Facing ‘Months Of Criticism,’ Bush Administration Strips Loophole Concealing Abuse Of Overseas Contracts

In May 2007, the Bush administration responded to intense public criticism and “introduced plans to force companies to notify the government about evidence of contract abuse worth $5 million or more.” Previously, such reports were voluntary and not surprisingly, the number of company-reported fraud cases had “declined steadily over the past 15 years.”

Yet someone at the Justice Department quietly slipped in a provision exempting U.S. contractors who do work overseas from the reporting requirements. Bipartisan groups of public officials criticized the loophole, including the Office of the Special Inspector General for Iraq Reconstruction and Sen. Charles Grassley (R-IA). Rep. Peter Welch (D-VT) has also led calls for a House inquiry into the matter.

The loophole has now been removed, after months of resistance by the White House. ThinkProgress has obtained an updated version of the Justice Department’s proposal, drafted April 4, that requires reporting on all contracts, including ones abroad. From the new proposal:

It is still unclear exactly which official was responsible for slipping in the loophole. Assistant Attorney General Alice S. Fisher originally requested the new reporting requirement last May to apply to all contracts, including ones overseas. But in November, the rule was published by the White House’s Office of Management and Budget with the loophole. Somewhere along the way, the provision was changed. A Bush administration official claimed the loophole was the result of a “drafting error” and faulty cutting and pasting.


“I hate to sound cynical, but what lobbyist working for a contractor in Iraq wanted this get-out-of-jail card?” wondered Patrick Burns of Taxpayers Against Fraud. Several contractors interviewed by the AP said they agreed with the rule, although they all claimed they did not request it. [featuredcomment]Lisa FTW Says: “Typical of this administration and just as sickening….any average citizen would be prosecuted for committing a $5 robbery, but it’s OK to rip off the taxpayers as long as the tab is less than 5 million? What about contract abuse of $4.9 million? In neo-bizarro world, that’s ‘normal’.”[/featuredcomment]