U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

72–557 PDF 2012

S. Hrg. 112–358 

WEEDING OUT BAD CONTRACTORS: DOES THE 

GOVERNMENT HAVE THE RIGHT TOOLS? 

HEARING 

BEFORE THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

NOVEMBER 16, 2011 

Available via the World Wide Web: http://www.fdsys.gov/ 

Printed for the use of the 

Committee on Homeland Security and Governmental Affairs 

( 

(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

JOSEPH I. LIEBERMAN, Connecticut, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

MARK BEGICH, Alaska 

SUSAN M. COLLINS, Maine 

TOM COBURN, Oklahoma 

SCOTT P. BROWN, Massachusetts 

JOHN MCCAIN, Arizona 

RON JOHNSON, Wisconsin 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

JERRY MORAN, Kansas 

MICHAEL L. ALEXANDER, Staff Director 

TROY H. CRIBB, Senior Counsel 

CARLY A. COVIEO, Professional Staff Member 

NICHOLAS A. ROSSI, Minority Staff Director 

J. KATHRYN FRENCH, Minority Deputy Staff Director 

CLYDE E. HICKS, Minority Professional Staff Member 

TRINA DRIESSNACK TYRER, Chief Clerk 

PATRICIA R. HOGAN, Publications Clerk 

LAURA W. KILBRIDE, Hearing Clerk 

(III) 

C O N T E N T S 

Opening statements: Page 

Senator Lieberman ........................................................................................... 1 

Senator Collins ................................................................................................. 3 

Senator McCaskill ............................................................................................ 17 

Prepared statements: 

Senator Lieberman ........................................................................................... 33 

Senator Collins ................................................................................................. 35 

WITNESSES 

WEDNESDAY, NOVEMBER 16, 2011 

Hon. Daniel I. Gordon, Administrator, Office of Federal Procurement Policy, 

Office of Management and Budget ..................................................................... 5 

William T. Woods, Director, Acquisition and Sourcing Management, U.S. Government Accountability Office ............................................................................. 8 

David M. Sims, Chairman, Interagency Suspension and Debarment Committee .................................................................................................................... 9 

Allison C. Lerner, Inspector General, National Science Foundation ................... 11 

Steven A. Shaw, Deputy General Counsel for Contractor Responsibility, U.S. 

Department of the Air Force ............................................................................... 14 

ALPHABETICAL LIST OF WITNESSES

Gordon, Hon. Daniel I.: 

Testimony .......................................................................................................... 5 

Prepared statement .......................................................................................... 37 

Lerner, Allison C.: 

Testimony .......................................................................................................... 11 

Prepared statement .......................................................................................... 59 

Shaw, Steven A.: 

Testimony .......................................................................................................... 14 

Prepared statement .......................................................................................... 68 

Sims, David M.: 

Testimony .......................................................................................................... 9 

Prepared statement .......................................................................................... 55 

Woods, William T.: 

Testimony .......................................................................................................... 8 

Prepared statement .......................................................................................... 45 

Response to hearing question for the Record ................................................. 73 

APPENDIX 

Letter from Ethan Treese, VP, Government Solutions, Dun & Bradstreet, 

dated December 1, 2011 ...................................................................................... 75 

GAO report titled ‘‘Suspension and Debarment: Some Agency Programs Need 

Greater Attention, and Governmentwide Oversight Could Be Improved,’’ 

August 2011 .......................................................................................................... 77 

(1) 

WEEDING OUT BAD CONTRACTORS: DOES 

THE GOVERNMENT HAVE THE RIGHT TOOLS? 

WEDNESDAY, NOVEMBER 16, 2011 

U.S. SENATE,

COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, 

Washington, DC. 

The Committee met, pursuant to notice, at 9 a.m., in room SD– 

342, Dirksen Senate Office Building, Hon. Joseph I. Lieberman, 

Chairman of the Committee, presiding. 

Present: Senators Lieberman, Pryor, McCaskill, Collins, and 

Brown. 

OPENING STATEMENT OF CHAIRMAN LIEBERMAN 

Chairman LIEBERMAN. Good morning. The hearing will come to 

order. I thank everyone for being here. 

Today, we ask two vexing questions about Federal contract 

spending. One, why are contractors who are known to be poor performers, who have engaged in fraud or other misconduct, not being 

put on the Excluded Parties List System (EPLS), which would bar 

them from receiving Federal contracts? 

And two, why are some contractors who have been placed on the 

list of banned contractors still taking in millions of dollars from the 

Federal Government? 

As we show here this morning, the answers to both of these 

questions are unacceptable and costly for taxpayers, and that has 

to stop. 

Sometimes I think, who was it? Was it Andy Warhol who said 

15 percent of life is showing up? It was not Woody Allen, was it? 

Senator COLLINS. I believe it was Woody Allen. 

Chairman LIEBERMAN. It could have been Woody Allen. Let us 

have a show of hands. [Laughter.] 

Anyway sometimes I think that some of the most effective things 

that we do in the Committee are to decide to hold hearings because 

it seems to generate reaction. I am not being critical of that. I appreciate it. 

So, that is why I say that perhaps it was a coincidence, but I was 

very glad to hear yesterday, the Director of the Office of Management and Budget (OMB) indicated that the Office of Federal Procurement Policy was issuing new guidelines to protect taxpayer 

dollars from waste, fraud, and abuse by Federal contractors. I look 

forward to hearing more about those guidelines during this hearing. 

2 

Let me give some of the examples that motivates this hearing. 

These are factual, of course. The report issued by the Department 

of Defense (DOD) last month shows that over a 10-year period 

DOD awarded $255 million to contractors who were convicted of 

criminal fraud, and almost $574 billion to contractors involved in 

civil fraud cases that resulted in a settlement or judgment against 

the contractor. 

Last year, the Department of Homeland Security’s (DHS) Inspector General (IG) found 23 cases where the Department had canceled a contract because of poor performance but in none of those 

cases did DHS suspend or debar the contractor. 

That means not only other DHS component agencies were at risk 

of entering contracts with these poor performers, but agencies 

across the government might obviously do the same. 

After Hurricane Katrina, the Department of Justice found it necessary to set up a whole task force devoted to Hurricane Katrina 

fraud, and yet the Federal Emergency Management Agency 

(FEMA), over at least a 5-year period, never sent one name to the 

Excluded Parties List for a suspension or debarment. How is that 

possible? 

The Federal Acquisition Regulation gives Federal agencies broad 

discretion under suspension and debarment procedures to prohibit 

new contracts from going to companies or individuals who perform 

poorly, engage in fraudulent behavior or otherwise act, if responsible. 

But it is a tool that is used all too rarely, and that means that 

it enables millions, perhaps billions of dollars of waste, fraud, and 

abuse to continue. 

The Government Accountability Office (GAO) issued a report last 

month and found that over a 5-year period the Departments of 

Health and Human Services (HHS), Commerce, Labor, Education, 

and Housing and Urban Development (HUD), as well as FEMA 

and the Office of Personnel Management (OPM) initiated no suspensions or debarment actions against a contractor. Zero. Most of 

the other Federal agencies sent 20 or fewer contractors to the Excluded Parties List. 

To me, it strains the imagination to think that these agencies 

have not encountered more companies that have overbilled the government, engaged in fraud, or failed to perform or carry out their 

obligations. 

But, as I said earlier, even getting on the list does not seem to 

guarantee that bad contractors are banned from receiving Federal 

contracts. For example, the U.S. Navy suspended a company after 

one of its employees sabotaged the repairs of steam pipes on an aircraft carrier. But less then a month later that same company was 

awarded three new contracts because the Navy contracting officer 

failed to check the Excluded Parties List. 

Just last month the IG at the Department of Justice reported 

that over a 6-year period that department had issued 77 contracts 

or modifications to contracts, to six separate suspended or debarred 

parties. 

Following the GAO report that I mentioned, the one that was 

issued last month, Senator Collins and I sent letters to the agencies identified by GAO as lacking the best practices that are comVerDate Nov 24 2008 12:28 Apr 30, 2012 Jkt 72557 PO 00000 Frm 000006 Fmt 06633 Sfmt 06633 P:\DOCS\72557.TXT SAFFAIRS PsN: PAT
3 

mon for those agencies that do make effective use of suspension 

and debarment, and we intend to monitor the response of those 

agencies. 

Today, we are going to hear from a panel of witnesses who are 

advocates of more active and aggressive use of suspension and debarment programs as a way of ensuring American taxpayers are 

getting their money’s worth from these Federal contractors. 

Let me move on. This is not the first time this problem has been 

examined. In 1981, the Subcommittee on Oversight and Government Management, the Federal Workforce, and the District of Columbia of the then Governmental Affairs Committee, chaired by 

then Senator William Cohen of Maine, held a series of hearings on 

suspension and debarment and in words that still ring true today, 

Senator Cohen said, ‘‘In this time of economic crisis and huge government deficits when both Congress and the Administration are 

looking for equitable ways to reduce government spending, we certainly welcome this opportunity to evaluate and propose mechanisms by which the government can protect itself from dealing with 

proven irresponsible firms. We have to ensure that the government’s investment in hundreds of millions of dollars of Federal contracts is not jeopardized because of the failure to debar undesirable 

contractors.’’ 

Very well said by Senator Cohen. I think as I approach my retirement I probably will be citing former Senators more often, hoping that may happen. 

But those words were prescient and quite well spoken but not 

surprisingly because, as some of you may know, Senator Cohen was 

blessed with an extremely talented staff director who has remained 

steadfast in her commitment to see that the government takes 

every action necessary to protect taxpayer dollars and I now turn 

to that former staff director, the current Senator from Maine, 

Susan Collins. 

OPENING STATEMENT OF SENATOR COLLINS 

Senator COLLINS. Thank you, Mr. Chairman. 

As the ghost author of those words, I was very pleased to hear 

them recited today. I want to thank you for holding this hearing 

on this important issue. 

