Written Procedures Needed To Guide Personnel in Dealing With Investigations of Contractors

In response to a congressional inquiry, certain information was obtained about the Western Economic Development Corporation (WEDCO), a local business development enterprise in California funded by the Department of Commerce's Office of Minority Business Enterprise. Concern was expressed that the Department of Commerce renewed the WEDCO contract while it was under investigation by the Department of Justice. Commerce's renewal of the WEDCO contract was not in violation of procurement regulations because the regulations do not specifically prohibit contracting with firms which are under investigation for possible criminal violations. In addition, the Department of Commerce lacks formal written procedures to guide its personnel in dealing with investigations of Commerce contractors. It is a matter of the contracting officer's subjective judgment as to what should be done when the officer is informed of an investigation which could affect a contracting decision. The Department of Commerce should establish written procedures which establish: the responsibility of the Office of Investigations and Security for notifying agencies within the Department of investigations which could affect their activities, the policy for distributing copies of investigative reports to such agencies, and the responsibility of contracting officers when informed of an investigation which could affect contracting decisions.