Justice Department Announces Global Resolution of Criminal and Civil Investigations with Opioid Manufacturer Purdue Pharma and Civil Settlement with Members of the Sackler Family

Today, the Department of Justice announced a global resolution of its criminal and civil investigations into the opioid manufacturer Purdue Pharma LP (Purdue), and a civil resolution of its civil investigation into individual shareholders from the Sackler family.  The resolutions with Purdue are subject to the approval of the bankruptcy court. 

“The abuse and diversion of prescription opioids has contributed to a national tragedy of addiction and deaths, in addition to those caused by illicit street opioids,” said Deputy Attorney General Jeffrey A. Rosen.  “With criminal guilty pleas, a federal settlement of more than $8 billion, and the dissolution of a company and repurposing its assets entirely for the public’s benefit, the resolution in today’s announcement re-affirms that the Department of Justice will not relent in its multi-pronged efforts to combat the opioids crisis.”

“Today’s resolution is the result of years of hard work by the FBI and its partners to combat the opioid crisis in the U.S.,” said Steven M. D’Antuono, Assistant Director in Charge of the FBI Washington Field Office.  “Purdue, through greed and violation of the law, prioritized money over the health and well-being of patients.  The FBI remains committed to holding companies accountable for their illegal and inexcusable activity and to seeking justice, on behalf of the victims, for those who contributed to the opioid crisis.”

“The opioid epidemic remains a significant public health challenge that impacts the lives of men and women across the country,” said Gary L. Cantrell Deputy Inspector General for Investigations at the U.S. Department of Health and Human Services’ Office of Inspector General.  “Unfortunately, Purdue’s reckless actions and violation of the law senselessly risked patients’ health and well-being.  With our law enforcement partners, we will continue to combat the opioid crisis, including holding the pharmaceutical industry and its executives accountable.”

“This resolution closes a particularly sad chapter in the ongoing battle against opioid addiction,” said Drug Enforcement Administration (DEA) Assistant Administrator Tim McDermott.  “Purdue Pharma actively thwarted the United States’ efforts to ensure compliance and prevent diversion.  The devastating ripple effect of Purdue’s actions left lives lost and others addicted.  DEA will continue to work tirelessly with our partners and the pharmaceutical industry to address the damage that has been done, and bring an end to this epidemic that has gripped the nation for far too long.” 

Purdue Pharma has agreed to plead guilty in federal court in New Jersey to a three-count felony information charging it with one count of dual-object conspiracy to defraud the United States and to violate the Food, Drug, and Cosmetic Act, and two counts of conspiracy to violate the Federal Anti-Kickback Statute.  The criminal resolution includes the largest penalties ever levied against a pharmaceutical manufacturer, including a criminal fine of $3.544 billion and an additional $2 billion in criminal forfeiture.  For the $2 billion forfeiture, the company will pay $225 million on the effective date of the bankruptcy, and, as further explained below, the department is willing to credit the value conferred by the company to State and local governments under the department’s anti-piling on and coordination policy.  Purdue has also agreed to a civil settlement in the amount of $2.8 billion to resolve its civil liability under the False Claims Act.  Separately, the Sackler family has agreed to pay $225 million in damages to resolve its civil False Claims Act liability.

The resolutions do not include the criminal release of any individuals, including members of the Sackler family, nor are any of the company’s executives or employees receiving civil releases.

While the global resolution with the company is subject to approval by the bankruptcy court in the Southern District of New York, one important condition in the resolution is that the company would cease to operate in its current form and would instead emerge from bankruptcy as a public benefit company (PBC) owned by a trust or similar entity designed for the benefit of the American public, to function entirely in the public interest.  Indeed, not only will the PBC endeavor to deliver legitimate prescription drugs in a manner as safe as possible, but it will aim to donate, or provide steep discounts for, life-saving overdose rescue drugs and medically assisted treatment medications to communities, and the proceeds of the trust will be directed toward State and local opioid abatement programs.  Based on the value that would be conferred to State and local governments through the PBC, the department is willing to credit up to $1.775 billion against the agreed $2 billion forfeiture amount.  The department looks forward to working with the creditor groups in the bankruptcy in charting the path forward for this PBC so that its public health goals can be best accomplished.

