Federal Government’s Largest Contractors Have Paid Billions in Fines, Penalties

The federal government’s largest suppliers of goods and services have accumulated more than $59 billon in fines, penalties, and settlements since 1995 according to the Project On Government Oversight’s (POGO) Federal Contractor Misconduct Database.

POGO has added 12 new entities to the database, including telecom giant Verizon Communications and health insurer Highmark. Verizon has 24 instances of misconduct for which it incurred $477.5 million in penalties. Highmark has 7 instances and $59.3 million in penalties. The database now contains the civil, criminal, and administrative misconduct track records of a total of 172 contractors.

The database’s new top 100 federal contractors—ranked according to fiscal year 2011 contract spending data reported on the Federal Procurement Data System—received 55 percent of the $537 billion in federal contracts awarded that year. As of today, these 100 contractors have accumulated 932 misconduct instances and $41 billion in monetary penalties since 1995.

A sizable portion of the top 100 have relatively “clean” misconduct histories. For 21 entities, POGO has not found any instances of misconduct. An additional 20 have only one instance, including new database contractor Austal USA, an Australia-based shipbuilder participating in the U.S. Navy’s controversial Littoral Combat Ship project. Austal received more than $1.3 billion in federal contracts in FY 2011.

Of the contractors with multiple instances of misconduct, BP tops the list with 63 instances of civil, criminal, or administrative misconduct. BP recently entered into record-setting criminal and civil settlements over the 2010 Deepwater Horizon oil rig disaster, which killed 11 men and spilled millions of barrels of oil into the Gulf of Mexico. In addition to paying more than $12.3 billion in fines and pleading guilty to multiple criminal counts, BP was also suspended in November 2012 from federal contracting by the Environmental Protection Agency. BP received more than $1.4 billion in federal contracts in FY 2011.

To view the database, please visit POGO’s Federal Contractor Misconduct Database.

New Highlights

In addition to BP, many other contractors in the database were involved in newsworthy misconduct incidents over the past year.

• Booz Allen Hamilton’s San Antonio office was suspended from contracting for nine weeks by the Air Force after employees at the office were caught sharing non-public procurement information that would have given Booz Allen an unfair competitive advantage.

• The company formerly known as Blackwater entered into a deferred prosecution agreement with the Justice Department and paid a $7.5 million fine to settle criminal charges of illegally exporting weapons and making false statements to the government. Six months later, two former Blackwater employees pleaded guilty to a misdemeanor firearms violation.

• KBR was hit with an $85.2 million verdict in a lawsuit filed by members of the Oregon Army National Guard who claimed KBR negligently exposed them to a toxic chemical while serving in the Iraq War.

• Fluor was found liable and assessed nearly $19 million in damages in a negligence lawsuit filed by a civilian contractor who was severely burned while showering at a Fluor-managed facility in Iraq.

• United Technologies and two of its subsidiaries paid $75.7 million to settle criminal and civil charges of illegally exporting sensitive military software to China.

• SAIC entered into a deferred prosecution agreement and paid more than $500 million to resolve alleged fraud occurring on a contract with New York City.

• McKesson paid a total of $341 million to the federal and state governments to settle a whistleblower lawsuit accusing the company of defrauding Medicaid by falsely inflating the prices of brand name drugs.

• Engility Corporation, a spin-off of L-3 Communications, paid more than $5 million to settle a lawsuit filed by dozens of Iraqis who alleged L-3 employees had abused them at the notorious Abu Ghraib prison and other detention facilities in Iraq.

• CH2M Hill entered into a non-prosecution agreement with the Justice Department and paid $19 million in fines and restitution for widespread time card fraud at the Hanford Nuclear Site.