Contractors Loophole

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					                               New York Times (4.27.08)


     Tracking the Spoils of the Private Sector

There are so many barn doors to be closed on the Bush administration’s wasteful, murky
world of government contractors that Congress barely knows where to begin. The House
has made a start in plugging the multibillion-dollar loophole that the White House let slip
into its promised crackdown on fraudulent contractors.

An executive mandate that contracted companies report misuse of taxpayers’ dollars to the
Justice Department somehow managed to exempt work performed overseas. A drafting
error, says the White House. But one, of course, that would further insulate the
administration’s favored war contractors from ever answering for waste and fraud. There
have been dozens of offenses, including kickbacks and bribes in Iraq and Afghanistan,
where more than $102 billion has been spent on contracts. The Senate must approve the
loophole closer.

The House voted as well to address another long-running boondoggle: the brazen failure of
contractors to pay federal taxes, even as they are enriched by taxpayers in winning
government business. More than 60,000 federal contractors owe $7.7 billion in back taxes,
according to the Government Accountability Office. Almost half of the deadbeats are
defense contractors who owe the Treasury $3 billion. Anyone shocked? The House bill
would prevent seriously delinquent contractors from getting fresh federal deals at home or
abroad, as they now routinely do.

These abuses only hint at the contractors’ lucrative universe, which has never been
properly mapped. A third measure approved by the House would create a comprehensive
database to try to track and monitor the federal procurement system. Right now, this is a
willy-nilly nonsystem in which separate government agencies burned by bum contractors
lack an efficient clearinghouse to swap warnings. Habitual scofflaws keep scoring

The database, proposed by Representative Carolyn Maloney of New York, is modeled after
one pioneered effectively by the Project on Government Oversight, a nonprofit watchdog.

The project’s database on the top 50 federal contractors has found they have paid $12
billion in fines and settlements in more than 350 instances of misconduct since 1995. Risky
offenders find no shortage of new government plums.

An occasional performance penalty should not necessarily bar a worthwhile contractor.
But Congress is finally facing up to the scandal that too many contractors bilk the taxpayer


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