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Obama orders department heads to review tax status of those seeking federal contracts

[JURIST] US President Barack Obama on Wednesday signed a memorandum [text] directing the heads of government agencies to conduct a review of the tax delinquency status of all companies that compete for federal contracts. Citing a need to protect taxpayer money and a total unpaid tax figure in excess of $5 billion, Obama authorized department heads to review the delinquency status of those companies seeking federal contracts and:

to evaluate practices of contracting officers and debarring officials in response to contractors' certifications of serious tax delinquencies and to provide me, within 90 days, recommendations on process improvements to ensure these contractors are not awarded new contracts, including a plan to make contractor certifications available in a Government-wide database, as is already being done with other information on contractors.

In remarks [transcript] made before the signing, Obama indicated that he expected swift implementation of the practice.

The subject of tax delinquent companies receiving federal contracts has been much debated, including numerous Government Accountability Office (GAO) [official website] reports and attempts to pass legislation. In April 2008, the Contracting and Tax Accountability Act of 2008 [HR 4881 materials] was passed by a voice vote in the House of Representatives and sent to the Senate, where no action was taken. The GAO has released several reports detailing abuses of the tax system by both civilian and defense [reports, PDF] contractors, with the total delinquency reaching an estimated $6 billion.

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