Analytical Response; government contracting
With the increased expenditures in US government contracting, there is increased need for the establishment of an effective law that governs procurement practices. Evidently, the existing laws have failed to deter and detect procurement contracting fraud particularly in the department of defense where some bids are awarded in a non-competitive manner. Consequently, as a result of the fictitious claims made by contractors, the government has lost substantial sums of money and numerous business opportunities. To ensure fair use of taxpayers’ money in government procurement, the management of procurement processes must conform to the requirements and standards set out in the relevant laws regulations. This paper gives an analytical response on the issue of government contract fraud by giving a critical position based on internal and foreign malpractices in the procurement of government contracts.
In my opinion, the issue of government contracting is a lucrative operation yet a very complex exercise that brings nightmares for private businesses. For one it is very clear that contractors must meet regulations and requirements before a private enterprise is accepted and registered as a government contractor. Although, the US law on government regulation for contracts is very elaborate, there seems to be deliberate efforts by some government officer in collusion with the contractors to defraud the taxpayers. However, it is important to understand government procurement procedures as a support for my arguments.
Federal Acquisition Regulations
The federal acquisition federation refers to set of rules and regulations that stipulate the practice of purchasing. The regulations and requirements are enacted to provide a framework for ensuring that government purchasing activities are accountable and impartial and that they meet the intended purposes. In this regard, it is notable that government contracting provides one of the business opportunities not only for large and experienced corporations, but also for small business units. One of the areas which have received a lot of attention in recent years is the defense contracting regulations. The concerns are fuelled by the fact that the department of defense is one of the largest consumers of commodities and services in the United States and most of its activities are not exposed for everyone. It is important to consider that with the increasing political conflicts in foreign countries and the surging effort by the United States to offer solutions into those countries, has led to a greater need for commodities and services in the department of defense.
The US department of defense has a clear and elaborate policy on the procurement of projects. It provides one of the biggest business opportunities for both small businesses and large corporations. Although all qualification for the department of defense contracting must meet the general rules and regulations of government contracting, it is notable that the department of defense has an extended supplementary regulation that stipulates the requirements and standards for contractors. The specific regulations and requirements for supplying the department of defense are contained in the Defense Federal Acquisition Regulation Supplement (DFAR).
Procurement for the department of defense
To my understanding, the federal acquisition regulationsis the primary source of all the conditions and requirements that stipulate government contracting including supplying the department of defense. The first difference between commercial contracting and government contracting for the department of defense is that the department of defense uses authorized personnel known as the contracting officers who act as agents between the government and the contracting organizations. There are different types of contracting officers starting with the procurement contracting officers who initiate the process and administrative contracting officers who supervise the contract. It is notable that under the regulations of the DFARs, the department of defense maintains the right to revise the contract details although the contractor retains his entitlement to make appropriate adjustments to meet the changes (David, 2007) In addition, the DOD performs an extensive audit, monitoring and evaluation to ensure that the contractor conforms to the regulations. More importantly, the DOD contracts are highly interconnected in that they may serve different purposes and as such the contractor may have to cooperate with other programs and institutions. Lastly, the DOD retains its right to recall or terminate the entire contract or part of based on its assessment of your compliance to the set regulations and conditions or for reasons born within the government. Other conditions given for government regulations and conditions for the DOD include the spirit of the regulations. The regulations are based on the need to get the best commodities or services at the most affordable price. This brings in the concept of competitiveness. However, the DOD regulations on procurement emphasizes on how the contractor is responsible for the task. This is based on the ability to mobilize adequate financial resources, deliver the agreement and ensure adherence to business principles and ethics.
Challenges in the enforcement of the FAR
The government ability to enforce the FAR has come under heavy criticism in recent years. Although there are clear procedures on the regulatory framework, there is evidence that the FAR regulations have been violated to a greater extending. In my view, these violations are not only rampant within the united sates, but also in foreign countries where the US has substantial business interests. In an effort to enhance compliance with the regulations, the federal government has put in place a regulatory framework and an establishment to enhance business operations within the US and in foreign countries (Edward, 2005). More importantly, the government through the department of state provides interested contractors with investment information and advice. For instance the US department of commerce works closely with Iraq investment and Reconstruction Task Force (IIRTF), the ministry of foreign affairs through the US embassy and the private sector and other international organizations to provide US companies with information on the business environment. The USAID also contributes in providing appropriate information for the US companies
Government procurement fraud
In my opinion, one of the greatest challenges for the enforcement of the FAR is the complexity of the government procurement fraud. It is clear that the federal government spends a substantial percentage of the tax payer’s money to finance contracts within the country and in foreign lands where the US has interests. For instance it is estimated that federal contracts form one of the rapidly growing aspects of the US budgetary allocations with some people claiming that US procurement spending has increased by over 86% in recent years a tremendous growth that depicts the growing consumptions and purchase by the government. However, on the other hand, the justice department claims that the government spends more than 1.4 million dollars in settlements and judgments. The department claims that much of the finance is spend in pursuing allegations of fraud in government contracting. The issue of procurement fraud leads to unfair use of taxpayer’s money and threatens national and international security based on the defense procurements and may lead to poor sourcing for commodities.