The Criminal Pleas

As part of the plea, Purdue will admit that from May 2007 through at least March 2017, Purdue conspired to defraud the United States by impeding the lawful function of the DEA by representing to the DEA that Purdue maintained an effective anti-diversion program when, in fact, Purdue continued to market its opioid products to more than 100 health care providers whom the company had good reason to believe were diverting opioids and by reporting misleading information to the DEA to boost Purdue’s manufacturing quotas.  The misleading information comprised prescription data that included prescriptions written by doctors that Purdue had good reason to believe were engaged in diversion.  The conspiracy also involved aiding and abetting violations of the Food, Drug, and Cosmetic Act by facilitating the dispensing of its opioid products, including OxyContin, without a legitimate medical purpose, and thus without lawful prescriptions.

In addition, Purdue will admit to conspiring to violate the Federal Anti-Kickback Statute.  Between June 2009 and March 2017, Purdue made payments to two doctors through Purdue’s doctor speaker program to induce those doctors to write more prescriptions of Purdue’s opioid products.  Similarly, from approximately April 2016 through December 2016, Purdue made payments to Practice Fusion Inc., an electronic health records company, in exchange for referring, recommending, and arranging for the ordering of Purdue’s extended release opioid products – OxyContin, Butrans, and Hysingla.

The Civil Settlements

The department’s civil settlements resolve the United States’ claims as to both Purdue and its individual shareholders, members of the Sackler family.

The civil settlement with Purdue provides the United States with an allowed, unsubordinated, general unsecured bankruptcy claim for recovery of $2.8 billion.   This settlement resolves allegations that from 2010 to 2018, Purdue caused false claims to be submitted to federal health care programs, specifically Medicare, Medicaid, TRICARE, the Federal Employees Health Benefits Program, and the Indian Health Service.  The government alleged that Purdue promoted its opioid drugs to health care providers it knew were prescribing opioids for uses that were unsafe, ineffective, and medically unnecessary, and that often led to abuse and diversion.  For example, Purdue learned that one doctor was known by patients as “the Candyman” and was prescribing “crazy dosing of OxyContin,” yet Purdue had sales representatives meet with the doctor more than 300 times.  It also resolves the government’s allegations that Purdue engaged in three different kickback schemes to induce prescriptions of its opioids.  First, Purdue paid certain doctors ostensibly to provide educational talks to other health care professionals and serve as consultants, but in reality to induce them to prescribe more OxyContin.  Second, Purdue paid kickbacks to Practice Fusion, as described above.  Third, Purdue entered into contracts with certain specialty pharmacies to fill prescriptions for Purdue’s opioid drugs that other pharmacies had rejected as potentially lacking medical necessity.

Under a separate civil settlement, individual members of the Sackler family will pay the United States $225 million arising from the alleged conduct of Dr. Richard Sackler, David Sackler, Mortimer D.A. Sackler, Dr. Kathe Sackler, and Jonathan Sackler (the Named Sacklers).  This settlement resolves allegations that, in 2012, the Named Sacklers knew that the legitimate market for Purdue’s opioids had contracted.  Nevertheless, they requested that Purdue executives recapture lost sales and increase Purdue’s share of the opioid market.  The Named Sacklers then approved a new marketing program beginning in 2013 called “Evolve to Excellence,” through which Purdue sales representatives intensified their marketing of OxyContin to extreme, high-volume prescribers who were already writing “25 times as many OxyContin scripts” as their peers, causing health care providers to prescribe opioids for uses that were unsafe, ineffective, and medically unnecessary, and that often led to abuse and diversion.     

The civil settlement also resolves the government’s allegations that from approximately 2008 to 2018, at the Named Sacklers’ request, Purdue transferred assets into Sackler family holding companies and trusts that were made to hinder future creditors, and/or were otherwise voidable as fraudulent transfers.

