Bush Reverses Course on Contract Fraud Loophole

WASHINGTON — A multibillion-dollar loophole that would have helped conceal abuse of overseas contracts has been eliminated from a Bush administration proposal to protect taxpayer dollars, according to documents obtained Monday by The Associated Press.

Reversing itself after months of criticism, the administration closed the loophole that was quietly slipped last year into a proposed Justice Department crackdown on government contract fraud.
The loophole specifically exempted contractors from reporting evidence of fraud or abuse in overseas work that cost taxpayers at least $5 million. An updated version of the proposal, drafted April 4, requires reporting on all contracts — whether at home or abroad.

The government has spent more than $102 billion since 2003 on contracts in Iraq and Afghanistan alone.

"This change would result in making the clause requirements for a contractor code of business ethics and conduct, business ethics awareness and compliance program, and internal control system applicable to contracts performed outside the United States," the new draft rule states.

Government policywriters said the original rule was drawn up quickly, and chided the Justice Department for not explicitly making sure that overseas contracts should be included in the crackdown. "It was only after publication of the proposed rule … that DoJ and other respondents expressed concern about the overseas exemption," the draft states.

Source - Rutland Herald