Profiteering legislation lacks real purpose

When I was a child, my parents repeatedlyreminded me to "think beforeyou act." That advice would serveCongress well as it considers new legislationto address war profiteeringand expansion of the False Claims Act.Bills in both houses wouldestablish significant penaltiesfor profiteering and fraud associatedwith contractors supportingoverseas missions of theU.S. government. On the surface,it is hard to argue with thelegislation. Clearly, any entity orindividual that engages in suchbehavior must be held accountable.But beneath the surface,the legislation is so broadlywritten that it raises more questions? and potential problems? than it answers.Defrauding the U.S. governmenton any contract has long beenprohibited, and the penalties, asdefined in the Federal False Claimsand False Statements Accountabilityacts, are severe. Thus, it is unclearwhat statutory gap needs to be filled.Companies or individuals foundguilty of fraud should be punished tothe fullest extent of the law, and theyare. According to the SpecialInspector General for IraqReconstruction (SIGIR), althoughfraud has not been a significant componentof the U.S. contracting experiencein Iraq, it does happen. This iswhy the SIGIR is pursuing severaldozen criminal cases under existingcivil and criminal laws.In addition, the legislation fails todefine its key terms, such as "materiallyover-valuing" and "excessively profit."This lack of definitions is a criticalfailure. What is excessive? How aremarket realities, or variable businessand performance risks, to be accountedfor? After all, profits are largelydriven by risk.Is a company that earns an 8 percentprofit on work performed in traditionalenvironments entitled to alarger profit when that same work isperformed in a war zone where therisks are orders of magnitude higher?Who decides, and how do theydecide? Without objective criteria andclear definitions, the legislation injectsfar too much subjectivity and uncertaintyinto an acquisition system inwhich subjectivity, predictability andobjectivity must be carefully balanced.The Senate also is consideringproblematic legislation to significantlyexpand the reach and scope of theFederal False Claims Act. That billwould give unique and remarkableauthority to the government to pursuedamages for false claims even when ithas not received such a claim or experienceddamages.One of the basic requirements ofthe False Claims Act is presentment,in this case, the actual submission of afalse or fraudulent claim for payment.By eliminating that requirement, thisbill enables the government's pursuitof false claims against subcontractors? with which the government has noprivity of contract to begin with ?even in cases in which the prime contractorhas rejected a subcontractor'sbill and refused to present it to thegovernment. Thus, if there is no falseclaim to the government, what's thepoint?The bill also would allow thegovernment to pursue damages forfalse claims on contracts with quasigovernmentalentities in which theU.S. government is merely one participant.While driven by court rulingsunder which the Coalition ProvisionalAuthority in Iraq was determined notto be a U.S. government instrument? thereby preventing the governmentfrom pursuing false claims casesinvolving CPA contracts ? the legislationwould also include sovereignorganizations such as the UnitedNations and World Bank. They are,and should be, responsible for theirown contracting and protecting theirown interests.Sweeping legislation with such clearprecedents and complicated effectsmerits much more substantial andcareful analysis before any action istaken. Unfortunately, in the currentfrenzy to find solutions, that vital steptoo often is missed.