Today’s resolution does not resolve claims that states may have against Purdue or members of the Sackler family, nor does it impede the debtors’ ability to recover any fraudulent transfers.

Today’s announcement was made by Deputy Attorney General Jeffrey A. Rosen; Acting Assistant Attorney General of the Civil Division Jeffrey Clark; U.S. Attorney for the District of Vermont Christina Nolan; and First Assistant U.S. Attorney for the District of New Jersey Rachael Honig.  The criminal investigation was conducted by the U.S. Attorney’s Offices for the Districts of New Jersey and Vermont, the Consumer Protection Branch of the Department of Justice’s Civil Division, and the FBI’s Washington, D.C. and Newark Field Offices, with assistance by the DEA and the U.S. Attorney’s Office for the Northern District of Ohio.  The civil settlements were handled by the Fraud Section of the Commercial Litigation Branch of the Department of Justice’s Civil Division, and the U.S. Attorney’s Offices for the Districts of New Jersey and Vermont, with assistance from the Department of Health and Human Services, Office of General Counsel and Office of Counsel to the Inspector General; the Defense Health Agency; and the Office of Personnel Management.  The Purdue bankruptcy matter is being handled by the U.S. Attorney’s Office for the Southern District of New York and the Civil Division’s Commercial Litigation Branch, Corporate/Finance Section.

Except to the extent of Purdue’s admissions as part of its criminal resolution, the claims resolved by the civil settlements are allegations only.  There has been no determination of liability in the civil matters.

