Category Archives: Federal

Education Department chooses firm with ties to Betsy DeVos for debt-collection contract

Source: Charlie May, Salon, January 14, 2018

Education Secretary Betsy DeVos once had financial ties to one of the two companies selected by the Department of Education to assist the agency in collecting unpaid student loans. The company, Performant Financial Corp., has also been criticized by other contract bidders for having inadequate ratings in the past. Performant and Windham Professionals were the two firms that were awarded contracts, out of almost 40 other bidders, and the deal is expected to be worth as much as $400 million, the Washington Post reported. The decision was touted by the Education Department as “the most advantageous to the government,” however, Performant’s past ratings have contrasted that assessment. Prior to her job with the Trump administration, DeVos was listed as an investor to LMF WF Portfolio, a limited liability company linked to Performant. …

Federal Fraud Recoveries Decline in Fiscal Year 2017

Source: Project on Government Oversight, January 2, 2018

… The DOJ announced it had recouped $3.7 billion through settlements and judgments in False Claims Act cases in fiscal year 2017. This amount is nearly 23 percent lower than the previous fiscal year, but roughly in line with FY 2015’s total. This seems to be a trend: a historical analysis of DOJ’s fraud recoveries since 1986 (the year Congress substantially strengthened the False Claims Act) shows that, in recent years, a substantial drop-off occurs in non-election years. … As in past years, the largest share of the recoveries—about two-thirds—involved health care fraud. But a substantial sum also came from some of Uncle Sam’s largest contractors:

  • AECOM and Bechtel: $125 million to settle False Claims Act allegations that the contractors charged the government for deficient materials and services at the Hanford Nuclear Site. Separately, AECOM paid over $5.2 million to settle another fraud investigation involving its work at Hanford.
  • Agility: $95 million to settle a 12-year-old case accusing the company of overcharging the government for food supplied to U.S. troops in the Middle East.
  • Atlantic Diving Supply: $16 million for allegedly inducing the government to award small business contracts to companies misrepresenting their eligibility as socially or economically disadvantaged small businesses.
  • Huntington Ingalls Industries: $9.2 million to resolve claims of overbilling the government for work at its Mississippi shipyards.
  • Pacific Architects and Engineers: $5 million to settle allegations that it failed to properly screen and oversee personnel working on a contract to train Afghan security forces.
  • Sierra Nevada Corporation: $14.9 million for allegedly causing the government to pay inflated labor costs on contracts.
  • Defense contractors accounted for $220 million in fraud settlements and judgments.

I.R.S. Paid $20 Million to Collect $6.7 Million in Tax Debts

Source: Patricia Cohen, New York Times, January 10, 2018

Private debt collectors cost the Internal Revenue Service $20 million in the last fiscal year, but brought in only $6.7 million in back taxes, the agency’s taxpayer advocate reported Wednesday. That was less than 1 percent of the amount assigned for collection. What’s more, private contractors in some cases were paid 25 percent commissions on collections that the I.R.S. made without their help, according to the annual report by Nina E. Olson, who heads the Taxpayer Advocate Service, an independent office within the I.R.S. While Republicans have been the most vocal proponents of privatizing public services, congressional Democrats are equally responsible for the I.R.S.’s program. Despite the pointed failure of similar efforts in the past, Congress passed a law in 2015 requiring the I.R.S. to use outside contractors to make a dent in the $138 billion that taxpayers owe the government. The outsourcing began last April. Since then, the report stated, “the I.R.S. has implemented the program in a manner that causes excessive financial harm to taxpayers and constitutes an end run around taxpayer rights protections.” …

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I.R.S. Enlists Debt Collectors to Recover Overdue Taxes
Source: Jessica Silver-Greenberg and Stacy Cowley, New York Times, April 20, 2017

The Internal Revenue Service is about to start using four private debt-collection companies to chase down overdue payments from hundreds of thousands of people who owe money to the federal government, a job it has handled in house for years.  Unlike I.R.S. agents, who are not usually allowed to call delinquent taxpayers by telephone, the outside debt-collection agencies will have free rein to do so. Consumer watchdogs are fearful that some of the nation’s most vulnerable taxpayers will be harassed and that criminals will take advantage of the system by phoning people and impersonating I.R.S. collectors. …

IRS Debt Collection Program May Lead to Confusion, Help Scammers
Source: AJ Walker, NBC Connecticut, February 14, 2017

