WASHINGTON — A Bush administration plan to crack down on contract fraud has a multibillion-dollar loophole: The proposal to force companies to report abuse of taxpayer money will not apply to work overseas, including projects to secure and rebuild Iraq and Afghanistan.
For decades, contractors have been asked to voluntarily report internal fraud or overpayment on government- funded projects. Now, the Justice Department wants to force companies to notify the government if they find evidence of contract abuse of more than $5 million.
But the proposed rules, which are in the final approval stages, specifically exempt “contracts to be performed outside the United States,” according to a notice published last month in the Federal Register.
Critics, including the watchdog group Taxpayers Against Fraud, said the overseas exemption raises suspicions.
The Justice Department, which pushed for the self- reporting requirement, called the overseas exemption a mistake that should be fixed before the plan becomes final.
