Finally common sense in Washington? Minutes ago federal contracting officials finalized a series of rules designed to keep tax cheats and felons from receiving government contracts. That it took so long to promulgate such a common sense rule is amazing. That big business fought so hard against these rules is even more amazing and quite disheartening.
The rules come on the heals of a call from President Obama to tighten contracting guidelines and require federal contractors to notify the government of any tax delinquencies and felony convictions. Those events will now be used as a reason to bar the contractor from further government work.
The new rules were issued by the General Services Administration (GSA), NASA and the Department of Defense (DOD). Because of DOD and GSA’s participation, the new rules should cover most companies with federal contracts.
We have been following this debate since 2005 when General Accountability Office (GAO) issued a report to Congress called “Thousands of Civilian Agency Contractors Abuse the Federal Tax System with Little Consequence.” Over a decade letter and there still has been little consequence.
Like almost every federal rule, there are exceptions. For example, if national security interests are at play, a government agency can still do business with a tax cheating contractor. For the new rules to really mean something, they will need to be properly enforced. (The actual rules say that the federal government is prohibited from entering into a contract with an entity having an unpaid federal tax delinquency or a federal felony conviction in the prior 24 months, unless the agency has considered suspension or debarment of the company and has determined that this further action is not necessary to protect the interests of the United States.)
What really concerns us is why the business community objects to these rules. In our mind, that makes no sense. Assuming the majority of U.S. businesses aren’t felons or tax cheats, why would they object to rules that help level the playing field and make it easier for honest businesses to compete?
We suspect that it is organizations like the U.S. Chamber that were behind the opposition. The Chamber purports to speak on behalf of all businesses but often speaks only for the most powerful ones.
The rules are now final and sadly we believe that the same people who are felons and cheaters won’t self report their errant ways. That means another new class of whistleblowers will soon follow.
Hopefully some of the new whistleblowers will be the honest contractors just trying to make a living. We have already seen that phenomena with private ambulance companies. In some areas of the country there is so much illegal kickback activity taking place it is almost impossible to occupy the EMS space without engaging in illegal bribes and kickbacks. That has caused some competing ambulance business owners to become whistleblowers in order to clean up the fraud and level the playing field.
Whatever happens with the new rules, the fraud recovery and whistleblower lawyers at MahanyLaw are here to support the efforts of both whistleblowers and honest business owners. We have helped our whistleblower clients clean up greed and corruption, bring back billions of tax dollars and receive over $100 million for their efforts.
Need more information? The author of this post, Brian Mahany, can be reached at or by telephone at (414) 704-6731.
MahanyLaw – America’s Whistleblower Lawyers