By a voice vote, the the House Oversight and Government Reform Committee approved a bill (HR 5712) that would close a loophole in the Federal Acquisition Regulation (FAR) that excuses federal contractors working overseas from reporting fraud. The loophole was inserted into the federal procurement rules and was published in November of last year as part of a contracting oversight measure. Called a "drafting error" by GSA chief acquisition officer David Drabkin, the loophole exempts companies performing federal contracts overseas from mandatory reporting of employee contract fraud.

For more background on (with hints of Administration shenanigans), see:

After fending off an effort to attach an immigration provision, the House passed HR 5719 by a vote of 238-179.

The bill would end the IRS's private debt collection (PDC) program if signed into law. It was this provision and a proposed change to the rules of health savings accounts (HSAs) that drew vocal opposition from Republicans.

While the fortunes of the bill in the Senate are uncertain -- Sen. Charles Grassley (R-IA) is a staunch supporter of the PDC initiative -- The House vote indicates an override of a veto is unlikely.

For more details about bill, read this Watcher article.

President Bush has threatened to veto HR 5719, the bill recently approved by the House Ways & Means Committee and expected to see House floor action today. The bill would end the IRS's private debt collection (PDC) program, require that disbursements from health savings accounts (HSAs) be substantiated (i.e. require submission of receipts), and implement a bevy of other tax policies.

The president feels that the federal government should continue to waste money on the PDC initiative, because he would rather put taxpayer data at risk and open citizens to abusive debt collection practices than divert federal funds to more efficient and transparent tax collection methods.

Bush also objects to the changes to the HSA code, because requiring HSA account holders to prove that withdrawals from their accounts are, in fact, for approved purposes, would result in a lower usage rate of such accounts.

OMB Watch has signed on to a National Treasury Employees Union letter that calls on Representatives to support H.R. 5719, the "Taxpayer Assistance and Simplification Act of 20080." The bill would, among other things, end the private debt collection program, which is not only fiscally irresponsible, but puts sensitive taxpayer data at risk and opens citizens to abusive collection practices.

If you would like to sign on to the letter, email Matt Socknat at NTEU -
(email address appears as an image and is un-clickable to prevent spam)

Update: The letter sign-on deadline has passed. You can read the letter here.

The Taxpayer Assistance and Simplification Act (H.R. 5719) approved by the House Ways & Means Committee yesterday contains a measure that would force U.S. firms employing workers through foreign shell companies to pay Social Security and Medicare taxes if the work is performed under a contract with the federal government.

The provision's language is lifted from the Fair Share Act of 2008 (H.R. 5602), which was introduced in the Senate and House on March 13. The measure would bring in, over ten years, $846 million in new revenue.

See this Watcher piece for more details on the Fair Share Act of 2008.

The House Ways & Means Committee is expected ($) to markup legislation (H.R. 5719) today that would end the IRS's private tax collection initiative. Today's markup begins another attempt to put the kibosh on this wasteful program. Efforts to end the program have been stymied in the past by Senate opposition and House parliamentary rules. The latest effort to end the program was initially inserted in the FY 2008 Financial Services appropriations bill in the House but was stripped out prior to including the bills language in the FY 2008 omnibus spending measure.

The truncation of the program would be welcome development for advocates of fiscal responsibility and good governance. National Taxpayer Advocate Nina Olso recently testified that the IRS's continued operation of the program ultimately deprives the Treasury of some $91 million per year. And although tax collection is an inherently governmental function, citizens are not privy to the methods that these firms employ, while the collection agencies are not accountable to elected officials.

Committee member Rep. Tom Reynolds (R-NY) strongly objects to Rangel's bill despite his support for other provisions in the measure. Reynolds was the author the original legislation that initiated the program, and his rabid support for the program may be explained by the $16,600 in campaign contributions he has received from one of the two firms (Pioneer Credit Recovery) which contracts with the IRS in the private debt collection program.

POGO's Scott Amey flags this update on the government's suspension of IBM from obtaining federal contracts:

WASHINGTON (AP) — The government has lifted a week-old ban that prevented IBM from getting new federal contracts in an exchange for an agreement from the company to drop its protest of an $84 million Environmental Protection Agency contract it lost last year.

...

The two sides on Thursday signed an agreement in which IBM agreed to withdraw its protest from the Government Accountability Office and drop any interest in competing for the contract. The company will also refund the EPA any attorneys fees and costs the agency paid to IBM in regard to the filing of the protest.

Amey notes the general implications for government oversight of contractors:

So after seven days, what have we learned? The EPA is now convinced that IBM is a responsible contractor. The government believes that public-private agreements (and the promises within them) go a long way in establishing contractor responsibility. The government's reliance on large contractors is a big factor in government decisions. And, the decision to lift IBM's suspension may have been different if this were a small business (see Ray Bjorklund's quote in today's AP story).

As many of you know, federal contracting is complex and imperfect. We are talking about big money, politics, profits, power, influence, "best value" and so many other factors--as recently witnessed in the Air Force tanker contract award, bid protest, and subsequent fallout. I hope that EPA's decisions were aimed at protecting taxpayers. Finally, I appreciate EPA's effort to hold a contractor and its employees accountable, however short-lived, as well as IBM's willingness to promise to do the right thing.