Contractors that submit bids through shell companies that obscure a company's ownership need increased scrutiny by the US Defense Department to prevent fraud, including purchases of defective parts made overseas, the General Accountability Office (GAO) said in a report on Monday
WASHINGTON (Pakistan Point News / Sputnik - 26th November, 2019) Contractors that submit bids through shell companies that obscure a company's ownership need increased scrutiny by the US Defense Department to prevent fraud, including purchases of defective parts made overseas, the General Accountability Office (GAO) said in a report on Monday.
"These risks, identified through GAO's review of 32 adjudicated cases, include price inflation through multiple companies owned by the same entity to falsely create the appearance of competition, contractors receiving contracts they were not eligible to receive, and a foreign manufacturer receiving sensitive information or producing faulty equipment through a US-based company," the report said.
The report found that the Defense Department has taken some steps to reduce risks related to contractor ownership, but needed to expand efforts across the entire department.
The report illustrated the fraud risk by detailing a case 47 F-15 fighter jets had to be grounded because of inferior parts made overseas. A US shell company that won the contract by claiming the parts would be made in the United States.
