U.S. Govt. Gives “Egregious” Contractors Big Bonuses

In yet another example of how the government wastes huge amounts of tax dollars, federal agencies award billions in bonuses to firms that violate their public contracts by doing unsatisfactory or even dismal work.

In doing so, the government repeatedly violates a policy specifically requiring agencies to link contract award fees to results and prohibiting payments for poor performance. Among the major agencies that award negligent contractors with hefty bonuses are the Department of Defense, the Department of Health and Human Services, the Department of Homeland Security and the Department of Energy. 

The waste was exposed by Congress’s investigative arm, which published a lengthy report that includes specific figures for various agencies, charts and illustrations. The information was gathered from more than $300 billion in government contracts from 2004 to 2008 that include monetary incentives or award fees for performance. 

A prominent example features a Homeland Security contractor that received a hefty undisclosed bonus despite an evaluation that described its work as "egregious." The firm maintained aircraft for Customs and Border Protection and switched to a more expensive and questionable method of disposing of hazardous waste without notice. Homeland Security officials chastised the move as a “questionable use of taxpayer funds,” yet the company got its bonus.

Other agencies have blanket policies that essentially award bonuses automatically, despite a firm’s performance. One is the Department of Energy, which uses a scoring system that allows for payment of as much as 84% of an award regardless if performance is below level. 

One military official heavily involved in the process shed light into the system, telling investigators that a contractor “has to do a pretty bad job” to receive a “good” rating that pays in excess of 85% of the award or bonus. Simply following existing guidelines could save taxpayers hundreds of millions of dollars, according to congressional investigators.