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Home :  Federal Budget & Tax : 
Federal Budget & Tax:      News     Blog     Background    



Wednesday, April 30, 2008

First Jackson, Now Lurita Doan Falls

The long saga of General Services Administrator Lurita Doan has finally come to an end - the White House fired her yesterday. We have posted extensively on Doan's short tenure at the GSA on this blog, in our press room, and in the Watcher as well. It seemed there just was never enough print space to truly capture all the corrupt, illegal, and unethical behavior of Ms. Doan (also see here, here, here, and here).

My only question at this point is, why was she fired now? It's been 11 months since the independent Office of Special Counsel recommended to President Bush that Doan be fired for blatant violations of the Hatch Act - which prohibits the use of federal resources for partisan political activities. It certainly does seem like strange timing, but I suppose I should stop being surprised by the bizarre actions of this administration.

It is time to say farewell and good luck to Administrator Doan. Thanks, Ms. Doan, for wasting our money, helping out your friends with no-bid contracts, hiding the truth by interfering with oversight investigations, attempting to intimidate an Inspector General's office, violating federal law, keeping us entertained at many congressional hearings with your poor memory and shifty ways, and generally, making life interesting here at this watchdog organization. You certainly weren't dull.



Posted by Adam Hughes, 09:11:18 AM



Monday, April 28, 2008

Wesley Snipes Gets Three Years for Tax Evasion

On Friday, actor Wesley Snipes was sentenced to three years in prison for failing to pay federal income taxes for close to ten years. Snipes could have been sentenced to up to 16 years if he had been convicted of all charges, but he was not convicted of tax fraud and conspiracy back in February. He owes close to $20 million according to the IRS. Snipes maintains he was dupped, but the judge thought otherwise:

But U.S. District Judge William Terrell Hodges said Snipes exhibited a "history of contempt over a period of time" for U.S. tax laws, and granted prosecutors the sentence they requested — one year for each of Snipes' convictions of willfully failing to file a tax return from 1999-2001.

The Snipes case is the highest profile tax evasion prosecution since the billionaire Leona Helmsley was convicted of tax fraud in 1989.



Posted by Adam Hughes, 09:24:58 AM



Thursday, April 24, 2008

Feds Return Virtual Border Fence to Boeing

Here's a short item reported ($) in CongressDaily yesterday afternoon that as escaped most mainstream media coverage. Apparently the federal government, specifically officials at the Customs and Border Protection office, have decided to scrap continued work on a brand new, $20 million virtual fence along the Arizona-Mexico border. The initiative, called Project 28, was awarded to Boeing, Inc., as part of a $67 million contract to provide advanced border protection technologies.

Project 28 has experienced repeated delays (in June 2007 and again in February 2008) due to technical problems and software glitches since it began about 18 months ago, and now that the government has accepted the program infrastructure from Boeing, it found out it doesn't work. The Government Accountability Office (GAO) has testified before Congress that the technology provided under the contract "did not fully meet user needs and the project's design will not be used as the basis for future" development of border protection technologies.



Does Boeing owe the government $20 million? Find out...

Posted by Adam Hughes, 05:45:15 PM



Monday, April 21, 2008

SCHIP Rules Imposed in 2007 Violated Law

The Government Accountability Office and the Congressional Research Service have concluded that rule changes imposed by the Bush administration on the State Children's Health Insurance Program (SCHIP) in 2007 violated federal law: BNA reports:

In legal opinions released April 18, the Government Accountability Office and the Congressional Research Service said the SCHIP guidance is a rule for purposes of the Congressional Review Act (CRA) and so violates statutory requirements for congressional notice and review.

The Congressional Review Act was passed in 1996 and serves to keep Congress informed of rulemaking activities at federal agencies and makes sure those rules are submitted to Congress and the Comptroller General before they take effect. In this case, the SCHIP rules were published and used to deny a request by New York State to expand its SCHIP coverage to children from higher-income families (up to 250 percent of poverty, or $44,000 for a family of 3).

Unfortunately, $44,000 isn't a lot of money for a family of three in many parts of New York State, particularly NYC. Come to think of it, that isn't a lot of money for a family of three in many parts of the United States. Considering the prices of health care these days, restricting access to SCHIP for families in NY was an unfortunately decision from the Bush administration. This latest development gives some hope that it can be overturned.

Read the Opinions:
GAO Opinion
CRS Opinion

Posted by Adam Hughes, 09:37:46 AM



Wednesday, April 16, 2008

House Committee Approves Contractor Fraud Loophole Fix

By a voice vote, the the House Oversight and Government Reform Committee approved a bill (HR 5712) that would close a loophole in the Federal Acquisition Regulation (FAR) that excuses federal contractors working overseas from reporting fraud. The loophole was inserted into the federal procurement rules and was published in November of last year as part of a contracting oversight measure. Called a "drafting error" by GSA chief acquisition officer David Drabkin, the loophole exempts companies performing federal contracts overseas from mandatory reporting of employee contract fraud.

