What GAO Found
GAO identified nine categories of contracting fraud schemes that occurred at the Department of Energy (DOE), including billing schemes, conflicts of interest, and payroll schemes. For example, a subcontractor employee at a site created fraudulent invoices for goods never received, resulting in a loss of over $6 million. In another scheme, a contractor engaged in years of widespread time card fraud, submitting inflated claims for compensation. The contractor agreed to pay $18.5 million to settle the case. DOE reported that it identified nearly $15 million in improper payments due to confirmed fraud in fiscal year 2019. However, due to the difficulty in detecting fraud, agencies—including DOE—incur financial losses related to fraud that are never identified or are settled without admission to fraud and are not counted as such. Fraud can also have nonfinancial impacts, such as fraudsters obtaining a competitive advantage and preventing legitimate businesses from obtaining contracts.
DOE has taken some steps and is planning others to demonstrate a commitment to combat fraud and assess its contracting fraud risks, consistent with the leading practices in GAO’s Fraud Risk Framework. However, GAO found that DOE has not assessed the full range of contracting fraud risks it faces. Specifically, GAO found DOE’s methods for gathering information about its fraud risks captures selected fraud risks—rather than all fraud risks—facing DOE programs. As shown in the figure, DOE’s risk profiles for fiscal years 2018 and 2019 did not capture four of nine fraud schemes that occurred at DOE. For example, one entity did not include any fraud risks in its risk profiles, yet GAO identified six types of fraud schemes that occurred at the entity’s site. DOE plans to expand its risk assessment process, but officials expect the new process will continue to rely on a methodology that gathers information on selected fraud risks. The Fraud Risk Framework states that entities identify specific tools, methods, and sources for gathering information about fraud risks. Without expanding its methodology to capture, assess, and document all fraud risks facing its programs, DOE risks remaining vulnerable to these types of fraud.
Fraud Risks Identified in Fiscal Years 2018 and 2019 Risk Profiles Compared with Types of Fraud Schemes That Have Occurred at DOE
DOE is planning to develop an antifraud strategy in fiscal year 2022 and has taken some steps to evaluate and adapt to fraud risks, consistent with leading practices in GAO’s Fraud Risk Framework. Part of DOE’s effort to manage fraud risks includes adapting controls to address emerging fraud risks. Additionally, DOE is planning to expand its use of data analytics to detect contracting fraud, beginning in fiscal year 2022.
Why GAO Did This Study
DOE relies primarily on contractors to carry out its missions at its laboratories and other facilities, spending approximately 80 percent of its total obligations on contracts. GAO and DOE’s Inspector General have reported on incidents of fraud by DOE contractors and identified multiple contracting fraud risks.
GAO was asked to examine DOE’s processes to manage contracting fraud risks. This report examines, for DOE, (1) types of contracting fraud schemes and their financial and nonfinancial impacts, (2) steps taken to commit to combating contracting fraud risks and the extent to which these risks have been assessed, and (3) steps taken to design and implement an antifraud strategy and to evaluate and adapt its approach.
GAO reviewed relevant laws and guidance; reviewed agency media releases, Agency Financial Reports, and DOE Inspector General reports to Congress from 2013 through 2019; and reviewed documents and interviewed officials from 42 DOE field and site offices, contractors, and subcontractors, representing a range of sites and programs.
What GAO Recommends
GAO is making two recommendations, including for DOE to expand its fraud risk assessment methodology to ensure all fraud risks facing DOE programs are fully assessed and documented in accordance with leading practices. DOE concurred with GAO’s recommendations.
