[Congressional Record Volume 140, Number 18 (Friday, February 25, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: February 25, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                      FRAUD IN PUBLIC CONTRACTING

  Mr. GRASSLEY. Madam President, today I will speak for a few minutes 
on the topic of public contract fraud.
  The taxpayers got good news Tuesday when the Supreme Court let stand 
the court of appeals' ruling in U.S. ex rel. Kelly versus Boeing that 
the whistleblower provisions of the False Claims Act are 
constitutional. That should settle the issue once and for all. 
Congratulations to Senate legal counsel Michael Davidson and assistant 
Senate legal counsel Claire Sylvia for their outstanding advocacy on 
the side of Congress and the taxpayers.
  I had hoped the new Justice Department would step in and advocate the 
constitutionality of whistleblower lawsuits, but I am still waiting for 
Attorney General Reno and her assistants to follow up on their 
confirmation hearing promises to consider reversing the hostile 
neutrality of the previous administration.
  This and other matters have caused me concern that the new 
administration is no more committed to an aggressive stance on public 
contract fraud than the previous two administrations were. That concern 
was compounded on Wednesday, when Attorney General Reno and President 
Clinton nominated Defense Department general counsel Jamie Gorelick to 
be second-in-command of the Justice Department. I am concerned that 
this nomination signals an administration willingness to let the fox 
guard the chicken coop when it comes to fraud on the taxpayers.
  Ms. Gorelick has a fine reputation as an effective lawyer and bar 
activist. What concerns me is how she earned that reputation--by 
specializing in getting defense contractors off the hook for fraud 
against the United States. Mr. Gorelick spent the last 12 years working 
as outside counsel for companies like General Electric, Teledyne, and 
United Technologies. I have always been uncomfortable with the 
revolving door between the Justice Department and the public contract 
defense bar. In this instance, I am concerned that Ms. Gorelick has 
campaigned so hard and so long for the contractors' side of fraud 
issues that she will find it difficult to turn around and zealously 
protect the interests of taxpayers. I am anxious to hear the extent to 
which she will recuse herself from issues that affect the former 
clients in the defense industry, or her former colleagues in the public 
contract bar.
  My concern about how Ms. Gorelick will handle fraud matters as Deputy 
Attorney General is heightened by the fact that her current office--
Pentagon general counsel--is currently advocating positions on a major 
fraud statute which favor the defense industry over the taxpayers. I 
look forward to her confirmation hearing in order to discuss these 
issues in detail.
  The Judiciary Committee is presently considering housekeeping 
amendments to the whistleblower provisions of the False Claims Act. 
Under the act, better known as the ``Lincoln law''--after its enactment 
in 1863 to deal with fraud by Civil War arms manufacturers--private 
citizens with knowledge of fraud can sue the culprit on behalf of the 
United States, and share in the Government's recovery. Since 
Representative Howard Berman and I got amendments enacted in 1986 which 
revived the act, the Lincoln law has brought $588 million back into the 
Treasury. The Government now recovers more money through these 
whistleblower lawsuits than through suits initiated by the Justice 
Department.

  Not surprisingly, Defense contractors hate the whistleblower law. 
They hate it because it is very effective at exposing their fraud. The 
law allows honest employees who don't want to be party to their 
employer's fraud, and who find the Federal bureaucracy lackadaisical in 
its representation of the taxpayers, to act as citizen attorneys 
general and make their employers accountable for the fraud.
  When we enacted the amendments to the Lincoln law in 1986, I knew we 
would be hearing from the Defense contractors down the road. It has 
finally happened. The contractors and their slick lobbyists have 
descended on Capitol Hill. They are breaking out the crying towels, 
complaining about how hard it is to cope with the whistleblower 
lawsuits. A coalition of major defense contractors is pushing for a 
series of amendments which would emasculate the Lincoln law. They are 
also pushing a bill to streamline procurement law--which is another way 
of saying they want to gut much of the procurement reform legislation 
of the 1980's.
  These same companies have paid out more than a half-billion dollars 
in penalties and settlements for fraud in just the past 3 fiscal 
years--a quarter of which comes from whistleblower lawsuits alone. My 
message to the contractors is: Stop the fraud, instead of blowing money 
on billable hours in futile efforts to gut the Government's antifraud 
tools.
  While I expect companies who feed at the public trough to lobby to 
weaken fraud statutes, I am always surprised at the extent to which the 
administration, be it Republican or Democrat, seems more interested in 
protecting contractors than protecting taxpayers. But my experiences 
with the Reagan administration, the Bush administration, and now the 
Clinton administration have all shown me that's the case. The Defense 
Department is out to protect its contractors, and the Justice 
Department is out to protect the Defense Department. Which brings me 
back to Ms. Gorelick.
  The Defense Department has been pressing within the Government for 
amendments which would significantly weaken the Lincoln law--amendments 
nearly identical to those promoted by the defense industry. I want to 
know from Ms. Gorelick why lawyers in her office have been advocating 
amendments which would gut the whistleblower law. I want to know 
whether she has directed these efforts, whether she agrees with the 
positions advocated by her office, and whether she will press the same 
antiwhistleblower agenda when she gets to DOJ.
  This is especially important given the current lack of leadership on 
these issues at DOJ. While the Attorney General and her chief deputies 
all pledged to reverse the previous administration's hostility to 
whistleblowers, their actions speak louder than their words. So far, 
the Department has shown itself to be more responsive to the 
antiwhistleblower sentiments of career lawyers burrowed into the bowels 
of the civil division, and to the defense industry's protectors at the 
Pentagon.
  I want the change in leadership at the Justice Department to 
accomplish a change in policy on fraud and whistleblowers, not a step 
back in the other direction.
  I yield the floor.

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