Obama issues Memorandum Addressing Tax Delinquency by Government Contractors

January 26, 2010

The President issued a memorandum to the heads of executive departments and agencies on January 20, 2010 directing them to evaluate practices of contracting officers and debarring officials in response to contractors' certifications of serious tax delinquencies and to provide recommendations on process improvements to ensure these contractors are not awarded new contracts, including a plan to make contractor certifications available in a Government-wide database, as is already being done with other information on contractors. Reference Federal Register January 25, 2010 (Volume 75, Number 15).

Full text of the memorandum:

The Federal Government pays more than half a trillion
dollars a year to contractors and has an important
obligation to protect American taxpayer money and the
integrity of the Federal acquisition process. Yet
reports by the Government Accountability Office (GAO)
state that Federal contracts are awarded to tens of
thousands of companies with serious tax delinquencies.
The total amount in unpaid taxes owed by these
contracting companies is estimated to be more than $5
billion.

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.

Accordingly, I hereby direct the Commissioner of
Internal Revenue (Commissioner) to direct a review of
certifications of non-delinquency in taxes that
companies bidding for Federal contracts are required to
submit pursuant to a 2008 amendment to the Federal
Acquisition Regulation. I further direct that the
Commissioner report to me within 90 days on the overall
accuracy of contractors' certifications.

I also direct the Director of the Office of Management
and Budget, working with the Secretary of the Treasury
and other agency heads, to evaluate practices of
contracting officers and debarring officials in
response to contractors' certifications of serious tax
delinquencies and to provide me, within 90 days,
recommendations on process improvements to ensure these
contractors are not awarded new contracts, including a
plan to make contractor certifications available in a
Government-wide database, as is already being done with
other information on contractors.

Executive departments and agencies shall carry out the
provisions of this memorandum to the extent permitted
by law. This memorandum is not intended to, and does
not, create any right or benefit, substantive or
procedural, enforceable at law or in equity by any
party against the United States, its departments,
agencies, or entities, its officers, employees, or
agents, or any other person.

The Director of the Office of Management and Budget is
hereby authorized and directed to publish this
memorandum in the Federal Register