Academy to develop 
such training.
    Our report also highlighted a number of suspension and 
debarment practices that could help boost the overall use and 
effectiveness of these tools within the IG community.
    Since staffing considerations can affect how S&D referrals 
are undertaken, several OIGs provided information on staffing 
approaches they have utilized to promote the use of suspension 
and debarment.
    Another means by which OIGs can contribute to more frequent 
and effective S&D use is by conducting internal audits or 
reviews of the efficacy of agency S&D systems, and several of 
those reviews have already been noted today in the discussion.
    Other suggested practices include routinely reviewing 
investigative audit and inspection reports to identify 
candidates for suspension and debarment, enhancing OIG referral 
practices, developing strong OIG suspension and debarment 
policies, increasing outreach among relevant communities, 
providing additional training on suspension and debarment and 
publicly reporting data on S&D actions as a means of 
encouraging OIG referral and agency action.
    Mr. Chairman, an agency's vigorous and appropriate use of 
suspension and debarment protects not just the integrity of 
that agency's programs but also the integrity of procurements 
and financial assistance awards across the Federal Government. 
As such, suspension and debarment are two of government's most 
powerful defenses against fraud, waste, and abuse.
    These important tools can be used more frequently and 
effectively if the relevant Federal communities understand them 
better and are motivated to work together in using them.
    Over the coming year, the working group will continue to 
explore ways to increase understanding of these tools and to 
promote communication and collaboration between all parties 
involved in suspension and debarment.
    This concludes my statement, Mr. Chairman, and I would be 
happy to answer any questions you might have.
    Chairman Lieberman. Thanks very much, Ms. Lerner. That was 
very helpful.
    Finally, we have Steven Shaw, Deputy General Counsel at the 
Department of the Air Force, acknowledged as an expert in this 
area of contractor and business ethics.
    The Air Force, in fact, is known for having a robust 
suspension and debarment program. So, we are very happy you are 
here today, Mr. Shaw, to share your thoughts on how agencies 
should carry out their responsibility in this regard. Please 
proceed.

  TESTIMONY OF STEVEN A. SHAW,\1\ DEPUTY GENERAL COUNSEL FOR 
  CONTRACTOR RESPONSIBILITY, U.S. DEPARTMENT OF THE AIR FORCE

    Mr. Shaw. Thank you very much, Chairman Lieberman, Ranking 
Member Collins, and other Members of the Committee.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Shaw appears in the Appendix on 
page 68.
---------------------------------------------------------------------------
    I have been the debarring official at the Air Force for 15 
years; and as you noted, we do have a mature program. I 
recognize that there are some agencies that do not, and I am 
pleased to have the opportunity to address some of the features 
that I think make the Air Force's program perhaps unique and 
not just mature.
    At a high level it is really three areas, and that is the 
referral process that the CIGIE report covers very well and we 
fully agree with the SDO structure, how an office should be 
structured to work effectively. GAO and my friend Mr. Woods 
covered that very well and the OFPP memorandum is welcome in 
that area.
    The SDO policies are the area that I am going to focus more 
on because I think that is what makes us a little bit unique.
    We, in the Air Force, do have a dedicated staff as was 
mentioned by the GAO report. We have three full-time attorneys 
at headquarters and some 10 full-time attorneys in the field 
that provide counsel on fraud cases and work with our office in 
the coordination of fraud remedies, including suspension and 
debarment.
    We feel that we are very aggressive in the area of dealing 
with bad actors. But there is a flip side to that, the carrot 
and stick approach that we have taken, and that is, to be 
aggressive on the bad actors but to be proactive at the front 
end with the leverage that we have with this tool of suspension 
and debarment to encourage contractors to have risk management 
programs and other ethics programs to prevent fraud from 
happening in the first place.
    So, on the aggressive side of this region, we did 367 
suspensions and debarment actions last year, and so there is an 
average over my 15 years of perhaps 4,000 actions that I have 
signed in this area.
    Only 5 percent of our cases last year--and that is 
anecdotal, it is not our data base that establishes this. But 
roughly 5 percent of our cases are interestingly enough from 
referrals.
    We do 95 percent of our cases by reaching out and actively 
working with the field in working groups and with the 
Inspectors General reviewing case status reports from the 
Office of Special Investigations and from the DOD IG so that 
when we see that a case is ready for debarment, we do not wait 
for somebody to refer to us. We do not wait for the Justice 
Department to return an indictment.
    We look at the case status report and we make a 
determination that this looks like it is ready for debarment 
and we will ask for the full file and then do a debarment.
    Sixty-two percent of our cases are fact-based where we do 
not wait again for the Justice Department to make a decision. 
There are plenty of cases dealing with defense contractors and 
government contractors where there are serious problems but 
where the Justice Department has not finished their 
investigation or where the problems are below their threshold 
so the Department of Justice declines to intervene.
    Those cases are still cases that we in the Air Force care 
about. Just because it is below the threshold of the Justice 
Department should not mean that we do not care about protecting 
ourselves from such contractors.
    There are four broad themes that I think really defined our 
program and I will go over those briefly.
    One is our broad view of the types of misconduct that would 
qualify for consideration of suspension or debarment. It is not 
just fraud in any government contract, and a lot of agencies 
focus only on that.
    We are concerned with any crime that relates to business 
integrity, and that might be a crime that has nothing to do 
with a government contract. But we care about it because it is 
an Air Force contractor that does something wrong and that 
could be tax violations. It could be Foreign Corrupt Practices 
Act, commercial fraud.
    If it is an Air Force contractor and they are committing 
some misconduct outside of the realm of Air Force contracting, 
we are still concerned about it.
