Iraq Oversight and Accountability
U.S. taxpayers are outraged about the massive levels of waste, fraud and abuse that have been documented in large government contracts to well-connected firms, including many reconstruction contracts in Iraq. Since 2003, the United States has appropriated nearly $45 billion for reconstruction contracts in Iraq – to rebuild everything from electric, oil and water infrastructure to security and law enforcement.
Recently, the Defense Contract Audit Agency found more than $10 billion in questionable or unsupported charges in Iraq reconstruction contracts. Additionally, a new audit by the Special Inspector General for Iraq Reconstruction (SIGIR) underscores the level of waste, fraud and abuse that continues to cost American taxpayers billions:
- “Millions of dollars of lucrative Iraq reconstruction contracts were never finished because of excessive delays, poor performance or other factors, including failed projects that are being falsely described by the U.S. government as complete, federal investigators say.” [AP, 4/28/08]
- An estimated 855 reconstruction contracts were terminated before the projects were completed “primarily because of unforeseen factors such as violence and excessive costs.” [AP, 4/28/08]
- Of these, 112 contracts were ended because of “actual or anticipated failure to perform” the requirements of the project. [Special Inspector General for Iraq Reconstruction Audit, 4/28/08]
NEW DIRECTION CONGRESS IS TAKING ACTION TO CRACK DOWN ON ABUSE IN IRAQ
The House has passed a series of key bills to crack down on waste, fraud and abuse by U.S. contractors – particularly in Iraq. House Democrats are fighting to ensure that these bills are quickly acted upon by the Senate and sent to the President’s desk.
ENACTED INTO LAW
Improving Accountability in Government Contracting Provisions (in DOD Authorization Bill)
The FY 2008 DOD Authorization bill, which the President signed on January 28, 2008, contains several key contracting reform provisions, including instituting new steps for managing and overseeing contracts in Iraq. It also contains provisions to improve the acquisition system and increase the accountability of contractors – both government-wide and at DOD.
PASSED BY THE HOUSE
Closing the Contractor Fraud Loophole – H.R. 5712
This bill closes a loophole in a proposed rule so that mandatory fraud reporting requirements would apply to U.S. contractors working overseas as well as to contractors working here at home. In addition to closing this loophole, the bill requires mandatory fraud reporting for all U.S. contractors who have $5 million or greater in federal contracts – no matter where the work is done. Under the mandatory fraud reporting, all U.S. contractors would be required to report known instances of employees breaking federal criminal laws or receiving significant overcharges in relation to a federal contract. Passed by the House on April 23, 2008.
Government Contractor Accountability Act - H.R. 3928 (or the “Blackwater” bill)
This bill requires all companies that receive more than 80 percent of their annual gross revenue from federal funds to disclose the salaries of their most highly-compensated officers. Currently, for example, the management practices, financial statements, and employment policies of Blackwater, a privately-held company, which receives nearly all of its revenue from U.S. taxpayers, are tightly held secrets. Since 2001, Blackwater has had a meteoric rise in profits due to hundreds of millions of dollars in government contracts, mostly in Iraq, often won through no-bid processes. Passed by the House on April 23, 2008.
Withholding Federal Contracts from Tax-Delinquent Companies - H.R. 4881
The Contracting and Tax Accountability Act would withhold most federal contracts from corporations that are delinquent on their federal taxes. The Government Accountability Office (GAO) has just reported that 60,000 federal contractors owe $7.7 billion in back taxes. GAO also reports that, of those contractors, there are 27,000 defense contractors – many of which have contracts in Iraq – that owe $3 billion in back taxes. Passed by the House on April 14, 2008.
Closing Offshore Tax Loopholes for Federal Contractors - H.R. 5602 (or the “KBR” bill)
This bill would close a loophole that allows government contractors to set up sham companies in foreign jurisdictions to avoid paying Social Security and Medicare taxes. It has been recently reported that the defense contractor KBR which has received millions of U.S. taxpayer dollars through its Iraq contracts, has avoided paying its fair share of Social Security and Medicare taxes by creating shell companies in the Cayman Islands. KBR is taking advantage of a tax loophole and prevents its U.S. employees working in Iraq from being able to qualify for these vital programs. Passed by the House as part of H.R. 5719, the Taxpayer Assistance and Simplification Act, on April 15, 2008.
Stopping Fraudulent Federal Contractors from Fleecing Taxpayers - H.R. 3033
The United States is the largest purchaser of goods and services in the world, spending more than $419 billion on procurement awards in Fiscal Year 2006 alone. Yet, the federal government’s watchdogs lack the information they need to protect taxpayer dollars; there is no centralized government-wide method to account for the performance of U.S. contractors. This bill creates a database that lists civil and criminal proceedings concluded by federal and state governments against contractors. This is designed to prevent the situation in which a fraudulent contractor can bounce from federal agency to federal agency, fleecing taxpayers the whole way. Passed by the House on April 23, 2008.
Ensuring Independence of Inspectors General - H.R. 928
The Improving Government Accountability Act contains a number of provisions to enhance the effectiveness and independence of Inspectors General. They are the principal watchdogs of the major federal agencies and are responsible for detecting waste, fraud and abuse. Passed by the House on October 3, 2007; the Senate is expected to pass its version soon.
Cracking Down on No-Bid Contracts - H.R. 1362
The Accountability in Contracting Act would crack down on the use of no-bid contracts by federal agencies. Agencies would be required to publicize the justifications for sole-source contracts. The bill also increases transparency and accountability in federal contracting. It was in response to the overuse of no-bid contracts by the Bush Administration in Iraq and the Gulf Coast. Passed by the House on March 15, 2007; the Senate passed their own version (S. 680) on November 7; it is anticipated that a compromise version will be finalized in the coming weeks.
Protecting Federal Whistleblowers - H.R. 985
The Whistleblower Protection Enhancement Act would strengthen protections for federal whistleblowers who report waste, fraud and abuse. Specifically, the measure gives whistleblower protections to federal workers specializing in national security issues, and improves protection for employees of federal contractors who report on waste, fraud and abuse of taxpayer dollars. Passed by the House on March 14, 2007; the Senate passed their own version (S. 274) on December 17; it is anticipated that a compromise version will be finalized in the coming weeks.
The War Profiteering Prevention Act - H.R. 400
The War Profiteering Prevention Act creates a new federal criminal fraud offense to prohibit fraudulent acts involving the provision of goods or services in connection with a mission of the U.S. government overseas. Following are highlights of some of the bill’s provisions.
Passed by the House on October 9, 2007.
Read the Gavel's coverage of Iraq oversight and accountability in the House>>
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