Oct. 24, 2015: An editor's note has been added to this article.
This article was co-published with The Washington Post.
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 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 Bank starting in 2008. Glocoms was supposed to send employees, he said, but instead subcontracted the work to another company.
After 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 cancelled, 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, according to a Bank press release in 2010 and notices it issued in 2011. The Bank blacklisted the firm and its owner in 2010 for four years, 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 earned nearly $9 million for providing services to U.S. agencies, mostly the Department of Defense, 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 dollars from federal contracts this year alone.
The Center’s investigation found that troubled small government contractors like Glocoms can readily get new contracts for a host of reasons. U.S. agencies have no mandate to take international sanctions into consideration when awarding contracts. And many international or U.S. contracting officers conduct only superficial vetting of small contractors, while keeping imperfect databases on problematic conduct.
The international institutions that pay for this work – including the World Bank – most often leave it to others, such as local governments, to ensure that those doing the work have clean records. The governments, in turn, often have few tools and little ability to investigate past work by small or foreign contractors that they are not financing themselves.