    Another area is contract performance as was mentioned 
earlier. That can be mere negligence. It does not have to have 
anything to do with fraud at all.
    So, negligent performance of a contract can qualify for 
debarment, and we do debar contractors for negligent 
performance of contracts.
    The next theme is early fact-based actions. Not only are 62 
percent of the cases that we do fact-based that have nothing to 
do with Justice Department cases, but we do them very early. We 
do not wait for the Justice Department to get to the point 
where they are declining.
    When there is a preponderance of evidence we take action. 
By doing that, we protect further losses to the government as 
well as flight safety issues. And frankly, it gets beyond the 
point of present responsibility determination if we wait 5 
years for the Justice Department to determine at the point of 
the running of the statute of limitations that they are not 
going to take any action.
    The next theme is the independence of the contracting 
chain. I feel very strongly about this. We are very successful 
in the Air Force because we are a separate entity that does not 
require the gatekeeper of the contracting community to refer 
cases to us.
    We coordinate with the contracting and the acquisition 
community certainly, but we are independent of them and that is 
a result of a DOD IG report in the early 1990s that suggested 
that was the best way to proceed, and the Defense Department 
has been doing it that way since that time.
    The final area is the discretion. I think it is very 
important to maintain the discretion of the debarring officials 
so that we can do such things as leverage what I mentioned 
earlier and help companies prevent fraud from happening in the 
first place.
    If there are mandatory debarments that some are suggesting, 
then we lose the ability to be proactive and to prevent fraud 
from happening at the front end.
    In my final moments, if I could, with the Senate's 
indulgence, talk about the right tools. That is a headline here 
of this hearing and it is slightly different from debarment and 
suspension but I would say in the debarment area we do have the 
right tools.
    The FAR Subpart 9.4 is broadly worded, if debarring 
officials will look at it and understand how broadly worded it 
is. In the fraud area frankly, there are a couple of more tools 
that would help in this area.
    One is the proceeds of fraud recoveries. This is something 
that has come up in the past. As you know, under current fiscal 
laws, the proceeds of most fraud recoveries go to the U.S. 
Treasury.
    And that is so because the contracts are closed, are over 
at that point, the investigation is over and we get to look at 
them. So, at that point, they cannot go back to the victimized 
program.
    So, it is very difficult to get the acquisition communities 
and the contracting officers excited about referring cases to 
us when they have to spend all of that time and effort putting 
together a package and finding an alternate source, and then 
they do not get the money to fix the problem that was caused by 
the bad contractor.
    So, if there is a way to legislate some exception that 
would return the funds to the victimized agency, then we could 
fix the problems that were caused by the bad contractors.
    The other area is the Program Fraud Civil Remedies Act 
(PFCRA), which was passed in 1986. I am sure you know about it. 
It is not used in the Defense Department. It is, frankly, not 
used, with maybe one exception, anywhere in the government, and 
that is because it is hugely cumbersome.
    And it could be a great resource that would enable the 
agencies to recover funds that are below the Justice 
Department's threshold. So, there would be no way to recover 
those funds or impose penalties against bad contractors unless 
there is a mechanism like the PFCRA.
    And the Defense Department has submitted as part of its 
next cycle legislative package a proposal to revise the PFCRA 
to make it workable. And I would ask your support on that.
    Finally, we would look for some way, and this is probably a 
way that we can work out with the Justice Department, to get 
information about indictments that are not related to 
government contracts.
    As I mentioned, I care about Air Force contractors 
committing fraud that doesn't relate to a government contract; 
but in many ways, many times we are not even aware of that. 
Export violations, Foreign Corrupt Practices Act cases.
    If the agencies can be made aware of those types of 
violations that would not happen in a normal IG chain because 
the IGs are focusing on fraud in the government contract, then 
that would be helpful too.
    That would conclude my remarks. I apologize for being over 
my time.
    Chairman Lieberman. Not at all. Thanks, Mr. Shaw. Thank you 
for setting the standard here and for giving some very 
practical suggestions. Your testimony has been excellent.
    Senator McCaskill has been a real leader in this area. In 
fact, your name has been mentioned here, not in vain but in 
praise, earlier. Senator McCaskill has an urgent meeting she 
has to go to.
    So, Senator Collins and I are happy to let her go first. We 
have not consulted with Senator Pryor and Senator Brown but 
they are both so widely acknowledged as being good guys that I 
am sure they will not object.
    Senator McCaskill.

             OPENING STATEMENT OF SENATOR MCCASKILL

    Senator McCaskill. They are good guys, and thank you both 
very much.
    It came to my attention, the scope and breadth of this 
problem, when I found out about a soldier that was killed in 
Iraq by a negligent truck driver for one of our contractors. He 
was run over and killed. No question it was negligence on the 
part of the truck driver of the company.
    There was a lawsuit brought by his family to try to have 
their day of justice in the United States, and this contractor 
fought jurisdiction and refused to submit to the jurisdiction 
of the United States of America even though they were being 
paid by the United States of America and had killed one of our 
soldiers through their negligence.
    That obviously made me angry, but I will tell you what 
really upset me is that we kept doing business with them.
    And so, that is when I realized we had a real problem with 
suspensions and debarment; and the Wartime Contracting 
Commission looked at this extensively.
    It seems to me, and if anybody disagrees with any of these 
four reasons, I would love to get your input, that suspension 
and debarment officials are afraid of litigation; that it is, 
second, too much trouble; that third, some of these contractors 
are ``too big to fail''; and four, it is not clear who is 
accountable for failure to suspend or ban from contracting.
    Does anybody disagree with those four as the primary 
reasons that we are so bad at suspensions and debarments?
    [No response.]
    Senator McCaskill. OK.
