House passes bill with contracting reforms

The House has passed legislation to reduce fraud by contractors and abuse of government contracts. The fiscal 2008 Supplemental Appropriations Act, passed May 15, includes language copied from two bills designed to oversee contractors, the Close the Contractor Fraud Loophole Act and the Government Funding Transparency Act.
Previously passed by the House on April 23, the fraud loophole bill would force the administration to close an exemption in the Federal Acquisition Regulation. The exemption would not require contractors working outside of the United States to comply with reporting rules that concern fraud. Rep. Peter Welch (D-Vt.), who sponsored the measure, was skeptical of the administration and its effort to amend the exemption.

However, regulators told a congressional committee in April that the exemption was a simple oversight, not a trick in favor of contractors. One administration official said regulators copied decades-old language from the Defense Department’s acquisition regulation.

In response to concerns from Welch and other lawmakers, Paul Denett, administrator of the Office of Federal Procurement Policy, said he would expedite a new rule through the regulatory process to fix the exemption. Congress gave him six months to change the FAR, or the statute would kick in.

In addition, the supplemental bill would require any company or organization receiving at least $25 million and 80 percent or more of its revenue from federal payments to disclose the salaries of its most highly compensated officers. The bill would create disclosure requirements for privately held government contractors similar to existing requirements for publicly traded companies and nonprofit organizations.

The original bill, introduced in October by Rep. Christopher Murphy (D-Conn.), came as a reaction to allegations about Blackwater USA, a government contractor for overseas security contracting.

Some Republican lawmakers and administration officials consider the bill unnecessary. Officials said contracting officers already have the information Murphy’s bill would require to be made public. In a hearing, Denett said the bill could have “a chilling effect” on contractor participation in federal contracting. The House passed the bill April 23 by voice vote.

On May 15, the House passed an amendment that adds the two reform bills’ language to the appropriations legislation by a vote of 256 to 166. The Senate now must approve the supplemental appropriations bill with the House’s amendments.

However, President Bush has threatened to veto the entire supplemental bill.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.


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