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The Value of Background Checks When Hiring Contractors

By Michael Klazema on 6/9/2020

COVID-19 brought with it an unprecedented need for medical products and personal protection equipment. Some questionable spending decisions at the federal level have underlined the importance of contractor screening. According to a recent article published by ProPublica, the Trump Administration has paid $1.8 billion to hundreds of contractors with no experience with federal contracting who were not subject to a thorough vetting process or required to bid on their projects.

The lack of competitive bidding raises questions about whether these contracts were distributed as political favors in a show of federal-level corruption. The ProPublica article opens by briefly profiling three of the contractors, noting that there is no evidence that any of them obtained their contracts through political relationships or connections.

That fact raises more questions, especially given their biographies, including “a firm set up by a former telemarketer who once settled federal fraud charges for $2.7 million”, “a vodka distributor accused in a pending lawsuit of overstating its projected sales”, and “an aspiring weapons dealer operating out of a single-family home.” Not only do these businesses seem questionably qualified to provide federal contract services, but the first two also seem likely to raise red flags on a standard background check.

ProPublica tracked 384 first-time federal contractors. That number represents 13 percent of the new federal government spending initiative intended to bring more medical products—particularly vital personal protective equipment (PPE) into the United States supply chain. The federal government is spending $13.8 billion on contracts with companies to acquire this medical equipment for the domestic market. The contracts were largely inspired by early pandemic PPE shortages, particularly in hospitals, where N95 masks, gowns, and other PPE was quickly exhausted.

The urgency led the government to onboard new contractors quickly, which seems to have resulted in cutting corners. By not conducting a thorough contractor screening, government agencies overlooked the fact that some of the firms they hired were formed just days or weeks before seeking government contracts. These businesses had no track record—and some have already lost their contracts due to poor performance. By not requiring competitive bidding, federal agencies failed to survey the landscape of potential contractors to find the entities best-suited to achieve results.

On a federal scale, such errors can lead to a significant spend of taxpayer dollars without the desired outcome of a more stable PPE supply chain. Most businesses will not face similarly high-stakes consequences with their own vetting, but the incidents highlight the importance of contractor screening—and all background checks—even in urgent hiring decisions.

In emergencies, employers may feel inclined to skip background checks or cut other corners to onboard new employees or contractors more quickly. Instead, hiring managers should take a steady and consistent approach. Vetting the people you hire thoroughly and learning about their experience, skills, and backgrounds will always lead to better results than making a rapid decision based on minimal information.

At backgroundchecks.com, we are proud to offer solutions for vetting contractors and vendorsContact us today if you have any questions.


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