Government spending: Banned firm still gets raft of new contracts
In 2006, the Mongolian Finance Ministry hired a small Chicago-based consulting firm called Glocoms to strengthen its budget planning. The $1.5 million job, financed by the World Bank, aimed to help a country still grappling with Soviet legacies to reallocate its spending and reduce its debt.
Unfortunately, the company's consultants didn't always show up and their reports were riddled with errors, said Zahid Hasnain, who oversaw the project for the World Bank starting in 2008. Glocoms was supposed to send employees, he said, but instead subcontracted the work to another company.
After World Bank investigators took a broad look at Glocoms' work and concluded that in Mongolia it had misrepresented the availability of key staff, causing "performance deficiencies," the contract was canceled, according to a debarment notice.
But the small contractor had aspirations beyond Mongolia. The investigators also concluded that Glocoms had misstated its qualifications when bidding for contracts in Ethiopia, Iraq, Vietnam and the West Bank and Gaza — in a total of 49 instances.
The World Bank blacklisted the firm and its owner in 2010 for four years, one of its more severe penalties, and a year later, extended the punishment until March 2018.
That didn't stop Glocoms from getting new contracts from federal or global public institutions, including the U.S. government, a Center for Public Integrity investigation shows.
After its World Bank debarment, Glocoms landed dozens of contracts and nearly $9 million for providing services to U.S. agencies, mostly the Defense Department, according to FedMine, a firm that aggregates federal contracting data. These included assignments to supply flight surgeons, paramedics and hazardous-waste-disposal personnel.
Since 2014 Glocoms has received nearly $5.9 million in U.S. government revenue, according to FedMine data, with at least $1 million from federal contracts this year alone. In the government's registry of contractors eligible to receive federal funds, Glocoms has an active listing as a vendor for 57 services, including environmental consulting, physician services and newspaper publishing.
Some contractor matchmaking firms — which place consultants and short-term workers — appear to operate on the margins of the relatively loose domestic and international rules that govern such work. The profits can be considerable, and the scope of the work — and its potential impact — is often substantial. Their duties can range from advising governments on cargo security to reforming national regulatory bodies.
Federal spending on service contracts that include this type of work increased between 2000 and 2012 by 90 percent, adjusted for inflation, to reach $259 billion - more than the $244 billion spent on salaries and benefits for civilian federal employees. In 2014, nearly two-thirds of federal contracting dollars were spent on services rather than goods. And in fiscal 2015, roughly a quarter of all federal contracting dollars went to small companies, amounting to $90.7 billion.
In 11 of Glocom's contracts with U.S. government agencies — including the Millennium Challenge Corporation (for U.S. federal foreign aid), the Army, and the Fish and Wildlife Service — the firm had problems meeting requirements, and in two other cases it failed to provide the qualified staff it had promised, according to documents obtained through public records requests and staff at the agencies that oversaw the contracts. These included contracts to inspect munitions, provide surgical technicians for the Army and clean government facilities.
While federal rules require that contracting officers take steps to ensure that all vendors are responsible, ethical and experienced, they aren't required to consider past sanctions by international institutions. For awards below $150,000 — mostly reserved for small firms like Glocoms — officials aren't required to update or check databases on performance or to document any concerns.
"The government seems willing to make some trade-offs to support small businesses, figuring that it's smaller dollars, and therefore [it] puts itself at risk of hiring a contractor that has a poor track record and isn't qualified to get the job done," says Scott Amey, general counsel at the Project on Government Oversight, a nonprofit watchdog organization.
'Anybody can do it'
The Glocoms Group Inc. was formed in Chicago in March 2004 by Cameroonian-born Maurence Anguh. The firm's website displays the catchphrase: "You can trust us today, tomorrow and thereafter." The site says that Glocoms has taken on 140 projects in more than 50 countries and has offices on five continents. The address specifically listed on its website is for a mailbox at a UPS Store beneath a street-level Chicago Starbucks.
Anguh declined to comment for this story after multiple attempts to reach him over the phone, by email and in person. He also said he would pursue legal action if reporters continued to contact him or other Glocoms employees.
After Anguh's wife filed for divorce in 2008, he told a judge that Glocoms had never had any permanent employees and relied instead on more than 50 consultants, including his wife's uncle, according to a 2011 court judgment. But a July 2013 Dun & Bradstreet report said Glocoms had 78 employees and $15 million in sales, as of May that year; while FedMine's listing for the firm in June - based on the company's self-reporting to the government - cites 10 employees and $700,000 in revenue.
In a 2011 proposal to supply a flight medicine physician at a Texas Air Force base, Anguh listed five others — including Humphrey Anyele and Yufanyi Vifansi — as his company's "senior managers" and described how he used "celebrations like surprise high tea parties, small outings and sporting events [that] keep the spirit alive and maintain vibrancy at work." In testimony to the divorce court judge, however, he described Anyele and Vifansi as consultants.
The company's phone-answering service offers extensions for Anguh, Anyele and Vifansi — and for two others named Mimi Feigenson and Emmanuel Asongwe. Anyele and Asongwe could not be reached, Feigenson declined to comment, and LinkedIn profiles for all but Anguh list them as holding different jobs for other firms.
