Contract fraud loophole eliminated

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A multibillion-dollar loophole has been removed from a proposal to crack down on government contract abuse. The Bush administration removed the loophole the day before a hearing was scheduled to investigate how it was placed in a Department of Justice rule.

The loophole would have shielded abuse of overseas contracts. Documents show the loophole was closed following complaints and concerns that it would hinder efforts to curb contract fraud in government projects outside the United States.

Congressman Peter Welch called for the investigation into how the loophole was placed in the rule. In a statement, Welch said the investigation proves the need for congressional oversight. But Welch said he questions why it required a congressional investigation to prevent the Bush administration from giving overseas contractors a free pass to defraud taxpayers.

Last year the loophole was quietly slipped into a Justice Department rule aimed at cracking down on all government contracts worth at least $5 million.

The government has spent more than $102 billion since 2003 on contracts in Iraq and Afghanistan alone.

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