Suspension and debarment are mechanisms by which the Federal Government protects taxpayers by avoiding the award of new 

contracts or grants to those individuals and businesses who have 

proven to be bad actors. 

Debarment is automatic upon conviction of certain crimes but 

Federal agencies also have the authority to suspend or debar an individual or business in cases where there has not been a conviction 

or an indictment but there is, nevertheless, ample evidence of unethical behavior or incompetent performance. 

The GAO has found that some agencies have failed for years to 

suspend or debar a single individual or business. For example, the 

GAO found that FEMA had no suspensions or debarments from 

2006 to 2010, despite the fact that our Committee found numerous 

instances of contract waste, abuse, fraud, and nonperformance in 

the aftermath of Hurricane Katrina. 

4 

In FEMA’s disaster housing program alone, GAO identified ap- proximately $30 million in wasteful and potentially fraudulent payments to FEMA contractors in 2006 and 2007, which likely lead to 

millions more in unnecessary spending beyond this period. 

In another example, the Department of Justice suspended or 

debarred only eight contractors from 2006 to 2010. Making matters 

worse, a recent Inspector General audit reveals that from 2005 to 

2010, the Department actually issued 77 contracts and contract 

modifications to some of the exact same entities that the Department itself had suspended or debarred. I would join the Chairman 

in asking: How could this possibly happen? 

Now, the vast majority of individuals and businesses who participate in the Federal marketplace are honest and they do their utmost to fulfill the terms of their Federal contracts. It is not fair or 

ethical to competent government contractors when they lose government business to those who will not perform effectively and 

honestly. 

Our goal here is not to punish but rather to protect. Taxpayers 

deserve to know that Federal contracts and grants are awarded not 

to those who have acted dishonestly, irresponsibly, or incompetently. 

Having powerful suspension and debarment tools in our arsenal 

does little good if they are not being used. GAO found that civilian 

agencies with the highest numbers of debarment and suspensions 

shared certain characteristics. 

First, they dedicated staff full-time to the suspension and debarment process. Second, they have detailed guidance in place; and finally, they have a robust case referral process. 

GAO found that the U.S. Immigration and Customs Enforcement, the General Services Administration, the Navy, and the Defense Logistics Agency are actively protecting the Federal Government from unscrupulous and habitually nonperforming contractors. 

On the other hand, as the Chairman has pointed out, GAO found 

that the Departments of Commerce, State, Treasury, Justice, 

Health and Human Services, and FEMA must improve. 

The failure of agencies to use their suspension authority regrettably is not a new revelation. As the Chairman has mentioned, 30 

years ago as the staff director of a Subcommittee of this very Committee, I was extremely involved in oversight hearings on suspension and debarment. 

Reading over the transcript of that hearing, I was struck by the 

exact same problems that were highlighted in GAO’s recent report, 

especially the reluctance on the part of some agencies to exercise 

their suspension and debarment authority. 

Today, there is even less excuse than ever given the new tools 

available to agencies. One such tool is the Excluded Parties List, 

which allows for real-time listing of all contractors who have been 

suspended or debarred. And since that time, the suspension or debarment at one agency generally applies to all agencies. 

Since 1986, the Interagency Suspension and Debarment Committee has been established to facilitate the process of determining 

which agency should take the lead in suspending or debarring an 

unethical or incompetent entity that is doing business with more 

than one agency. 

5 

1The prepared statement of Mr. Gordon appears in the Appendix on page 37. 

This GAO report must be a wake-up call to agencies that are failing to protect the interests of taxpayers. Like the Chairman, I was 

pleased to see that the GAO report and this hearing prompted the 

OMB to issue new direction to agencies to strengthen their suspension and debarment procedures. 

But let us hope that this time it really will make a difference and 

that 30 years from now this Committee is not again holding yet another hearing examining why Federal agencies do not act more aggressively to protect taxpayers. 

Thank you, Mr. Chairman. 

Chairman LIEBERMAN. Thank you very much, Senator Collins. 

Later we can talk about which one of our staff members we think 

will be a Senator 30 years from now. [Laughter.] 

Anyway, I appreciate your support and work on this over the 

long term. 

Our first witness is Dan Gordon, who is the Administrator of the 

Office of Federal Procurement Policy (OFPP) within OMB. I gather, 

Mr. Gordon, that you have announced recently that you are leaving 

OFPP to become an Associate Dean at George Washington University’s law school. I want to take the opportunity to thank you for 

your service at OFPP and for your many years as an attorney at 

GAO. 

You have really worked very hard and pushed the envelope forward in every place you have worked and I appreciate and wish 

you well and assume that you will be helping to train the coming 

generations of government contract attorneys in your new position. 

Good morning. 

TESTIMONY OF HON. DANIEL I. GORDON,1 ADMINISTRATOR, 

OFFICE OF FEDERAL PROCUREMENT POLICY, OFFICE OF 

MANAGEMENT AND BUDGET 

Mr. GORDON. Thank you, Mr. Chairman. We will be training suspension and debarment officials to be more vigorous in their actions. 

Chairman LIEBERMAN. Very good. 

Mr. GORDON. Chairman Lieberman, Ranking Member Collins, it 

is a pleasure to be here to discuss this very important topic of suspension and debarment in the procurement system. 

From the start of this Administration, we have focused on being 

sure that we have more fiscally responsible acquisition practices. I 

am happy to report that we have made significant progress over 

these past 3 years in buying less, in buying smarter, and in rebuilding the acquisition workforce. 

Our efforts have been reinforced by our commitment to increase 

the consideration of integrity in the award of Federal contracts and 

grants so that taxpayer dollars are not put at risk of waste or 

abuse in the hands of contractors or grantees who disregard laws 

and regulations and the commitments that have been made in 

their contracts. 

Suspension and debarment, as you have both said, are very important tools in that effort. Your invitation letter asked that I provide a brief overview of the suspension and debarment procedures 

6 

and I will do that, although I must say I feel like I am speaking 

to two people who are very much expert and seasoned in the area. 

Let me try to be brief. But the request that I do a mini explanation 

is something that someone with somewhat professorial tendencies 

cannot resist. 

Suspension or debarment makes an entity, whether a company 

or an individual, ineligible for a Federal contract or grant. As Senator Collins said, they are not meant to be punitive. They are not 

punishment. They are there to protect the public interest if there 

is a determination made that the entity is not presently responsible, that is to say, there is an intolerable risk of dishonest, unethical, or otherwise illegal conduct or that the entities simply will not 

be able to satisfactorily perform the responsibilities if they are 

given a contract or grant. 

As you know Subpart 9.4 of the Federal Acquisition Regulation 

sets out causes for suspension or debarment but the decision to 

suspend or debar is a discretionary one. 

As Senator Collins pointed out, suspension and debarment now 

apply governmentwide and it is one of the improvements over these 

past 30 years that we do have the Excluded Party List System that 

Senator Collins had a role in promoting. 

It is a system that works governmentwide when it works appropriately and when we use it appropriately so that when a company 

or an individual is suspended or debarred by one agency, they cannot get a contract or grant from any agency. 

Suspension, as you know, is a preliminary step usually taken 

during a review or an investigation. Debarment is typically longer, 

often 3 years, and occurs only after the entity is given appropriate 

due process, essentially a chance to defend themselves. 

If I put this in terms of a cycle, I would point out the stages at 

which, over the past several decades, problems have developed. If 

someone engages in the problematic conduct, if you will, the matter 

may come to the attention of staff in an agency who look into possible suspension or debarment. 

Agencies’ inspectors general play a key role in referring cases for 

possible suspension or debarment and that is why I am pleased 

that you will be hearing from Ms. Lerner, who will be able to speak 

on behalf of the Council of Inspectors General on Integrity and Efficiency (CIGIE). 

But whether that referral takes place has historically been one 

of the weak links in the system. Too often we have entities that 

behave illegally or whose performance is absolutely unacceptable so 

that their contract is terminated for default and yet they are never 

referred for suspension or debarment. 

If there is a referral, the suspension or debarment official (SDO) 

may ultimately decide to suspend or debar. Where there has been 

criticism at that stage of the process, it is typically that it has 

taken us too long to investigate and then to decide so that in the 

interim the entity continues to get contracts and grants. 

Once the entity is suspended or debarred, their name goes into 

the EPLS, as you have said, which is maintained by the General 

Services Administration (GSA). 

Historically, going back several decades, we have been very bad 

about sharing information about suspension or debarment so that 

7 

you could have one agency award a contract to an entity where another agency had found that entity one that should be debarred or 

suspended. 

Just before making the final decision about a contract or grant, 

the contracting officer, to use the procurement world’s term, is required to check EPLS to see if that entity, which is about to get 

the contract is actually suspended or debarred. 

At that stage of the process, the problem, and there have been 

a good number of them reported by GAO and by the IGs, is that 

the contracting officer fails to check EPLS or did not check late 

enough to get current information or there was some problem with 

the spelling of the name of the entity, the entity uses a different 

name in its offer to the government, and the result was that entity 

that had been suspended or debarred again gets a contract or a 

grant while they should not be getting them. 

Because of the shortage of time, I want to sum up here and say 

that the bottom line, in our view, is that the procedures and the 

policies and the legal framework are adequate. 

The problem is that the tools are not being used properly. That 

is why OMB issued the memorandum yesterday. This is the first 

step in an effort to reinvigorate this process. 

We will be working with the Interagency Suspension and Department Committee, and I am pleased that Mr. Sims will be testifying 

shortly about the work of that committee. 

We will be providing much more detailed guidance at OMB to be 

sure that agencies are taking the steps that GAO pointed out as 

characteristics of more vigorous programs. 

We will be working directly with the agencies to ensure that we 

do, in fact, have more rigorous and more vigorous suspension and 

debarment actions. 

Thank you. I will be happy to answer questions afterwards. 

Chairman LIEBERMAN. Thanks, Mr. Gordon. That is a good beginning. 

So, I take it that you are saying that there is not really a need 

for additional legislation here. This is really a question of implementing the current law. 

