This week’s Golden Horseshoe award goes to the Pension Benefit Guaranty Corp., the nation’s pension bailout agency that is still reeling from revelations its chief of contracting engaged in a bribery scheme that steered $4.8 million in fraudulent business to a vendor in return for more than $1 million in personal benefits.
The bribery scheme involving the now convicted director of PBGC’s Procurement Department was possible because the agency suffered from several vulnerabilities, including reduced competition among vendors, missing legal reviews and sole-source contracts that evaded bidding designed to get taxpayers the best bargain, the PBGC’s inspector general reported.
“His actions were enabled by internal control weaknesses; specifically, inadequate oversight of PD procurements and a lack of a control mechanism to ensure that PD sent all requisite contract actions for legal review,” the inspector general reported. “Although PBGC began requiring that more contract actions receive legal review after the PD Director resigned in February 2020, it does not have a mechanism to ensure PD complies with this requirement.”
The internal watchdog said it also found “internal control deficiencies allowed PD to avoid competition requirements when awarding five other contracts, three of which were for PD support. Four of the contracts were awarded on a sole-source basis, including three using small business set-aside programs.”
The weaknesses are particularly concerning because PBGC, which normal funds itself through insurance payments from employer pension plans, just received its first ever infusion of tax dollars to replenish coffers that were on track to be insolvent by 2026, the IG noted.
President Biden signed the American Rescue Plan Act in March that provides more than $86 billion in Special Financial Assistance to bail out financially troubled plans in PBGC’s Multi-employer Program
“The Multiemployer Special Financial Assistance that PBGC will receive from the Department of the Treasury will be the first time in the history of the PBGC that the Corporation will receive taxpayer funds,” the IG noted. “Our office is committed to protecting taxpayer dollars and we will continue to aggressively protect the integrity of the Multi-employer Program.
The agency procurement director over a two-year period solicited and received cash payments and other items of value from a contractor when the official steered PBGC contracts valued at $4.8 million to that company. The company also promised the director a $1 million job, according to the watchdog’s semi-annual report.