    Mr. Shaw. Well, I would disagree as applied to the Air 
Force. But I think your questioning is about why we are bad at 
other agencies in suspension and debarment; and I really do not 
have an opinion about other agencies. But I do not think any of 
those are the case for the Air Force certainly.
    Senator McCaskill. And you are good at contracting and you 
are good at suspensions and debarment. We have to figure out 
what the deal is there because the Air Force is also much 
better at contract oversight.
    We have used you extensively to try to cross-pollinate any 
other branches. So, my congratulations to the Air Force.
    What about mandatory suspension for criminal activity. The 
Wartime Contracting Commission backed off of this 
recommendation. I think deterrence for other contractors is 
really important, and I understand that it allows leverage to 
get better behavior out of contractors.
    But should we not, just as a matter of character of our 
Nation, say if you are indicted--like Halliburton was for 
bribery in Africa--for criminal activity in connection with 
your government contracting activities, that you are done with 
us?
    Should we not just make that a rule? Is that not just a 
good standard for us to have?
    Mr. Gordon.
    Mr. Gordon. Senator McCaskill, we very much want to keep 
bad actors from getting contracts. We agree with that. There 
are, as Mr. Woods pointed out, mandatory triggers, statutory 
violations--like the Clean Air Act and the Clean Water Act--
that do make you ineligible.
    But it seems to us that it undermines the role of the 
suspension and debarment official to say we are taking away 
your discretion. We are deciding that no matter what you have 
done to correct the problem, no matter what remedial measures 
you have taken you are going to be automatically suspended or 
debarred. That does not strike us as a good solution.
    Senator McCaskill. Well, I get the point you are making, 
Mr. Gordon, but I guess my problem is if that is criminal 
activity? I do not mean just indicted but convicted of criminal 
activity in association with contracting, to me it seems like 
if we do not send the word out that if you do not work hard 
enough on your internal controls, because I get it that, at 
large, the company may not know that they have a bad guy 
working for them in some country across the ocean.
    On the other hand, they have not exercised controls 
adequately and should there not be an ultimate penalty if 
somebody is actually conducting criminal activity because there 
are lots and lots, I mean, if you look at the Project on 
Government Oversight (POGO) database on all of the misdeeds, 
most of those falls short of criminal activity.
    So, there is plenty of room for discretion in debarment 
without criminal activity. But we are drafting legislation to 
enact all of the Wartime Contracting Commission 
recommendations. They backed off on this mandatory suspension 
issue, as you all know.
    I think it is a mistake to back off on the mandatory 
suspension. Is there not enough discretion with all the 
hundreds of other cases that are not being addressed right now 
that we could easily deal with the ones where there is criminal 
convictions?
    Anybody else besides Mr. Gordon? Mr. Shaw.
    Mr. Shaw. I wonder whether a good balancing on that might 
be a mandatory referral of such cases to the debarring official 
perhaps within a designated period of time.
    I mean, any case like that certainly should be looked at by 
a suspending and debarring official. Any termination for 
default, frankly, should be looked at by the debarring and 
suspending official.
    But I really think you have to continue to have that 
discretion. What if it is entirely a new management? What if 
the conviction is misconduct that happened 7 or 8 years ago and 
there is an entirely new structure now?
    I mean, you need to be able to encourage companies to fix 
the problem; and if there is mandatory debarment, I do not know 
that you have that encouragement.
    Senator McCaskill. Well, to me, if we are going to 
overreach, it seems to me we should overreach by cleaning this 
problem up. I am sympathetic to the discretion argument but 
having seen so many instances where no one even lifted a finger 
to go after these folks, it is just hard for me to think that 
we are going to get serious about this if we do not have some 
lines in the sand. It seems to me criminal activity is a 
logical place to begin that.
    Mr. Gordon. If I could suggest, Senator McCaskill, there 
was a provision in some of the appropriations bills right now 
that would talk about mandatory suspension or debarment, and we 
in the Administration made a suggestion that might address your 
concern.
    And that is, there would be automatic suspension or 
debarment unless the agency made a determination that there 
were particular circumstances so that there would be a 
presumption. It would address your concern but you would still 
retain the ability for the agency to say this is a special 
case.
    Senator McCaskill. I want to thank all of you, and I want 
to particularly thank the two Senators for allowing me to do 
this. It is very nice of you to defer.
    This is a great hearing and we have to stay on this because 
this is part of the contracting debacle that is a lack of 
accountability. I mean, some of these folks that were bad 
actors got performance bonuses as you well know in Iraq and 
Afghanistan, which is really enough to make a taxpayer lose the 
top of their head from anger. Thanks.
    Chairman Lieberman. Thanks, Senator McCaskill. Thanks for 
your leadership in this area.
    We talked earlier about the guidance that OMB Director Jack 
Lew issued yesterday and it included the direction that each 
agency appoint a senior official to review the agency's 
program.
    But one matter that the guidance did not address is where 
the suspension and debarment function should be placed in an 
agency, and we just heard Mr. Shaw describe how being 
independent from the acquisition chain, he feels, empowers him 
to make the right decisions to protect the Air Force.
    As I hear it, I think in essence it removes a conflict of 
interest--the kind of situation where there may be a natural 
reluctance by an acquisition person to take action against 
someone to whom they have just rewarded a contract.
    So, I wanted to ask the other witnesses what they think. 
Should the suspension and debarment official in each of the 
agencies, under the guidance of Director Lew yesterday, be 
separate from the acquisition functions? Mr. Gordon.
    Mr. Gordon. Several thoughts, Mr. Chairman. One, I should 
say right away that the Air Force has what in many ways is a 
role model of a suspension and debarment program and much of 
that credit goes to Mr. Shaw and his staff.
