The Government Accountability Office has urged the Department of Defense to assess potential risks from a contractor’s opaque ownership structure and use data to inform other fraud risk assessments.
GAO said Monday contracting firms that conceal information about other entities or individuals who own, manage or earn financial benefits from the company pose national security and fraud risks to the Pentagon.
The government watchdog agency reviewed 32 adjudicated contractor ownership cases that include businesses that were ineligible to receive DoD contracts and a foreign manufacturing company that received sensitive military data or through a U.S.-based entity.
DoD has implemented measures to address such risks in its procurement process and introduced a fraud risk management program across the organization.
However, the Pentagon has not yet examined risks of contractor ownership nor identified this as a specific area for evaluation at the department, GAO noted.
The office added such assessments will help DoD to determine a strategy to mitigate the impacts of opaque ownership and better manage department’s resources.