Bush administration misses deadline to hand over contract fraud documents to House inquiry

Other News Materials 8 April 2008 07:31 (UTC +04:00)

(AP) - The Bush administration has delayed delivering documents to Congress explaining how a multibillion-dollar loophole exempting overseas work from scrutiny was slipped into a rule intended to crack down on fraud in government contracts.

House panel will hear April 15 from White House and other administration officials about the loophole, which drew protests from Democrats and Republican lawmakers alike and been disavowed by Attorney General Michael Mukasey.

"If this loophole was a bureaucratic mistake as some in the administration have claimed, then our requests should be easy to meet," Rep. Peter Welch, D-Vt., said in a statement Monday. "This should be simple. Someone in the administration made this change and it should be easy to explain why. A delay only raises more questions."

Jane Lee, a spokeswoman for the White House Office of Management and Budget, which oversees the government's contracts policy, said the office is working with the committee regarding the request and plans to provide a response to the inquiry "in the near term."

Proposed by the Justice Department last year, the rule aims to weed out and prosecute waste, fraud and abuse of taxpayer dollars spent on pricey government contracts. The loophole was slipped in without the department's approval by the time the proposed rule was published in the Federal Register in November.

The proposed rule - including the loophole, which was first reported by The Associated Press - could become law at any time.

The United States has spent more than $102 billion over the last five years to help rebuild Iraq and Afghanistan. In that time, the Justice Department has uncovered at least $14 million in contract bribes in those two nations alone.

The documents demand was the first step of a House Oversight and Government Reform Committee inquiry into whether private contracting firms pushed for the loophole. Documents from OMB, the departments of Justice and Defense, the General Services Administration and NASA were due Friday but have yet to be delivered.

A House Democratic leadership aide said administration officials have characterized the loophole as a bureaucratic mix-up but have given no assurances that it will be stripped from the overall rule.

Welch, who called for the inquiry, filed legislation that would eliminate the loophole and restore the rule to what the Justice Department initially proposed.

The rule has been controversial since it was first proposed, garnering criticism from private firms that would be forced to spend millions of dollars on internal investigations.

A trade association that lobbies on behalf of Blackwater USA, KBR Inc. and other giant global government contractors has said the loophole merely follows long-standing Defense Department policy that protects firms from being held liable for abuse by foreign-based subcontractors.