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Mass spectrometry, which measures the mass-to-charge ratio of ions (i.e., charged particles) by converting molecules to ions and separating the ions based on their molecular weight. Nuclear magnetic resonance (NMR), which can determine the structure of a molecule by measuring the interaction between atomic nuclei placed in a magnetic field and exposing it to radio waves. NMR works on is the same principle as magnetic resonance imaging (MRI) used in medical diagnostics. In the third step—still under development—investigators use the data from the forensic chemical identification and analysis and identification methods from step two to develop a "chemical fingerprint." The fingerprint can be matched to a database of information on existing methods or known sources to identify chemical agents (i.e., Source A matching Sample 1 of Fig. 2). However, a comprehensive database containing complete, reliable data for known agents does not exist. How mature is it? Forensic chemical analysis and identification (i.e., Step 2 of Fig.1) is mature for known chemical agents. For example, investigators determined the nerve agent sarin was used in an attack on civilians in 2017. The methods can also identify new agents, as when investigators determined the chemical composition of the Novichok nerve agent after its first known use, in 2018. Forensic chemical analysis and identification methods are also mature enough to generate data that investigators could use as a "chemical fingerprint"– that is, a unique chemical signature that could be used in part to attribute a chemical weapon to a person or entity. For example, combining gas chromatography and mass spectrometry can provide reliable information about the chemical components and molecular weight of an agent. To achieve Step 3, scientists could use this these methods in a laboratory experiment to match impurities in chemical feedstocks of the weapon to potentially determine who made it. In an investigation, such impurities could indicate the geographic origin of the starting material and the process used to create the agent. Figure 2. Example of forensic chemical identification and analysis, showing a match between Sample 1 and Source A. Opportunities An effective international system for forensic chemical attribution can open up several opportunities, including: Defense. Knowing the source of a chemical agent could help nations better defend against future attacks and, when appropriate, take military action in response to an attack. Legal response. Source attribution may provide information to help find and prosecute attackers or to impose sanctions. Deterrence. The ability to trace chemical agents to a source might deter future use of chemical weapons. Challenges Chemical database. Creating a comprehensive international database of chemical fingerprints would require funding and international collaboration to sample chemicals from around the world. Finding perpetrators. Matching a chemical to its sources does not reveal who actually used it in an attack. Almost all investigations require additional evidence. Samples. Collecting a sufficient sample for attribution can be challenging, as can storing and transporting it using a secure chain of custody—potentially over great distance—to one of the 18 authorized biomedical labs worldwide. International cooperation. Lack of cooperation can delay investigations and may compromise sample quality. Cooperation is also essential for creating an international database. Standardization. Attribution methods are complex and require standardized, internationally accepted protocols to ensure results are reliable and trusted. Such protocols do not yet exist for attributing a chemical weapons attack. Policy Context and Questions The following questions are relevant to building an effective, trusted system for tracing attacks using forensic chemical attribution: How can federal agencies promote and contribute to the international standardization of scientific methods for forensic chemical attribution? Which agency or agencies should lead this effort? How can the international community create and implement a framework for cooperation and trust in forensic chemical attribution? What actions could promote or incentivize creation of an internationally accepted database of unique chemical fingerprints for attributing chemical agents to their sources? What can be done to fully identify and address the scientific and technological gaps in current capabilities for attributing a chemical agent to its source? For more information, contact Karen Howard at (202) 512-6888 or HowardK@gao.gov.[Read More…]
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- DSS cooperation in international police operation results in extradition of Albanian man wanted for human smugglingBy Sam NewsSeptember 26, 2020Xhensila Kodra — [Read More…]
