Government Contracts Monitor

Congress Ponders the Excluded Parties List System in Wake of Unprecedented Government Expenditure

February 26, 2009

Today, in response to a Government Accountability Office (GAO) report citing several instances of suspended and debarred contractors continuing to receive federal government contracts, the U.S. House of Representatives’ Committee on Oversight and Government Reform held a hearing examining the effectiveness of the Excluded Parties List System (EPLS) – the federal database intended to prevent persons and businesses ineligible to receive federal contracts due to past misconduct from receiving new awards.

Many of the panelists at this morning’s hearing attributed these failures to an undertrained and overstretched acquisition workforce (i.e. human error), rather than a broken suspension and debarment reporting system.  Under current procurement regulations, contracting officers must check the EPLS before awarding a contract and awardees must certify that they are not currently suspended or debarred.  The panelists testified that, where errors have occurred, it was typically because:

• Contracting Officers failed to check the EPLS before issuing an award;
• The EPLS was not updated to include current suspension and debarment information; or
• Individuals fraudulently operated under different identities to avoid EPLS identification.

The GAO report cited 25 specific instances of suspended or debarred contractors that continued to receive contracts despite being listed on the EPLS.  The report concluded: 

Most of the improper awards and payments we identified can be attributed to ineffective management of the EPLS database or to control weaknesses at both excluding and procuring agencies.  For example, our cases and analyses of EPLS data show that EPLS entries may lack DUNS numbers, the database had insufficient search capabilities, and that a number of the listed points of contact for further information about exclusions were incorrect.

As Brigadier General Edward Harrington (ret.) testified today, the EPLS may not be perfect, but Congress should remember that “people make mistakes.”

Congress’ New Catchphrase: “Waste, Fraud, and Abuse”

Today’s hearing may be a sign of things to come.  With the recent passage of the over $700B American Recovery and Reinvestment Act (ARRA), Congress must reassure taxpayers that it is working to limit “waste, fraud, and abuse” in the award of billions of dollars in government contracts.  That legislation contains strict oversight provisions granting Congress and executive agencies unprecedented access to contractors’ internal business operations.    

However, of the millions of contract actions entered into by federal agencies, GAO cited only a handful that had gone to suspended or debarred contractors.  As Donald Drabkin of the General Services Administration (GSA) stated at today’s hearing, the overwhelming majority of contracts go to responsible government contractors. 

Under Federal Acquisition Regulation (FAR) Part 9, contracting officers must make an affirmative declaration that the contractor is “presently responsible” to receive a government contract.  The present responsibility determination takes into account many factors, including the contractor’s ability to perform the contract, the contractor’s history of integrity and business ethics, and whether the contractor is “otherwise qualified and eligible to receive an award under applicable laws and regulations.”  Suspension and debarment may not be used to punish contractors – instead, they demonstrate that a contractor is no longer presently responsible to hold government contracts.  Even if a contractor is suspended or debarred, it may continue to perform its preexisting contracts.  Some of the “illegal” payments to suspended and debarred contractors cited by GAO were for contracts that were not covered by suspension or debarment orders.

It is true that the EPLS can be updated to improve its search capabilities and contracting officers can be retrained on the necessity of checking the EPLS prior to making an award. However, this morning’s hearing – sensationally named “How Convicts and Con Men Receive New Federal Contracts” – was not called to address this “problem.” Rather, it was intended to send a clear statement to constituents: Congress, and the new Oversight Committee, are serious about preventing “fraud, waste, and abuse” in the doling out of the trillions of U.S. taxpayer dollars.