Whistleblowers Vulnerable in Stimulus

Published on February 02, 2009

Please, share this page
Whistleblowers Vulnerable in Stimulus

Congress Learns Lessons From Katrina, Iraq — But Not All

By Daphne Eviatar 2/3/09
The Washington Independent

While most of the debate over the proposed stimulus bill has focused on whether the federal government ought to embark on a plan expected to cost taxpayers some $885 billion, equally important is how that money gets spent. Much of the construction and other work will have to be done by private companies contracting with federal, state and local governments. But how the government contracts with private companies, and how those contracts are monitored, can make all the difference to the program’s success.

Although government watchdog groups have been largely supportive of the bill’s provisions for oversight of government contractors, some say that a key problem may have been overlooked: several important means of holding government contractors accountable are missing from the voluminous 647-page stimulus bill. Most importantly, the stimulus bill fails to adequately protect employees of government contractors, who are in the best position to blow the whistle on fraud and abuse of taxpayer money. The Senate version of the bill also doesn’t protect federal employee whistleblowers – an odd oversight given that state and local employees are protected. And neither version explains how the government is going to ramp up its own hiring quickly enough to oversee and coordinate all these new government contracts.

Supporters of the 2009 American Recovery and Reinvestment Bill, including President Obama, claim it will create some four million jobs. But how can the gover

The experience of government contracting in Iraq and post-Hurricane Katrina stand as stark warnings. The Bush administration, in what came to be seen as among its most glaring failures, authorized trillions of dollars in government spending with little oversight or accountability. A study by the House Committee on Oversight and Government Reform, for example, found waste, fraud and abuse in $1.1 trillion worth of government contracts governing reconstruction work in Iraq. The Pentagon’s inspector general similarly estimated that some $15 billion spent in Iraq was never adequately accounted for. And just one company – KBR, the former Halliburton subsidiary created by former Vice President Dick Cheney when he was Halliburton’s CEO – billed the government more than $2.7 billion worth of questionable and unsupported goods and services. House investigations found KBR billing taxpayers $45 for a case of soda, for example, and $100 to wash a bag of laundry; meanwhile, the company was abandoning new trucks paid for by the government that had broken down instead of properly maintaining them. Much of the key information about misspending by federal contractors came from their own employees.

Overall, Congress and the Obama administration have made extraordinary efforts in the stimulus legislation, despite strong pressure from government contractors and their lobbyists, to require transparency and accountability. so as not to repeat the mistakes of the recent past. But due either to oversight or pressure from contractors’ lobbyists, several critical protections are missing.

Experts say that one key way to prevent fraud and abuse by private contractors is to protect those who report it to higher-ups at the company. But that protection has been left out of the stimulus bill. This means someone like Rory Mayberry, a former KBR manager in Iraq, who testified to Congress about KBR charging the government for meals it never served, overpaying sub-contractors, and serving spoiled food to U.S. troops, might not have job protection if he first reported the problem to one of his supervisors. The same is true for Ben Carter, a former Halliburton water purification specialist who discovered that his employer was providing US soldiers with dangerously contaminated water.

That’s because the definition of protected whistleblowing activity under the bill includes going to an Office of Inspector General or going to Congress, but not going to your own employer.

“The biggest defect in the current language in the house and senate versions, is about blowing the whistle internally,” said Stephen Kohn, president of the National Whistleblower Center and a lawyer who represents whistleblowers.

He and Adam Miles, legislative representative for the Government Accountability Project, appear to be among the few advocates who’ve picked up on this critical omission. “It will post significant problems in the provision’s effectiveness, because a whistleblower’s instinct is to report wrongdoing internally, to supervisors or others in chain of command,” said Miles. “So they could be fired just for doing their job.”

Those employees would be protected if they reported the problem to Congress or an Inspector General. “But for people not that savvy, or who don’t have such a big issue – they’re seeing, say, double-charging for meals, or a thousand-dollar toilet seat – if they report it within the company, they’re not protected. And they’re out there.”

“It’s a rare employee who takes the leap of going to a federal inspector general,” agreed Kohn. “Most employees report indications of fraud and abuse within the company.”

