Database used to track contractor fraud poorly managed, filled with inaccuracies


Congressional watchdogs have often criticized the online tool maintained by the General Services Administration to prevent the award of federal funds to banned individuals and companies. A Sunlight Reporting Group review of the sites data finds that it continues to be badly maintained, with rampant problems including omissions, inaccuracies and other data quality issues.

The Government Accountability Office examined the Excluded Party List System, which lists individuals and entities that are ineligible to receive federal contracts, some subcontracts and grants. The site allows procurement officers to check whether a potential contractor has been debarred, which can result from a contractor defrauding the government, evading taxes, committing a felony, or, in some cases, failing to repay a student loan.

In a Feb. 26, 2009 report, GAO cites several case studies which show flaws in the EPLS system, including agencies awarding funds to debarred contractors who have committed offenses ranging from tax fraud to violations of national security rules. While the report lists the month the company was debarred and the agency that debarred it, it does not list the name of the company. A search of EPLS  for the dates and agencies in the examples cited by GAO, however, failed to find any plausible matches. And the GSA officials that manage the web site refused to talk to us about the specific cases of debarment or address the issue as to why these examples could not be found on the Web site. Our review included all the cases cited in the GAO report.

For example, GSA debarred a chemical company in May 2007 for affixing false manufacturing labels on products they sold to the government. The Drug Enforcement Agency later found that the company was selling chemicals to individuals for the production of illegal methamphetamines. Despite being banned from receiving federal contracts, the Department of Agriculture and the GSA awarded it another $1 million.

Asked why they continued giving contracts to the company, GSA officials claimed it wasnt the same company, according to the GAO report, which found that the company continued to receive contracts because its address was incorrectly entered in the database and it lacked any contractor identification number.

A review of EPLS data shows no debarments in the month of May 2007 by GSA.

Another case involved serious national security issues when the Army continued to employ a German company that was debarred after their president was caught trying to smuggle materials that could be used in making a nuclear bomb to North Korea. The report found that the Army continued to pay the company as much as $4 million in 2006 even though the contract should have been terminated based on past performance and the violation of national security.

Army officials claimed they were legally obligated to continue the contract, citing a rule that stated, agencies may continue contracts or subcontracts in existence at the time the contractor was debarred, suspended or proposed for debarment unless the agency head directs otherwise. The GAO noted that the rule allows the Army to continue a contract, but does not require doing so.

In July 2005, the Army debarred the company; as with the other case studies cited by GAO, there was no company in EPLS data that matched the description.

After several phone calls, interviews and email exchanges with GSA, their spokesperson, Jeffery Woodworth was unwilling to identify the companies cited in the GAO report or explain why our searches were not drawing them up on the Web site. The inadequacy of the search function was a problem identified by the GAO in its February 2009 report.

This has been a longstanding problem. A 2005 GAO report, which also found that several debarred contractors continued to receive contracts or grants, highlighted problems in how the data in managed and that several times contract officers dont search the database before giving out a contract. The report suggested that GSA strengthen EPLS search capabilities and take steps to update and maintain EPLS points of contact. In fact, the report says that when these deficiencies were pointed out the GSA simply restated its current policies and procedures instead of agreeing to take steps to oversee the completeness of EPLS and ensure that exclusions are properly enforced.

When asked about the GAO report, GSAs suspension and debarment officer Joe Neurauter officials dismissed the report saying the report doesnt matter because we double check everything and ensure the system runs properly and search engine friendly.
The number of individuals debarred compared to companies is much larger a totally of 61,000 individuals and only 5,000 companies. The GAO report too pointed out the discrepancy saying that in a few cases the company names should have been identified. The data on the website is searchable by name of the company and the individual employees that have been debarred and ideally should have all individuals connected to companies they work for.

But Neurauter defended the number saying,as a rule GSA refers more individuals because very often an individual acted on his or her own account and the company didnt know about it. This happens often when its a high ranking official of a company.