Vifansi, whose profile describes him as a project manager at a Chicago energy company, said in a telephone interview that it was simple for Glocoms to craft successful proposals for government agencies. "It's a very easy thing. Anybody can do it," he said, adding that he no longer worked for the company.
Glocoms and its affiliates got at least 27 other consulting contracts worth $4.4 million in World Bank-backed projects. The borrowers of World Bank funds — usually local government agencies — are supposed to check the qualifications of consultants; World Bank staff themselves review less than 35 percent of the 20,000 contracts awarded each year, according to the World Bank's data.
Government agencies that get World Bank funding are required to check its debarment list as well as similar lists compiled by other multilateral banks. But neither the World Bank nor its borrowers have an easy way to tell if contractors who aren't blacklisted failed to perform on past projects, because the World Bank doesn't track and share this information, spokesman David Theis said.
"The bank's role is to make sure that the borrower's work is done properly, that the agreed procurement procedures are observed, and that the entire process is conducted with efficiency, fairness, transparency and impartiality," he said.
In Glocoms' case, the World Bank's investigative arm began looking into the company in 2007, focusing on a $660,000 contract that Glocoms received in 2006 to help a Vietnamese bank reform its payment system. Investigators concluded that Glocoms had "misrepresented its capacity and commitment in the proposal," according to the World Bank's final report.
By 2011, they described a pattern of misconduct by Glocoms. The company had misrepresented its experience while bidding for contracts in five projects, according to two notices that Pascale Dubois, the World Bank's evaluation and suspension officer, issued in 2011 recommending further sanctions. Besides the job with Mongolia's finance ministry, these included bids for projects to strengthen Ethiopia's financial sector, build local government capacity in the West Bank and Gaza, and develop emergency hydropower in Iraq.
World Bank spokesman Theis, who would not comment specifically on Glocoms, said it can take the bank years to uncover fraud because it lacks law enforcement powers and typically learns of wrongdoing only through complaints.
Theis added that in 2010 the World Bank created a database that alerts its own staff if a firm is on investigators' "radar screen," even if it hasn't yet been sanctioned. But the bank hasn't typically shared the contents with other organizations.
Because the World Bank doesn't have a formal cross-debarment agreement with the United Nations, Glocoms continued consulting for the U.N. Development Program in Somalia in 2011, receiving almost $62,000, a U.N. spokesman said. The U.N. suspended work with Glocoms in 2013 after a reporter informed it that the World Bank had debarred the company.
Four of Glocoms's U.S. government contracts were terminated for poor performance, and at least four others were canceled early. But some of Glocoms's other U.S. contracts were carried out smoothly. A flight surgeon Glocoms stationed at Dyess Air Force Base "provided an excellent body of work," according to base spokesman Joel Mease. In 2013, an official at Buckley Air Force Base emailed a contracting officer that a medical application systems trainer the company provided was "meeting the service need" and "quality is satisfactory."
Some experts say many of the shortcomings in the review of small contractors could be fixed if federal contracting officers had access to more thorough and reliable information.
"We don't have the system perfectly integrated," said Frank Fariello, lead counsel for operations policy in the World Bank's legal division. "It is of concern because ... if you have loopholes in the system, people [who have been debarred] will no doubt get back in."
U.S. federal contracting officers have discretion to conduct a basic Google search about individual firms, though they aren't required to do so (the top five searches on "Maurence Anguh" or "Glocoms" include an account of the World Bank sanctions).
International debarments also aren't captured in the Federal Awardee Performance and Integrity Information System, a database established by the General Services Administration in 2010 as a one-stop-shop for contracting officers to review past performance evaluations, U.S. lawsuits, federal suspensions and debarments, and terminations for cause on government contracts from the previous five years.
U.S. contracting officers don't even have to consult the database when handing out awards below what's known as a Simplified Acquisition Threshold — generally $150,000. They also aren't required to report on contractor performance for awards below that threshold.
Congress enacted these rules in 1994 to reduce costs and improve opportunities for small businesses. Recently, changes in federal contracting rules have allowed officers to use the simplified procedures for contracts as large as $13 million for certain items and services.
John Shoraka, an official at the Small Business Administration, says the simplified procedures reflect a balance between risk and efficiency. "The thought process is that with the dollar amount, there is less risk to the federal government and therefore we should allow some efficiencies to occur," he said. "You can close that risk, but you won't get any business done."
A 2014 GAO report noted that one reason for gaps in performance reporting has been a shortage of federal acquisitions staff. "Officers are short on time and resources and training and probably have bigger portfolios than they've ever had in the past," Amey said. "You don't want to slow down procurements. You don't want your boss on your back."
Glocoms hasn't slowed down. In the past year, as part of at least $1 million the firm has obtained from the federal treasury, the U.S. Army Corp of Engineers hired it to provide advanced life support services; the Federal Bureau of Prisons asked it to provide phlebotomy, dental and radiologic services for inmates; and the Indian Health Services awarded it a contract to provide a diabetes specialist for 37 health care programs.
The results remain to be seen.
The Center for Public Integrity is a nonprofit, investigative newsroom in Washington, D.C. A longer version of this story and other national security-related reporting can be found at www.publicintegrity.org/national-security.
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