    I appreciate the point about independence. I would approach 
it with care. I would point out, for example, that the GAO's 
report did not cite independence as a criterion, and they did 
point, as you know, to three other characteristics. So, they 
did not actually say that independence is needed to get an 
effective program.
    The issue of conflict of interest, I can understand the 
point but I am a little bit skeptical. Contracting officers 
make responsibility determinations, as you know, before they 
award every single contract.
    They have to decide--it is their job--whether the 
contractor is responsible. I do not understand why they would 
be allowed to do that if it was viewed as a conflict of 
interest. I think it is their job to protect taxpayer funds. I 
think that there may be agencies where independence works.
    But as we in OMB work to put together much more guidance 
because that is our next step in this, as we work to put 
together more detailed guidance, I want to carefully consider 
independence and see if it makes sense as a step that could 
help this process work better. We need to find steps to make 
this process work better.
    Chairman Lieberman. Do any of the others, Mr. Woods?
    Mr. Woods. Well, as Mr. Gordon pointed out, we did not find 
the organizational placement of the suspension and debarment 
officials to make a difference; and in fact, we found a wide 
range of situations.
    Some of the suspension and debarment officials were part of 
the acquisition organization and that seemed to work well at 
some agencies, and some had more remote connection to the 
acquisition functions and that seemed to work just as well as 
those that had connection with the acquisition community.
    Chairman Lieberman. Mr. Sims.
    Mr. Sims. I would also agree and speaking personally from 
my experience over 20 years in the field that I think the 
critical thing is that agencies--and all agencies are organized 
differently--have a structure in place and the positioning of 
the function in such a way that information can be gathered 
efficiently and sent forward to the debarring official and the 
debarring official has sufficient objectivity.
    It can work in many fashions. At EPA, for example, where I 
was before the Department of the Interior, we had a separate 
debarring official. At Interior, we have a robust problem that 
we have put in place. The debarring official is the Senior 
Procurement Executive; but as the senior procurement executive, 
the debarring official has responsibility not just for 
procurement debarments but also for non-procurement debarments. 
I know some other agencies have multiple debarring officials 
keyed to their various programs.
    But I think the critical point is not so much where it is 
located but rather that there is a structure in place for an 
active, effective program.
    Chairman Lieberman. Ms. Lerner.
    Ms. Lerner. Our CIGIE report did not assess this issue; but 
as an Inspector General, I certainly know that the independence 
that I have to do my work enables me to do my best work.
    So, I recognize, based on what these three gentlemen to my 
right have said, that there is not likely a one-size-fits-all 
answer to this. But, I would certainly commend studying 
independence as a factor, as OMB moves forward in this area.
    Chairman Lieberman. That is interesting. Mr. Shaw, do you 
want to respond because there is some respectful dissent from 
what seems to work at the Air Force, or part of what works?
    Mr. Shaw. Yes. I think it is important at the Air Force, 
and frankly I do not see why it would not be important 
elsewhere. There is one department that comes to mind that had 
no debarment or suspensions last year and the debarring 
official was a contracting person, and the reason for no 
debarment or suspensions was stated as being that there were 
not any bad contractors, that they do a good job of selecting 
the contractors at the front end.
    And I think that is what I meant about the independence. It 
is not truly a legal conflict of interest but, as you said, it 
is a conflict of interest type of issue where in the gray areas 
you are going to be viewing the contractor in a more favorable 
light.
    Certainly, contracting officers, when there is clear fraud, 
are going to refer it but it is not so clear in the gray areas.
    Chairman Lieberman. Understood. I thank you for that.
    Ms. Lerner, I wanted to ask you this question. One of the 
interesting takeaways from the survey that CIGIE of IGs was 
that audit findings rarely form the basis of suspensions and 
debarments.
    I was surprised by that because obviously audits often 
uncover a pattern of overbillings to the government. Was there 
discussion or has there been discussions in your CIGIE working 
group of coming up with guidance for the IGs on when they 
should make referrals to the suspension and debarment officials 
based on audits?
    Ms. Lerner. We have not talked about establishing guidance 
per se. We have certainly recommended, as the best practice, 
the idea of examining all audits; and, in fact, some of the 
offices that we cited as having strong practices look at all 
audit, inspection, and investigation reports to see if there is 
evidence to refer.
    So, one of the areas that we did focus on was strengthening 
the process for reviewing our own work and making appropriate 
referrals to agencies.
    Chairman Lieberman. Were you surprised about this result?
    Ms. Lerner. About the fact that there are so few audit 
referrals?
    Chairman Lieberman. Yes.
    Ms. Lerner. Not really. I think this goes back to education 
and understanding the tool. This tool has really been viewed as 
something in the investigator's toolkit.
    Chairman Lieberman. Right.
    Ms. Lerner. And when you read the regulations, it is 
obvious that it is not something that is limited to 
investigators.
    Chairman Lieberman. Sure.
    Ms. Lerner. So, that is one of the reasons that we are very 
strong on more training for the IG community because the more 
our people understand the elegance of the suspension and 
debarment process the more opportunities that I think they will 
see for it. And that will increase the number not just of 
investigative referrals, but of audit and inspection referrals.
    Chairman Lieberman. I urge you to continue that emphasis on 
that education. My time is up on this round. Senator Collins.
    Senator Collins. Thank you, Mr. Chairman.
    Mr. Woods, in your report you found that six out of the ten 
agencies reviewed lacked the characteristics of a successful 
suspension and debarment program.
    Of those six, which responded the most favorably to your 
recommendations and which agency was the most negative as far 
as adopting your recommendations?
    Mr. Woods. Well, the one that comes most readily to mind in 
terms of a favorable response would be the Department of 
Homeland Security, generally.
