Federal Contractor Misconduct Led by Energy and Healthcare Companies

Defense contractors are no longer tops on the list of naughty government contractors, with energy and healthcare companies (in particular the pharmaceutical manufacturers) leading the list of misconduct among those that receive federal government spending. The Project on Government Oversight has revamped and re-released its database of misconduct by federal contractors. In total, the companies tracked by POGO have paid at least $92 billion in fines, settlements and court judgments for corporate wrongdoing. The database profiles just over 200 of the largest contractors and tracks 2,500 instances of misconduct (both resolved and pending) dating back to 1995.

There are 17 different types of misconduct tracked by the database, with labor and environmental issues the most common. Misconduct involving government contracts, of the type that might typically be brought through a lawsuit under the False Claims Act, accounted for 22 percent.

The top 10 contractors for misconduct by both the number of instances and the penalty totals are composed of mostly pharmaceutical, energy and defense companies. GSK Merck and Pfizer were tops in healthcare penalties. BP and Exxon Mobile led energy companies in total fines. And Boeing and Lockheed Martin had the highest number of misconduct instances from defense contractors.

The database also provides insight into the prevalence of criminal actions brought by the government against federal contractors, which has been a major area of criticism against government agencies recently. According to the data, less than 7 percent of the government prosecutions are brought under criminal law. This correlates with data released by the Transactional Records Access Clearinghouse which indicated that federal criminal prosecutions of corporations declined over the past decade by nearly one-third.

The SEC and the DOJ have been taking heat for a few years now based on the criticism that they did not punish corporate executives of the banks and mortgage companies for their roles in the financial crisis. The Justice Department over the past year has announced that it would examine more cases for potential criminal charges as well as review the individual behavior of culpable corporate employees for possible criminal prosecution based on their role in the wrongdoing.

The database is available at http://www.contractormisconduct.org.

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