Federal Contractor Fraud Laws To Get Tougher? ACORN Controversy Casts Spotlight on Larger Contractors That Violate False Claims Act

Outrage over misuse of public funds is a healthy reaction to those who cheat taxpayers. It can also create interesting bedfellows, as newly-introduced legislation in the House demonstrates.

HR 3571, aimed at “de-funding ACORN,” would ban federal contracts and most federal funds to any organization that “has filed a fraudulent form with any Federal or State regulatory agency,” among other things. (Complete bill is below.)

As. Rep. Alan Grayson (D-FL) observed correctly, fraud by those who receive government funds involves much “bigger fish” than ACORN–and bigger dollar amounts of alleged fraud.

“We can’t have a situation where the laws of justice are applied to one organization and not to any of the others, particularly when there are organizations that are polluting water for our soldiers and electrocuting them.” Grayson presumably was referring to allegations that KBR’s performance of government contracts for our troops has caused soldiers to be electrocuted and otherwise endangered.

Rep. Grayson is on target. He saw these abuses as a lawyer vindicating the public’s interest in fighting fraud in pursuing qui tam whistleblower cases under the False Claims Act, the nation’s primary civil statute for combating fraud and false claims against the government.

On the other side of the aisle, Rep. Dan Issa (R-CA) appeared to agree with this principle–“abuse and fraud will not be tolerated,” as his spokeperson told ABC News.

Battling fraud against taxpayers can and should be a universal concern of both parties. Let’s see whether this bill is weakened by those who reap the most rewards from cheating the public. The full text of the proposed legislation is below:

Defund ACORN Act (Introduced in House)

HR 3571 IH

1st Session
H. R. 3571 To prohibit the Federal Government from awarding contracts, grants, or other agreements to, providing any other Federal funds to, or engaging in activities that promote certain indicted organizations.

September 15, 2009 Mr. BOEHNER (for himself, Mr. CANTOR, Mr. PENCE, Mr. ISSA, Mr. ADERHOLT, Mr. AKIN, Mr. ALEXANDER, Mrs. BACHMANN, Mr. BACHUS, Mr. BARRETT of South Carolina, Mr. BARTLETT, Mr. BILIRAKIS, Mr. BISHOP of Utah, Mrs. BLACKBURN, Mr. BLUNT, Mr. BONNER, Mrs. BONO MACK, Mr. BOOZMAN, Mr. BOUSTANY, Mr. BRADY of Texas, Mr. BROUN of Georgia, Mr. BROWN of South Carolina, Mr. BURTON of Indiana, Mr. BUYER, Mr. CALVERT, Mr. CAMP, Mrs. CAPITO, Mr. CARTER, Mr. CHAFFETZ, Mr. COFFMAN of Colorado, Mr. COLE, Mr. CONAWAY, Mr. CULBERSON, Mr. DAVIS of Kentucky, Mr. DENT, Mr. DREIER, Mr. DUNCAN, Mr. EHLERS, Ms. FALLIN, Ms. FOXX, Mr. FRANKS of Arizona, Mr. GALLEGLY, Mr. GARRETT of New Jersey, Mr. GERLACH, Mr. GOODLATTE, Ms. GRANGER, Mr. GRAVES, Mr. HARPER, Mr. HELLER, Mr. HENSARLING, Mr. HERGER, Mr. INGLIS, Mr. SAM JOHNSON of Texas, Mr. JONES, Mr. JORDAN of Ohio, Mr. KING of New York, Mr. KINGSTON, Mr. KLINE of Minnesota, Mr. LAMBORN, Mr. LANCE, Mr. LATOURETTE, Mr. LATTA, Mr. LEE of New York, Mr. LEWIS of California, Mr. LINDER, Mr. LOBIONDO, Mr. LUETKEMEYER, Mrs. LUMMIS, Mr. DANIEL E. LUNGREN of California, Mr. MACK, Mr. MARCHANT, Mr. MCCAUL, Mr. MCCARTHY of California, Mr. MCCOTTER, Mrs. MCMORRIS RODGERS, Mr. MCHENRY, Mr. MCKEON, Mr. MILLER of Florida, Mrs. MILLER of Michigan, Mr. MORAN of Kansas, Mrs. MYRICK, Mr. NEUGEBAUER, Mr. OLSON, Mr. PAUL, Mr. PETRI, Mr. PLATTS, Mr. POSEY, Mr. PUTNAM, Mr. RADANOVICH, Mr. ROGERS of Alabama, Mr. ROGERS of Kentucky, Mr. ROSKAM, Mr. ROYCE, Mr. SCALISE, Mr. SESSIONS, Mr. SHIMKUS, Mr. SHUSTER, Mr. SIMPSON, Mr. SMITH of Texas, Mr. SOUDER, Mr. SULLIVAN, Mr. TERRY, Mr. TIBERI, Mr. TIAHRT, Mr. THOMPSON of Pennsylvania, Mr. TURNER, Mr. UPTON, Mr. WALDEN, Mr. WAMP, Mr. WESTMORELAND, Mr. WHITFIELD, Mr. WILSON of South Carolina, Mr. WOLF, Mr. YOUNG of Florida, and Mrs. BIGGERT) introduced the following bill; which was referred to the Committee on Oversight and Government Reform


A BILL To prohibit the Federal Government from awarding contracts, grants, or other agreements to, providing any other Federal funds to, or engaging in activities that promote certain indicted organizations.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,


This Act may be cited as the `Defund ACORN Act’.


(a) Prohibitions- With respect to any covered organization, the following prohibitions apply:

(1) No Federal contract, grant, cooperative agreement, or any other form of agreement (including a memorandum of understanding) may be awarded to or entered into with the organization.

(2) No Federal funds in any other form may be provided to the organization.

(3) No Federal employee or contractor may promote in any way (including recommending to a person or referring to a person for any purpose) the organization.

(b) Covered Organization- In this section, the term `covered organization’ means any of the following:

(1) Any organization that has been indicted for a violation under any Federal or State law governing the financing of a campaign for election for public office or any law governing the administration of an election for public office, including a law relating to voter registration.

(2) Any organization that had its State corporate charter terminated due to its failure to comply with Federal or State lobbying disclosure requirements.

(3) Any organization that has filed a fraudulent form with any Federal or State regulatory agency.

(4) Any organization that–

(A) employs any applicable individual, in a permanent or temporary capacity;

(B) has under contract or retains any applicable individual; or
(C) has any applicable individual acting on the organization’s behalf or with the express or apparent authority of the organization.

(c) Additional Definitions- In this section:

(1) The term `organization’ includes the Association of Community Organizations for Reform Now (in this subsection referred to as `ACORN’) and any ACORN-related affiliate.

(2) The term `ACORN-related affiliate’ means any of the following:

(A) Any State chapter of ACORN registered with the Secretary of State’s office in that State.

(B) Any organization that shares directors, employees, or independent contractors with ACORN.

(C) Any organization that has a financial stake in ACORN.

(D) Any organization whose finances, whether federally funded, donor-funded, or raised through organizational goods and services, are shared or controlled by ACORN.

(3) The term `applicable individual’ means an individual who has been indicted for a violation under Federal or State law relating to an election for Federal or State office.

(d) Revision of Federal Acquisition Regulation- The Federal Acquisition Regulation shall be revised to carry out the provisions of this Act relating to contracts.

Contact Information