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    The federal government has long identified the financial services sector as a critical component of the nation's infrastructure. The sector includes commercial banks, securities brokers and dealers, and providers of the key financial systems and services that support these functions. Altogether, the sector holds about $108 trillion in assets and faces a variety of cybersecurity-related risks. Key risks include (1) an increase in access to financial data through information technology service providers and supply chain partners; (2) a growth in sophistication of malware—software meant to do harm—and (3) an increase in interconnectivity via networks, the cloud, and mobile applications. Cyberattacks that exploit risks can occur against either public or private components of the sector. For example, in February 2016, hackers were able to install malware on the Bangladesh Central Bank's system through a service provider, which then directed the Federal Reserve Bank of New York to transfer money to accounts in other Asian countries. This attack resulted in the theft of approximately $81 million. Several industry groups and firms are taking steps to enhance the security and resilience of the U.S. financial services sector through a broad range of cyber risk mitigation efforts. These efforts include coordinating within the sector through groups such as the Financial Services Sector Coordinating Council and the Financial Systemic Analysis and Resilience Center, conducting industrywide incident response exercises, sharing threat and vulnerability information, developing and providing guidance in conducting risk assessments, and offering cybersecurity-related training. The Departments of Homeland Security and the Treasury and federal financial regulators are also taking multiple steps to support cybersecurity and resilience through risk mitigation efforts. Among other things, federal agencies provide cybersecurity expertise and conduct simulation exercises related to cyber incident response and recovery. Treasury, as the designated lead agency for the financial sector, plays a key role in supporting many of the efforts to enhance the sector's cybersecurity and resiliency. For example, Treasury's Assistant Secretary for Financial Institutions serves as the chair of the committee of government agencies with sector responsibilities, and Treasury coordinates federal agency efforts to improve the sector's cybersecurity and related communications. However, Treasury does not track efforts or prioritize them according to goals established by the sector for enhancing cybersecurity and resiliency. Treasury also has not fully implemented GAO's previous recommendation to establish metrics related to the value and results of the sector's risk mitigation efforts. Further, the 2016 sector-specific plan, which is intended to direct sector activities, does not identify ways to measure sector progress and is out of date. Among other things, the sector-specific plan lacks information on sector-related requirements laid out in the 2019 National Cyber Strategy Implementation Plan . Unless more widespread and detailed tracking and prioritization of efforts occurs according to the goals laid out in the sector-specific plan, the sector could be insufficiently prepared to deal with cyber-related risks, such as those caused by increased access to data by third parties. For decades, the federal government has taken steps to protect the nation's critical infrastructures. The financial services sector's reliance on information technology makes it a leading target for cyber-based attacks. Recent high-profile breaches at commercial entities have heightened concerns that data are not being adequately protected. Under the Comptroller General's authority, GAO initiated this review to (1) describe the key cyber-related risks facing the financial sector; (2) describe steps the financial services industry is taking to share information on and address risks to its sector; and (3) assess steps federal agencies are taking to enhance the security and resilience of the sector. GAO analyzed relevant reports and information to determine risks and mitigation efforts and compared agency efforts against federal policies and guidance. GAO also interviewed officials at 16 private sector entities, two self-regulatory organizations, and eight federal agencies, including the Department of the Treasury. GAO is making recommendations to Treasury to track and prioritize the sector's cyber risk mitigation efforts, and to update the sector's plan with metrics for measuring progress and information on how sector efforts will meet sector goals and requirements, including those contained within the National Cyber Strategy Implementation Plan. Treasury generally agreed with the recommendations. For more information, contact Nick Marinos at (202) 512-9342 or marinosn@gao.gov or Michael Clements at (202) 512-7763 or ClementsM@gao.gov.
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  • Veterans Community Care Program: Improvements Needed to Help Ensure Timely Access to Care
    In U.S GAO News
