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IG calls on USDA to increase debarment

Phyllis Fong

Phyllis Fong

By JERRY HAGSTROM

Agriculture Department Inspector General Phyllis Fong said today that the agency should increase the use of suspension and debarment agency-wide to fight fraud and other crimes.

Debarment excludes persons or entities from doing business with the government for periods of up to three years. It is the government’s strongest weapon in fighting fraud and crime in both procurement and non-procurement programs, because it means the person or company cannot do business with other federal agencies as well as the one in which it got in trouble.

“USDA as a general rule needs to do a better job of suspension and debarment,” Fong told the House Oversight and Government Reform Committee.

Fong made the general statement during a question and answer period at a hearing titled “Food Stamp Fraud as a Business Model: USDA’s Struggle to Police Store Owners.”

She testified that USDA’s Food and Nutrition Service “is not making use of one of the most powerful tools available to keep bad actors away, not only from SNAP [the supplemental nutrition assistance program, the formal title for food stamps] but from other federal programs they might exploit.”

Fong said that in a recent audit the Inspector General’s office determined that FNS did not debar any of the 615 wholesalers and retailers convicted in relation to 208 OIG cases, even though a conviction is adequate grounds.
Kevin Concannon

Kevin Concannon
Agriculture Undersecretary for Food, Consumer and Nutrition Services Kevin Concannon disagreed with Fong, telling the committee that the FNS administrative disqualification system is a much more efficient way to get stores out of the system because suspension and debarment requires hearings.

The disqualification system makes stores that engage in trafficking ineligible to take food stamps.

If FNS started suspension and debarment procedures, Concannon said, the stores would be allowed to stay in the program during that process, while the current system allows the agency to disqualify them quickly.

Concannon said that USDA is developing a system to notify other federal agencies about retailers that have been permanently disqualified but he noted that most of the stores that engage in food stamp trafficking are small stores that are unlikely to have any other business with the government.

Fong acknowledged that the stores engaging in food stamp crime are small, but said that she believes other divisions of USDA that deal with much larger business entities could improve their performance with greater use of suspension and debarment.

The Inspector General’s Office released a lengthy report in August 2010 (linked below) that noted the OIG had found in 1990 that USDA had not implemented an adequate system of suspension and debarment and that it still did not have a proper suspension and debarment system in 2010.

“USDA agency officials chose not to implement suspension and debarment for department scientific, inspection and grading, marketing and natural resources programs, stating that to do so would endanger the public health and safety,” the 2010 report said. “The Environmental Protection Agency, however, suspends and debars violators of its clean air and water statutes to protect public health and safety,” the report added.

The report did note that USDA did take suspension and debarment action in 2009 against the Peanut Corporation of America for delivering products containing salmonella into the school lunch program, and debarred AWB Ltd. in 2006 because of evidence it had engaged in bribery and kickbacks in selling wheat to the Iraqi government.

The Risk Management Agency, which runs the crop insurance program, and the Farm Service Agency, which handles farm subsidies, have also used debarment in some cases, the report said.

House Oversight and Government Reform Committee Chairman Darrell Issa, R-Calif., told The Hagstrom Report after the hearing that “inspectors general like debarment” and “we are hot on debarment” because the process is public and includes key employees, officers and directors of companies.

Issa acknowledged that debarment “takes time,” but concluded, “It’s the system that protects against future fraud.”