Certain provisions of the federal False Claims Act – which allows people outside government to sue contractors for defrauding the government and recover a portion of the damages – would seem to protect government contractor whistleblowers; but experts say the law emphasizes recovering money owed to the government, not protecting whistleblowers. And ever since the Supreme Court decided the case of Garcetti v. Ceballos in 2006, ruling that the First Amendment doesn’t protect government workers blowing the whistle as part of their job duties, advocates for whistleblowers have worried that the Garcetti ruling will end up strangling courts’ interpretation of the False Claims Act as well. As Jack Balkin, professor at Yale Law School and founder of the blog Balkinization, wrote at the time: “the effect of the Court’s decision [in Garcetti] is to create very strong incentives against whistleblowing of any kind.”

Although the Garcetti case was about a public employee, “the effect of Garcetti has been spreading like wildfire,” said Miles. “That if an employee is acting pursuant to job duties, they’re not protected as a whistleblower. That needs to be addressed in the law.”

“It’s a gray area,” agreed Kohn. “But it’s one that absolutely has to be fixed, because that’s where most employees start.”

There are other problems with the whistleblower protections in the stimulus bill. For example, while the House version protects state, local and federal whistleblowers, the Senate version strangely leaves out protection for federal employees – a protection that a broad range of public interest groups have been advocating for years. (The omission may be because the House version includes whistleblower protection for intelligence workers, which critics argue is dangerous because it would allow disclosure of classified material to federal overseers.) The result is that while the employee of a government contractor can safely blow the whistle to the government, were the Senate bill to pass as it stands now, the government employee supervising that contract could not. What’s more, the public employee protections extend only insofar as the fraud pertains to the spending of stimulus bill dollars. If the fraud is in a contract authorized under the Troubled Assets Relief Program, or TARP, for example, the whistleblower protections don’t apply.

“That’s a gigantic problem,” said Kohn. “Say a bridge is being built and the tar on the bridge is being paid for by the stimulus. But the bolts are being paid for by a state block grant. So someone working on the bridge blows the whistle to the government about the bolts being weak or broken. Unless that worker can show those bolts are being paid for by the stimulus, they can be fired,” explained Kohn. “That’s crazy – it should cover all taxpayer dollars.”

Another looming problem for accountability in the stimulus package is that the government doesn’t have sufficient qualified staff to monitor all the new contracts it will be entering into. So even though the bill includes lots of new oversight and transparency requirements, as noted by watchdog organizations such as Taxpayers for Common Sense and the Project on Government Oversight, it’s not clear how the government is going to have enough qualified staff in place to put them to good use.

Government contract lawyers blame the lack of qualified government contract oversight officials for many of the cost overruns, fraud, waste and mismanagement in Iraq and after Hurricane Katrina. The House Committee on Government Oversight, for example, found that 70 percent of post-Katrina contracts were awarded without competition, were poorly planned and subject to little oversight, and that contractors relied excessively on subcontractors to do the work. Similar problems plagued the Department of Homeland Security’s contracts, the committee found.

In the wake of such scandals, the stimulus bill requires competition, and demands that the government post its reasons for issuing any no-bid contracts. But it doesn’t explain how the government will hire qualified workers quickly enough to oversee and monitor the bid process and its aftermath. “This is going to be a massive amount of spending very quickly,” said Jeremy Madson, spokesman for the Professional Services Council, a lobbying group for government contractors. “And as we learned with Iraq and with Hurricane Katrina, If you don’t have the people to manage it, if you don’t engineer the process well, you’re going to have big problems.”

But can the government hire the people it needs to oversee these contracts quickly enough?

Tom Abbott, a lawyer who represents major government contractors such as KBR and Bechtel, is skeptical. “It takes too long to hire people into government and get them trained,” he said. “There’s no time. You can’t build the government workforce back up in 90 days. It would take six months.” Indeed, a recent GAO report found that the Treasury Department is having trouble hiring enough qualified workers fast enough to oversee the Troubled Assets Relief Program, or TARP. “So the talk is already that the way to solve it is to hire contractors to do the oversight,” said Abbott.

Outsourcing oversight could just create more of the same problems, however.

Government agencies have “very few knowledgeable people who can look at a contract with a green eye shade,” said Marthena Cowart, spokesperson for the Project on Government Oversight. But they need to hire them, she said, adding that the experience of having contractors such as KBR and Halliburton oversee themselves in Iraq was “not a great idea.”

“Government is supposedly representing you and me and not corporate interests,” she said. “They would be truly independent.”

As for the time pressure, she added: “People say it would take too long to hire government workers. But as my grandmother used to say, ‘You start at the beginning and go to the finish.’ ”

Report Fraud Now