    We picked two subcomponents at DHS specifically, one with 
an active program, Immigration and Customs Enforcement (ICE), 
and also FEMA, which, as you pointed out, had virtually no 
suspension and debarment activities.
    But the Department of Homeland Security took our findings 
to heart as well as the findings of their own Inspector 
General, which had recently concluded some work in the area. 
They have elevated the suspension and debarment function to the 
department level and they have a senior official who is now in 
charge overall of making those decisions.
    So, the Department of Homeland Security really stands out 
in that area.
    Senator Collins. And the low-lying departments?
    Mr. Woods. I am not sure there is any particular agency 
that stands out.
    Senator Collins. Let me help you. [Laughter.]
    It is my understanding that the Department of Justice 
initially responded to your reports saying that it did not plan 
to make changes. Is that accurate?
    Mr. Woods. That is correct. We pointed out that we thought 
that their policies and procedures were not nearly as robust as 
we found at some of the other agencies and they frankly 
disagreed with that.
    And we pointed out that, although they believe that their 
policies and procedures were adequate, when one looks at them 
they merely mirror what is in the Federal Acquisition 
Regulation, and that is not enough to really invigorate the 
process and to have people understand what their roles and 
responsibilities are.
    So, we disagree with the Department of Justice on that 
point.
    Senator Collins. Do you believe that the Department of 
Justice is operating under the impression that there needs to 
be a conviction before they can proceed with a suspension and 
debarment?
    Mr. Woods. We did not get that sense from the department.
    Senator Collins. I am trying to figure out why the 
department is the laggard in this area. Let me ask you another 
question. If the department does not improve its procedures and 
does not adopt the recommendations, what impact do you believe 
it will have on the department's ability to ensure that it is 
not doing business with bad actors?
    Mr. Woods. We think having good policies and procedures is 
critical to the process. So, we would be concerned about their 
ability to really step up in this area absent sound policies 
and procedures.
    Senator Collins. Thank you.
    Mr. Shaw, an issue that has been brought to my attention is 
that at times an entity will be suspended or debarred, but then 
it will change its corporate form or its corporate name and 
attempt to do business as a new kind of business but it has the 
same principals and the same bad actors.
    Is there a way that we can guard against a suspended firm 
simply changing its shape, adopting a new name, and then being 
able to secure Federal work?
    Mr. Shaw. That is the most difficult problem in this area 
frankly, and we are very aggressive on that when we learn about 
it. The contracting community is usually very helpful. They 
figure that out. Often times they will see a bid coming in from 
the same fax number with a different name or something like 
that.
    When we learn about it obviously we debar them again with a 
much longer period of time but we also refer it to the Justice 
Department for criminal prosecution because that kind of case, 
I mean, if somebody is going to totally ignore the system, that 
is the only remedy.
    And we have been successful and the Justice Department has 
been successful in getting convictions in those areas.
    Senator Collins. If you have any suggestions for us on how 
we can do a better job of preventing that from happening--it 
sounds like you are on the alert for it and because you follow 
up aggressively with the Justice Department and with a longer 
debarment, you send out a message of deterrence.
    And the other entity that we found has been trying to do 
those is the Recovery Accountability and Transparency Board, 
which is working with Dun & Bradstreet to try to prevent this 
from happening.
    But if you have suggestions, I would welcome them. I think 
the Committee would welcome them because I do believe this is a 
problem.
    Mr. Shaw. Yes, I would be happy to provide follow-up with 
that.
    Senator Collins. Thank you. That would be very helpful.
    Ms. Lerner, I wanted to ask you a question about your 
report. You stated that 69 percent of the respondents to your 
survey reply that their IG never made referrals based on audits 
and inspections.
    Now, I realize that not every IG office has an inspection 
component, but that still seems like an extraordinarily high 
number. I would think the IGs would be a very common source of 
referrals toward suspension and debarment.
    So, in your judgment, what is the cause of this? Is it due 
to a lack of knowledge or concern that it is going to take too 
many resources? What is the problem here?
    Ms. Lerner. As we noted in our report, I think there are 
multiple causes. As I mentioned to the Chairman, education is 
the first. People do not understand these tools.
    There are misconceptions about them that I outlined and 
that we are trying to work against. They think that they are 
only for investigators and that they can only come as a result 
of prior judicial action. That is not the case.
    So, we are working to make sure that our broader community 
understands, and we have done training for the principals at 
CIGIE. We have trained Assistant Inspectors General for 
investigators.
    We went to the Federal Audit Executive Council, which is 
all of our audit executives, and we are talking about 
suspension and debarment and making sure that they understand 
that it is for them too.
    I took my head of audits with me to the Federal Law 
Enforcement Training Center (FLETC) and took the week-long 
course there so that he would understand and he could push out 
to his folks that this is something that not just the 
investigators can do, but auditors can do also.
    So, we are really working to educate and motivate our 
broader community on how this tool can be used.
    Senator Collins. Thank you.
    Chairman Lieberman. Thanks, Senator Collins. I have a few 
more questions.
    Mr. Woods, let me ask you, since the GAO report effectively 
recommended the guidance Mr. Lew issued yesterday, if you have 
any specific reaction to that guidance.
    Mr. Woods. We have not had a chance to study that yet.
    Chairman Lieberman. Good enough. When you do let me ask you 
for the record if you could submit a reaction to it.
    Mr. Woods. We would be delighted to look at it and submit 
that for the record.\1\
---------------------------------------------------------------------------
    \1\ Mr. Woods' response to the question from Chairman Lieberman 
appears in the Appendix on page 73.
---------------------------------------------------------------------------
    Chairman Lieberman. Good.