Mr. GORDON. Precisely, Mr. Chairman. I like the way that the 

CIGIE’s workforce titled their report. They use words like ‘‘do not 

let the tools rust.’’ 

We have tools. What we need to be sure is happening is that we 

are using those tools, and GAO pointed at key steps, key characteristics that we will be pushing from OMB. 

Chairman LIEBERMAN. Good. 

Next we will go to William Woods, who is the Director of Acquisition and Sourcing Management, a division at the GAO. 

Mr. Woods has done really outstanding work for our Committee 

on many reports including the latest report on suspension and debarment that I referred to. 

So, we thank you, Mr. Woods, and welcome you back to the Committee. 

8 

1The prepared statement of Mr. Woods appears in the Appendix on page 45. 

TESTIMONY OF WILLIAM T. WOODS,1 DIRECTOR, ACQUISITION 

AND SOURCING MANAGEMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. WOODS. Thank you, Mr. Chairman and Senator Collins. It is 

a pleasure to be invited to appear before the Committee today to 

talk about the report that we issued on August 31 for this Committee. 

Also Senator McCaskill was a co-requester on that in her role as 

the Chairman of the Subcommittee on Contracting Oversight. 

You both have mentioned the report and summarized it accurately. Let me just cover very briefly what our three objectives 

were. 

First of all, you asked us to take a look at the Excluded Parties 

List System and to see what that list consisted of. 

We found that there were some 24,000 cases on that list dating 

back over the 5-year period that we looked at. Much to our surprise, however, at least to my surprise, not nearly all of those cases 

are related to Federal procurement. 

In fact, a small percentage, only 16 percent, are related to Federal procurement. The other 84 percent are as a result of statutory 

exclusions. 

For example, if someone was found to be in violation of the Clean 

Air Act or the Clean Water Act, there are statutory provisions that 

require that the entity be listed on EPLS. 

Medicare fraud is another example where the Department of 

Health and Human Services has a very significant number of exclusions on the EPLS. 

Contrast that, however, with Health and Human Services, which 

does a fair amount of government contracting but, as has been 

pointed out earlier, had zero suspensions or debarments related to 

Federal procurement over the 5-year period that we looked at. 

You asked us also in your request to take a look at the factors 

that might contribute to some agencies being relatively active in 

the area and some agencies being relatively inactive. 

And as Senator Collins pointed out, there were three factors that 

we found. The first was that agencies have dedicated staff. The 

four agencies that we found to be most active had full-time staff. 

That is not necessarily required in all instances, but what we 

found and what we think is required is that the agencies devote 

sufficient resources. They can be part time. They can have other responsibilities but people need to know that suspension and debarment is their area of responsibility. 

The next thing that contributed to the active programs were detailed policies and procedures. The Federal Acquisition Regulation 

(FAR) is quite detailed in terms of providing for the causes and the 

reasons why an entity might be suspended or debarred. 

But what we found made a difference at the agencies with active 

programs is that they went beyond the guidance in the Federal Acquisition Regulation and provided additional detail to the people 

who were actually responsible for carrying out the functions. 

They laid out the roles and responsibilities of those people. They 

identified the approval process within an agency. They defined the 

9 

1The prepared statement of Mr. Sims appears in the Appendix on page 55. 

role of their counsel in terms of approving suspension and debarment proposals. 

It is that kind of detail that we found separated the agencies 

with the active programs from the agencies with the relatively inactive programs. 

And the third area that we found was an active referral process; 

the suspension and debarment officials worked closely with their 

inspectors general. 

As has been pointed out, very often the contracting officers may 

take action against a contractor in terms of a termination for default. 

In the agencies with active programs, those would get referred 

rather routinely to the suspension and debarment official for consideration of action at that level. 

These were the three factors that separated out the active agencies from the relatively inactive agencies. 

We made three recommendations in our report. 

First of all, we wanted to see the six agencies with the inactive 

programs, take a look at those three factors and incorporate those 

into their programs. 

We also made a recommendation to the Office of Federal Procurement Policy within the Office of Management and Budget to 

make those three factors known governmentwide, to use their 

forum to provide additional guidance to all agencies to incorporate 

those three provisions. 

And then we also asked OMB and the Office of Federal Procurement Policy to provide some support for the interagency committee 

in terms of asking all agencies to cooperate with the very good 

work of that committee. 

With that, let me stop there and I will be happy to take any 

questions. 

Chairman LIEBERMAN. Thank you very much for all of your work 

on the report and your very helpful testimony. 

Next we have David Sims, who is before us today as the Chair 

of the Interagency Suspension and Debarment Committee. He is 

also the debarment program manager at the Department of the Interior, previously served in the suspension and debarment office of 

the Environmental Protection Agency (EPA). 

Mr. Sims, we welcome you to the Committee this morning. 

TESTIMONY OF DAVID M. SIMS,1 CHAIRMAN, INTERAGENCY 

SUSPENSION AND DEBARMENT COMMITTEE 

Mr. SIMS. Thank you, Chairman Lieberman, Ranking Member 

Collins, and Members of the Committee. I appreciate the opportunity to appear before you today in my capacity as the Chair of 

the Interagency Suspension and Debarment Committee (ISDC) to 

offer observations on the role of the Federal procurement and nonprocurement suspension debarment’s system. 

I have submitted a full statement for the record, for the written 

record, but I would like, if I may, to summarize the testimony. 

The ISDC is an interagency body that provides support for the 

implementation of the governmentwide system of suspension and 

10 

debarment. Each of the 24 agencies covered by the Chief Financial 

Officers Act is a standing member of the ISDC. Also nine independent agencies and government corporations participate. 

The ISDC provides an important support structure to help agencies in their debarment and suspension programs. It serves as a 

forum for agencies to share best practices, lessons learned, and 

through our monthly meetings which are well attended, to discuss 

issues of common interest. 

We also assist agencies in efficiently identifying the appropriate 

agency to act as the lead on particular suspension debarment matters. 

The ISDC’s activities are overseen by OMB, which works closely 

with the ISDC to identify where refinement of current policies or 

practices may be needed. 

The specific functions for the ISDC include encouraging and insisting Federal agencies to achieve operational efficiencies in the 

governmentwide, resolving issues regarding lead status and coordination among interested agencies, recommending to the OMB for 

consideration possible changes to the government suspension and 

debarment system, and reporting annually to Congress on agency 

debarment and suspension activities. 

As has been said by Mr. Gordon, debarment is a discretionary 

decision by the government as a consumer of goods and services, 

serves the purpose of protection, not punishment. The action is forward-looking. It is prospective in application and really serves best 

to head off participation of problem actors in new Federal awards. 

It is a potent remedy for the government as a consumer, perhaps 

one of the most important remedies. 

It is my observation, formed from experience in this debarment 

field spanning more than 20 years, that the rules, as currently 

stated, provide agencies and departments with a highly effective 

toolkit for the application of this remedy. 

In fact, those agencies with robust programs demonstrate that 

the current rules provide an effective framework for protection of 

government procurement and non-procurement award interests. 

The challenge really is to ensure that all agencies have appropriate 

programs in place to use these tools effectively. 

As chair of the ISDC, I certainly agree with the overall conclusions by GAO in its recent report on the elements necessary for an 

effective program. The factors that promote an active agency discretion in the suspension and debarment program are having a defined implementing guidance, practices, and procedures that encourage the referral and action-taking process, staff dedicated to do 

the program and commitment from upper management. 

I would just add that I believe hearings such as these, IG program reviews, and efforts by OMB such as the memo that just 

came out today directed to agency heads are really key tools to encourage and promote effective use of this remedy and focus on it. 

Additionally, in addition to commitment from upper management, a collaborative working relationship with the agencies Office 

of Inspector General is important. So, collectively these factors are 

relevant to suspension debarment programs whether they are operating under the FAR or the non-procurement rule. 

11 

1The prepared statement of Ms. Lerner appears in the Appendix on page 59. 

The ISDC has taken a number of actions to assist agencies in 

suspension to debarment proceedings. Over the past 2 years, ISDC 

has used its collective expertise to provide to more than 10 agencies example policies and procedures, sample action documents, to 

aid in the development and implementation of new or strengthened 

existing programs. 

We have also recently created a standing subcommittee to evaluate methods and opportunities for training government personnel 

on the suspension debarment remedy, to increase awareness of the 

remedy, promote its use, and provide us practices and assistance 

to agencies to develop robust programs. 

In addition, we have evolved an informal collaborative process for 

the lead agency which utilizes an email notification, broadcast to 

the membership, that a particular agency is considering action inquiry whether another agency has an interest and setting a prompt 

response time. 

The ISDC has this month created a workgroup to also explore 

and evaluate possible practical mechanical alternatives for the existing mechanism. We have also supported governmentwide efforts 

to enhance information systems designed to protect and strengthen 

the integrity of the program, particularly the GSA’s effort on the 

Federal Awardee Performance Integrity Information System 

(FAPIIS), in regard to the terms of debarment program elements 

and working with GSA on improving the EPLS. 

So, as the ISDC chair, it is my observation that the key to successful use of the EPLS is timely and accurate entrance of names 

on the list and use of the list by contracting and award personnel 

prior to award to preclude ineligible parties. 

The existing rules already imposed these requirements. Compliance can be enhanced through internal management directives 

stressing the importance of using the list and the training of personnel, both debarment and award officials, to use the list. 

We look forward to working with this Committee, other Members 

of Congress, GAO, and the Council of Inspectors General for Integrity and Efficiency in the ongoing efforts to strengthen the governmentwide debarment and suspension remedy. 

This concludes my remarks and I am happy to answer any questions you may have. Thank you. 

Chairman LIEBERMAN. Thank you, Mr. Sims. It was very helpful. 

Now, we welcome Allison Lerner, IG of the National Science 

Foundation, and also the co-chair of the working group on suspension and debarment of the Council of the Inspectors General on Integrity and Efficiency. That is quite a title. 

We appreciate your being here and helping us to hear the perspective on this problem from the IGs. Please proceed. 