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- GAO Audits Involving DOD: Status of Efforts to Schedule and Hold Timely Entrance ConferencesBy Sam NewsNovember 20, 2020GAO began 37 new audits that involved the Department of Defense (DOD) in the fourth quarter of fiscal year 2020. Of GAO's 37 requested entrance conferences for those audits, DOD scheduled 33 within 14 days and held 34 within 30 days of GAO's notification. Entrance conferences are initial meetings between agency officials and GAO staff that allow GAO to communicate its audit objectives and enable agencies to assign key personnel to support the audit work. The four entrance conferences that were scheduled more than 14 days after notification were scheduled late due to either difficulties in identifying a primary action officer or aligning the schedules of GAO and DOD officials. The three entrance conferences that were held more than 30 days after notification were scheduled late due to difficulties in aligning the schedules of GAO and DOD officials. GAO's agency protocols govern GAO's relationships with audited agencies. These protocols assist GAO in scheduling entrance conferences with key agency officials within 14 days of their receiving notice of a new audit. The ability of the Congress to conduct effective oversight of federal agencies is enhanced through the timely completion of GAO audits. In past years, DOD experienced difficulty meeting the protocol target for the timely facilitation of entrance conferences. In Senate Report 116-48 accompanying a bill for the National Defense Authorization Act for Fiscal Year 2020, the Senate Armed Services Committee included a provision for GAO to review DOD's scheduling and holding of entrance conferences. In this report, GAO evaluates the extent to which DOD scheduled entrance conferences within 14 days of receiving notice of a new audit, consistent with GAO's agency protocols, and held those conferences within 30 days. This is the final of four quarterly reports that GAO will produce on this topic for fiscal year 2020. In the first three quarterly reports, GAO found that DOD had improved its ability to meet the protocol target. GAO analyzed data on GAO audits involving DOD and initiated in the fourth quarter of fiscal year 2020 (July 1, 2020, through September 30, 2020). Specifically, GAO identified the number of notification letters requesting entrance conferences that it sent to DOD during that time period. GAO determined the number of days between when DOD received GAO's notification letter for each new audit and when DOD scheduled the entrance conference and assessed whether DOD scheduled entrance conferences within 14 days of notification, which is the time frame identified in GAO's agency protocols. GAO also determined the date that each requested entrance conference was held by collecting this information from the GAO team conducting each audit and assessed whether DOD held entrance conferences for new audits within 30 days of notification, which was the time frame identified in the mandate for this review. For more information, contact Elizabeth Field at (202) 512-2775 or Fielde1@gao.gov.[Read More…]
- Georgia Correctional Officer Pleads Guilty to Civil Rights Offense for Assaulting InmateBy Sam NewsNovember 9, 2020Brian Ford, 23, a correctional officer at the Valdosta State Prison (VSP) in Valdosta, Georgia, pleaded guilty today to one count of using excessive force against an inmate housed at the facility.[Read More…]
- Further Sanctions on Entities Trading in or Transporting Iranian PetrochemicalsBy Sam NewsMarch 18, 2020
- Antarctica Travel AdvisoryBy Sam NewsSeptember 26, 2020Exercise increased [Read More…]
- Justice Department Files Suit Against Dallas, Texas, Towing Company for Unlawfully Selling Servicemember-Owned VehiclesBy Sam NewsSeptember 28, 2020The Justice Department today filed a lawsuit in the Northern District of Texas alleging that Dallas-based towing company United Tows LLC violated the Servicemembers Civil Relief Act (SCRA), by unlawfully auctioning off vehicles owned by SCRA-protected servicemembers.[Read More…]
- U.S. Law Enforcement Assists Brazilian Law Enforcement Takedown of Numerous Digital Piracy Sites and Apps Alleged to Have Caused Millions of Dollars in Losses to U.S. Media CompaniesBy Sam NewsNovember 5, 2020Seizure warrants have been executed against three domain names of commercial websites engaged in the illegal reproduction and distribution of copyrighted works in support of a Brazilian-led takedown of digital piracy sites there, dubbed “Operation 404”.[Read More…]
- Justice Department Announces $29 Million To Support Justice And Mental Health ProgramsBy Sam NewsOctober 15, 2020The Department of [Read More…]
- United States Takes Action To Counter Iranian Support for al-Qa’idaBy Sam NewsJanuary 12, 2021
- US-European Mission Launches to Monitor the World’s OceansBy Sam NewsDecember 9, 2020Sentinel-6 Michael [Read More…]
- On Progress Toward PeaceBy Sam NewsDecember 11, 2020
- Pennsylvania Attorney Sentenced for Role in $2.7 Million Ponzi SchemeBy Sam NewsNovember 30, 2020An Allentown, Pennsylvania, attorney was sentenced today to 78 months in prison followed by three years of supervised release for his role in a $2.7 million investment fraud scheme that victimized his law clients.[Read More…]
- New York Businessman Pleads Guilty to Tax EvasionBy Sam NewsNovember 13, 2020A Woodsburgh, New York, businessman pleaded guilty today to tax evasion, announced Principal Deputy Assistant Attorney General Richard Zuckerman of the Justice Department’s Tax Division.[Read More…]
- Travel of Special Envoy for the Sahel Region Dr. J. Peter Pham to MaliBy Sam NewsSeptember 30, 2020
