Hillary Clinton Introduces Legislation to Prevent Contractors that Violate Criminal Laws from Obtaining Federal Contracts

Continues Push for Increased Transparency and Greater Oversight and Accountability of Out-of-Control Waste and Abuse in Federal Contracting

April 25, 2008 -- Washington, DC – Senator Hillary Clinton today announced that she introduced legislation that will bring new transparency to the federal contracting process and help prevent contractors that have violated criminal laws from receiving federal contracts.

The Guaranteeing Real Accountability in Federal Transactions (GRAFT) Act will close a proposed regulatory loophole that would allow some of the largest federal contractors to hide fraud, waste, and abuse. It will also mandate new and stronger disclosure and reporting requirements for contractors and provide stronger oversight of the federal contracting process.

“The American people deserve an efficient, transparent and accountable government that works for them. Instead, the Bush Administration has outsourced critical government functions to unaccountable and too often unqualified private contractors,” Senator Clinton said. “It is critical that the federal government crack down on contractors that hide criminal fraud and abuse. My legislation closes the unacceptable loophole that would allow this rampant misuse of taxpayer funds to continue unexposed. Congress must restore the accountability and credibility that this Administration has squandered.”

While the Administration has stated that it has closed the loophole, only a statutory change in the law will guarantee that all contractors meet the disclosure requirements. Senator Clinton’s legislation requires any contractor competing for a federal contract to disclose any violation of federal criminal law while performing or bidding for a federal contract, or if they have ever received a significant overpayment from the federal government. The legislation also requires all contractor violations and overpayments to be posted on the Internet for the public to see, and directs the White House and federal agencies to provide a report to Congress on the criminal violations and significant overpayments that have occurred in connection with the award or performance of covered contracts. The legislation applies to all contracts greater than $1 million and strengthens whistleblower protections for those employees that report crimes and overpayments to the government.

The federal government is increasingly reliant on contractors both at home and abroad. A recent Government Accountability Office (GAO) report found that government-wide spending on contractor services has more than doubled in the last 10 years. Taxpayer spending on private contracts by the federal government was nearly $440 billion in fiscal year 2007, and that amount continues to increase. As contracting out has increased, so has waste, fraud, and abuse.

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Last summer it was reported that in an effort to privatize and downsize the Federal Protective Service, the only agency tasked with providing security to federal buildings, the Department of Homeland Security had outsourced the security services to a company whose president had served five years in prison for bank fraud and money laundering. The company’s president had not paid contract security guards in a month, and as a result, some of these guards did not show up for work at the buildings they were tasked to protect. It was later learned that the president used company money to pay for condos in the District OF COLUMBIA and Myrtle Beach (including a $652,000 condo in Penn Quarter with a rooftop pool and $530,000 apartment in Myrtle Beach).

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A recent report found that senior Air Force personnel had directed a $50 million contract to Strategic Message Solutions (SMS) to provide entertainment services at Air Force functions. One person involved in the procurement process described it as “the dirtiest thing” he had ever experienced, and the Inspector General of the Department of Defense (DOD) found that “the December 2005 award to SMS was tainted with improper influence, irregular procurement practices, and preferential treatment.”

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A recent report revealed that the DOD had awarded a $300 million contract to a company run by a twenty-two year old “contractor” who provided decomposed Chinese-made ammunition to our allies in Afghanistan in order to fulfill his contractual obligation.

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Recent reports indicate that the State Department may be renewing its contract with Blackwater Worldwide even though the company is under investigation for violating rules governing the use of deadly force in Iraq.

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According to press reports, a Kevlar helmet manufacturer was sued by the Department of Justice for producing up to 2.2 million deficient helmets for the military. Whistleblowers from within the company accused the manufacturer of shortchanging the armor in the helmets, rendering troops more vulnerable to injury from shrapnel and other projectiles. The company recently settled the suit for $2 million without admitting wrongdoing. Nonetheless, the Pentagon awarded the same manufacturer a major new contract to produce new helmets.

Senator Clinton has been an aggressive critic of abuses in government contracting. This month she wrote to the Director of the Office of Management and Budget calling on the administration to move quickly to close loopholes in proposed rules that would allow federal contractors to hide criminal fraud, waste and abuse. She secured into law two measures to curtail wasteful and unnecessary practices including those that have resulted in the outsourcing of critical national security jobs to private firms and rewarded underperforming private contractors. One measure stopped DHS’s plan to downsize the Federal Protective Service, which is charged with protecting 9,000 non-military Federal buildings. The other provision barred DHS from giving award fees or bonuses to private contractors that do not meet the stipulations related to cost, schedule, and performance outlined in the contract. Additionally, Senator Clinton offered an amendment to the FY 2009 Budget Resolution calling for a one-year moratorium on abusive and unchecked no-bid contracts that have become commonplace under the Bush Administration and cost taxpayers at least $200 billion in fiscal year 2007 alone.

Source: Senator Hillary Clinton

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