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Obama's Crack Down on Federal Contract Abuse Cannot Happen Without Federal Whistleblower Protection

Washington, D.C. March 5, 2009. The National Whistleblowers Center (NWC) applauds President Barack Obama's commitment to crack down on federal contract abuse, especially in the defense industry.  As President Obama observed, the contracting process is "plagued by massive cost overruns and outright fraud."

According to Michael D. Kohn, General Counsel of the NWC, "Federal employees are all too well aware of the 'crack down' they face when they have tried to confront the cozy relationship between contractors and agency officials."

Bunnatine ("Bunny") Greenhouse is a prime example of what happens to federal employees who try to protect the public.  When she objected to the cozy relationship between Halliburton and government contracting officials during the ramp-up to the Iraq war, the excessive duration of the contract, and the failure to seek competitive bids she was removed as the Army Corp's chief of contracting.  "Without meaningful whistleblower protections, federal employees will remember what happened to Bunny Greenhouse and remain silent instead of exposing waste, fraud, and abuse," Kohn said.

Congress has taken the first step in ensuring oversight and accountability by including whistleblower protections for employees of private contractors and state and local governments who receive stimulus money in the American Recovery and Reinvestment Act.  The stimulus whistleblower protections are already having an effect on corporate culture

The law firm EpsteinBeckerGreen recently issued a client alert on the whistleblower provisions contained in the stimulus legislation.  EpsteinBeckerGreen is a respected employer-side law firm of over 350 attorneys. The firm's statement provided an extensive briefing on the whistleblower protection provisions and urges every company to undertake extensive voluntary compliance actions in order to avoid becoming entangled in a high-profile whistleblower case:

"Employers receiving covered funds should take proactive steps now to prevent whistleblower claims under ARRA [American Recovery and Reinvestment Act]. As part of a comprehensive compliance program, it may be worthwhile to assure appropriate procedures are in place to prevent and detect mismanagement, fraud, waste, situations creating public danger, abuse or unlawful activity concerning covered funds. Broadening existing hotline or other reporting channels and complaint procedures to cover matters under ARRA may be in order. ARRA also may occasion review and updating of policies and related orientation, training and monitoring programs, with specific regard to employee whistleblower issues that accompany the receipt of covered funds."

EpsteinBeckerGreen "Client Alert," dated Feb. 27, 2009.

This is precisely the impact that the NWC and other whistleblower rights groups hoped would be triggered by including strong whistleblower provisions in the stimulus-spending package.  Only when employers know that their employees are being encouraged to detect and report fraud - and when those employees have effective legal protections and rewards - will employers undertake the kinds of voluntary reforms necessary to create a change in culture that will save the taxpayers billions of dollars.  

Congress now must act swiftly to ensure current ARRA protections are made permanent and are extended to cover all employees (including federal employees) and all taxpayer spending.

"The stimulus whistleblower provision is already impacting internal corporate culture and will undoubtedly reduced fraud and create an environment where private sector employees are encouraged to tell the truth" and "it's about time federal employees had the same protections as the private sector when it comes to saving taxpayer dollars" Kohn said.