The federal government’s Commission on Wartime Contracting has issued its final report, finding that $31 billion to $60 billion dollars in taxpayers’ money was wasted between fiscal year 2002 and fiscal year 2011. The final report states that this is a conservative estimate of money lost through American and foreign contractors. The commission urges Congress to develop specific goals for government contractors instead of utilizing contingency goals and objectives. Additionally, the report notes that new and enforcement mechanisms are necessary to prevent further fraud and abuse.
Operations in Iraq and Afghanistan averaged approximately $12 million dollars every day for the past ten years in waste. Millions of dollars were paid from the U.S. Government to the Taliban or insurgents fighting our armed forces. The Taliban and insurgents threaten harm to the employees of government contractors unless they pay “protection fees.” Contractors regularly capitulate to the insurgents’ demands and pay them out of the funds that the U.S. Government (American taxpayer money) has provided them.
But, the insurgents aren’t the only ones to blame for the billions of dollars wasted. The report cites inadequate competition for contracts as a major problem. Contracts are routinely awarded without competitive bidding and are then extended without a review of the contractor’s performance or reopening the contract to competitive bidding. In addition, the military regularly awards contracts without giving any task orders or expectations to guide government contractors. Therefore, the contractors are free to use the funds as they see fit and not in a manner that best accomplishes the contract’s goals.
Finally, there is also a problem with the proliferation of subcontractors. The majority of subcontractors come from cultures in which bribes and kickbacks are a normal part of business. The United States has little control over these subcontractors, and therefore has little oversight as to how they spend their money on kickbacks. The report also found that Afghan subcontractors “have proved to be unreliable, while agency oversight has been especially difficult to implement.”
Because of contractor’s abuse of American taxpayers’ funds, the reputation of the United States has suffered abroad. Unfortunately, contractors do not limit their fraudulent activities with taxpayers’ money to Iraq and Afghanistan. Every year, government contractors, by submitting false claims for payment, defraud millions of dollars from the state and federal governments. When contractors commit fraud against the U.S. Government, they can be held accountable. The federal False Claims Act allows whistleblowers to file complaints to recover the damages done to the federal government. Whistleblowers who come forward and report wrongdoers can be awarded between 15% to 30% of the federal government’s recovery. Therefore, if the government recovers $1 million dollars, the whistleblower could receive a reward between $150,000 and $300,000.
Our firm takes fraud against the federal and state governments seriously. If you have any information in regard to contractors or subcontractors defrauding the federal or state governments, then please let us know. Andrew Brashier, a lawyer in our Consumer Fraud Section, has been investigating False Claims Act cases. He can be reached at 1-800-898-2034, 334-269-2343 or Andrew.Brashier@beasleyallen.com.
Source: http://www.wartimecontracting.gov/ Chapters 3 & 7.
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