    I want to pick up on a question from the DHS IG report that 
you referred to which found that DHS seemed to be reluctant to 
use suspension and debarment against poorly performing 
contractors because they feared it would negatively impact the 
size of the contract or pool.
    So while that is a practical result, it seems totally 
unacceptable to allow bad performers to continue to bid just so 
you increase the size of the contract pool.
    Mr. Gordon, have you seen that at all in your work in other 
departments?
    Mr. Gordon. I am not sure if I know of specific examples, 
Mr. Chairman, but I will tell you that it is, in my opinion, 
intolerable that a company gets, for example, terminated for 
default but yet they are not immediately referred for potential 
suspension or debarment. That should be as obvious a referral 
as a conviction for a crime.
    We need to crack down on the poor performers. That is this 
fact-based area where you do not actually have a conviction but 
they are performing terribly.
    We need to go beyond just waiting to see if there is a 
criminal action against the company and take action. I have not 
seen good data so I cannot tell you how widespread the problem 
is but I will tell you that for most of these problems, and my 
colleagues on the panel have pointed it out, training is often 
the biggest gap, whether it is training for contracting 
officers, for the people in the IG shop, or other 
investigators, we need to improve training, and that is why we 
have been working both with the Defense Acquisition University 
and the Federal Acquisition Institute to be sure that we are 
getting better training about these tools.
    Chairman Lieberman. Let me ask you about the use of 
information technology. Earl Devaney, who I am sure most of you 
know, was appointed to lead the Recovery Accountability and 
Transparency (RAT) Board--which has really one of the most 
noteworthy acronyms in my long involvement, the RAT Board--set 
up to do oversight of the spending under the American Recovery 
and Reinvestment Act--the stimulus spending.
    They have been aggressive users of data put together by Dun 
& Bradstreet to find connections between companies that have 
received the stimulus money and companies that had been 
debarred, and I was struck. I thought about it because of the 
reference to some cases where contracts were let to companies 
that had been suspended or debarred simply because the 
contracting officer had not checked the list.
    Is there not a way we can fit this into the system so that 
it does not happen, that they have to go through some kind of 
information technology (IT) filter before a contract is 
awarded?
    Mr. Gordon.
    Mr. Gordon. Mr. Chairman, it is interesting that the IT 
systems, which were meant to be helping us, sometimes actually 
are not helping us as much as they should.
    In terms of Dun & Bradstreet and the Data Universal 
Numbering System (D-U-N-S) Numbers, we are in the midst right 
now of exploring the whole issue of the way D-U-N-S Numbers 
work.
    The unfortunate thing is that if an entity has been 
suspended or debarred under one D-U-N-S Number but they submit 
a bid with a different D-U-N-S Number, we are liable not to 
know about it when we check EPLS.
    We just worked with GSA who issued a ``sources sought'' to 
see if there might be a different way to do the contractor 
identification. And we at OMB are looking into a broader review 
because we have situations where, whether it is checking for 
suspension or debarment or for that matter past performance, 
you need to be able to get a full picture of what is going on 
and not one artificially limited by these numbers.
    Chairman Lieberman. Senator McCaskill referred briefly to 
the too-big-to-fail syndrome. In this case presumably that 
agencies are reluctant to suspend or debar large companies 
because even though there is a risk to the government in having 
money in the hands of those contractors based on their records, 
the agencies are dependent on them for goods and services.
    And I just wanted to invite any of you to add on to that. 
First off, is that real? And second, what can we do about it? I 
mean, you used the word ``intolerable'' in the situation I 
described a moment ago and I might add the same adjective to 
this.
    If somebody is a proven bad actor, no matter how big they 
are, they ought to suffer some punishment. I correct myself 
that the purpose here is not punishment but to protect the 
government and the taxpayers, and it is hard to protect against 
somebody who has already cheated you once.
    Mr. Gordon, do you want to start it?
    Mr. Gordon. Sure. I am happy to start although I am sure my 
colleagues on the panel will have further thoughts.
    I have never seen good data but it is certainly the word on 
the street that if you look at EPLS you are going to find 
companies and individuals you have never heard of, and you will 
not see the very big corporations there.
    I do not know that the cause of that is what it sounds 
like. I am not sure it is a too-big-to-fail. It could well be 
that large sophisticated contractors, (A) in fact have systems 
in place to protect their behavior, but (B) when there are 
problems, they address the problems promptly, or (C) they reach 
settlements with suspension or debarment officials like Mr. 
Shaw so they never end up on the EPLS.
    It does not mean that we are not paying attention. I would 
want to see much better data before I drew conclusions that 
someone was too big to fail and, therefore, we did not pay 
attention to their problem.
    Chairman Lieberman. That is interesting. Mr. Woods, what do 
you think?
    Mr. Woods. There are some examples of large contractors 
appearing on the suspension and debarment list but frankly they 
are few and far between.
    Chairman Lieberman. Right.
    Mr. Woods. But I think Mr. Gordon put his finger on some of 
the reasons why that happens. We have other work under way 
looking at some of the internal audit activities of the large 
contractors, and one walks away from that work being somewhat 
impressed, actually very impressed, with the level of 
oversight, internal oversight that major corporations have. 
They do not want to be suspended and debarred and they want to 
take every step to make sure that their procedures are working 
at the largest contractors.
    Chairman Lieberman. Right. So they have their resources 
also obviously to afford to do that.
    Mr. Woods. Absolutely. And they have their own robust 
procedures in place to guard against this because they know the 
consequences.
