Repealed contractor ethics rule may not have caught offenders

A short-lived contractor ethics rule would likely have caught few lawbreakers, according to a new General Accounting Office report.

A Federal Acquisition Regulation rule, dubbed "blacklisting" by critics, required federal contractors to meet certain labor, environmental and ethics standards. The rule was implemented in the last days of the Clinton administration and subsequently revoked by the Bush administration because officials said it was too stringent and too burdensome for contracting officials.

According to GAO, if the blacklisting rule had survived, many of the agencies identified during its investigation might have drifted under the radar because settlements do not have to be reported under the rule. In its report, GAO investigated the number of businesses awarded contracts of $100,000 or more in fiscal 2000 that had violated areas of law specified in the now-defunct blacklisting rule. Of the contractors involved in GAO's study, 3,403 were involved in 6,705 cases that were settled. In most of those cases, the contractors did not admit guilt or wrongdoing, GAO found.

"Few contractors in our review would have actually had to report past violations," the report (GAO-03-163) concluded. "Additionally, contracting officers would face significant difficulties in verifying or obtaining contractor compliance history information."

According to GAO, the contractor ended up taking corrective action in situations where the parties settled, assuring compliance with the law and agreeing to make some form of payment to the government.

The watchdog agency determined that 39 of 16,819 contractors would have violated the blacklisting rule, if it hadn't been repealed. The businesses identified by GAO held approximately $855 million in government contracts.

Of those 39 contractors, GAO found that seven businesses were convicted in federal court of crimes; five businesses suffered federal judgments in civil court; and administrative law judges, boards or commissions issued adverse decisions against 27 businesses.

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