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Hotline Truths: Issues Raised by Recent Audits of Defense Contracting

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Washington, February 25, 2016 | comments

Audits Reveal Problems with DoD Subcontracting for Small Firms

Small Business Committee Has Approved Bipartisan Reform Legislation

– Today an official from the Department of Defense Office of Inspector General (DoD OIG) told a Congressional subcommittee that two key Marine Corps commands failed to meet their legally-mandated requirements for small business subcontracting plans. The hearing comes as the House Committee on Small Business continues its efforts to help small firms better compete for contracts with the Department of Defense, providing value to the taxpayer and quality to the warfighter. 

“The Small Business Act contains important protections for small companies that provide services to our men and women in uniform,” said Subcommittee on Contracting and the Workforce Chairman Richard Hanna (R-NY). “Existing law ensures that we have a vibrant community of small contractors ready to provide innovative and cost effective solutions.  However, if the statutory provisions of the Small Business Act are not observed, those benefits are lost.” 

The Marine Corps’ documented failure to comply with statutory requirements concerning the approval and oversight of small business subcontracting plans has resulted in significant harm to the small business community. Continued failure to provide mandatory oversight of small business subcontracting plans has real consequences,” Hanna added.


“We initiated the two audits based on a Defense hotline complaint alleging that the Marine Corps Regional Contracting Office-National Capital Region (RCO-NCR) and the Marine Corps Systems Command (MCSC) did not ensure small businesses were awarded a sufficient number of contracts and did not hold large prime contractors accountable for meeting small business subcontracting goals,” said Michael Roark, the Assistant Inspector General for Contract Management and Payments in the Department of Defense.

“We are not surprised by the OIG findings in response to Defense Hotline allegations. On the contrary, we suspect that the problems identified – lack of adequate policies for requiring subcontracting plan submissions and reports, insufficient training for contracting officials regarding their responsibilities for evaluating and administering subcontracting plans, and failure to monitor compliance with subcontracting plans – are common across all federal agencies, because the root causes are not unique,” testified Chuck Spence, the President of the Association of Procurement Technical Assistance Centers.

"We applaud Chairman Chabot, Ranking Member Velázquez, and the House Small Business Committee for the ambitious effort to address [the issues exposed by the DoD IG report] through HR. 4341, The Defending America’s Small Contractors Act of 2016.  The bill’s comprehensive approach to clarifying the language and definitions of contracting provisions in the Small Business Act - as well as promoting greater transparency in goaling and accountability in execution - is much needed," added Spence.

You can watch video of today’s hearing HERE.



  • H.R. 4341 builds upon key provisions secured by the Small Business Committee in the FY2016 National Defense Authorization Act to help small firms compete for contracts with the Department of Defense.


  • Full Committee Chairman Steve Chabot (R-OH) identified contracting reform as one of the key ways Congress can empower America entrepreneurs in his speech at the National Press Club last week.         

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