TESTIMONY OF ALLISON C. LERNER,1 INSPECTOR GENERAL, 

NATIONAL SCIENCE FOUNDATION 

Ms. LERNER. Thank you, Mr. Chairman, Ranking Member Collins, and other Members of the Committee. I appreciate this opportunity to discuss the efforts of the suspension debarment working 

group of CIGIE. 

12 

Steve Linick, Inspector General at the Federal Housing Finance 

Agency, and I are co-chairs of that working group as part of the 

CIGIE Investigations Committee. 

As our Nation faces pressing economic challenges, it is imperative that we effectively and vigorously use every tool available to 

us to ensure that the billions in taxpayer dollars that go to Federal 

contractors, grantees, and other awardees every year are spent for 

their intended purposes, that unscrupulous individuals and companies are prohibited from obtaining government funding, and that 

hard-earned tax dollars are safeguarded. 

Suspension and debarment are two key tools the government has 

to protect public funds. However, too often those tools go unutilized, quietly rusting away, as has been noted, in the government’s 

toolbox. 

Since its formation in June 2010, the working group has focused 

on raising the profile of suspension and debarment by educating 

the IG community about the suspension and debarment (S&D) 

process, by busting myths about suspension and debarment that 

may have impeded their use in the past and by identifying successful practices across the IG community that could be emulated by 

offices new to S&D so they do not have to reinvent the wheel to 

develop an effective referral process. 

The group is also working to promote an active dialogue between 

Offices of Inspectors General (OIGs) suspension and debarment officials, and prosecutors as a way to enhance the overall effectiveness of the S&D process. 

To increase awareness of suspension and debarment, the working 

group has provided training to various members within the IG 

community. With support from the Recovery Accountability and 

Transparency Board, it has also sponsored two governmentwide 

S&D workshops attended by approximately 750 OIG and S&D staff 

from 74 different agencies. 

My testimony will focus on the working groups September 2011 

report, which built upon information about suspension and debarment practices obtained in an informal survey of the IG community. 

Mr. Chairman, the working group survey results reflected a view 

within the IG community that suspension and debarment could be 

used more frequently and more effectively. 

To further the use of these important tools, our report sought to 

dispel three common misconceptions about S&D. 

With regard to the first, some OIGs and prosecutors resist seeking suspension or debarment under the mistaken belief that pursuing such actions could compromise ongoing civil or criminal prosecutions by requiring the disclosure of sensitive investigative information. 

Our report identified many ways in which contemporaneous actions can be protected while suspension and debarment are pursued. Perhaps the best way OIGs, prosecutors, and SDOs can resolve their concerns about the effect of suspension and debarment 

on ongoing proceedings is to engage in staff-level training and to 

communicate frankly and continuously regarding all evidence sharing issues. 

13 

Second, as the report notes, some agencies and OIGs mistakenly 

believe that suspensions and debarments must be tied to a prior 

judicial finding such as an indictment, civil judgment, or conviction. 

In reality, actions based on facts developed through investigations, audits, or inspections are a less traveled path that can be followed to exclude non-responsible parties from doing further business with the government and may be viable options in many circumstances. 

The third misconception that limits the number of S&D referrals 

made by OIGs is the idea that an action can only be based on facts 

developed during an OIG’s investigation. 

In reality, suspension and debarments can also arise from facts 

discovered during OIG audits or inspections. Because referrals of 

this type are uncommon, it is important to lay some groundwork 

to help ensure their growth and success. 

In particular, focused training for auditors and inspectors on how 

their work can produce and support suspension and debarment opportunities would be beneficial. Our working group is working with 

the Investigator Training Academy to develop such training. 

Our report also highlighted a number of suspension and debarment practices that could help boost the overall use and effectiveness of these tools within the IG community. 

Since staffing considerations can affect how S&D referrals are 

undertaken, several OIGs provided information on staffing approaches they have utilized to promote the use of suspension and 

debarment. 

Another means by which OIGs can contribute to more frequent 

and effective S&D use is by conducting internal audits or reviews 

of the efficacy of agency S&D systems, and several of those reviews 

have already been noted today in the discussion. 

Other suggested practices include routinely reviewing investigative audit and inspection reports to identify candidates for suspension and debarment, enhancing OIG referral practices, developing 

strong OIG suspension and debarment policies, increasing outreach 

among relevant communities, providing additional training on suspension and debarment and publicly reporting data on S&D actions 

as a means of encouraging OIG referral and agency action. 

Mr. Chairman, an agency’s vigorous and appropriate use of suspension and debarment protects not just the integrity of that agency’s programs but also the integrity of procurements and financial 

assistance awards across the Federal Government. As such, suspension and debarment are two of government’s most powerful defenses against fraud, waste, and abuse. 

These important tools can be used more frequently and effectively if the relevant Federal communities understand them better 

and are motivated to work together in using them. 

Over the coming year, the working group will continue to explore 

ways to increase understanding of these tools and to promote communication and collaboration between all parties involved in suspension and debarment. 

This concludes my statement, Mr. Chairman, and I would be 

happy to answer any questions you might have. 

14 

1The prepared statement of Mr. Shaw appears in the Appendix on page 68. 

Chairman LIEBERMAN. Thanks very much, Ms. Lerner. That was 

very helpful. 

Finally, we have Steven Shaw, Deputy General Counsel at the 

Department of the Air Force, acknowledged as an expert in this 

area of contractor and business ethics. 

The Air Force, in fact, is known for having a robust suspension 

and debarment program. So, we are very happy you are here today, 

Mr. Shaw, to share your thoughts on how agencies should carry out 

their responsibility in this regard. Please proceed. 

TESTIMONY OF STEVEN A. SHAW,1 DEPUTY GENERAL COUNSEL FOR CONTRACTOR RESPONSIBILITY, U.S. DEPARTMENT 

OF THE AIR FORCE 

Mr. SHAW. Thank you very much, Chairman Lieberman, Ranking 

Member Collins, and other Members of the Committee. 

I have been the debarring official at the Air Force for 15 years; 

and as you noted, we do have a mature program. I recognize that 

there are some agencies that do not, and I am pleased to have the 

opportunity to address some of the features that I think make the 

Air Force’s program perhaps unique and not just mature. 

At a high level it is really three areas, and that is the referral 

process that the CIGIE report covers very well and we fully agree 

with the SDO structure, how an office should be structured to work 

effectively. GAO and my friend Mr. Woods covered that very well 

and the OFPP memorandum is welcome in that area. 

The SDO policies are the area that I am going to focus more on 

because I think that is what makes us a little bit unique. 

We, in the Air Force, do have a dedicated staff as was mentioned 

by the GAO report. We have three full-time attorneys at headquarters and some 10 full-time attorneys in the field that provide 

counsel on fraud cases and work with our office in the coordination 

of fraud remedies, including suspension and debarment. 

We feel that we are very aggressive in the area of dealing with 

bad actors. But there is a flip side to that, the carrot and stick approach that we have taken, and that is, to be aggressive on the bad 

actors but to be proactive at the front end with the leverage that 

we have with this tool of suspension and debarment to encourage 

contractors to have risk management programs and other ethics 

programs to prevent fraud from happening in the first place. 

So, on the aggressive side of this region, we did 367 suspensions 

and debarment actions last year, and so there is an average over 

my 15 years of perhaps 4,000 actions that I have signed in this 

area. 

Only 5 percent of our cases last year—and that is anecdotal, it 

is not our data base that establishes this. But roughly 5 percent 

of our cases are interestingly enough from referrals. 

We do 95 percent of our cases by reaching out and actively working with the field in working groups and with the Inspectors General reviewing case status reports from the Office of Special Investigations and from the DOD IG so that when we see that a case 

is ready for debarment, we do not wait for somebody to refer to us. 

We do not wait for the Justice Department to return an indictment. 

15 

We look at the case status report and we make a determination 

that this looks like it is ready for debarment and we will ask for 

the full file and then do a debarment. 

Sixty-two percent of our cases are fact-based where we do not 

wait again for the Justice Department to make a decision. There 

are plenty of cases dealing with defense contractors and government contractors where there are serious problems but where the 

Justice Department has not finished their investigation or where 

the problems are below their threshold so the Department of Justice declines to intervene. 

Those cases are still cases that we in the Air Force care about. 

Just because it is below the threshold of the Justice Department 

should not mean that we do not care about protecting ourselves 

from such contractors. 

There are four broad themes that I think really defined our program and I will go over those briefly. 

One is our broad view of the types of misconduct that would 

qualify for consideration of suspension or debarment. It is not just 

fraud in any government contract, and a lot of agencies focus only 

on that. 

We are concerned with any crime that relates to business integrity, and that might be a crime that has nothing to do with a government contract. But we care about it because it is an Air Force 

contractor that does something wrong and that could be tax violations. It could be Foreign Corrupt Practices Act, commercial fraud. 

If it is an Air Force contractor and they are committing some 

misconduct outside of the realm of Air Force contracting, we are 

still concerned about it. 

Another area is contract performance as was mentioned earlier. 

That can be mere negligence. It does not have to have anything to 

do with fraud at all. 

So, negligent performance of a contract can qualify for debarment, and we do debar contractors for negligent performance of 

contracts. 

The next theme is early fact-based actions. Not only are 62 percent of the cases that we do fact-based that have nothing to do with 

Justice Department cases, but we do them very early. We do not 

wait for the Justice Department to get to the point where they are 

declining. 

When there is a preponderance of evidence we take action. By 

doing that, we protect further losses to the government as well as 

flight safety issues. And frankly, it gets beyond the point of present 

responsibility determination if we wait 5 years for the Justice Department to determine at the point of the running of the statute 

of limitations that they are not going to take any action. 

The next theme is the independence of the contracting chain. I 

feel very strongly about this. We are very successful in the Air 

Force because we are a separate entity that does not require the 

gatekeeper of the contracting community to refer cases to us. 

