The Government Accountability Office (GAO) found that the Departments of Health and Human Services (HHS), Energy, Veterans Affairs (VA), U.S. Army, and U.S. Navy inappropriately awarded 1,849 contracts to businesses that had tax debts in 2015 and 2016. A Federal Acquisition Regulation requires that businesses pay their taxes, while also reporting their tax debts if those businesses want Federal contracts. Before awarding the contracts to businesses, Federal agencies are responsible for considering any tax debts incurred by businesses.
After reviewing the agencies that inappropriately awarded the contracts, GAO made several recommendations to HHS, Energy, VA, Army, and Navy. Among those recommendations, the GAO report said agencies should enhance controls for contractors before awarding contracts; have Senior Procurement Executives for each of the agencies to review the awarded contracts; and have the Internal Revenue Service (IRS) “evaluate options to obtain comprehensive contract-payment information.”
GAO also made a recommendation to the General Services Administration, recommending that the Administrator coordinates with the System for Award Management users “to identify potential updates to facilitate contracting officers’ identification of contractors that report qualifying Federal tax debt” under the Federal Acquisition Regulation.
The agencies in question all agreed to the recommendations made by GAO.
