Department of Defense Report Outlines Contractor Fraud

By Theo Emery, The Boston Globe

04 February 11

ore than 100 military contractors providing everything from aircraft to wrist cuffs for gloves committed civil or criminal fraud between 2007 and 2009, according to a report from the Department of Defense, yet many continued to receive funds from the department - including some barred from contracting.

The Pentagon report found that 30 contractors had been convicted of fraud between 2007 and 2009, and 91 had been the subject of civil judgments over fraud claims; some companies appeared on both lists. In addition, 120 companies had reached settlements over claims. Forty-three companies were suspended, and 164 were debarred from contracting.

The information is not typically compiled in one place, but Senator Bernard Sanders, an Independent from Vermont, requested the information through a defense spending bill last year. Covering three of the 10 years worth of data requested, the report lists many cases that are already public, including some that have received widespread news coverage, and includes no details of the cases. Still, the report provides a window into contractor fraud, which Sanders said should be paramount as Congress wrestles cutting the federal deficit.

"The people of this country want to make sure that when they spend a dollar on defense, it's going for defense, it's not going to companies committing fraud," said Sanders.

Billions of dollars continued to flow to contractors even after they were found to have committed fraud, and about a dozen had been barred from contracting altogether. Still, the report concluded that "existing remedies with respect to contractor wrongdoing are sufficient. Sanders bridles at that finding, saying "the DOD has got to be a lot more vigorous in terms of its investigations, and a lot more vigorous in prosecuting those people who have committed fraud."

One of the companies named in the report is Raytheon Co.'s Integrated Defense Systems, which is based in Tewksbury. But the company said it was included in error; it had agreed to pay about $213,000 to settle a dispute over a Patriot missile component, but had not been the subject of a 2009 civil fraud judgment, as the report said.

"The Raytheon settlement referenced in the report did not relate to fraud and did not involve a civil judgment. It was a fair and amicable resolution of a dispute over contractual requirements for component testing," the company said in a statement.

Starting in mid-April, information about contractor fraud in all federal agencies will be publicly available through a database known as the Federal Awardee Performance and Integrity Information System. The system was not intended to be public, but Sanders included a provision in another war spending bill making the information public.