[Congressional Record Volume 146, Number 127 (Thursday, October 12, 2000)]
[Senate]
[Page S10400]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            TAXPAYER PROTECTION AND CONTRACTOR INTEGRITY ACT

  Mr. HARKIN. Mr. President, yesterday I introduced the Taxpayer 
Protection and Contractor Integrity Act. This legislation, which was 
introduced concurrently by Rep. Peter DeFazio in the House, is intended 
to crack down on fraud and abuse in government contracts. It would say 
to federal government contractors that have been convicted or had civil 
judgement rendered against them at least three times for procurement 
fraud and related offenses: you do not deserve further taxpayer 
support; you are suspended from new contracts for three years. Three 
strikes and you're out.
  A recent report by the General Accounting Office on procurement fraud 
by the 100 largest Department of Defense contractors during the years 
1995-1999 found: 8 criminal cases in which contractors pled guilty and 
paid fines totaling $66 million, and 95 civil cases, including 94 
settlements and one judgment, in which awards totaled $368 million. The 
offenses included overcharging, kickbacks, defective products, 
procurement fraud, misuse/diversion of government furnished materials, 
cost/labor mischarging, and others. A number of companies, including 
some of the largest DOD contractors, had several criminal convictions 
or civil judgments for similar offenses over a few years. This clearly 
demonstrates a pattern of misconduct.
  But the Department of Defense continued to conduct business with 
contractors even after these companies had committed multiple frauds 
against the government. Not one of the top military contractors guilty 
of procurement fraud was barred from future contracts. According to a 
recent Associated Press analysis, there are 1,020 contractors 
government-wide that were sued or prosecuted for fraud in the past five 
years. Of these, 737 remain eligible for future contracts.
  It is disgraceful that the Pentagon and other agencies seem to hear 
and see no evil in the criminal fraud committed by contractors. Now 
it's up to Congress to step in and start cracking down on big 
contractors who have been swindling the federal government out of 
billions of dollars. I am hopeful that the bill we're introducing today 
will force all contractors to play by the rules and stop ripping off 
American taxpayers.
  Under current law, a contracting officer is required to make a 
determination regarding the integrity and responsibility of a potential 
contractor prior to awarding a new contract. In making this 
determination, prior convictions can be taken into account, but even 
with several convictions an individual or company may still be granted 
a contract award.
  The bill I introduced would require contractors to disclose the 
number of convictions or civil judgments, the nature of the offense, 
and whether any fines, penalties, or damages were assessed. Any 
contractor who has three or more convictions or civil judgements for 
fraud and similar offenses related to government contracts would be 
prohibited from receiving future contracts. Existing contracts would 
not be impacted. The prohibition on future contracts would last three 
years. If, during that period, the contractor demonstrates a 
satisfactory record of ethics and integrity by avoiding additional 
criminal convictions, the contractor may become eligible for future 
federal contracts. The bill also allows a waiver by the President in 
the interest of national security or to prevent serious injury to the 
government. Note that the bill does not prevent debarment under current 
procedures for fewer than three violations or broader consideration of 
ethics under the proposed OMB regulations. But recognizing that some 
agencies will not use these discretionary procedures, the bill sets a 
firm limit.
  The bill was crafted much like the Violent Crime Control and Law 
Enforcement Act of 1994, which made life in prison mandatory for 
criminals convicted of their third federal felony. That's why we 
sometimes call this the ``Three strikes and you're out'' bill. This 
bill, however, is much softer, as the suspension can be lifted after 
three years. We've made a commitment in this country to be tough on 
crime. That resolve should apply to federal contractors too. It is time 
to stop rewarding criminal contractors with American taxpayers' hard-
earned dollars.

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