“Contractor misconduct” is a term the Project On Government Oversight (POGO) uses to highlight instances when companies that sell goods or services to the government violate laws or regulations or are the subject of misconduct allegations in their dealings with the government, individuals, or private entities.
While we realize that certain instances of misconduct could be listed under multiple categories, we try our best to catalog them accurately. POGO has made every attempt to cross-reference multiple instances of misconduct that derive from the same matter. Misconduct of subsidiaries and acquired companies or their employees is included with the parent company if the parent played any role in the act itself or its resolution, including any payment made to the government or a private entity.
In an effort to provide an accurate database, and to allow contractors to respond for the record, POGO contacted every contractor featured in the FCMD for confirmation on the misconduct instances. POGO’s correspondence and the contractor’s reply (if received) are included on each contractor’s profile page.
The majority of the misconduct instances involve civil, criminal, or administrative settlements. This should not come as a surprise, as corporations frequently resolve cases prior to a trial or widespread media exposure. Rather than risk going to trial, they often choose to settle the matter as a cost of doing business, often without having to admit culpability or wrongdoing. Many times, settlements provide companies with more control over the terms of the agreement and the public disclosure of the alleged wrongdoing. Nevertheless, inclusion of such agreements and settlements is essential for the government to learn more about a contractor’s complete record of responsibility.
In addition to the misconduct instances for each contractor, the FCMD includes links to helpful NGO and government resources, and contractor-specific links to annual reports, company SEC filings, lobbying and campaign finance information, and other helpful information.
The FCMD ranking data is compiled from the Federal Procurement Data System – Next Generation. POGO updates the FCMD when complete ranking and contract award dollar totals for the previous fiscal year become available. As we periodically update the contractor ranking, POGO retains all prior rankings as well. Contractors not appearing on the most recent ranking will remain in the FCMD for historical purposes.
In order to make the database user-friendly and allow the reader to analyze the data more easily, misconduct types are condensed into 18 different categories. A category can pertain to a criminal, civil, or administrative proceeding. Listed below are descriptions of the categories:
- Price-fixing and bid-rigging
- Consumer Affairs
- Defective products/product liability; unfair or deceptive business practices; death or injury caused by corporate negligence (NOTE: Instances involving pharmaceutical products or medical devices are generally included under “Health”)
- Cost/Labor Mischarge
- Goods, services, or labor billed at unfair or unreasonable costs or prices
- Defective Pricing
- While technically not misconduct, POGO considers cases involving cost accounting or pricing later found to be incorrect as being indicative of a lack of contractor responsibility and accountability
- Pollution and hazardous waste violations pertaining to the ecosystem (i.e., violations of the Clean Water Act, Clean Air Act, etc.)
- Conflict of interest and ethics instances (i.e., bribery, kickbacks, Procurement Integrity Act violations, etc.)
- Government Contract Fraud
- False statements or false claims submitted to the government in the course of a contract (i.e., False Claims Act, product substitution, false testing, defective parts, etc.)
- Government Grant Fraud
- False statements or false claims submitted to the government in the course of obtaining or administering a grant
- Acts that threaten the health of the general public
- Human Rights
- Denial of basic human freedoms (i.e., torture, trafficking in persons, etc., but not including worker discrimination cases, which are included under “Labor”)
- Trade violations (i.e., Arms Export Control Act, etc.)
- Intellectual Property
- Copyright, patent, and trademark violations
- Violations involving employees’ safety, health, and personal rights (i.e., discrimination, etc.)
- Non-Governmental Contract Fraud
- False statements or fraudulent billing involving a contract to which the government is not a party (i.e. product substitution, false testing, defective parts, etc.)
- Poor Contract Performance
- Failing to fully satisfy contractual obligations; contractual matters that appear questionable but do not rise to the level of fraud
- Shareholder cases that are primarily enforced by the Securities and Exchange Commission (SEC) or state agencies
- Violations enforced by the Internal Revenue Service (IRS) or state agencies
- Violations not covered by another category
Cases in the FCMD are either pending or have been resolved in one or more of the following ways:
- Administrative Agreement
- An agreement between a contractor and an agency that usually involves a change in business practices rather than a monetary penalty.
- Deferred Prosecution Agreement
- An agreement between a contractor and prosecutor that imposes a period of probation on the contractor, during which time charges are held in abeyance in exchange for the contractor’s agreement to cooperate with investigators, enact corporate reforms, and/or cooperate with a specially-appointed corporate monitor. If the contractor satisfies the terms of the agreement, the charges are dismissed.
- A sum of money the contractor is required to pay as a penalty for alleged wrongdoing. In some cases, the fine was split among two or more contractors or it was undisclosed. As a result, POGO was unable to determine the exact amount each contractor paid.
- Found Guilty
- Either a judge or a jury found the contractor guilty in a criminal case.
- Investigative Finding
- Government reports that detail misconduct and other missteps that might lead to a criminal, civil, or administrative disposition.
- Judgment Against Defendant
- The contractor was found liable in a civil or administrative case.
- Non-Prosecution Agreement
- An agreement between a contractor and prosecutor in which no charges are filed in exchange for the contractor’s payment of a criminal fine, agreement to cooperate with investigators and/or agreement to enact corporate reforms.
- The case has not reached a conclusion; as such, it is not counted as an instance of misconduct.
- Pleaded Guilty
- The contractor entered a plea of guilty in a criminal case.
- The contractor reimbursed the government or victim for financial losses or other damages.
- The parties agreed to end any legal proceedings in exchange for money or contractor action, often with no admission of guilt or liability. In some cases, POGO was unable to determine the settlement amount because the parties agreed to keep this information confidential.
- Suspension/Debarment – Contractor
- A tool used by procurement officials to prevent nonresponsible contractors, divisions and/or affiliates from receiving future contract awards. The contractor cannot receive future contract awards until the suspension or debarment is waived or lifted.
- Suspension/Debarment – Employee
- A tool used by procurement officials to prevent nonresponsible employees or former employees of a contractor from receiving future contract awards. An employee or a former employee of a contractor cannot receive future contract awards until the suspension or debarment is waived or lifted.
Misconduct instances are classified according to the government agency that investigated or prosecuted the underlying case. The agency can be:
- Federal (i.e. Agriculture, Defense – General, Defense – Air Force, Defense – Army, Defense – Navy, EPA, Treasury – IRS, etc.)
- Multiple Agencies
- Non-Governmental (instances not involving a government agency, such as legal actions pursued by companies or individuals)
Misconduct instances involving a contractual relationship are classified according to who the other contracting party is. The contracting party will either be a government agency (see “Enforcement Agency” section above) or “Non-Governmental.” Instances not involving a contracting party are classified as “None.” In some instances, the contracting party and the enforcement agency may be the same.
POGO provides a fair and neutral description of the misconduct instance and its outcome. Whenever possible, the synopsis quotes the primary source directly. The synopsis attempts to answer the following questions for each instance of misconduct:
- Who were the parties involved?
- What was the fine/penalty?
- What was the statute/name of law allegedly violated?
- How did the contractor allegedly violate the statute (i.e., what was the misconduct)?
- When did the alleged misconduct occur?
- Where did the alleged misconduct occur?