While U.S.-based companies are forbidden from doing business with the government of Iran, U.S. Senator Claire McCaskill is aiming to close a loophole that allows taxpayer-financed government contracts to be awarded to overseas contractors that have continued their dealings with the oppressive regime.
"I'm willing to bet that Missouri families would be outraged-and rightfully so-that while we're fighting to cut down on federal spending, taxpayer dollars are going to companies that are doing business with Iran," said McCaskill, Chairman of the Senate Subcommittee on Contracting Oversight. "We're supposed to be using every tool available to isolate and squeeze Iran, to contain the threat they pose to our allies, and to force them to give up their nuclear ambitions-and any loophole that allows American dollars into Iran hurts that effort."
Since 2010, prospective government contractors have been required to certify that they are not engaged in sanctioned activity in Iran. If a contractor submits a false certification, federal agencies have the authority to terminate the contract or propose the contractor for suspension or debarment. U.S.-based companies, including government contractors, are also prohibited from doing business with all individuals, groups, and companies that are owned, controlled by, or acting on behalf of Iran.
Such requirements, however, do not apply to contractors based outside the U.S. Specifically, in 2011, McCaskill learned of an alleged business relationship between the Kuwait-based contractor KGL and companies owned or controlled by the government of Iran.
As part of her ongoing fight to crack down on waste, fraud, and abuse of taxpayer dollars in government contracting, McCaskill has sent several letters seeking input from stakeholders across the political spectrum on how best to protect U.S. dollars from companies doing business with Iran. McCaskill-also a member of the Senate Armed Services Committee-said she intends to use the information she collects to crack down on taxpayer dollars going to businesses that are doing business with the Iranian government.
McCaskill has consistently used her Senate panel to combat waste of taxpayer money-ranging from her work cracking down on the General Services Administration (GSA) for irresponsible spending to her legislation to overhaul the way the government contracts in wartime.
A copy of McCaskill's letter to the American Israel Public Affairs Committee (AIPAC) is available on her website, HERE and appears below. McCaskill sent similar requests to groups including the Anti Defamation League, the American Foreign Policy Council, the Foundation for Defense of Democracies, the Washington Institute For Near East Policy, the Saban Center for Middle East Policy at Brookings, the National Iranian American Council, the National Foreign Trade Council (NFTC), and the Council on Foreign Relations.
The American Israel Public Affairs Committee
251 H Street, NW
Washington, DC 20001
Dear Mr. Kohr:
I am writing to you to request AIPAC's assistance with the Subcommittee's ongoing oversight of the impact of Iran sanctions on government contractors.
Since 2010, prospective government contractors have been required to certify that neither they nor their affiliates are engaged in sanctioned activity in Iran. If a contractor submits a false certification, agencies may terminate the contract or propose the contractor for suspension or debarment. U.S.-based companies, including government contractors, are also prohibited from doing business with all individuals, groups, and companies owned, controlled by or acting for or on behalf of Iran.
These requirements do not prohibit non-U.S. based government contractors from engaging in business activity with groups or companies owned, controlled by, or acting for or on behalf of Iran. In 2011, the Subcommittee learned of an alleged business relationship between the Kuwait-based contractor KGL and companies owned or controlled by the government of Iran. In meetings with government agencies and experts, the Subcommittee was assured that these alleged relationships did not constitute a barrier to KGL's receipt of government contracts.
In 2011, the U.S. government awarded more than $21 billion in government contracts to non-U.S. based contractors. That amounts to nearly 4% of all government contract dollars being awarded to companies who have no impediment to doing business with companies acting on behalf of the Iranian government.
I invite you to provide official comments on these issues, including the applicability of U.S. laws and policies relating to Iran to government contracts. I would also appreciate your input regarding the following questions:
(1) What changes (if any) should be made to the Iran Sanctions Act and Comprehensive Iran Sanctions, Accountability, and Divestment Act to ensure that sanctioned companies cannot obtain government contracts?
(2) What changes (if any) should be made to the Treasury Department's Specially Designated Nationals List to ensure that current or prospective government contractors are not doing business with named individuals or companies?
(3) What other legislative or regulatory changes may be necessary to ensure that government contracts are not awarded to individuals or companies who are engaged in business activities which may counteract U.S. policies towards Iran?
I would also welcome your input on any other matter that would inform the Subcommittee's oversight. Please provide your response by August 10, 2012.
The jurisdiction of the Subcommittee on Contracting Oversight is set forth in Senate Rule XXV clause 1(k); Senate Resolution 445 section 101 (108th Congress); and Senate Resolution 73 (111th Congress).
Please contact Sarah Garcia at (202) 224-1014 with any questions. Please send any official correspondence relating to this request to Kelsey_Stroud@hsgac.senate.gov.
Subcommittee on Contracting Oversight