Defense Procurement: E-Systems' Reporting of Alleged Wrongdoing to Army's Fraud Division.

After E-Systems, Inc., a defense contractor, pleaded guilty in July 1990 to violations of federal law related to contracts with the Department of the Army, the Army entered into a 3-year administrative settlement agreement Memcor Agreement with the company. Among other things, the agreement required E-Systems to report all hotline allegations to the Armys Procurement Fraud Division. When the Subcommittee on Oversight and Investigations, House Committee on Energy and Commerce, received allegations from a former chief investigator for E-Systems Greenville Texas Division concerning the divisions hotlineethics program, the Subcommittees then Chairman, asked the General Accounting Office GAO to answer the following questions 1 Did federal law, regulations, or the Memcor Agreement require E-Systems to disclose suspected violations of procurement law 2 How many and what types of hotline complaints were lodged against E-Systems Greenville Division 3 Did E-Systems employees, contrary to federal law, alter or reinvestigate hotline complaints and investigation results to avoid disclosing information to the federal government and what were the details behind three cases that had been brought to the Subcommittees attention 4 Why did the Army not debar E-Systems from doing business with the government, given the serious accusations contained in a May 1994 Army show cause letter and 5 What loss did the government experience as a result of E-Systems actions in the three previously mentioned hotline cases