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Pentagon Instructs Officials to Cancel Contracts with ACORN. The Problem: They Don't Exist

by Jeremy Scahill

On Tuesday night, US Undersecretary of Defense Shay Assad, the Pentagon's top contracting official, sent a memo to the commanders and directors of all branches of the military instructing them to cease all business with the embattled community organization ACORN and to take "all necessary and appropriate" steps to prevent future contracts with the organization. Assad's brief memo [PDF] contained the two-page guidelines issued October 7 by Peter Orszag, the director of the Office of Management and Budget. Orszag's guidelines were issued following the passage of Congressional legislation aimed at "defunding ACORN."

Orszag's guidelines were sent on October 7 to "the heads of Executive Departments and Agencies" and instructed them to "immediately commence all necessary and appropriate steps" to comply with the terms of the Defund ACORN Act. These include: no future obligation of funds, suspension of grant and contract payments and no funding of ACORN and its affiliates through Federal grantees or contractors. "Your agency should take steps so that no Federal funds are awarded or obligated" to ACORN, wrote Orszag.

While the DoD memo sent by Assad is basically a formality initiated by Orszag's guidelines to all federal agencies, it is nonetheless remarkable given that ACORN is not a Defense Department contractor. According to an ACORN spokesperson, the group has not received Pentagon funds, nor has the community group even considered applying for such funds. "Of course we were hoping to win the contract to build the B-1 bomber, but we didn't get that one," says Brian Kettering, ACORN's Deputy Director of National Operations, sarcastically. "This is all just silly, but the travesty here is that once again the witch-hunt against ACORN continues while there is a total neglect of [the misconduct] of the likes of Blackwater and Halliburton."

While the DoD sends out memos regarding an organization that it does not contract with, the Pentagon currently does business with a slew of corporate criminals whose billions of dollars in annual federal contracts make the $53 million in government funds received by ACORN over the past 15 years look like, well, acorns. The top three government contractors-all of them weapons manufacturers-committed 109 acts of misconduct since 1995, according to the Project on Oversight and Government Reform. In that period, Northrop Grumman, Lockheed Martin and Boeing paid fines or settlements totaling nearly $3 billion. In 2007 alone, the three companies won some $77 billion in federal contracts. There has been no letter sent around to federal agencies instructing them to cancel contracts with these companies that have ripped off taxpayers and engaged in a variety of fraudulent activities with federal dollars.

Also, it is not just the Defense Department that continues to hire corporations with real rap sheets. Contracting fraud and abuse is a corrupt cancer that permeates the federal bureaucracy. Overall, the top 100 government contractors make about $300 billion a year in federal contracts. Since 1995, they have paid a total of $26 billion in fines to settle 676 cases stemming from fraud, waste or abuse. According to the 2008 Corporate Fraud Task Force Report to the President, "United States Attorneys' offices opened 878 new criminal health care fraud investigations involving 1,548 potential defendants. Federal prosecutors had 1,612 health care fraud criminal investigations pending, involving 2,603 potential defendants, and filed criminal charges in 434 cases involving 786 defendants. A total of 560 defendants were convicted for health care fraud-related crimes during the year." Last month, the pharmaceutical giant Pfizer settled a series of cases, including Medicaid fraud and illegally marketing banned drugs, in what the Department of Justice said is "the largest civil fraud settlement in history against a pharmaceutical company." The company has also been ordered to pay a criminal fine of $1.195 billion, "the largest criminal fine ever imposed in the United States for any matter," according to the DoJ.

ACORN, which, like all recipients of federal dollars, certainly should be subjected to scrutiny, but these stats are a damning commentary on the upside down priorities when it comes to fighting contracting corruption.

Florida Representative Alan Grayson has argued that the Defund ACORN Act as written by the Republican geniuses on the Hill should actually apply to all government contractors. As he told Salon's Glenn Greenwald after the bill passed: "The barn door has been opened, and the horses and the cows have both left. It's done. It's passed; there's nothing they can do. There's not take-backs in legislation; that's not the way it works. And if they were sloppy in writing up this bill, then maybe they should have read the bill before they went ahead and tried to ram it through the House. Read their own bill, for a change."

If the law is to be applied equally, then Peter Orszag should be firing off memos instructing all federal agencies to cease business and cancel contracts with massive financial institutions, weapons manufacturers, mercenary firms and pharmaceutical companies. Given the incredible government reliance on corporations, particularly in the defense industry and in the wars in Iraq and Afghanistan, don't hold your breath waiting for such a memo on DoD stationary any time soon.

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