We coordinate with the contracting and the acquisition community certainly, but we are independent of them and that is a result 

of a DOD IG report in the early 1990s that suggested that was the 

best way to proceed, and the Defense Department has been doing 

it that way since that time. 

16 

The final area is the discretion. I think it is very important to 

maintain the discretion of the debarring officials so that we can do 

such things as leverage what I mentioned earlier and help companies prevent fraud from happening in the first place. 

If there are mandatory debarments that some are suggesting, 

then we lose the ability to be proactive and to prevent fraud from 

happening at the front end. 

In my final moments, if I could, with the Senate’s indulgence, 

talk about the right tools. That is a headline here of this hearing 

and it is slightly different from debarment and suspension but I 

would say in the debarment area we do have the right tools. 

The FAR Subpart 9.4 is broadly worded, if debarring officials will 

look at it and understand how broadly worded it is. In the fraud 

area frankly, there are a couple of more tools that would help in 

this area. 

One is the proceeds of fraud recoveries. This is something that 

has come up in the past. As you know, under current fiscal laws, 

the proceeds of most fraud recoveries go to the U.S. Treasury. 

And that is so because the contracts are closed, are over at that 

point, the investigation is over and we get to look at them. So, at 

that point, they cannot go back to the victimized program. 

So, it is very difficult to get the acquisition communities and the 

contracting officers excited about referring cases to us when they 

have to spend all of that time and effort putting together a package 

and finding an alternate source, and then they do not get the 

money to fix the problem that was caused by the bad contractor. 

So, if there is a way to legislate some exception that would return the funds to the victimized agency, then we could fix the problems that were caused by the bad contractors. 

The other area is the Program Fraud Civil Remedies Act 

(PFCRA), which was passed in 1986. I am sure you know about it. 

It is not used in the Defense Department. It is, frankly, not used, 

with maybe one exception, anywhere in the government, and that 

is because it is hugely cumbersome. 

And it could be a great resource that would enable the agencies 

to recover funds that are below the Justice Department’s threshold. 

So, there would be no way to recover those funds or impose penalties against bad contractors unless there is a mechanism like the 

PFCRA. 

And the Defense Department has submitted as part of its next 

cycle legislative package a proposal to revise the PFCRA to make 

it workable. And I would ask your support on that. 

Finally, we would look for some way, and this is probably a way 

that we can work out with the Justice Department, to get information about indictments that are not related to government contracts. 

As I mentioned, I care about Air Force contractors committing 

fraud that doesn’t relate to a government contract; but in many 

ways, many times we are not even aware of that. Export violations, 

Foreign Corrupt Practices Act cases. 

If the agencies can be made aware of those types of violations 

that would not happen in a normal IG chain because the IGs are 

focusing on fraud in the government contract, then that would be 

helpful too. 

17 

That would conclude my remarks. I apologize for being over my 

time. 

Chairman LIEBERMAN. Not at all. Thanks, Mr. Shaw. Thank you 

for setting the standard here and for giving some very practical 

suggestions. Your testimony has been excellent. 

Senator McCaskill has been a real leader in this area. In fact, 

your name has been mentioned here, not in vain but in praise, earlier. Senator McCaskill has an urgent meeting she has to go to. 

So, Senator Collins and I are happy to let her go first. We have 

not consulted with Senator Pryor and Senator Brown but they are 

both so widely acknowledged as being good guys that I am sure 

they will not object. 

Senator McCaskill. 

OPENING STATEMENT OF SENATOR MCCASKILL 

Senator MCCASKILL. They are good guys, and thank you both 

very much. 

It came to my attention, the scope and breadth of this problem, 

when I found out about a soldier that was killed in Iraq by a negligent truck driver for one of our contractors. He was run over and 

killed. No question it was negligence on the part of the truck driver 

of the company. 

There was a lawsuit brought by his family to try to have their 

day of justice in the United States, and this contractor fought jurisdiction and refused to submit to the jurisdiction of the United 

States of America even though they were being paid by the United 

States of America and had killed one of our soldiers through their 

negligence. 

That obviously made me angry, but I will tell you what really 

upset me is that we kept doing business with them. 

And so, that is when I realized we had a real problem with suspensions and debarment; and the Wartime Contracting Commission looked at this extensively. 

It seems to me, and if anybody disagrees with any of these four 

reasons, I would love to get your input, that suspension and debarment officials are afraid of litigation; that it is, second, too much 

trouble; that third, some of these contractors are ‘‘too big to fail’’; 

and four, it is not clear who is accountable for failure to suspend 

or ban from contracting. 

Does anybody disagree with those four as the primary reasons 

that we are so bad at suspensions and debarments? 

[No response.] 

Senator MCCASKILL. OK. 

Mr. SHAW. Well, I would disagree as applied to the Air Force. 

But I think your questioning is about why we are bad at other 

agencies in suspension and debarment; and I really do not have an 

opinion about other agencies. But I do not think any of those are 

the case for the Air Force certainly. 

Senator MCCASKILL. And you are good at contracting and you are 

good at suspensions and debarment. We have to figure out what 

the deal is there because the Air Force is also much better at contract oversight. 

We have used you extensively to try to cross-pollinate any other 

branches. So, my congratulations to the Air Force. 

18 

What about mandatory suspension for criminal activity. The 

Wartime Contracting Commission backed off of this recommendation. I think deterrence for other contractors is really important, 

and I understand that it allows leverage to get better behavior out 

of contractors. 

But should we not, just as a matter of character of our Nation, 

say if you are indicted—like Halliburton was for bribery in Africa— 

for criminal activity in connection with your government contracting activities, that you are done with us? 

Should we not just make that a rule? Is that not just a good 

standard for us to have? 

Mr. Gordon. 

Mr. GORDON. Senator McCaskill, we very much want to keep bad 

actors from getting contracts. We agree with that. There are, as 

Mr. Woods pointed out, mandatory triggers, statutory violations— 

like the Clean Air Act and the Clean Water Act—that do make you 

ineligible. 

But it seems to us that it undermines the role of the suspension 

and debarment official to say we are taking away your discretion. 

We are deciding that no matter what you have done to correct the 

problem, no matter what remedial measures you have taken you 

are going to be automatically suspended or debarred. That does not 

strike us as a good solution. 

Senator MCCASKILL. Well, I get the point you are making, Mr. 

Gordon, but I guess my problem is if that is criminal activity? I do 

not mean just indicted but convicted of criminal activity in association with contracting, to me it seems like if we do not send the 

word out that if you do not work hard enough on your internal controls, because I get it that, at large, the company may not know 

that they have a bad guy working for them in some country across 

the ocean. 

On the other hand, they have not exercised controls adequately 

and should there not be an ultimate penalty if somebody is actually 

conducting criminal activity because there are lots and lots, I 

mean, if you look at the Project on Government Oversight (POGO) 

database on all of the misdeeds, most of those falls short of criminal activity. 

So, there is plenty of room for discretion in debarment without 

criminal activity. But we are drafting legislation to enact all of the 

Wartime Contracting Commission recommendations. They backed 

off on this mandatory suspension issue, as you all know. 

I think it is a mistake to back off on the mandatory suspension. 

Is there not enough discretion with all the hundreds of other cases 

that are not being addressed right now that we could easily deal 

with the ones where there is criminal convictions? 

Anybody else besides Mr. Gordon? Mr. Shaw. 

Mr. SHAW. I wonder whether a good balancing on that might be 

a mandatory referral of such cases to the debarring official perhaps 

within a designated period of time. 

I mean, any case like that certainly should be looked at by a suspending and debarring official. Any termination for default, frankly, should be looked at by the debarring and suspending official. 

But I really think you have to continue to have that discretion. 

What if it is entirely a new management? What if the conviction 

19 

is misconduct that happened 7 or 8 years ago and there is an entirely new structure now? 

I mean, you need to be able to encourage companies to fix the 

problem; and if there is mandatory debarment, I do not know that 

you have that encouragement. 

Senator MCCASKILL. Well, to me, if we are going to overreach, it 

seems to me we should overreach by cleaning this problem up. I 

am sympathetic to the discretion argument but having seen so 

many instances where no one even lifted a finger to go after these 

folks, it is just hard for me to think that we are going to get serious 

about this if we do not have some lines in the sand. It seems to 

me criminal activity is a logical place to begin that. 

Mr. GORDON. If I could suggest, Senator McCaskill, there was a 

provision in some of the appropriations bills right now that would 

talk about mandatory suspension or debarment, and we in the Administration made a suggestion that might address your concern. 

And that is, there would be automatic suspension or debarment 

unless the agency made a determination that there were particular 

circumstances so that there would be a presumption. It would address your concern but you would still retain the ability for the 

agency to say this is a special case. 

Senator MCCASKILL. I want to thank all of you, and I want to 

particularly thank the two Senators for allowing me to do this. It 

is very nice of you to defer. 

This is a great hearing and we have to stay on this because this 

is part of the contracting debacle that is a lack of accountability. 

I mean, some of these folks that were bad actors got performance 

bonuses as you well know in Iraq and Afghanistan, which is really 

enough to make a taxpayer lose the top of their head from anger. 

Thanks. 

Chairman LIEBERMAN. Thanks, Senator McCaskill. Thanks for 

your leadership in this area. 

We talked earlier about the guidance that OMB Director Jack 

Lew issued yesterday and it included the direction that each agency appoint a senior official to review the agency’s program. 

But one matter that the guidance did not address is where the 

suspension and debarment function should be placed in an agency, 

and we just heard Mr. Shaw describe how being independent from 

the acquisition chain, he feels, empowers him to make the right decisions to protect the Air Force. 

As I hear it, I think in essence it removes a conflict of interest— 

the kind of situation where there may be a natural reluctance by 

an acquisition person to take action against someone to whom they 

have just rewarded a contract. 

So, I wanted to ask the other witnesses what they think. Should 

the suspension and debarment official in each of the agencies, 

under the guidance of Director Lew yesterday, be separate from the 

acquisition functions? Mr. Gordon. 

