McCaskill Praises Bush Administration Move to Close Contracting Loophole

Press Release

McCaskill Praises Bush Administration Move to Close Contracting Loophole

U.S. Senator Claire McCaskill praised the Bush Administration for beginning the process to close a loophole in a proposed federal regulation that would have exempted federal contractors who carry out their contracts overseas from being required to self-report criminal activity they are involved in. The proposed rule placed that reporting requirement only on domestic contracting. The action taken by the Bush Administration comes after McCaskill expressed her concerns to Director of the Office of Management and Budget Jim Nussle that the loophole would be a setback for efforts to improve contracting oversight and accountability. McCaskill has also introduced legislation that would close the loophole, S. 2905, the "Close the Contractor Fraud Loophole Act."

"The companies that receive defense contracts must be held to the highest standard," McCaskill said today. "The idea that some contractors would not be required to report illegal activities because of where they are doing their work is contrary to common sense, especially when the loophole exempts overseas contracting, precisely the place where criminal activity by contractors has been broadly alleged in recent years." McCaskill conclude, "I was pleased to see that the Bush Administration has gotten the message loud and clear on this issue and has decided to change course."

McCaskill was not alone in her criticism of the proposed policy. Nearly every Inspector General dealing with U.S. contracting overseas - including the Office of the Special Inspector General for Iraq Reconstruction (SIGIR) - had spoken out against efforts to implement this loophole. SIGIR previously said it was "important for the loophole to be closed in order to ensure good government oversight." In the House of Representatives, Congressman Peter Welch (D-VT) expressed his concerns over the policy and had won House passage of legislation, H.R. 5712, to require that the loophole be closed. McCaskill's "Close the Contractor Fraud Loophole Act" is the companion legislation to Welch's House bill. McCaskill's bill has also been included in a wartime supplemental funding bill recently passed by the Senate Appropriations Committee and likely to receive consideration by the full Senate in the next few days.

"Our taxpayers and our troops deserve to know that companies contracting with the federal government are acting with unquestionable integrity and honesty, regardless of where the contract is being performed—and the rules of the game should not change based on location," McCaskill wrote in her letter. "If anything, contracts performed overseas, away from the infrastructure of government oversight available in the U.S., require greater scrutiny and disclosure, not less."

McCaskill has been an advocate of increasing oversight of contractors in Iraq and Afghanistan since being elected to the Senate. She, along with Senator Jim Webb of Virginia, passed legislation that created a commission to examine wartime contracting, similar to a committee President Harry Truman created as senator to examine contracting abuses during World War II. President Bush signed the legislation into law earlier this year.

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