For instance, one case the report looks at is that of an “ineligible foreign manufacturer that illegally exported sensitive military data and provided defective and nonconforming parts that led to the grounding of at least 47 fighter aircraft.” This appears to reference Allied Components LCC, a military hardware supplier whose owner pleaded guilty in 2013 to providing F-15 fighter aircraft parts that were not only defective but also made in India even though the contract required the parts to be U.S.-made, and to passing along information about nuclear-powered submarines to India without the required government approval.

Altogether, four of the 32 cases involved contractors using U.S.-based shell companies to conceal that the work was really being done by a foreign-based company. Concealing beneficial ownership in this manner increases the chance that “adversaries seeking to act against the government’s interests” will gain access to sensitive government information or installations, according to the report.

A case the GAO cited as an example of contractors inflating prices by concealing their ownership and control of subcontractors is apparently that of Supreme Foodservice, which pleaded guilty in 2014 to major fraud against the United States and paid a total of $434 million in penalties. And the unnamed contractor executives who admitted to “creating fictitious, inflated bids that were not from actual businesses” and fraudulently inflating invoices is an unmistakable reference to Glenn Defense Marine Asia and the massive “Fat Leonard” Navy contract corruption scandal.

The most rampant form of abuse documented in the report—accounting for 20 of the 32 cases—is contractors falsely posing as being eligible for contracts set aside for small businesses owned by “service-disabled veterans, women, minorities, or economically and socially disadvantaged individuals.” The report describes what POGO determined is likely a recent case involving a Kansas City, Missouri-area construction company owner who was sentenced to 18 months in prison last year for falsely claiming the company was managed by a service-disabled veteran in order to win more than $13.7 million in contracts.

And in one instance, an individual debarred from federal contracting got around his debarment by creating shell companies under the names of relatives and fictitious people. He was convicted of fraud and sent to prison, but not before selling the Pentagon $2.8 million in defective parts for airplanes. Suspended and debarred contractors getting around their bans through opaque ownership structures has long been an area of concern for POGO.

The GAO estimates the government’s losses from the 32 cases total over $875 million ($200 million of which comes from just one small business set-aside fraud case). In addition, there is the potential nonmonetary harm to U.S. national security, and all of this could be just the tip of the iceberg. As the report states, “There may be additional fraud or other risks and cases related to contractor ownership that are presently undiscovered fraud and are not identified in our report.”

