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Senate Accepts Coburn Amendment Blocking Bonuses for non-Performing Government Contractors and Executives

Press Release

Location: Washington, DC

U.S. Senator Tom Coburn, M.D (R-OK) released the following statement today after the Senate accepted several Coburn amendments designed to improve government efficiency and help struggling homeowners.

"The public had every right to be outraged when AIG received $165 million in bonuses from public funds, yet few taxpayers realize the government has spent billions on improper bonuses for the defense industry, non-performing contractors and incompetent executives at places like Fannie Mae. The scandal of the government handing out improper bonuses to contractors and government executives dwarfs the scope of the AIG bonus scandal," Dr. Coburn said.

Coburn amendment 892 ends bonuses awarded to contractors and government executives responsible for over budget projects and programs that fail to meet basic performance requirements. Examples of improper bonuses that will be blocked by the Coburn amendment include:

1. The Department of Defense paid $8 billion in unwarranted bonuses to contractors for weapons programs that had severe cost overruns, performance problems, and delays between 1999 and 2004.

2. The Centers for Medicare and Medicaid Services pays more than $312 million per year in quality-of-care bonuses to nursing homes that provide below average care and have past violations of health-and-safety regulations.

3. In 2007, Harris Corp. developed a handheld device to collect data for the 2010 Census that failed to work properly and was $198 million over budget. Despite this costly failure that could cause delays in preparing for the nationwide head count, the Department of Commerce's Census Bureau awarded Harris $14.2 million in bonuses.

4. The Federal National Mortgage Association, a government sponsored mortgage enterprise better known as Fannie Mae, suffered $59 billion in losses last year and has requested $15 billion in taxpayer assistance. Yet it plans to pay $4.4 million or more in bonuses to its top executives. Fannie Mae's Chief Operating Officer is expected to receive a $1.3 million bonus, the Deputy Chief Financial Officer is slated for $1.1 million, and two executive vice presidents are each in line for $1 million each.

5. In 2008, three top executives in the Office of the Inspector General of the Department of Defense each received a cash bonus of $30,000 for outstanding leadership even though their agency has a history of weak management and strained relations between employees and supervisors.

Additional examples are here.

"I'm pleased my colleagues agreed to end this outrageous abuse of the public's trust and I expect that they will retain this and all of my amendments in conference. President Obama promised to go through the budget line-by-line and eliminate waste but the only change Congress is interested in is in taxpayers' pockets. It's time for Congress to make tough choices, set common sense priorities and end the waste, fraud and abuse in the federal budget," Dr. Coburn said.

The Senate also accepted the following Coburn amendments:

• Coburn amendment 893, in keeping with President Obams's campaign pledge, requires Congress to go through the federal budget "line by line" to identify and eliminate duplicative, inefficient, or failing government programs. Additional background available here.

• Coburn amendment 895 ends wasteful no-bid contracts by requiring all federal contracts over $25,000 be competitively bid. Additional background available here.

• Coburn amendment 894 requires Congress to set performance measures for every government program. Additional background available here.

• Coburn amendment 830 allows for a temporary suspension of the 10 percent early withdrawal tax penalty for withdrawals from retirement accounts to allow struggling families to make monthly mortgage payments.

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