- Fair Labor Standards Act: Tracking Additional Complaint Data Could Improve DOL’s EnforcementBy Sam NewsJanuary 8, 2021Over the past 10 years, the number of Fair Labor Standards Act (FLSA) minimum wage and overtime cases has generally ranged between 23,000 and 30,000 each year. The compliance actions the Department of Labor's (DOL) Wage and Hour Division (WHD) used to address these cases primarily involved either on-site investigations or conciliations that seek a resolution between the employer and the worker by phone. Back wages due to workers for FLSA minimum wage and overtime violations increased from $129 million in fiscal year 2010 to $226 million in fiscal year 2019. Although the number of WHD investigators decreased by 25 percent from 2010 to 2019, WHD maintained its casework by using procedural flexibilities, such as not investigating low-priority complaints and by distributing work across offices to balance workloads. From fiscal years 2014 through 2019, most of WHD's FLSA compliance actions were targeted at priority industries—those WHD identified as low-wage, high violation industries that employ workers who are unlikely to file wage or overtime complaints, such as food services. In 2011, WHD developed a list of 20 priority industries, and encouraged its regional and district offices to focus on these industries by setting and monitoring performance goals as part of its annual enforcement planning process. The percentage of FLSA compliance actions involving the priority industries increased from 75 to 80 percent from fiscal years 2014 through 2019, according to DOL data. WHD uses several strategies, including supervisory reviews, to address FLSA complaints consistently, but does not track uniform data needed to ensure that the reasons complaints are filed with no WHD compliance action are applied consistently. WHD may file complaints without completing a compliance action because they are not within WHD's jurisdiction or for other reasons, such as that they are determined to be low-priority. GAO found that WHD filed about 20 percent of FLSA complaints with no compliance action from fiscal years 2014-2019 and the percent varied considerably (from 4 to 46 percent) among district offices (see figure). WHD lacks uniform data on the reasons complaints are filed with no compliance action at intake or the reasons cases are dropped after initial acceptance because there is no data field in WHD's enforcement database that can be used to systematically aggregate that information. Absent this data, WHD is less able to ensure that a consistent process is applied to complaints. Percentage of Fair Labor Standards Act Complaints Filed with No Compliance Action by WHD District Offices, Fiscal Years 2014-2019 Note: WHD filed about 20 percent of FLSA complaints with no compliance action from fiscal years 2014-2019, and the percent varied considerably among its district offices. The FLSA sets federal minimum wage and overtime pay requirements for millions of U.S. workers. WHD may investigate worker complaints of FLSA violations or initiate investigations in industries it prioritizes for enforcement. GAO was asked to review WHD compliance actions. This report examines (1) trends in WHD's FLSA minimum wage and overtime cases, (2) the extent to which WHD's FLSA compliance actions targeted priority industries, and (3) the extent to which WHD's reported efforts and data indicate that WHD applied a consistent process to FLSA complaints. GAO analyzed WHD data on FLSA cases for fiscal years 2010 through 2019, the last full fiscal year of data available when GAO conducted its analysis. GAO also conducted more in-depth reviews of recent efforts (fiscal years 2014-2019). GAO interviewed officials from WHD's national office, five regional offices, and five of WHD's 54 district offices with the largest share of FLSA cases in their regions. GAO also interviewed external stakeholders, including state agencies and organizations that represent workers and employers. GAO recommends DOL's WHD develop a method for systematically aggregating and reviewing data on the reasons complaints are filed with no compliance action or cases are dropped. DOL agreed with GAO's recommendation and stated it would take action to address it. For more information, contact Cindy Brown Barnes at (202) 512-7215 or firstname.lastname@example.org.[Read More…]
- South Sudan Travel AdvisoryBy Sam NewsSeptember 26, 2020Do not travel to South [Read More…]
- Secretary Pompeo’s Meeting with Ecuadoran Foreign Minister GallegosBy Sam NewsNovember 9, 2020
- Joint Statement on Hong KongBy Sam NewsNovember 18, 2020
- NASA Develops COVID-19 Prototype Ventilator in 37 DaysBy Sam NewsSeptember 26, 2020A high-pressure [Read More…]
- New York Brothers Charged With COVID-Relief FraudBy Sam NewsSeptember 10, 2020Two New York brothers were charged in a criminal complaint unsealed today for their alleged participation in a scheme to file fraudulent loan applications seeking nearly $7 million in forgivable Paycheck Protection Program (PPP) loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, announced Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division and U.S. Attorney James P. Kennedy, Jr. of the U.S. Attorney’s Office for the Western District of New York.[Read More…]
- Follow NASA’s Perseverance Rover in Real Time on Its Way to MarsBy Sam NewsSeptember 26, 2020A crisply rendered web [Read More…]
- CEO of Medical Device Company Charged in COVID-19 Related Securities Fraud SchemeBy Sam NewsDecember 18, 2020The chief executive officer (CEO) of a California-based medical device company was indicted by a federal grand jury in connection with an alleged scheme to defraud investors by making false and misleading statements about the purported development of a new COVID-19 test, leading to millions of dollars in investor losses.[Read More…]
- Tonga Travel AdvisoryBy Sam NewsSeptember 26, 2020