    And based on some work we did a number of years ago, 
companies of that size will often enter into administrative 
agreements with the agencies, with the suspension and debarment 
officials, who very much want to bring these companies in line, 
not necessarily because they are dependent on them but they 
want to maintain competition. They want companies that are 
interested in serving the government, and it is in their 
interest to have the companies reform themselves and to enter 
into administrative agreements short of a suspension and 
debarment to make sure that happens.
    Chairman Lieberman. Thanks. Mr. Sims, do you want to add 
anything?
    Mr. Sims. Yes. I would also agree with what was said by Mr. 
Gordon and Mr. Woods, and would like to build on that. Problems 
are caused by people. Large corporations have the capacity to 
deal with that. One of the factors in terms of looking whether 
debarment is appropriate, whether the respondent has distanced 
himself from the problem is have you taken appropriate 
disciplinary action.
    Large corporations can certainly do that in addition to 
institutionalizing appropriate corporate governance provisions.
    I think it is important certainly to take actions against 
people, individuals as well as the businesses, when you are 
entering into debarment action because you can certainly, under 
the rules, impute conduct; for example, to individuals who are 
the problem. You can act in that way to isolate them from going 
out on their own, going to other organizations.
    But beyond that, in terms of individuals, smaller entities, 
mom and pop organizations, tend to be where the closer the 
problem person is to the control of the organization the harder 
it is for that business or the individual--where they continue 
to be in control of the organization--the harder it is for them 
to demonstrate that they have done something to say that they 
should not now be considered a risk to the government.
    Chairman Lieberman. It make sense. Ms. Lerner.
    Ms. Lerner. Because our work was looking at the IG 
community, we did not see any impact of the too-big-to-fail 
issue on the IG community as a whole.
    Chairman Lieberman. Thank you. Mr. Shaw.
    Mr. Shaw. Thank you, Mr. Chairman.
    I have a little bit of a problem with the premise because 
the Air Force has, of course, suspended Boeing. We had Boeing's 
three launch units suspended for a 20-month period.
    We suspended it for some period of time due to its improper 
conduct under an Air Force contract. We have engaged with BAE 
Systems, which is the second-largest defense contractor, in a 
proactive way that helped them fix the company. It was not a 
debarment because I did not have sufficient evidence at that 
time.
    So, we do address that. There are fewer big companies than 
there are small companies so in some sense an analysis of the 
EPLS is going to kick out more small companies than large 
companies.
    But I think the important point here is that I am really 
able to do that with another level of independence I think not 
just independence from the contracting community but I am 
independent from the waiver authority that determines whether a 
company or a widget that is made by a company is essential for 
national security. And I think that is a terrific set up in the 
Air Force.
    There are a lot of other agencies that do it differently. 
But because of that, I am empowered to do the right thing, to 
debar or suspend a company if that is necessary to protect the 
government's interest without considering, we coordinate, but 
without being hung up on whether we really need that product 
because I know there is somebody else in the Air Force that 
will make that judgment.
    Chairman Lieberman. Excellent. Thank you. Senator Collins.
    Senator Collins. Thank you, Mr. Chairman.
    Mr. Gordon, you mentioned that you thought that legislation 
is not necessary because the tools are out there. On the other 
hand, if we have a major department like the Department of 
Justice refusing to follow GAO's recommendations and adopt more 
effective means to go after contractors who should be debarred 
or suspended it raises the question in my mind about whether 
there should be a legislative mandate.
    I will also say that my experience of having had a very 
similar 2-day hearing 30 years ago with exactly the same kinds 
of issues makes me wonder if we should have acted back then to 
pass legislation.
    So, I guess I would ask you. What would be the harm, as 
long as we kept debarment and suspension discretionary, with 
requiring that every agency of a certain size have dedicated 
staff, have agency-specific policies, and an active referral 
process? In other words, statutorily mandate the GAO 
recommendations.
    Mr. Gordon. Senator, I will say that in preparing for this 
hearing, I got a chance to read through some of the materials 
about your work back then in the MCI, Inc., matter and others.
    And I was, on the one hand, impressed; on the other hand, 
it is somewhat discouraging to see that we have not made enough 
progress. So, I certainly share your points there.
    I would want to see the draft legislation. We would want to 
look at the draft legislation. I do think that what GAO 
described was actually not recommendations because they also 
made recommendations that we will be considering.
    But what they described were characteristics and the 
characteristics are a bit tricky. From my point of view, what 
you need is a push from the top and a push from the center that 
this is serious and needs to be done.
    If I could share with you, we have had conversations with 
the agencies including, I should tell you, the Department of 
Justice about this matter. I have personally engaged in those 
conversations.
    We need to make progress. I do not want to be at that 
hearing 30 years from now, I do not know about everybody else 
here, but we need to make progress.
    I will tell you also that the Department of Justice 
reported to me that there has been an increase in their cases 
over the last 12 months. It did not yet get picked up in the 
GAO report because of the period they were looking at.
    But they fully understand that the Office of Management and 
Budget will pursue this. That said, if there were draft 
legislation, obviously we would be happy to look at it 
especially if it were along the lines of GAO's described 
characteristics.
    Senator Collins. Thank you. I think that is something that 
we should take a look at because it is discouraging to see such 
uneven progress over the years.
    Mr. Shaw, another blast from the past for me was when you 
mentioned the Program Fraud Civil Penalties Act because I was 
involved in writing that also as a staffer. I think it passed 
in the mid-1980s, as I recall. I think you said 1986.
    Mr. Shaw. I think so.
    Senator Collins. And I remember Senators Carl Levin and 
Bill Cohen being the primary authors of that.
    I just want to tell you that I look forward to your 
recommendations on how we could make it work better because 
that was intended to be a vigorous tool that could be used with 
administrative law judges, as I recall, and to avoid having to 
go through the judicial system on some of these small dollar 
cases where the Justice Department is just never going to 
pursue them.
