- The Washington Times - Tuesday, December 17, 2002

Federal agencies awarded more than $855 million in contracts during the 2000 budget year to companies that had violated at least one federal law in the three previous years, congressional investigators said yesterday.
The General Accounting Office said a 15-month study of companies that won contracts of $100,000 or more during 2000 revealed that 39 had been found guilty in federal courts or in administrative proceedings of violating one or more federal labor, environmental, employment or antitrust laws.
Federal law and contracting rules say that companies cannot receive federal contracts without "a satisfactory record of integrity and business ethics." The General Services Administration maintains a list of companies barred from doing business with the government because of fraud convictions, contract violations or other charges.
Nevertheless, agencies often do not ban such companies. An Associated Press analysis in 2000 found hundreds of companies still eligible for federal business, even though they had been prosecuted or sued for defrauding the government.
Rep. Carolyn B. Maloney, New York Democrat, who has introduced legislation to tighten the banning process, said that the government needs a system to keep better track of companies that break federal laws and then seek federal contracts.
"The taxpayers deserve to know that their tax dollars are being spent to purchase goods and services from corporations that do not violate the law," she said.
The Clinton administration in late 2000 expanded the contracting rule to require companies bidding on federal contracts to certify that they have been in compliance with all federal environmental, labor, employment, antitrust and consumer protection laws for the past three years.
The expanded rule was suspended after President Bush took office, then revoked in December 2001. Officials said that the potential benefits of the rule were outweighed by the increased reporting burdens on businesses and the government.
While the rule was suspended, Reps. Thomas M. Davis III, Virginia Republican, and Steve Horn, California Democrat, asked the GAO to determine the extent to which federal contractors violate federal laws. GAO used the standard laid out in the Clinton administration rule to measure compliance in seven areas of federal law.
The 39 companies identified as having broken the law accounted for just 0.2 percent of the more than 16,000 that received large federal contracts in 2000. But the $855 million in contracts they received amounted to 1.4 percent of the large contract awards.
Seven of the companies had been convicted of crimes in federal courts; five lost civil cases brought by federal prosecutors; and 27 had been found guilty by administrative law judges or federal boards or commissions.

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