Acceptance of a voluntary disclosure into the program by DOD is based on four criteria. Defense Contractor Participation in the Program

The number of voluntary disclosures under the program has been relatively small and the dollar recoveries have been modest. From its inception in 1986 through September 1994, DOD reported that 138 defense contractors made 325 voluntary disclosures of potential procurement fraud, of which 129 have been closed. According to DOD, 48 of the top  100 defense contractors made 222 disclosures. The $290 million represents about 17 percent of the Justice Department’s $1.7 billion in reported settlements on DOD procurement fraud cases between fiscal years 1987 and 1994. While the value of the voluntary disclosure program may well extend beyond the amount of dollar recoveries, we note that most disclosures did not result in significant dollar recoveries for the government. Of 129 closed cases, 81 cases, or about 63 percent, had reported recoveries of less than $100,000, of which 52 cases, or 40 percent, had no dollar recoveries. Forty-eight cases had reported recoveries of $100,000 or more, of which  15 cases had reported recoveries of $2 million or more. The $290 million attributable to the program is overstated because it includes an amount that should not be considered a recovery from the program, as well as amounts related to disclosures made prior to the formal initiation of the program. With regard to the progress payments, both the contractor’s disclosure report and the government’s subsequent investigative report showed the contractor prematurely billed the government by about $75 million. Voluntary Disclosures Take an Average of 2.8 Years to Complete

For closed cases, DOD records show that it took an average of 2.8 years to complete a voluntary disclosure case, with about 25 percent taking over  4 years. As of September 30, 1994, there were 173 open cases that have been open an average of 3.5 years. There is little overlap between voluntary disclosures and related qui tam actions. For the 129 voluntary disclosure cases closed since the program began, only 4 involved qui tam actions. Comments From the Department of Defense

The following are GAO’s comments on the Department of Defense’s (DOD) letter dated October 13, 1995.
Why GAO Did This Study

Pursuant to a congressional request, GAO provided information on the Department of Defense's (DOD) Voluntary Disclosure Program, focusing on the: (1) extent to which defense contractors participate in the program; (2) amount of money that has been recovered under the program; (3) time taken to close disclosure cases; (4) most common type of disclosures; and (5) extent of overlap between voluntary disclosures and qui tam actions.

What GAO Found

GAO found that: (1) although 48 of the top 100 defense contractors have made voluntary disclosures, the total number of disclosures under the program has been relatively small and dollar recoveries have been modest; (2) from its inception in 1986 through September 1994, DOD reported that, of the thousands of defense contractors, 138 contractors made 325 voluntary disclosures of potential procurement fraud; (3) DOD reported recoveries from these disclosures to be $290 million, about 17 percent of total reported DOD procurement fraud recoveries between fiscal years (FY) 1987 and 1994; (4) GAO's review indicated that DOD's reported recoveries of $290 million were overstated because they included $75 million in premature progress payments and amounts from disclosures made prior to the program; (5) further, DOD accepted some disclosures into the program that the Justice Department believed were triggered by imminent government discovery and thus did not meet the criteria for admission; (6) voluntary disclosure cases took an average of 2.8 years to close, with about 25 percent taking over 4 years; (7) open cases are taking longer; (8) as of September 1994, DOD data showed that open cases averaged 3.5 years, with over half of the cases disclosed in FY 1990 still open; (9) less than full contractor cooperation with the government and low priority given by DOD and other investigative agencies to managing cases expeditiously may be problems in some cases; (10) most disclosures did not result in significant dollar recoveries for the government; (11) of 129 closed cases, 81 cases, or about 63 percent, had reported recoveries of less than $100,000, of which 52 cases, or 40 percent, had no dollar recoveries; (12) forty-eight cases had reported recoveries of $100,000 or more, of which 15 cases had reported recoveries of $2 million or more; (13) there is little overlap between voluntary disclosures and qui tam actions; and (14) of the 129 voluntary disclosure cases closed since the program began, 4 involved qui tam actions.