HCFA Extended Its Contract With Accounting Firm Implicated in Major Fraud

GAO-01-136R: Published: Oct 31, 2000. Publicly Released: Nov 30, 2000.

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Donald G. Fulwider
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Concerns have been raised about the Health Care Financing Administration's (HCFA) decision to extend a contract with an accounting firm that has been implicated in major fraud. KPMG's contract with HCFA included annual options to extend performance that could be exercised at HCFA's will. Although information on the fraud investigation was available to HCFA staff at various levels, the information was not used to make reasoned contracting decisions. If HCFA had considered the information and documented its decision to extend KPMG's contract, it could have minimized concerns over the appropriateness of its decision.

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