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Friday, March 21, 2008

Waxman Asks AG About Overseas Contracting Loophole

House Oversight and Government Reform Committee chair Henry Waxman (D-CA) has sent a letter^* to Attorney General Michael Mukasey asking why federal contracting rules have been changed such that they would "exempt overseas contracts from a requirement that the contractor detect and prevent fraud and report it to the government."

AP:

The United States has spent more than $102 billion over the last five years to help rebuild Iraq and Afghanistan. In that time, the Justice Department has uncovered at least $14 million in contract bribes in those two nations alone.

"Preventing fraud by contractors overseas should be a high priority," Democrats wrote in letters sent to the White House Office of Management and Budget and four other executive agencies. "Instead, the exemption for contracts to be performed overseas appears to have been inserted in the rule late in the process and against the wishes of the Department of Justice, which raises serious questions as to why and how such a policy was developed."

The letters were signed by House Oversight Chairman Henry Waxman of California and committee members Reps. Edolphus Towns of New York and Peter Welch of Vermont. Welch, who first called for the investigation, vowed "to get to the bottom of this."

"Who snuck this in at the eleventh hour and why?" Welch said in a statement. "No contractor should be given a free ride to defraud taxpayers, at home or abroad."

And Big Contractor (i.e. the lobby that represents government contractors - Professional Services Council) is pretty clear that this loophole is intended to remove accountability from contractors doing overseas work.

Without the exemption, [executive vice president of the Professional Services Council] Chvotkin said, U.S. firms that subcontract out work to foreign businesses could be unfairly held liable for abuse that they have little or no way of preventing.

Indeed. Chvotkin makes a good point. Contractors have no way of preventing abuse of federal funds.