    The Department of Veterans Affairs (VA) established an appointment scheduling process for the Veterans Community Care Program (VCCP) that allows up to 19 days to complete several steps from VA providers creating a referral to community care staff reviewing that referral. However, as the figure shows, VA has not specified the maximum amount of time veterans should have to wait to receive care through the program. GAO previously recommended in 2013 the need for an overall wait-time measure for veterans to receive care under a prior VA community care program. Subsequent to VA not implementing this recommendation, GAO again recommended in 2018 that VA establish an achievable wait-time goal as part of its new community care program (the VCCP). Potential Allowable Wait Time to Obtain Care through the Veterans Community Care Program Note: This figure illustrates potential allowable wait times in calendar days for eligible veterans who are referred to the VCCP through routine referrals (non-emergent), and have VA medical center staff—Referral Coordination Team (RCT) and community care staff (CC staff)—schedule the appointments on their behalf. VA has not yet implemented GAO's 2018 recommendation that VA establish an achievable wait-time goal. Under the VA MISSION Act, VA is assigned responsibility for ensuring that veterans' appointments are scheduled in a timely manner—an essential component of quality health care. Given VA's lack of action over the prior 7 years implementing wait-time goals for various community care programs, congressional action is warranted to help achieve timely health care for veterans. Regarding monitoring of the initial steps of the scheduling process, GAO found that VA is using metrics that are remnants from the previous community care program, which are inconsistent with the time frames established in the VCCP scheduling process. This limits VA's ability to determine the effectiveness of the VCCP and to identify areas for improvement. In June 2019, VA implemented its new community care program, the VCCP, as required by the VA MISSION Act of 2018. Under the VCCP, VAMC staff are responsible for community care appointment scheduling; their ability to execute this new responsibility has implications for veterans receiving community care in a timely manner. GAO was asked to review VCCP appointment scheduling. This report examines, among other issues, the VCCP appointment scheduling process VA established and VA's monitoring of that process. GAO reviewed documentation, such as scheduling policies, and referral data related to the VCCP and assessed VA's relevant processes. GAO conducted site visits to five VAMCs in the first region to transition to VA's new provider network, and interviewed VAMC staff and a non-generalizable sample of community providers receiving referrals from those VAMCs. GAO also interviewed VA and contractor officials. GAO recommends that Congress consider requiring VA to establish an overall wait-time measure for the VCCP. GAO is also making three recommendations to VA, including that it align its monitoring metrics with the VCCP appointment scheduling process. VA did not concur with one of GAO's recommendations related to aligning monitoring metrics to VCCP scheduling policy time frames. GAO continues to believe this recommendation is valid, as discussed in the report. For more information, contact Sharon M. Silas at (202) 512-7114 or silass@gao.gov.
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  • VA Health Care: VA Needs to Continue to Strengthen Its Oversight of Quality of State Veterans Homes
    In U.S GAO News
    The Department of Veterans Affairs (VA) pays over $1 billion a year to state veterans homes (SVH)—homes owned and operated by the states—to provide nursing home care to approximately 20,000 veterans. In fiscal year 2019, VA paid SVHs $1.17 billion for an average daily census of 20,072 veterans (51 percent of the total veterans receiving nursing home care through VA). Further, VA projects its payments to SVHs will continue to increase; VA projects it will pay $1.7 billion to SVHs to provide care to veterans in fiscal year 2022. VA oversees the quality of care veterans receive at SVHs mainly through annual inspections that VA hires a contractor to perform. In its July 2019 report, GAO found that VA's SVH contractor performed the required annual inspections for all SVHs in 2018, but VA needed to take action to enhance its oversight of SVHs and to ensure that information on quality of care provided in this setting is publicly available to veterans. Specifically, GAO found the following: VA does not require its SVH contractor to identify all failures to meet quality standards during its inspections as deficiencies . For example, GAO found that VA allows its SVH contractor to cite some failures to meet quality standards as “recommendations,” rather than as deficiencies. VA officials said they do not track or monitor the nature of the recommendations or whether they have been addressed. As a result, VA does not have complete information on all failures to meet quality standards at SVHs and cannot track this information to identify trends in quality across these homes. VA is not conducting all monitoring of its SVH contractor. GAO found that, at the time of its review, VA had not monitored the SVH contractor's performance of inspections through regular observational assessments to ensure that contractor staff effectively determine whether SVHs are meeting required standards. Specifically, VA officials said they intended to observe the SVH contractor's inspections on a quarterly basis; however, at the time of GAO's review, VA officials could not recall when VA last observed the SVH contractor's inspections. In July 2020, VA provided information indicating that they will regularly monitor the SVH contractor's performance in conducting inspections through observational assessments. VA does not share information on the quality of SVHs on its website. GAO found that, while VA provides information on the quality of other nursing home care settings on its website, it does not do so for SVHs. According to VA officials, there is no requirement to provide information on SVH quality on its website, as SVHs are owned and operated by the states. VA is the only federal agency that conducts regular oversight inspection on the quality of care of all SVHs and, as a result, is the only agency that could share such quality information on its website. Veterans—like over a million other Americans—rely on nursing home care to help meet their health needs. For eligible veterans whose health needs require skilled nursing and personal care, VA provides or pays for nursing home care in three nursing home settings: the VA-owned and -operated community living