For more background on (with hints of Administration shenanigans), see:

AP: Administration says contracting fraud loophole was mistake
Brattleboro Reformer: Official says fraud loophole was a mistake
GovExec: House committee approves bill to close contracting loophole
GovExec: Much-derided overseas contracting loophole to be closed


Posted by Craig Jennings, 06:07:41 PM



Monday, April 14, 2008

House Passes HR 4881 - Contracting and Tax Accountability Act of 2007

By a voice vote, the House approved HR 4881. The bill, the Contracting and Tax Accountability Act of 2007, if signed into law, would bar firms that are delinquent in paying their federal income taxes from obtaining federal contracts.



Posted by Craig Jennings, 04:58:10 PM



Friday, April 04, 2008

IBM Suspension Lifted

POGO's Scott Amey flags this update on the government's suspension of IBM from obtaining federal contracts:

WASHINGTON (AP) — The government has lifted a week-old ban that prevented IBM from getting new federal contracts in an exchange for an agreement from the company to drop its protest of an $84 million Environmental Protection Agency contract it lost last year.

...

The two sides on Thursday signed an agreement in which IBM agreed to withdraw its protest from the Government Accountability Office and drop any interest in competing for the contract. The company will also refund the EPA any attorneys fees and costs the agency paid to IBM in regard to the filing of the protest.

Amey notes the general implications for government oversight of contractors:

So after seven days, what have we learned? The EPA is now convinced that IBM is a responsible contractor. The government believes that public-private agreements (and the promises within them) go a long way in establishing contractor responsibility. The government's reliance on large contractors is a big factor in government decisions. And, the decision to lift IBM's suspension may have been different if this were a small business (see Ray Bjorklund's quote in today's AP story).

As many of you know, federal contracting is complex and imperfect. We are talking about big money, politics, profits, power, influence, "best value" and so many other factors--as recently witnessed in the Air Force tanker contract award, bid protest, and subsequent fallout. I hope that EPA's decisions were aimed at protecting taxpayers. Finally, I appreciate EPA's effort to hold a contractor and its employees accountable, however short-lived, as well as IBM's willingness to promise to do the right thing.



Posted by Craig Jennings, 04:11:07 PM



Tuesday, April 01, 2008

GSA Suspends IBM from Federal Contracting

Reuters:

SAN FRANCISCO (Reuters) - IBM is under investigation by the U.S. Environmental Protection Agency over an $80 million bid it made in 2006 to modernize EPA financial systems and has been suspended from seeking new contracts with all U.S. agencies, the company said on Monday.

...

International Business Machines Corp, the world's largest provider of computer services, said it only learned on Friday of the temporary suspension from the Environmental Protection Agency (EPA) tied to possible violations of ethical bidding provisions on an EPA contract IBM had submitted in March 2006.

...

The temporary suspension applies to all federal agencies and IBM business units. IBM may continue work on existing contracts as of the date of the suspension, unless a particular agency directs otherwise, the company said in a statement.

UPDATE: The Wall Street Journal has a few more details ($).

Fred McNeese, a spokesman for IBM, said "it's our understanding that the basic issue is whether certain information concerning a contract should have been provided to IBM employees by an EPA employee."

A person familiar with the matter said concerns were raised within the EPA about how IBM had acquired sensitive information relevant to its pursuit of a contract valued at more than $80 million to help the EPA modernize some of its computer systems. "It appeared they [IBM officials] used some information given to them by an EPA employee who didn't realize the ramification of sharing such information," the person familiar with the matter said.

USASpending.gov indicates that IBM received $1.4 billion in federal contracts in 2007. This represents about 1.4 percent of IBM's total revenues that year.



Posted by Craig Jennings, 03:35:51 PM



The Paulson Plan: Multiple Choice, Missing the Mark

The response to the financial institution regulatory reform proposal introduced yesterday by Treasury Secretary Hank Paulson has been striking. The U.S. Chamber of Commerce and the American Bankers Association, small banks and state attorneys general, left-leaning economists and analysists, and members of Congress, even the man with the max Street cred, Jim "I reiterate -- I am embarrassed by these guys. Thank heavens, no matter who wins the White House, they will soon be gone" Cramer, have trashed the plan unceremoniously.

The Paulson plan has been dissed on a number of grounds. It regulates already-regulated institutions, not ones lacking and needing regulation. It will weaken state banks. The plan could have been released anytime over the last several years and would not have changed a thing regarding market conditions today. It blithely declares that "market discipline is the most effective tool to limit systemic risk." And so forth.

Secretary Paulson is a bright man who understands financial market operations as well as anyone. His tenure at Treasury has, surprisingly, been as marginal thus far as those of his predecessors Paul O'Neill and John Snow. Treasury is facing its first full-blown crisis since the Asian contagion of a decade ago. This is Paulson's moment.

OK -- so what does Paulson's proposal accomplish ? Is it:

  • A. an effort to disguise the administration's laissez-faire approach to the crisis?
  • B. a smokescreen to distract from such "interventionist" initiatives as the Frank-Dodd bill?
  • C. an April Fool's errand?
  • D. all of the above?
  • E. none of the above?


Posted by Dana Chasin, 03:29:30 PM




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