Corruption In Army Contracts

(MoneyWatch)  As discussed in the past the Federal Government especially spends so much money on so many things there are many opportunities for fraud, waste and abuse. The Washington Post recently reported on a case of what may seem to be this related to Army information systems and support contracts in Northern Virginia.

In this instance a personal relationship developed between an Army official and an employee of a small defense contractor. This company then received a small contract from the official's organization. This ultimately became a very large contract worth $185 million when the same employee worked for a larger contract. This contract was suspended when the details of the relationship and the two's activities came to light.

The Army manager is accused of providing information that would allow the companies to make the best bid on the contract. He also supposedly allowed the company to write portions of the Statement of Work (SOW). This tailoring of a key procurement document made it even easier for the company to win the contract. All involved deny any improprieties.

The Post has followed up with another story that the House of Representatives will begin to review the contracts involved in the scandal. The Panel seems as much concerned with how the Army handled the review of the situation and the legal remedies that they took. If there is no real punishment to those involved the motivation to carry out such schemes will remain.

In an unrelated story again involving Army personnel two men and an Army Warrent Officer conspired to defraud a private company by pretending that they had contracts with the Army. The officer provided false emails from his official Army account supporting the claims by the two men that they had received contracts from the Army. The company involved provides financial advances to companies waiting to be paid by the government. They are then paid back the amount with some extra money added for the use of their money. This process allows companies starting a new contract to have the capital to begin work on the contract.

The two different stories illustrate the ways that fraud and waste can affect contracting. In the first case it can be assumed that the contract involved work that was required to support a mission. The company that ultimately won may not have provided either the best price or service. The money could have been used to better effect. The second story does not involve government money but it may slow down financing for a real company that is needed to provide a necessary product or service.

The worst effect of waste, fraud and abuse especially in defense work is that it might lead to soldiers deaths. It also slows down the whole acquisition process by adding layers of review and regulation. That is why the Government should pursue prosecution and punishment for those guilty of violating the laws on this.