centers, public- or privately owned community nursing homes, and state-owned and -operated SVHs. In fiscal year 2019, VA provided or paid for nursing home care for over 39,000 veterans. The majority of these veterans received care at SVHs. This statement summarizes the GAO's July 2019 report, GAO-19-428 , with a focus on issues related to SVHs. Specifically, it describes the: (1) use of and expenditures for SVHs, (2) inspections used by VA to assess the quality of SVH care and VA's oversight of the inspection process, and (3) information VA provides publicly on the quality of SVH care. As part of that work GAO analyzed VA data on expenditures for SVHs and interviewed VA officials. For this statement GAO reviewed expenditure and utilization data for fiscal year 2019. In its July 2019 report, GAO made three recommendations related to SVHs, including that VA require that all failures to meet quality standards are cited as deficiencies on SVH inspections. VA concurred with two recommendations and concurred in principle with the third. VA has addressed one recommendation and continued attention is needed to address the two remaining recommendations. For more information, contact Sharon M. Silas at (202) 512-7114 or silass@gao.gov.
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  • Information Technology: DHS Directives Have Strengthened Federal Cybersecurity, but Improvements Are Needed
    In U.S GAO News
    What GAO Found The Department of Homeland Security (DHS) has established a five-step process for developing and overseeing the implementation of binding operational directives, as authorized by the Federal Information Security Modernization Act of 2014 (FISMA). The process includes DHS coordinating with stakeholders early in the directives' development process and validating agencies' actions on the directives. However, in implementing the process, DHS did not coordinate with stakeholders early in the process and did not consistently validate agencies' self-reported actions. In addition to being a required step in the directives process, FISMA requires DHS to coordinate with the National Institute of Standards and Technology (NIST) to ensure that the directives do not conflict with existing NIST guidance for federal agencies. However, NIST officials told GAO that DHS often did not reach out to NIST on directives until 1 to 2 weeks before the directives were to be issued, and then did not always incorporate the NIST technical comments. More recently, DHS and NIST have started regular coordination meetings to discuss directive-related issues earlier in the process. Regarding validation of agency actions, DHS has done so for selected directives, but not for others. DHS is not well-positioned to validate all directives because it lacks a risk-based approach as well as a strategy to check selected agency-reported actions to validate their completion. Directives' implementation often has been effective in strengthening federal cybersecurity. For example, a 2015 directive on critical vulnerability mitigation required agencies to address critical vulnerabilities discovered by DHS cyber scans of agencies' internet-accessible systems within 30 days. This was a new requirement for federal agencies. While agencies did not always meet the 30-day requirement, their mitigations were validated by DHS and reached 87 percent compliance by 2017 (see fig. 1). DHS officials attributed the recent decline in percentage completion to a 35-day partial government shutdown in late 2018/early 2019. Nevertheless, for the 4-year period shown in the figure below, agencies mitigated within 30 days about 2,500 of the 3,600 vulnerabilities identified. Figure 1: Critical Vulnerabilities Mitigated within 30 days, May 21, 2015 through May 20, 2019 Agencies also made reported improvements in securing or replacing vulnerable network infrastructure devices. Specifically, a 2016 directive on the Threat to Network Infrastructure Devices addressed, among other things, several urgent vulnerabilities in the targeting of firewalls across federal networks and provided technical mitigation solutions. As shown in figure 2, in response to the directive, agencies reported progress in mitigating risks to more than 11,000 devices as of October 2018. Figure 2: Federal Civilian Agency Vulnerable Network Infrastructure Devices That Had Not Been Mitigated, September 2016 through January 2019 Another key DHS directive is Securing High Value Assets, an initiative to protect the government's most critical information and system assets. According to this directive, DHS is to lead in-depth assessments of federal agencies' most essential identified high value assets. However, an important performance metric for addressing vulnerabilities identified by these assessments does not account for agencies submitting remediation plans in cases where weaknesses cannot be fully addressed within 30 days. Further, DHS only completed about half of the required assessments for the most recent 2 years (61 of 142 for fiscal year 2018, and 73 of 142 required assessments for fiscal year 2019 (see fig. 3)). In addition, DHS does not plan to finalize guidance to agencies and third parties, such as contractors or agency independent assessors, for conducting reviews of additional high value assets that are considered significant, but are not included in DHS's current review, until the end of fiscal year 2020. Given these shortcomings, DHS is now reassessing key aspects of the program. However, it does not have a schedule or plan for completing this reassessment, or to address outstanding issues on completing required assessments, identifying needed resources, and finalizing guidance to agencies and third parties. Figure 3: Department of Homeland Security Assessments of Agency High Value Assets, Fiscal Years (FY) 2018 through 2019 Why GAO Did This Study DHS plays a key role in federal cybersecurity. FISMA authorized DHS, in consultation with the Office of Management