House Relentless in Pursuing Contracting Reforms

In the last several weeks, the House has continued its efforts to address federal contracting reform. With bills stalling in the Senate, the House has begun to attach various reform provisions to legislative vehicles that are more likely to be enacted into law this year. Marrying these proposals to the war supplemental bill and the Defense Authorization bill, for example, greatly increases the chances these important reforms will be implemented in 2008. This strategy has already paid dividends with the Fair Share Act (H.R. 5602). The Fair Share Act was originally introduced March 13 and would require U.S. firms that employ American citizens overseas through foreign subsidiaries to pay Social Security and Medicare taxes when contracting with the federal government.

The House first attached the Fair Share Act to the Taxpayer Assistance and Simplification Act (H.R. 5719), a collection of provisions aimed at facilitating income tax compliance — especially among elderly and low-income taxpayers. The House passed H.R. 5719 by a vote of 238-179 on April 15, but the bill has not moved at all in the Senate and received a veto threat from President Bush, threatening the Fair Share Act provisions.

Tired of waiting for the Senate and not wanting to take their chances with a veto-happy president, the House amended another bill extending tax cuts to veterans (the HEART Act, H.R. 6081) to include the original provisions of the Fair Share Act shortly before the Memorial Day recess. The HEART Act was approved without opposition by both the House and Senate on May 22 (House vote: 403-0, Senate vote: approved by voice vote) and is expected to be signed by the president shortly.

The strategy employed to pass the Fair Share Act is being seen with other contracting reform legislation. Two bills, the Close the Contractor Fraud Loophole Act (H.R. 5712) and the Government Funding Transparency Act of 2008 (H.R. 3928), passed the House as independent bills on April 23. The first bill would close a loophole in the Federal Acquisition Register, a set of regulations governing the federal procurement process, that did not require contractors working oversees to report fraud to the government. The second would require the disclosure of the names and salaries of the five highest paid executives of private companies that receive more than 80 percent of their revenue from the government.

Both of these bills were added to the House's version of the war supplemental bill, which passed on May 15. After various changes, the Senate sent the bill back to the House for final approval, retaining the two contractor reform amendments.

Given the uncertain future of the war supplemental bill (it has been opposed at various points by the Bush administration), the House has also acted to include these two contracting provisions on the 2009 National Defense Authorization Act (H.R. 5658). While this bill will likely pass Congress in 2008, the scope of the contracting reforms would be limited to contracting activities related to the Defense Department and other agencies covered under the Defense Authorization bill. Nonetheless, on May 22, the House approved an amendment by voice vote offered by Rep. Henry Waxman (D-CA) that would enact multiple contracting reforms, including the provisions of H.R. 5712 and H.R. 3928.

In addition, the Waxman amendment covered yet another important contracting reform by requiring the publication of a contractor integrity database that would provide information about criminal, civil, and administrative cases involving federal contractors. This proposal was introduced in the summer of 2007 as the Contractors and Federal Spending Accountability Act of 2007 (H.R. 3033) by Rep. Carolyn Maloney (D-NY) and passed the House unanimously on April 23. While it is possible this proposal will be amended before the Defense Authorization bill is finalized, it is unlikely the misconduct database proposal will be stripped from the bill altogether.

For the most part, these contracting reform proposals are non-controversial efforts to bring transparency and accountability to the federal procurement process, no doubt aiding the potential success of the strategy to attach them to multiple bills in 2008. There are additional proposals related to federal contracting, such as prohibiting the IRS from using private debt collectors to collect back taxes (H.R. 695) or prohibiting contractors from receiving contracts if they owe federal taxes (H.R. 4881), that might still be included in such a strategy. These proposals are unlikely to be enacted into law on their own.

Unfortunately, the window of opportunity to attach those bills to legislation that will pass Congress in 2008 is slowly closing. It is possible the war supplemental and Defense Authorization bill are two of the last pieces of legislation Congress will be able to enact before they adjourn before the fall elections.

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