DOD Inspector General Finds Playing Field Still Not Level

March 8, 2012

In February 2012 the Inspector General (IG) at the US Department of Defense released a report [PDF] finding that DOD had awarded hundreds of millions of dollars in Service-Disabled Veteran-Owned Small Business (SDVOSB) program funds to potentially ineligible contractors. The IG also found $1.3B worth of additional contracts that were inaccurately coded in the Federal Procurement Data System–Next Generation (FPDS-NG) federal procurement database. This reflects two sets of issues that have plagued federal and defense contracting for years.

The first issue relates to federal acquisition rules that start from good intentions but do not end up being fully enforced, in their spirit or letter. The US government has failed to meet its self-imposed goals on SDVOSB since they were put in place almost a decade ago, not to speak of the 1953 Small Business Act. The American Small Business League was noting very recently how large businesses keep being awarded set-asides they are not eligible for. One way to do just that often in use in the defense space is by contracting Alaska Native Corporations (ANCs). Overall, the FY12 report by the Small Business Administration IG shows some of amount of progress by bureaucratic standards that do not necessarily translate into "well now we actually stick to the rules we set for ourselves."

The second issue is one of transparency and accountability. The federal government has piled up several databases over time to keep track of requests for proposals, contract actions, contractors et. al. To this the Department of Defense and the services have added their layers of poorly integrated software to track program costs, performance, and other overlapping data. Despite occasional claims to the contrary, these tools remain a morass of confusing, often poor data. It is not rare to find contract actions worth dozens of millions of dollars in FPDS-NG that have a missing or garbled description, if they have a description at all. Whether set-aside status is properly documented in FPDS is unfortunately not that database's most pressing data quality issue. 

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