Mr. GORDON. Several thoughts, Mr. Chairman. One, I should say 

right away that the Air Force has what in many ways is a role 

model of a suspension and debarment program and much of that 

credit goes to Mr. Shaw and his staff. 

I appreciate the point about independence. I would approach it 

with care. I would point out, for example, that the GAO’s report did 

20 

not cite independence as a criterion, and they did point, as you 

know, to three other characteristics. So, they did not actually say 

that independence is needed to get an effective program. 

The issue of conflict of interest, I can understand the point but 

I am a little bit skeptical. Contracting officers make responsibility 

determinations, as you know, before they award every single contract. 

They have to decide—it is their job—whether the contractor is 

responsible. I do not understand why they would be allowed to do 

that if it was viewed as a conflict of interest. I think it is their job 

to protect taxpayer funds. I think that there may be agencies 

where independence works. 

But as we in OMB work to put together much more guidance because that is our next step in this, as we work to put together more 

detailed guidance, I want to carefully consider independence and 

see if it makes sense as a step that could help this process work 

better. We need to find steps to make this process work better. 

Chairman LIEBERMAN. Do any of the others, Mr. Woods? 

Mr. WOODS. Well, as Mr. Gordon pointed out, we did not find the 

organizational placement of the suspension and debarment officials 

to make a difference; and in fact, we found a wide range of situations. 

Some of the suspension and debarment officials were part of the 

acquisition organization and that seemed to work well at some 

agencies, and some had more remote connection to the acquisition 

functions and that seemed to work just as well as those that had 

connection with the acquisition community. 

Chairman LIEBERMAN. Mr. Sims. 

Mr. SIMS. I would also agree and speaking personally from my 

experience over 20 years in the field that I think the critical thing 

is that agencies—and all agencies are organized differently—have 

a structure in place and the positioning of the function in such a 

way that information can be gathered efficiently and sent forward 

to the debarring official and the debarring official has sufficient objectivity. 

It can work in many fashions. At EPA, for example, where I was 

before the Department of the Interior, we had a separate debarring 

official. At Interior, we have a robust problem that we have put in 

place. The debarring official is the Senior Procurement Executive; 

but as the senior procurement executive, the debarring official has 

responsibility not just for procurement debarments but also for 

non-procurement debarments. I know some other agencies have 

multiple debarring officials keyed to their various programs. 

But I think the critical point is not so much where it is located 

but rather that there is a structure in place for an active, effective 

program. 

Chairman LIEBERMAN. Ms. Lerner. 

Ms. LERNER. Our CIGIE report did not assess this issue; but as 

an Inspector General, I certainly know that the independence that 

I have to do my work enables me to do my best work. 

So, I recognize, based on what these three gentlemen to my right 

have said, that there is not likely a one-size-fits-all answer to this. 

But, I would certainly commend studying independence as a factor, 

as OMB moves forward in this area. 

21 

Chairman LIEBERMAN. That is interesting. Mr. Shaw, do you 

want to respond because there is some respectful dissent from what 

seems to work at the Air Force, or part of what works? 

Mr. SHAW. Yes. I think it is important at the Air Force, and 

frankly I do not see why it would not be important elsewhere. 

There is one department that comes to mind that had no debarment or suspensions last year and the debarring official was a contracting person, and the reason for no debarment or suspensions 

was stated as being that there were not any bad contractors, that 

they do a good job of selecting the contractors at the front end. 

And I think that is what I meant about the independence. It is 

not truly a legal conflict of interest but, as you said, it is a conflict 

of interest type of issue where in the gray areas you are going to 

be viewing the contractor in a more favorable light. 

Certainly, contracting officers, when there is clear fraud, are 

going to refer it but it is not so clear in the gray areas. 

Chairman LIEBERMAN. Understood. I thank you for that. 

Ms. Lerner, I wanted to ask you this question. One of the interesting takeaways from the survey that CIGIE of IGs was that audit 

findings rarely form the basis of suspensions and debarments. 

I was surprised by that because obviously audits often uncover 

a pattern of overbillings to the government. Was there discussion 

or has there been discussions in your CIGIE working group of coming up with guidance for the IGs on when they should make referrals to the suspension and debarment officials based on audits? 

Ms. LERNER. We have not talked about establishing guidance per 

se. We have certainly recommended, as the best practice, the idea 

of examining all audits; and, in fact, some of the offices that we 

cited as having strong practices look at all audit, inspection, and 

investigation reports to see if there is evidence to refer. 

So, one of the areas that we did focus on was strengthening the 

process for reviewing our own work and making appropriate referrals to agencies. 

Chairman LIEBERMAN. Were you surprised about this result? 

Ms. LERNER. About the fact that there are so few audit referrals? 

Chairman LIEBERMAN. Yes. 

Ms. LERNER. Not really. I think this goes back to education and 

understanding the tool. This tool has really been viewed as something in the investigator’s toolkit. 

Chairman LIEBERMAN. Right. 

Ms. LERNER. And when you read the regulations, it is obvious 

that it is not something that is limited to investigators. 

Chairman LIEBERMAN. Sure. 

Ms. LERNER. So, that is one of the reasons that we are very 

strong on more training for the IG community because the more 

our people understand the elegance of the suspension and debarment process the more opportunities that I think they will see for 

it. And that will increase the number not just of investigative referrals, but of audit and inspection referrals. 

Chairman LIEBERMAN. I urge you to continue that emphasis on 

that education. My time is up on this round. Senator Collins. 

Senator COLLINS. Thank you, Mr. Chairman. 

22 

Mr. Woods, in your report you found that six out of the ten agencies reviewed lacked the characteristics of a successful suspension 

and debarment program. 

Of those six, which responded the most favorably to your recommendations and which agency was the most negative as far as 

adopting your recommendations? 

Mr. WOODS. Well, the one that comes most readily to mind in 

terms of a favorable response would be the Department of Homeland Security, generally. 

We picked two subcomponents at DHS specifically, one with an 

active program, Immigration and Customs Enforcement (ICE), and 

also FEMA, which, as you pointed out, had virtually no suspension 

and debarment activities. 

But the Department of Homeland Security took our findings to 

heart as well as the findings of their own Inspector General, which 

had recently concluded some work in the area. They have elevated 

the suspension and debarment function to the department level 

and they have a senior official who is now in charge overall of making those decisions. 

So, the Department of Homeland Security really stands out in 

that area. 

Senator COLLINS. And the low-lying departments? 

Mr. WOODS. I am not sure there is any particular agency that 

stands out. 

Senator COLLINS. Let me help you. [Laughter.] 

It is my understanding that the Department of Justice initially 

responded to your reports saying that it did not plan to make 

changes. Is that accurate? 

Mr. WOODS. That is correct. We pointed out that we thought that 

their policies and procedures were not nearly as robust as we found 

at some of the other agencies and they frankly disagreed with that. 

And we pointed out that, although they believe that their policies 

and procedures were adequate, when one looks at them they merely mirror what is in the Federal Acquisition Regulation, and that 

is not enough to really invigorate the process and to have people 

understand what their roles and responsibilities are. 

So, we disagree with the Department of Justice on that point. 

Senator COLLINS. Do you believe that the Department of Justice 

is operating under the impression that there needs to be a conviction before they can proceed with a suspension and debarment? 

Mr. WOODS. We did not get that sense from the department. 

Senator COLLINS. I am trying to figure out why the department 

is the laggard in this area. Let me ask you another question. If the 

department does not improve its procedures and does not adopt the 

recommendations, what impact do you believe it will have on the 

department’s ability to ensure that it is not doing business with 

bad actors? 

Mr. WOODS. We think having good policies and procedures is critical to the process. So, we would be concerned about their ability 

to really step up in this area absent sound policies and procedures. 

Senator COLLINS. Thank you. 

Mr. Shaw, an issue that has been brought to my attention is that 

at times an entity will be suspended or debarred, but then it will 

change its corporate form or its corporate name and attempt to do 

23 

business as a new kind of business but it has the same principals 

and the same bad actors. 

Is there a way that we can guard against a suspended firm simply changing its shape, adopting a new name, and then being able 

to secure Federal work? 

Mr. SHAW. That is the most difficult problem in this area frankly, and we are very aggressive on that when we learn about it. The 

contracting community is usually very helpful. They figure that 

out. Often times they will see a bid coming in from the same fax 

number with a different name or something like that. 

When we learn about it obviously we debar them again with a 

much longer period of time but we also refer it to the Justice Department for criminal prosecution because that kind of case, I 

mean, if somebody is going to totally ignore the system, that is the 

only remedy. 

And we have been successful and the Justice Department has 

been successful in getting convictions in those areas. 

Senator COLLINS. If you have any suggestions for us on how we 

can do a better job of preventing that from happening—it sounds 

like you are on the alert for it and because you follow up aggressively with the Justice Department and with a longer debarment, 

you send out a message of deterrence. 

And the other entity that we found has been trying to do those 

is the Recovery Accountability and Transparency Board, which is 

working with Dun & Bradstreet to try to prevent this from happening. 

But if you have suggestions, I would welcome them. I think the 

Committee would welcome them because I do believe this is a problem. 

Mr. SHAW. Yes, I would be happy to provide follow-up with that. 

Senator COLLINS. Thank you. That would be very helpful. 

Ms. Lerner, I wanted to ask you a question about your report. 

You stated that 69 percent of the respondents to your survey reply 

that their IG never made referrals based on audits and inspections. 

Now, I realize that not every IG office has an inspection component, but that still seems like an extraordinarily high number. I 

would think the IGs would be a very common source of referrals 

toward suspension and debarment. 

So, in your judgment, what is the cause of this? Is it due to a 

lack of knowledge or concern that it is going to take too many resources? What is the problem here? 

Ms. LERNER. As we noted in our report, I think there are multiple causes. As I mentioned to the Chairman, education is the 

first. People do not understand these tools. 

There are misconceptions about them that I outlined and that we 

are trying to work against. They think that they are only for investigators and that they can only come as a result of prior judicial 

action. That is not the case. 

