Tuesday, Feb. 26, 2008 | 2:05 a.m.
A Justice Department proposal to reform government contracting is saddled with a glaring loophole, one that a spokesman for a consumer watchdog group has likened to a “get-out-of-jail card.”
The proposal was drafted in response to increasing instances of fraud involving both domestic and overseas contracts. Current rules state that federal contractors are expected to voluntarily report instances of internal corruption, which include false billing, kickbacks, bribery and outright theft.
The Justice Department last year proposed to end the volunteerism, which wasn’t working, and force federal contractors to report all instances of abuse that internal audits should be expected to uncover.
The Associated Press this month has been reporting what happened after the draft proposal was forwarded to Bush administration policy writers. It was changed to exempt “contracts to be performed outside the United States.”
Obviously affected by this exemption would be contracts for Iraq and Afghanistan, which have been notoriously susceptible to fraud for years. Why would anyone add this blatant loophole to a proposal intended to cut down on corruption and save taxpayers billions of dollars?
The AP has been asking this question, but so far officials at the White House, the president’s Office of Management and Budget, the Defense Department and the U.S. General Services Administration have refused to comment.
“What lobbyist working for a contractor in Iraq wanted this get-out-of-jail card?” said Patrick Burns, a spokesman for Taxpayers Against Fraud. “I’m not saying that’s the way it went,” he told AP. “I’m just suggesting that’s the most logical line to draw.”
Sen. Charles Grassley of Iowa, the top Republican on the Senate Finance Committee, said the exemption “could be a green light for fraud and abuse.”
And the Justice Department, the AP reported, has called the exemption a mistake that should be fixed.
Congress should demand an answer to why the exemption was added, and should certainly see that it and any other loophole is removed.
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