Pentagon agrees with GAO recommendation to consider contractor ownership

By Marjorie Censer / November 25, 2019 at 12:13 PM

The Pentagon is supporting a Government Accountability Office recommendation that it evaluate risks created by contractor ownership as part of its department-wide fraud risk assessment, according to a new report.

In the November report, GAO writes that the scale of the Defense Department's contracting makes "DOD procurement inherently susceptible to fraud."

But assessing the risks related to contractor ownership would help it determine whether certain procurements are more vulnerable, the report adds.

"We recognize that collecting additional ownership information, including beneficial-ownership information, could pose compliance burdens for contractors; and regulatory trends have generally focused on easing the burden to do business. Additionally, verifying contractor ownership can be challenging and time-consuming," the document continues. "Nevertheless, having a thorough assessment of contractor-ownership risks will better position DOD to make informed decisions on how best to use its resources and help ensure that the department's fraud risk management program is organized and targeted to manage risks in a prioritized manner."

GAO notes that DOD, responding to a draft of GAO's report, "concurred with our recommendation and provided additional written comments outlining current and planned efforts in response to our recommendation."

"These written comments were deemed sensitive by DOD and have been omitted from this report," GAO adds.

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