It was payback time for President Obama this week when he threw down the gauntlet to tax-dodging contractors.Taxpayers pay contractors more than half a trillion dollars each year for goods and services they provide to the government. Monitoring these contracts to stanch billions lost to waste, fraud and abuse has proven difficult enough. But the Government Accountability Office found that contractors in several government agencies including the Defense Department and General Services Administration owe between $5 and $8 billion, particularly in payroll taxes. 

Companies are required under the Federal Acquisition Regulation to certify tax compliance before being awarded any federal contract. A WhiteHouse memorandum to agency heads tasked the Internal Revenue Commissioner (IRS) with reporting on the accuracy of these certifications and the Office of Management and Budget with looking at whether contracting officials are taking correct action. How to accomplish this? “Make contractor certifications available in a Government-wide database, as is already being done with other information on contractors,” said the statement. 

“Too often, Federal contracting officials do not have the most basic information they need to make informed judgments about whether a company trying to win a Federal contract is delinquent in paying its taxes.  We need to give our contracting officials the tools they need to protect taxpayer dollars,” the memo read further. Agreed. So here’s a suggestion: How about finally implementing that contractor performance database that the industry has fought for years? 

The only currently available database simply lists suspended and debarred companies. A revamped version modeled on the Project on Government Oversight’s Federal Contractor Misconduct Database was proposed in the Federal Spending Accountability Act of 2008, sponsored by Rep. Carolyn Maloney (D-NY) and Sen. Claire McCaskill (D-MO). But the final bill was watered down after significant pressure from industry advocates and the lawmakers close to them.

Calling on contractors to pay Uncle Sam is nothing new. The White House memorandum closely mirrors a bill titled the “Contracting and Tax Accountability Act of 2007” introduced in the last Congress by a senator named…Barack Obama. That bill, co-sponsored by Claire McCaskill (D-MO) and Rep. Brad Ellsworth (D-IN), was passed by the House but then languished until the congressional session ended and Obama became busy with other endeavors. McCaskill and Ellsworth re-introduced the bill last year.

We support the President’s pledge to hold contractors more financially accountable to taxpayers, but hopefully he will learn from a hard look at how past efforts were derailed.