So, we are working to make sure that our broader community 

understands, and we have done training for the principals at 

CIGIE. We have trained Assistant Inspectors General for investigators. 

We went to the Federal Audit Executive Council, which is all of 

our audit executives, and we are talking about suspension and deVerDate Nov 24 2008 12:28 Apr 30, 2012 Jkt 72557 PO 00000 Frm 000027 Fmt 06633 Sfmt 06633 P:\DOCS\72557.TXT SAFFAIRS PsN: PAT
24 

1Mr. Woods’ response to the question from Chairman Lieberman appears in the Appendix on 

page 73. 

barment and making sure that they understand that it is for them 

too. 

I took my head of audits with me to the Federal Law Enforcement Training Center (FLETC) and took the week-long course 

there so that he would understand and he could push out to his 

folks that this is something that not just the investigators can do, 

but auditors can do also. 

So, we are really working to educate and motivate our broader 

community on how this tool can be used. 

Senator COLLINS. Thank you. 

Chairman LIEBERMAN. Thanks, Senator Collins. I have a few 

more questions. 

Mr. Woods, let me ask you, since the GAO report effectively recommended the guidance Mr. Lew issued yesterday, if you have any 

specific reaction to that guidance. 

Mr. WOODS. We have not had a chance to study that yet. 

Chairman LIEBERMAN. Good enough. When you do let me ask 

you for the record if you could submit a reaction to it. 

Mr. WOODS. We would be delighted to look at it and submit that 

for the record.1

Chairman LIEBERMAN. Good. 

I want to pick up on a question from the DHS IG report that you 

referred to which found that DHS seemed to be reluctant to use 

suspension and debarment against poorly performing contractors 

because they feared it would negatively impact the size of the contract or pool. 

So while that is a practical result, it seems totally unacceptable 

to allow bad performers to continue to bid just so you increase the 

size of the contract pool. 

Mr. Gordon, have you seen that at all in your work in other departments? 

Mr. GORDON. I am not sure if I know of specific examples, Mr. 

Chairman, but I will tell you that it is, in my opinion, intolerable 

that a company gets, for example, terminated for default but yet 

they are not immediately referred for potential suspension or debarment. That should be as obvious a referral as a conviction for 

a crime. 

We need to crack down on the poor performers. That is this factbased area where you do not actually have a conviction but they 

are performing terribly. 

We need to go beyond just waiting to see if there is a criminal 

action against the company and take action. I have not seen good 

data so I cannot tell you how widespread the problem is but I will 

tell you that for most of these problems, and my colleagues on the 

panel have pointed it out, training is often the biggest gap, whether 

it is training for contracting officers, for the people in the IG shop, 

or other investigators, we need to improve training, and that is 

why we have been working both with the Defense Acquisition University and the Federal Acquisition Institute to be sure that we are 

getting better training about these tools. 

25 

Chairman LIEBERMAN. Let me ask you about the use of information technology. Earl Devaney, who I am sure most of you know, 

was appointed to lead the Recovery Accountability and Transparency (RAT) Board—which has really one of the most noteworthy 

acronyms in my long involvement, the RAT Board—set up to do 

oversight of the spending under the American Recovery and Reinvestment Act—the stimulus spending. 

They have been aggressive users of data put together by Dun & 

Bradstreet to find connections between companies that have received the stimulus money and companies that had been debarred, 

and I was struck. I thought about it because of the reference to 

some cases where contracts were let to companies that had been 

suspended or debarred simply because the contracting officer had 

not checked the list. 

Is there not a way we can fit this into the system so that it does 

not happen, that they have to go through some kind of information 

technology (IT) filter before a contract is awarded? 

Mr. Gordon. 

Mr. GORDON. Mr. Chairman, it is interesting that the IT systems, which were meant to be helping us, sometimes actually are 

not helping us as much as they should. 

In terms of Dun & Bradstreet and the Data Universal Numbering System (D-U-N-S) Numbers, we are in the midst right now 

of exploring the whole issue of the way D-U-N-S Numbers work. 

The unfortunate thing is that if an entity has been suspended or 

debarred under one D-U-N-S Number but they submit a bid with 

a different D-U-N-S Number, we are liable not to know about it 

when we check EPLS. 

We just worked with GSA who issued a ‘‘sources sought’’ to see 

if there might be a different way to do the contractor identification. 

And we at OMB are looking into a broader review because we have 

situations where, whether it is checking for suspension or debarment or for that matter past performance, you need to be able to 

get a full picture of what is going on and not one artificially limited 

by these numbers. 

Chairman LIEBERMAN. Senator McCaskill referred briefly to the 

too-big-to-fail syndrome. In this case presumably that agencies are 

reluctant to suspend or debar large companies because even though 

there is a risk to the government in having money in the hands of 

those contractors based on their records, the agencies are dependent on them for goods and services. 

And I just wanted to invite any of you to add on to that. First 

off, is that real? And second, what can we do about it? I mean, you 

used the word ‘‘intolerable’’ in the situation I described a moment 

ago and I might add the same adjective to this. 

If somebody is a proven bad actor, no matter how big they are, 

they ought to suffer some punishment. I correct myself that the 

purpose here is not punishment but to protect the government and 

the taxpayers, and it is hard to protect against somebody who has 

already cheated you once. 

Mr. Gordon, do you want to start it? 

Mr. GORDON. Sure. I am happy to start although I am sure my 

colleagues on the panel will have further thoughts. 

26 

I have never seen good data but it is certainly the word on the 

street that if you look at EPLS you are going to find companies and 

individuals you have never heard of, and you will not see the very 

big corporations there. 

I do not know that the cause of that is what it sounds like. I am 

not sure it is a too-big-to-fail. It could well be that large sophisticated contractors, (A) in fact have systems in place to protect their 

behavior, but (B) when there are problems, they address the problems promptly, or (C) they reach settlements with suspension or 

debarment officials like Mr. Shaw so they never end up on the 

EPLS. 

It does not mean that we are not paying attention. I would want 

to see much better data before I drew conclusions that someone 

was too big to fail and, therefore, we did not pay attention to their 

problem. 

Chairman LIEBERMAN. That is interesting. Mr. Woods, what do 

you think? 

Mr. WOODS. There are some examples of large contractors appearing on the suspension and debarment list but frankly they are 

few and far between. 

Chairman LIEBERMAN. Right. 

Mr. WOODS. But I think Mr. Gordon put his finger on some of 

the reasons why that happens. We have other work under way 

looking at some of the internal audit activities of the large contractors, and one walks away from that work being somewhat impressed, actually very impressed, with the level of oversight, internal oversight that major corporations have. They do not want to be 

suspended and debarred and they want to take every step to make 

sure that their procedures are working at the largest contractors. 

Chairman LIEBERMAN. Right. So they have their resources also 

obviously to afford to do that. 

Mr. WOODS. Absolutely. And they have their own robust procedures in place to guard against this because they know the consequences. 

And based on some work we did a number of years ago, companies of that size will often enter into administrative agreements 

with the agencies, with the suspension and debarment officials, 

who very much want to bring these companies in line, not necessarily because they are dependent on them but they want to 

maintain competition. They want companies that are interested in 

serving the government, and it is in their interest to have the companies reform themselves and to enter into administrative agreements short of a suspension and debarment to make sure that happens. 

Chairman LIEBERMAN. Thanks. Mr. Sims, do you want to add 

anything? 

Mr. SIMS. Yes. I would also agree with what was said by Mr. 

Gordon and Mr. Woods, and would like to build on that. Problems 

are caused by people. Large corporations have the capacity to deal 

with that. One of the factors in terms of looking whether debarment is appropriate, whether the respondent has distanced himself 

from the problem is have you taken appropriate disciplinary action. 

Large corporations can certainly do that in addition to institutionalizing appropriate corporate governance provisions. 

27 

I think it is important certainly to take actions against people, 

individuals as well as the businesses, when you are entering into 

debarment action because you can certainly, under the rules, impute conduct; for example, to individuals who are the problem. You 

can act in that way to isolate them from going out on their own, 

going to other organizations. 

But beyond that, in terms of individuals, smaller entities, mom 

and pop organizations, tend to be where the closer the problem person is to the control of the organization the harder it is for that 

business or the individual—where they continue to be in control of 

the organization—the harder it is for them to demonstrate that 

they have done something to say that they should not now be considered a risk to the government. 

Chairman LIEBERMAN. It make sense. Ms. Lerner. 

Ms. LERNER. Because our work was looking at the IG community, we did not see any impact of the too-big-to-fail issue on the 

IG community as a whole. 

Chairman LIEBERMAN. Thank you. Mr. Shaw. 

Mr. SHAW. Thank you, Mr. Chairman. 

I have a little bit of a problem with the premise because the Air 

Force has, of course, suspended Boeing. We had Boeing’s three 

launch units suspended for a 20-month period. 

We suspended it for some period of time due to its improper conduct under an Air Force contract. We have engaged with BAE Systems, which is the second-largest defense contractor, in a proactive 

way that helped them fix the company. It was not a debarment because I did not have sufficient evidence at that time. 

So, we do address that. There are fewer big companies than 

there are small companies so in some sense an analysis of the 

EPLS is going to kick out more small companies than large companies. 

But I think the important point here is that I am really able to 

do that with another level of independence I think not just independence from the contracting community but I am independent 

from the waiver authority that determines whether a company or 

a widget that is made by a company is essential for national security. And I think that is a terrific set up in the Air Force. 

There are a lot of other agencies that do it differently. But because of that, I am empowered to do the right thing, to debar or 

suspend a company if that is necessary to protect the government’s 

interest without considering, we coordinate, but without being 

hung up on whether we really need that product because I know 

there is somebody else in the Air Force that will make that judgment. 

Chairman LIEBERMAN. Excellent. Thank you. Senator Collins. 

Senator COLLINS. Thank you, Mr. Chairman. 

