(Fraud), Waste, and Abuse

We often rattle off the phrase "fraud, waste, and abuse" when were really describing fraud. Sure, fraud can lead to waste and abuse but the Department of Defense has a separate definition of "waste and abuse". It comes from the 2011 report to Congress by the Commission on Wartime Contracting (COWC), and is really a bullet listing of examples of waste and abuse:

• Requirements that were excessive when established and/or not adjusted in a timely fashion
• Poor performance by contractors that required costly rework
• Ill-conceived projects that did not fit the cultural, political, and economic mores of the society they were meant to serve
• Security and other costs that were not anticipated due to lack of proper planning
• Questionable and unsupported payments to contractors that take years to reconcile
• Ineffective Government oversight
• Losses through lack of competition

The Government (and the taxpayers) lose billions of dollars every year due to waste. According to the aforementioned COWC report, the Government lost somewhere between $31 billion to $60 billion because of contract waste during recent contingency operations in Iraq and Afghanistan. Waste and abuse can be subjective and often more difficult to prosecute than fraud but contractors should make every effort to prevent and ultimately avoid waste and abuse of their own resources as well as the Government's.

In 2009, the DoD-IG (Inspector General) reported that a contracting officer approved invoices for underutilized contractor personnel responsible for tactical-vehicle field maintenance at a joint base. For more than a year, the actual utilization rate was only 10 to 15 percent of the requirement. The contractor did the right thing by alerting Government officials that the actual utilization was far below that of the contractor personnel being paid. The Government did not act on the information and as a result, the IG estimated that $400 million was lost due to under utilization. This is a good example of waste occurring on a Government contract. (By the way, the IG was unable to uncover any rationale for continuing to pay for under utilization.