Next Up: Infrastructure Oversight Week?
More than four years after “Infrastructure Week” was first announced by President Trump back in June 2017, Congress has finally passed an infrastructure bill and President Biden will soon sign it into law. A staggering $1.2 trillion in taxpayer money will soon start flowing from the U.S. Treasury to private contractors to upgrade the nation’s roads, bridges, power grid, and other public works. Is it too soon to start talking about how to prevent fraudsters from targeting this new outlay of public funds? Absolutely not. As Jetson Leder-Luis of Boston University has cogently argued, “[i]t is clear that in the current haste to spend federal money not enough attention has been paid to make sure that it all goes to the proper places.” Congress should start planning Infrastructure Oversight Week. What should be on the agenda?
First, Congress should take a hard and honest look at what gaps or loopholes exist in the infrastructure law and how unscrupulous private contractors might take advantage of them. Professor Leder-Luis points out that Congress included “very little language aimed at fighting fraud” in the infrastructure bill. It “instructs the government to deter waste and fraud but doesn’t specify penalties or how it will be carried out.”
Yet, it is well-established that a significant percentage of funds spent on public programs are lost to fraud, waste, and abuse every year. Citing a U.S. Government Accountability Office report, Professor Leder-Luis pegs the improper payment rate at 4% for all government spending. But when new government programs are rushed out the door, the loss of government funds is likely much greater. For example, about 15% of loans given out under the Payment Protection Program to address the effects of the Covid-19 pandemic are suspected of fraud. If that same rate holds for the planned burst of infrastructure spending, as much as $180 billion could be lost to fraud. This is an amount that demands attention. Congress should enact additional legislation to close the oversight and enforcement gap in the infrastructure law and federal agencies should tighten their procurement regulations.
Second, Congress needs to do more to encourage, protect, and reward whistleblowers to come forward and report fraud by private contractors involved in government infrastructure projects. Whistleblowers are essential to protecting these funds. Indeed, as Professor Leder-Luis observes, infrastructure programs are particularly susceptible to fraud because of the “information asymmetry” that exists between the companies that bid on and complete public works projects and the government officials tasked with overseeing them. The “quality of construction projects is hard to verify,” giving “contractors and builders opportunities to skimp on materials or inflate costs to earn profits.” And the bidding process itself is “susceptible to rigging.”
Leder-Luis identifies a number of tools that the federal government can use to detect and prevent these types of fraud schemes, but highlights whistleblowers who utilize the False Claims Act as “particularly valuable.” Like the public-private partnership envisioned by the infrastructure bill to spend government money, the False Claims Act is a partnership between the U.S. Department of Justice and private whistleblowers (and their attorneys) to recoup government money lost to fraud. It builds on a simple concept stemming from efforts to stop defense procurement fraud during the Civil War: nothing compares to the information that a well-placed, credible, inside whistleblower can bring to the law enforcement table. Congress should heed this lesson and take steps to strengthen the False Claims Act.
More broadly, as Professor Leder-Luis has insightfully stated, lawmakers should “include more anti-fraud language in large spending bills” to “help ensure more of these trillions of dollars go to the people and places they say need the support—and not to the fraudsters.” Infrastructure Oversight Week, when it occurs, should include a full and open discussion about how this can best be achieved, drawing on the remarkable contribution and bravery of whistleblowers.
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