No TINA In Kiddy Kickbacks

In Child Welfare, there is no Truth in Negotiations (TINA):

• Contracts are no-bid
• Freedom of Information Exclusion and Exemptions allow not-for-profits to forgo disclosures on pricing or risk
• Child Placing Agencies operate as geographic monopolies, with uncapped access to 100% federally funded Title IV-E and Targeted Case Management reimbursements
• Child Welfare contracts are "padded" with extra costs to fund major public relations campaigns to promote revenue maximization fraud schemes.

This is why child welfare fraud has remained untouched and unstoppable for decades: kiddy kickbacks will never allow TINA in the fraud game.

Compare the following fraud scheme litigated in 2004 with the above child welfare fraud scheme. The only difference is the Department of Defense contracted was prosecuted. Child Welfare organizations are untouchable.

In a federal lawsuit filed in the Western District of Texas in September 2004, Science Applications International Corporation (SAIC) is accused of violating the Truth In Negotiations Act. SAIC was awarded numerous firm-fixed price no-bid contracts to perform environmental clean-up at Kelly Air Force Base in San Antonio, Texas. The contracts required SAIC to fully disclose any and all cost and pricing data to ensure that the negotiations between the Air Force and SAIC were conducted on a level playing field.

In computing their cost estimates, SAIC is accused of having built in undisclosed risk reserves to help ensure profitability. Internally, SAIC estimated the risks associated with each project, assigned a dollar figure to each risk and then “padded” their proposals to ensure funds would be available if the risk were realized. SAIC did not disclose this methodology or the existence of these risk reserves to the government. This practice helped contribute to an average profitability of 38% and as high as 260% on contracts with negotiated profit margins of 8-10%.

Indicators of this Scheme:

• Profit margins higher than negotiated that cannot be logically explained
• Contractor refusal or reluctance to provide post-award / in progress actual cost data
• Non-disclosure of the existence of risk or management reserve data during negotiations

Ways to Reduce the Risk:

•  An open dialogue with contractors on their perceived project risks where TINA applies 
• Aggressive surveillance / post-award audit of actual costs on fixed price no-bid contracts 
• Ensure no-bid firm-fixed price contracts are used only when appropriate and justified