Will "Defunding" ACORN Force the Government to Stop Payment on Major Contractors?

The much ballyhooed “Defund ACORN Act,” introduced by House Republican leader John Boehner (R-OH), passed by an overwhelming majority in the House and was inserted into H.R. 3221 (the “Student Aid” Bill). H.R. 3221 was subsequently passed by the House, largely along party lines, on September 17, 2009.

Unintended Consequences?

The inserted language from the “Defund ACORN Act” defines a “covered organization” as including one that has “filed a fraudulent form with any Federal or State regulatory agency.”

According to Danielle Brian of POGO, this language may inadvertantly cover “all federal contractors and grantees.”

POGO’s Federal Contractor Misconduct Database (however out of date) reads like the “who’s who” of federal contractors. It cites hundreds of instances of alleged false claims and misconduct by giants in the industry such as Lockheed Martin, Boeing, Northrop Grumman, General Dynamics, Raytheon, BAE, KBR, etc.

"Fraudulent form"

Ms. Brian, in her assessment, correctly equated the “fraudulent form” language from the Defund ACORN Act with language from the False Claims Act (FCA), which states:

(a) Liability for Certain Acts.— Any person who—


(1) knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval;


(2) knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government;
…

"Fraudulent forms" presented to the government for payment under the Defund Acorn Act can meet the FCA definition of a "false record or statement" if provided to induce payment.  Ms. Brian is half right.

The "Short Arm" of the Boehner Law
Ms. Brian is also half wrong.  The Boehner Defund ACORN Act's is limited in its application to organizations that commit fraud against a "regulatory agency."  Thankfully, federal “regulatory agencies” (e.g., SEC, FTC, FDA, EPA, etc.) are not to be confused with the massive, free-spending, cash-flushed, nonregulatory agencies of the federal government (e.g., the DOD, DHS, DOS, etc.).  For most federal contractors, the  artfully drafted, narrowed scope of the Boehner Bill provides continued safe access to taxpayer funds regardless of how many "fraudulent forms" they may have filed. 

So, unless a federal contractor performed work for and made the grave miscalculation of filing false/fraudulent claims with one of the dozen or so federal “regulatory agencies,” it should be safe from the “short arm of the [Defund Acorn] law.”

But wait...while we're at it, why not "defund" ALL fraudulent contractors?

The question begged, of course, is: why do allegations of fraud by ACORN (which total "a few million dollars," at most) generate so much righteous bloviation while we hear nary a peep from the same politicians on potentially billions of dollars of fraud committed by other government contractors?  Instances of malfeasance on record against other large federal contractors are on an exponentially greater scale in terms of both dollars and number of allegations.

One can’t say it much better than Rep. Boehner: “This is a matter of common sense and respect for taxpayer dollars.”  That is, of course, if one can just get over the breathtaking hypocrisy displayed by House Republicans in launching its staged surgical strike against fraud.  Sphere: Related Content