Low competition in government acquisition methods
One of the greatest challenges for the US government is to ensure that the procurement process remains competitive by attracting quality bids for contracts. Evidently, the government has emphasized on evaluating bids by focusing on past performance, pricing and experience in supplying the commodity or service. However, there have been complaints by contractors that the government is increasingly using uncompetitive practices (Tiefer and Shook 2007). These contractors argue that the government uses unfair procurement practices that encourage wastage of tax payer’s money.
It is also notable that several government contracts are not competitive by nature. For instance some categories are generally non-competitive characterized by the presence of a single supplier who delivers the commodities or the services. The US budgetary allocation and consequential rationale for one contractor in non-competitive bidding has largely been influenced by emergency situations like the war in Iraq. The construction of Iraq has cost the taxpayer tremendously. In this regard, the FAR laws give exceptions for competitive procurement of which emergencies fall. Subsequent changes in the federal law have put a limit on the duration for such contracts to one year.
Government contract fraud
Fraud in government contracting can occur in numerous stages during the contracting process. Some of the stages where fraud occurs include violation of antitrust laws, kickbacks, pricing and inflated subcontracting. There have been claims that some contractors use falsified or altered data or fail to make appropriate adjustments on supporting data leading to fraudulent practices. There have also been concerns about the failure by contractors like the KBR in Iraq to disclose vital data hence causing delays and fraudulent payments. In addition, some contractors have been accused of using fictitious documentation to make false claims. Government procurement frauds have also taken the form of progress payment fraud. Progress payments refer to transactions in favor of the contractor where the government makes prior payments based on the ability of the contractor to complete the project. The government caries out a comprehensive audit after the project and in this case it provides an avenue for fraud as progress payments are not audited by the government. with the increased expenditure in foreign government contracting especially in Iraq and other war torn countries, it is imperative that that several measures must be put in place to protect witnesses of procurement contracting within the US and in foreign countries.
Government initiative to curb procurement fraud
The government has come up with several initiatives to enhance the detection and prevention of government procurement fraud.
The national procurement fraud task force
The department of justice came up with this task force within the criminal division. The mandate of the task force is to detect and apprehend violators of the government contracting procedures. The taskforce emphasizes on the pricing of contracts, documentation and fictitious claims among other aspects of procurement fraud.
Strengthening of Inspector general and SIGIR
There are efforts to combat fraud in government procurement at the department of defense. This has led to enactment of several laws to prohibit malpractices in the defense contracting. Some of the laws enacted include the establishment of the Special General Inspector for Iraq (SIGIR) to manage the construction kitty for Iraq.
Defense contract audit agency
This agency works in several military units to aid in auditing of contracts. The agency is mandated to carry out audits on defense contracts as well as other government agencies. In addition, the agency is mandated to carry out investigations pertaining to contracting (Darrell, 2005).
Other laws enacted to prevent procurement fraud
The procurement integrity act
The government implemented specific policies for re-employment of former state consultants to help in liaison functions. In this regard, the government enacted laws that enhance compliance to the law with the help of the former consultants.
False claims act
This law was enacted to provide punishment to defense contractors who make false claims to fraud the government. The law encouraged the use of private investigators to promote evidence gathering and apprehension of violators of the law. The false claims law also encourages whistleblowers to launch their evidence and report crimes pertaining to government contracting.
Due to the surge in public expenditure on government contracts, there is need for the government to put in place measures that streamline government spending in all the projects. In addition, there is need for the establishment of appropriate laws that help in the prevention and apprehension of violators of the Federal Acquisition Regulations. Moreover, it is vital for the government to enhance the protection of key witnesses and whistle blowers especially within the department of defense. On the other hand, the justice department needs to work closer with the professional procurement groups and other government agencies to reinforce the relevant laws and regulations and establish effective government procurement standards. Of particular significance, is the need to enhance accountability on the use of public funds in government contracting especially in foreign countries. In this regard, the role of the Special Inspector General for Iraq Reconstruction (SIGIR) must be enhanced to promote accountability in the use of taxpayer’s money.