    So, I just, on a personal note, wanted to tell you that 
while I am discouraged to learn that we did not fix the 
problem, I look forward to your recommendations on how we might 
do so.
    Mr. Shaw. Maybe by way of a preview of coming attractions, 
I mean, the concept would be that the debarring officials would 
be the deciding people in a DOD test program because the 
debarring officials would have the fact pattern for other 
reasons and we would have focused on it and it would be then a 
more streamlined approach.
    Senator Collins. Thank you.
    You know, when we are talking about debarment and 
suspension, the other aspect which I think is not well 
understood is that its purpose is to protect the taxpayer. It 
is to protect government. It is to ensure that we are not doing 
business with bad actors, whether they are unethical or unable 
to perform.
    It is not really to punish the contractor. I am sure 
contractors feel punished as a result, but it really is to 
protect the integrity of the procurement system.
    And one part of this that is so frustrating to me is when 
an unethical or an incompetent contractor wins a bid that means 
that the honest, good performer did not get the bid. And that 
is what is really frustrating in this. That is one reason this 
is so important.
    Ms. Lerner, since you are an Inspector General with the 
National Science Foundation (NSF), I want to end my question 
period with a question to you.
    When people think about debarment and suspension to the 
extent that they know about it, they think in terms of 
contracts for goods and services. They do not think in terms of 
grants.
    And since you are the IG for the National Science 
Foundation, which issues a lot of grants, I think it is 
important that we talk about that aspect of that because there 
are grant recipients that runaway with the money or fail to 
perform or default on their obligations too. It is not just the 
contractor.
    People think in terms of defense contractors. They might 
think in terms of Medicare fraud, but they do not think in 
terms of grants. So, are we doing enough in the area of grants?
    Ms. Lerner. Well, I can speak for NSF, and we have had a 
pretty robust process for suspending and debarring our 
recipients, who are primarily grantees.
    I looked back through the year 2000, and we have actively 
pursued debarment. Since the year 2000, we have racked up a 
total of close to 60 debarments in that timeframe, which for an 
agency of our size is substantial.
    As I pointed out, we have learned, and I have learned a lot 
since taking on the leadership role on the Council, and one of 
the things I learned was that we should be out there suspending 
people more.
    Since we have started doing this work, we have racked up 
nine suspensions last year alone, and that is an active tool 
that we are using.
    I also lead the research misconduct working group for 
CIGIE, and that is one of the tools that we will use to get 
word out to the grant community that this is something that we 
can do as well. Again more education, more outreach, better 
understanding, and better results.
    Senator Collins. I suspect that your experience is unusual 
because you personally are so committed and I think we need to 
look at the National Institutes of Health (NIH), at other 
agencies that do major grant awards to see whether there really 
is the kind of accountability that is necessary, and again here 
it is a matter if a grant goes to a researcher who turns out to 
be a fraud, that is money that could have gone to a researcher 
who would advance our knowledge of how to cure Alzheimer's, 
diabetes, or cancer, and that is why I feel so strongly that we 
need to be taking a harder look at the grant side too, and I 
suspect that it is due to your personal commitment and 
leadership that you have such an extraordinary record at the 
NSF. But that is something I hope we can look a little more 
into.
    Mr. Sims, you were nodding during this so I might give you 
the last word.
    Mr. Sims. I would certainly agree with the observations, 
Senator Collins, that it is important to use the non-
procurement rule as well.
    I think one thing to remember, though, because these are 
really procedure rules and due to reciprocity when you act 
under the contract rule, you also protect for purposes of 
debarred persons being rendered ineligible for non-procurement 
purposes as well and vice versa.
    Some agencies elect to act under the non-procurement role 
because, in many respects, it has some advantages over the FAR 
and more flexibility.
    Some agencies use both. At the Interior Department we used 
both rules as it appears appropriate with the understanding 
that when we do that we are actually providing protection, in 
both directions, procurement and non-procurement.
    Senator Collins. Thank you.
    Mr. Chairman, thank you so much for holding this hearing. 
It is a very long-held interest of mine and now that you have 
pointed out how long I had been around working on this issue I 
hope we can work on some legislation with the help of OFPP and 
our wonderful panel here and look forward to seeing the program 
fraud civil remedies amendments as well and also look at the 
grant side.
    Chairman Lieberman. Well said. Thank you, Senator Collins. 
I do want to state for the record that when you worked for 
Senator Cohen you were extremely young.
    Senator Collins. I wish. [Laughter.]
    Chairman Lieberman. This has been an excellent hearing. 
This is not only a panel that is informed and has helped to 
inform the Committee but, you are on the job and--I was about 
to be pejorative, Mr. Gordon--except for Mr. Gordon, who is 
leaving, the rest of you are going to continue on the job in 
your various capacities and I know you will continue to pursue 
aims that are shared by this Committee.
    We really do wish you good luck and thank you again, Mr. 
Gordon, for your service.
    Mr. Gordon. Thank you.
    Chairman Lieberman. I agree with Senator Collins. We are 
going to take a look at whether additional legislation is 
necessary along the lines that she has discussed.
    In the meantime, the implementation of existing law is 
critically important, and you are there to make that happen. We 
are not going to let this one go. We really intend to continue 
very active oversight.
    So, we thank you for your testimony today and for your 
continuing work in this area, which is really important to 
confidence in the government, not to mention the specific 
saving of taxpayer dollars.
    We are going to keep the record of the hearing open for 15 
days for any additional questions and statements.
    With that, we thank you.
    The hearing is adjourned.
    [Whereupon, at 10:43 a.m., the Committee was adjourned.]


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