and Budget, to develop and oversee the implementation of compulsory directives—referred to as binding operational directives—covering executive branch civilian agencies. These directives require agencies to safeguard federal information and information systems from a known or reasonably suspected information security threat, vulnerability, or risk. Since 2015, DHS has issued eight directives that instructed agencies to, among other things, (1) mitigate critical vulnerabilities discovered by DHS through its scanning of agencies' internet-accessible systems; (2) address urgent vulnerabilities in network infrastructure devices identified by DHS; and (3) better secure the government's highest value and most critical information and system assets. GAO was requested to evaluate DHS's binding operational directives. This report addresses (1) DHS's process for developing and overseeing the implementation of binding operational directives and (2) the effectiveness of the directives, including agencies' implementation of the directive requirements. GAO selected for review the five directives that were in effect as of December 2018, and randomly selected for further in-depth review a sample of 12 agencies from the executive branch civilian agencies to which the directives apply. In addition, GAO reviewed DHS policies and processes related to the directives and assessed them against FISMA and Office of Management and Budget requirements; administered a data collection instrument to selected federal agencies; compared the agencies' responses and supporting documentation to the requirements outlined in the five directives; and collected and analyzed DHS's government-wide scanning data on government-wide implementation of the directives. GAO also interviewed DHS and selected agency officials.
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  • Federal Contracting: Actions Needed to Improve Department of Labor’s Enforcement of Service Worker Wage Protections
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    The Department of Labor (DOL) completed over 5,000 Service Contract Act (SCA) cases, which for many resulted in the awarding of back wages to federally contracted security guards, janitors, and other service workers, in fiscal years 2014 through 2019, according to available data. DOL enforces the SCA, which was enacted to protect workers on certain types of federal service contracts. DOL found SCA violations—primarily of wage and benefit protections—in 68 percent of cases. Employers across a range of service industries agreed to pay around $224 million in back wages (see figure for examples). Sixty cases resulted in debarment—a decision to prevent an employer from being awarded new federal contracts for 3 years. DOL's strategic plan emphasizes optimizing resources for resolving cases using all available enforcement tools. However, DOL does not analyze its use of enforcement tools, such as debarment or employer compliance agreements. Therefore, DOL may lack a complete picture of how it uses resources on different strategies for resolving SCA cases, as well as the effectiveness of these enforcement strategies. Back Wages Paid for SCA Cases in Example Industries, Fiscal Years 2014-2019 Note: Mail haul refers to surface mail transportation by contract carriers. Values are adjusted for inflation and expressed in fiscal year 2019 dollars using the Gross Domestic Product Price Index from the U.S. Department of Commerce, Bureau of Economic Analysis. DOL reported various challenges to enforcing the SCA, including difficulty communicating with contracting agencies. For example, DOL officials told GAO that poor communication with contracting agencies—particularly with the U.S. Postal Service (USPS)—can affect and delay cases, though USPS officials told GAO they were unaware of any communication gaps. Without addressing communication issues between USPS and DOL, USPS's implementation and DOL's enforcement of the SCA may be weakened. GAO found that contracting agencies may face SCA implementation challenges, including not having key information about SCA debarments and violations from DOL. When recording SCA debarments, DOL does not always include the unique identifier for an employer so that contracting agencies can accurately identify debarred firms. DOL also does not have a process that consistently or reliably informs contracting agencies about SCA violations by employers. Without improved information sharing by DOL, an agency may award a contract to an employer without being aware of or considering its past SCA violations. The SCA ensures that service workers on certain federal contracts receive pay and benefits that reflect current employment conditions in their locality. From fiscal years 2014 through 2019, the U.S. government obligated over $720 billion on service contracts covered under the SCA. GAO was asked to review SCA implementation and enforcement. This report examines (1) what available data reveal about past SCA cases, (2) what challenges DOL reports facing in enforcing the SCA, and (3) how contracting agencies implement the SCA. GAO analyzed DOL and federal procurement data for fiscal years 2014 through 2019, the most recent years available; reviewed a nongeneralizable sample of contract performance assessments; examined practices at three agencies selected to represent a range of contracting services and agency size; interviewed DOL officials; and reviewed relevant federal laws, policy, and guidance. GAO is making six recommendations, including that DOL analyze its use of enforcement tools; that DOL and USPS implement written protocols to improve communication with each other; and that DOL improve its information sharing with contracting agencies on SCA debarments and investigation outcomes. DOL and USPS generally concurred with the recommendations. For more information, contact Thomas M. Costa at (202) 512-7215 or costat@gao.gov.
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