Summary

This letter and its enclosure respond to the Congressional request for information on selected executive agencies' policies and practices for making responsibility determinations before awarding contracts. Congress requested this information because of its continued concern for effective pre-contract screening to reduce fraudulent activities by contractors. On the basis of discussions, GAO's objectives were to (1) identify agency policies and practices for making contractor responsibility assessments, and determine under what conditions agencies conduct criminal background checks, (2) determine how contracting officers use the Excluded Parties List System (EPLS) to make responsibility assessments and identify planned improvements to the system, if any, and (3) determine the number of fraud investigations in which the contractor or principals had a prior criminal background.

Agencies base their policies and practices for making responsibility determinations on the Federal Acquisition Regulation (FAR) and their own supplements to the FAR. The FAR specifies a number of factors to consider in making responsibility determinations, but it does not require any particular type of background check. Criminal background checks are neither required by the FAR nor prohibited in making responsibility determinations. The FAR requires contracting officers to determine whether prospective contractors are eligible (not suspended, debarred, or proposed for debarment) to receive a contract as part of determining responsibility before awarding the contract. Contracting officers stated they generally search the EPLS by using (1) an identifying number such as the Data Universal Numbering System (DUNS) or a Taxpayer Identification Number, and/or (2) the name of either the firm or an individual. According to officials, agencies receive allegations of irregularities from many sources including contracting officers, oversight organizations such as the Defense Contract Management Agency, agency or contractor employees, competitors, other federal agencies, whistleblower cases, and hotlines. Agencies assign investigations of fraud to criminal investigative units within the within the agencies, such as the office of Inspector General. The investigative offices coordinate with offices of General Counsel to report indictments or evidence to initiate suspensions; they report convictions for debarment proceedings. According to agency officials, detailed information on whether investigations include employees or principals of the company or whether the parties had a prior criminal history may be contained in the case files if it is a part of the information collected in developing the investigation. For example, an official at DOJ told us that prior criminal history checks are a routine part of case development. However, the case files are narrative in nature and, therefore, obtaining the information requires a case-by-case analysis.