An organization overseeing federal spending in response to the pandemic has echoed concerns previously raised by the GAO that in an emergency, agencies “may face pressure to provide goods and services as quickly as possible, which can result in fraud and improper payments.”
“Even in non-pandemic times, financial management controls and proper oversight of government contracts pose a challenge to federal agencies and programs,” says a new report by the Pandemic Response Accountability Committee. “The substantial increase in funding for pandemic-related programs combined with the public’s expectation that these funds get distributed quickly makes it more likely that these risks may occur.”
It said, for example, that over April-September of last year, about $28 billion of the government’s $643 billion in spending on goods and services was related to the pandemic—about evenly split between special appropriations and regular appropriations. Of the pandemic spending, $4.4 billion went to first-time federal contractors.
However, pandemic contracts had almost $1.2 billion in “deobligations”—removal of funds for reasons including failure to meet requirements. That was especially common with first-time contractors; nearly a quarter of those actions had a deobligation. The highest percentage of deobligations for pandemic contracts with first-time federal contractors was in the accommodation and food industry, it said.
“While not all decreases in value and terminations are due to a negative performance by the contractor, the results of our data analysis and survey responses highlight the need for heightened diligence during emergency acquisitions, especially when contracting with first-time federal contractors,” it said.
The report also raised concerns about lack of competition, saying that even when making emergency acquisitions that allow for exceptions to normal requirements, “agencies are expected to use sound fiscal prudence and due diligence to maximize value for each taxpayer dollar spent.”
Recommendations included that:
* “If time does not permit adequate acquisition planning and market research, an agency should carefully consider limiting the value and length of a contract to only address immediate needs. This approach allows the agency to plan strategically for ongoing requirements.”
* “Contract pricing, terms, and conditions will vary depending on the emergency environment. Contracting officers should be aware of opportunities for terms and pricing to change through different phases of an emergency response.”