U.S. Government Contracts Case Study: Part 1 – Contractor Misconduct

When a company takes a contract with the U.S. government it requires making a lot of information public that is normally not the case with private sector contracts. This information is a great opportunity for any researcher interested in the company.

This post will be the first in a series that provides a walkthrough for researcher a U.S. government contract or contractor. The case study focuses on a contractor that trained sea lions for the U.S. Navy and ultimately involved the death of a trainer.

We start with the corporation Space Applications International Corporation (SAIC). The company website mentions that it has contracted for the U.S. government.

In theory, a researcher should first look up the company’s registration details, then contracts, then tenders. However, the most interesting information is often found in violations committed in the process of fulfilling government contracts. Therefore, the first step is to go to the Federal Contractor Misconduct Database that is maintained by the Project On Government Oversite (POGO), a nonprofit government watchdog organization.

When we search for SAIC, we see that the database lists 24 instances of misconduct with cumulative penalties of over half a billion dollars. The page lists POGO correspondence with SAIC and a list identifying each misconduct and providing a link to the source of the information.

Below we see some of the listed incidents of misconduct and the penalties leveled against the company. The incident that looks most interesting and will be the subject of this article is the incident named Drowning Death on Mark 6 Sea Lion Program.

Clicking on this incident’s title we are brought to a page on the incident itself. This includes a summary of the incident, identifies the enforcement agency as the U.S. Occupational Safety and Health Administration (OSHA), and includes a link to the OSHA decision.

With these kinds of incidents (while most do not involve a death, these kinds of incidents are not rare) you can an initial inspection with the results documented publicly on the OSHA website, an OSHA decision, and a final decision from the Occupational Safety and Health Review Commission (OSHRC) that will be posted on oshrc.gov.

All OSHA fatality-related reports are published here. We can find the report for the incident in question because we know the date, but the search feature is pretty user friendly regardless. The report shows that a second “serious violation” was observed by the inspector at the time but it was later decided against during the review commission. Given that some of those documents can be lengthy it is helpful to know what to look for, in this case we would want to find out why the commission ruled for one violation and against another.

In addition, by clicking on the violation ID numbers we can see the inspector’s reported observations/violations at that time. This sheds more light on the incident.

The OSHA review commission report provides a lot more details about the incident and alleged violations that would be particularly useful for a due diligence review of the company’s actions. For starters, the commission explains that a “serious” violation has a specific meaning. Namely, that if an accident occurred, it “must be likely to cause death or serious physical harm.”

Furthermore, the review goes on to detail several criteria necessary to establish a serious violation, including the existence of the hazard, the employer had knowledge in advance about the hazard, the hazard risked death or serious injury, and that there were feasible means to abate the risk but the employer did not take them. The report details the evidence why it deemed that the company’s actions met each of those criteria and why it met some but not all criteria for the second alleged violation.

This is important because, if we were going to assess the company’s decisions and abilities, this information shows that the company did not merely make an oversight. Rather, according to the report, the company made intentional decisions that led to the violation.

Also, the reports details adds further negative information related to the second alleged violation, because it shows that the report indicates there were problems but not enough to be deemed a “serious violation.”

Finally, the report makes a vague reference to a previous incident where a Navy diver had to be rescued and resuscitated and how this provides evidence that the company recognized the existence of certain hazards. This is discussed in greater detail in the final decision.

We can go to oshrc.gov and do a simple search for “SAIC” in the search function on the top right to find the final decision. If we read the final decision we see there is a lot of detailed information about the company, its history, and how it operates. For example, new information is identified that was obtained from testimony. In the section below, there is text that appears to addressing the previous incident involving the company where a diver had to be rescued. These details suggest that the previous incident occurred at the same place and while the company was providing similar services.

Ultimately, these three documents provide very detailed and valuable information about the company, and much or all of this information could have remained secret with a private sector contract.

If a researcher were writing a due diligence report, they could cite that OSHA cited “serious” violations in its inspection following the incident and that the OSHRC final decision noted, on page 8, a previous “near miss” that showed that the company’s employees had been put in danger in the past.

Further posts on this case study will explore researching the contracts themselves and investigating the company with contract-related websites.

See PART 2

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