Information on contractor misbehavior called inadequate

The database that agency contracting officials use to see if companies have been suspended or debarred from doing business with the government lacks critical information, according to a new report from the Government Accountability Office.

Entries in the General Services Administration's Excluded Parties List System almost always lack a contractor identification number, leaving agency officials no choice but to search the database by company name, GAO said in the report (GAO-05-479). This means that if a company that has been suspended or debarred has changed names, it wouldn't come up in a search.

"Consequently, contracting officials cannot always be fully confident that a prospective contractor is not on the list of excluded parties," the auditors said.

GAO based its conclusions on research at six agencies: the Air Force, Army, Navy, GSA, Defense Logistics Agency and Environmental Protection Agency. In fiscal 2004 those six agencies, which together are responsible for about two-thirds of federal contract spending, suspended 262 firms, debarred 590 and proposed debarments for 651.

But 99 percent of entries that the agencies made to the excluded parties database lacked contractor identification numbers, GAO found. The auditors recommended that GSA make the identification number a required field in the database.

In comments on the report, GSA officials agreed with the recommendation. They noted that the agency is in the process of updating the database and plans to make the field mandatory in the revised version-due out in fiscal 2006.

The Project on Government Oversight, a Washington, D.C.-based watchdog group that has pushed for enhancements to the database, praised this as a "good step forward" but said more improvements are needed. "POGO recommends that the government also collect and publish information that would help to inform its decisions about whether contractors are reputable, specifically, data on criminal, civil and administrative actions involving contractors," the group stated.

Under the Federal Acquisition Regulation, agencies are required to avoid any contractor on the excluded parties list unless they issue a waiver stating that they have a "compelling reason" to do business with the firm. Agencies can put companies on the list for a variety of infractions, including fraud, embezzlement and forgery. Suspension is temporary, while debarment can last three years or longer.

Of the six agencies studied by GAO, the Air Force and Army were the only two that had issued waivers. But five of the agencies entered administrative agreements with contractors to keep them off the list. These agreements subject companies to extra monitoring but let them continue to compete for new work as long as they act responsibly.

"Increased sharing of information on the terms and effectiveness of past and current administrative agreements would be helpful to officials in considering new agreements," the auditors said. "Similarly, reporting information on compelling reason determinations would allow suspension and debarment officials to assess the use of these waivers and would promote greater transparency and accountability."

GSA, the Defense Department, and the Office of Management and Budget generally agreed with GAO's recommendations.