Mr. Gordon, you mentioned that you thought that legislation is 

not necessary because the tools are out there. On the other hand, 

if we have a major department like the Department of Justice refusing to follow GAO’s recommendations and adopt more effective 

means to go after contractors who should be debarred or suspended 

it raises the question in my mind about whether there should be 

a legislative mandate. 

28 

I will also say that my experience of having had a very similar 

2-day hearing 30 years ago with exactly the same kinds of issues 

makes me wonder if we should have acted back then to pass legislation. 

So, I guess I would ask you. What would be the harm, as long 

as we kept debarment and suspension discretionary, with requiring 

that every agency of a certain size have dedicated staff, have agency-specific policies, and an active referral process? In other words, 

statutorily mandate the GAO recommendations. 

Mr. GORDON. Senator, I will say that in preparing for this hearing, I got a chance to read through some of the materials about 

your work back then in the MCI, Inc., matter and others. 

And I was, on the one hand, impressed; on the other hand, it is 

somewhat discouraging to see that we have not made enough 

progress. So, I certainly share your points there. 

I would want to see the draft legislation. We would want to look 

at the draft legislation. I do think that what GAO described was 

actually not recommendations because they also made recommendations that we will be considering. 

But what they described were characteristics and the characteristics are a bit tricky. From my point of view, what you need is a 

push from the top and a push from the center that this is serious 

and needs to be done. 

If I could share with you, we have had conversations with the 

agencies including, I should tell you, the Department of Justice 

about this matter. I have personally engaged in those conversations. 

We need to make progress. I do not want to be at that hearing 

30 years from now, I do not know about everybody else here, but 

we need to make progress. 

I will tell you also that the Department of Justice reported to me 

that there has been an increase in their cases over the last 12 

months. It did not yet get picked up in the GAO report because of 

the period they were looking at. 

But they fully understand that the Office of Management and 

Budget will pursue this. That said, if there were draft legislation, 

obviously we would be happy to look at it especially if it were along 

the lines of GAO’s described characteristics. 

Senator COLLINS. Thank you. I think that is something that we 

should take a look at because it is discouraging to see such uneven 

progress over the years. 

Mr. Shaw, another blast from the past for me was when you 

mentioned the Program Fraud Civil Penalties Act because I was involved in writing that also as a staffer. I think it passed in the 

mid-1980s, as I recall. I think you said 1986. 

Mr. SHAW. I think so. 

Senator COLLINS. And I remember Senators Carl Levin and Bill 

Cohen being the primary authors of that. 

I just want to tell you that I look forward to your recommendations on how we could make it work better because that was intended to be a vigorous tool that could be used with administrative 

law judges, as I recall, and to avoid having to go through the judicial system on some of these small dollar cases where the Justice 

Department is just never going to pursue them. 

29 

So, I just, on a personal note, wanted to tell you that while I am 

discouraged to learn that we did not fix the problem, I look forward 

to your recommendations on how we might do so. 

Mr. SHAW. Maybe by way of a preview of coming attractions, I 

mean, the concept would be that the debarring officials would be 

the deciding people in a DOD test program because the debarring 

officials would have the fact pattern for other reasons and we 

would have focused on it and it would be then a more streamlined 

approach. 

Senator COLLINS. Thank you. 

You know, when we are talking about debarment and suspension, the other aspect which I think is not well understood is that 

its purpose is to protect the taxpayer. It is to protect government. 

It is to ensure that we are not doing business with bad actors, 

whether they are unethical or unable to perform. 

It is not really to punish the contractor. I am sure contractors 

feel punished as a result, but it really is to protect the integrity of 

the procurement system. 

And one part of this that is so frustrating to me is when an unethical or an incompetent contractor wins a bid that means that 

the honest, good performer did not get the bid. And that is what 

is really frustrating in this. That is one reason this is so important. 

Ms. Lerner, since you are an Inspector General with the National 

Science Foundation (NSF), I want to end my question period with 

a question to you. 

When people think about debarment and suspension to the extent that they know about it, they think in terms of contracts for 

goods and services. They do not think in terms of grants. 

And since you are the IG for the National Science Foundation, 

which issues a lot of grants, I think it is important that we talk 

about that aspect of that because there are grant recipients that 

runaway with the money or fail to perform or default on their obligations too. It is not just the contractor. 

People think in terms of defense contractors. They might think 

in terms of Medicare fraud, but they do not think in terms of 

grants. So, are we doing enough in the area of grants? 

Ms. LERNER. Well, I can speak for NSF, and we have had a pretty robust process for suspending and debarring our recipients, who 

are primarily grantees. 

I looked back through the year 2000, and we have actively pursued debarment. Since the year 2000, we have racked up a total 

of close to 60 debarments in that timeframe, which for an agency 

of our size is substantial. 

As I pointed out, we have learned, and I have learned a lot since 

taking on the leadership role on the Council, and one of the things 

I learned was that we should be out there suspending people more. 

Since we have started doing this work, we have racked up nine 

suspensions last year alone, and that is an active tool that we are 

using. 

I also lead the research misconduct working group for CIGIE, 

and that is one of the tools that we will use to get word out to the 

grant community that this is something that we can do as well. 

Again more education, more outreach, better understanding, and 

better results. 

30 

Senator COLLINS. I suspect that your experience is unusual because you personally are so committed and I think we need to look 

at the National Institutes of Health (NIH), at other agencies that 

do major grant awards to see whether there really is the kind of 

accountability that is necessary, and again here it is a matter if a 

grant goes to a researcher who turns out to be a fraud, that is 

money that could have gone to a researcher who would advance our 

knowledge of how to cure Alzheimer’s, diabetes, or cancer, and that 

is why I feel so strongly that we need to be taking a harder look 

at the grant side too, and I suspect that it is due to your personal 

commitment and leadership that you have such an extraordinary 

record at the NSF. But that is something I hope we can look a little 

more into. 

Mr. Sims, you were nodding during this so I might give you the 

last word. 

Mr. SIMS. I would certainly agree with the observations, Senator 

Collins, that it is important to use the non-procurement rule as 

well. 

I think one thing to remember, though, because these are really 

procedure rules and due to reciprocity when you act under the contract rule, you also protect for purposes of debarred persons being 

rendered ineligible for non-procurement purposes as well and vice 

versa. 

Some agencies elect to act under the non-procurement role because, in many respects, it has some advantages over the FAR and 

more flexibility. 

Some agencies use both. At the Interior Department we used 

both rules as it appears appropriate with the understanding that 

when we do that we are actually providing protection, in both directions, procurement and non-procurement. 

Senator COLLINS. Thank you. 

Mr. Chairman, thank you so much for holding this hearing. It is 

a very long-held interest of mine and now that you have pointed 

out how long I had been around working on this issue I hope we 

can work on some legislation with the help of OFPP and our wonderful panel here and look forward to seeing the program fraud 

civil remedies amendments as well and also look at the grant side. 

Chairman LIEBERMAN. Well said. Thank you, Senator Collins. I 

do want to state for the record that when you worked for Senator 

Cohen you were extremely young. 

Senator COLLINS. I wish. [Laughter.] 

Chairman LIEBERMAN. This has been an excellent hearing. This 

is not only a panel that is informed and has helped to inform the 

Committee but, you are on the job and—I was about to be pejorative, Mr. Gordon—except for Mr. Gordon, who is leaving, the rest 

of you are going to continue on the job in your various capacities 

and I know you will continue to pursue aims that are shared by 

this Committee. 

We really do wish you good luck and thank you again, Mr. Gordon, for your service. 

Mr. GORDON. Thank you. 

Chairman LIEBERMAN. I agree with Senator Collins. We are 

going to take a look at whether additional legislation is necessary 

along the lines that she has discussed. 

31 

In the meantime, the implementation of existing law is critically 

important, and you are there to make that happen. We are not 

going to let this one go. We really intend to continue very active 

oversight. 

So, we thank you for your testimony today and for your continuing work in this area, which is really important to confidence 

in the government, not to mention the specific saving of taxpayer 

dollars. 

We are going to keep the record of the hearing open for 15 days 

for any additional questions and statements. 

With that, we thank you. 

The hearing is adjourned. 

[Whereupon, at 10:43 a.m., the Committee was adjourned.] 

(33) 

A P P E N D I X 


72557.001
34 


72557.002
35 


72557.003
36 


72557.004
37 


72557.005
38 


72557.006
39 


72557.007
40 


72557.008
41 


72557.009
42 


72557.010
43 


72557.011
44 


72557.012
45 


72557.013
46 


72557.014
47 


72557.015
48 


72557.016
49 


72557.017
50 


72557.018
51 


72557.019
52 


72557.020
53 


72557.021
54 


72557.022
55 


72557.023
56 


72557.024
57 


72557.025
58 


72557.026
59 


72557.027
60 


72557.028
61 


72557.029
62 


72557.030
63 


72557.031
64 


72557.032
65 


72557.033
66 


72557.034
67 


72557.035
68 


72557.036
69 


72557.037
70 


72557.038
71 


72557.039
72 


72557.040
73 


72557.041
74 


72557.042
75 


72557.043
76 


72557.044
77 


72557.045
78 


72557.046
79 


72557.047
80 


72557.048
81 


72557.049
82 


72557.050
83 


72557.051
84 


72557.052
85 


72557.053
86 


72557.054
87 


72557.055
88 


72557.056
89 


72557.057
90 


72557.058
91 


72557.059
92 


72557.060
93 


72557.061
94 


72557.062
95 


72557.063
96 


72557.064
97 


72557.065
98 


72557.066
99 


72557.067
100 


72557.068
101 


72557.069
102 


72557.070
103 


72557.071
104 


72557.072
105 


72557.073
106 


72557.074
107 


72557.075
108 


72557.076
109 


72557.077
110 


72557.078
111 


72557.079
112 


72557.080
113 


72557.081
114 


72557.082
115 


72557.083
116 


72557.084
117 


72557.085
118 


72557.086
119 


72557.087
120 


72557.088
121 


72557.089
122 


72557.090
123 


72557.091
124 


72557.092
125 


72557.093
126 

Æ 


72557.094