NBC Connecticut Troubleshooters caught up with officials from the IRS to find out more about their new debt collection program and how they’re going to protect taxpayers from getting scammed. This spring, debt collectors hired by the IRS will start making collection calls to go after money on old tax debts. This could lead to confusion as the fake IRS debt collection scam call is one of the number one scams in the country. In the past, the IRS has repeatedly said they will never call you collect money. Instead, they send a letter. This change could open the door to crooks who might see this as opportunity to reach out to more people using the IRS’s name. It’s too early to gauge how the ongoing phone scam will impact real IRS debt collection call efforts. But people targeted by the scheme say it will be confusing. … The collection program came about because a law called the FAST Act passed in 2015 requiring the Internal Revenue Service to use private debt collectors to go after tax money on older accounts. The money would help pay the FAST Act’s $305 billion price tag to fund transportation and infrastructure. … However, this isn’t the first time the agency has tried to use debt collectors. In 2006 the IRS hired Pioneer, CBE Group and a company called Linebarger Goggan Blair & Sampson to try to collect an additional $1.4 billion in past due taxes. It fired the debt collectors in 2009 saying it wasn’t cost effective to use private collectors and the “work is best done by IRS employees.” … However, one IRS debt collector has recently been accused of not acting in peoples best interest. Pioneer was mentioned in lawsuits filed by the Illinois Attorney General and the Consumer Finance Protection Bureau accusing the business and its parent company Navient of taking advantage of borrowers. …

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Lockheed Martin, Boeing aerospace venture bilked U.S. for $90 million, lawsuit says

Source: Kirk Mitchell, The Denver Post, January 8, 2018

A whistleblower has settled a lawsuit filed against a Centennial aerospace company formed by Lockheed Martin and The Boeing Company that claimed the company defrauded the U.S. government out of at least $90 million by grossly overcharging for employee work hours. Whistleblower Joseph Scott filed the lawsuit on behalf of himself and the government against United Launch Alliance and United Launch Services, under the Federal Civil False Claims Act. Scott is a former ULA employee. … This wasn’t the first time ULA practices have come under scrutiny. In December 2016, ULA paid the government $100,000 to settle allegations that a subcontractor paid its employees kickbacks in order to win contracts. As a result, the U.S. paid higher costs to subcontractor Apriori Technologies between 2011 and 2015, Troyer has previously said. …

… ULA used a system called the Keith Crohn model that creates a grid using the cost of equipment to reach an employee cost. A labor value was placed on the grid for every item ordered through the company’s purchasing department. For example, any item that cost between $1 and $1,000 would be assigned a labor value of 8 hours. It didn’t matter what part it was, the lawsuit said. The U.S. bans arbitrary cost estimates when actual data is available that establishes the cost. ULA took advantage of the government’s practice of not auditing smaller projects. On projects above $100 million, the government audits bids and can reduce the contract price if the Defense Contract Audit Agency discovers discrepancies, the lawsuit says. In the first five to seven years of its existence, ULA often failed those audits. For larger audited launches, ULA began using historic data of actual prior labor costs, the lawsuit says.
But for smaller bids, ULA continued using its flawed estimates, knowing that it wouldn’t be audited, the lawsuit says. …

A New Betsy DeVos Proposal Would Make It Much Tougher For Students To Get Loan Forgiveness

Source: Molly Hensley-Clancy, Buzzfeed News, January 3, 2018
 
The Education Department is planning to suggest new rules that would make it far more difficult for borrowers to obtain student loan forgiveness after being defrauded by their colleges, according to drafts circulated by the department and obtained by BuzzFeed News.  The department’s plan would require individual students to prove that their college intentionally deceived them — something that sparked alarm among student advocates, who argue it would push loan forgiveness out of reach for the vast majority of borrowers.  The proposal is part of the early stages of an effort by Education Secretary Betsy DeVos to rewrite the government’s standards for loan forgiveness, called the “borrower defense” regulations. The proposed new rules would eventually erase regulations put in place by the Obama administration. …

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Higher Education Act Proposal Primes Fight Over Future of Colleges
Source: Douglas Belkin and Melissa Korn, Wall Street Journal, December 2, 2017

The sprawling, 542-page revamp of the Higher Education Act released Friday by Rep. Virginia Foxx (R., N.C.), chairwoman of the House Education and Workforce Committee, kicks off what is likely to be a rocky and drawn-out legislative process aimed at reshaping college education. The bill, previewed earlier this week by The Wall Street Journal, would update the Higher Education Act of 1965 by overhauling student-loan programs, mandating more transparency on graduates’ earnings and jettisoning much of the existing regulatory framework on for-profit colleges. The bill, titled the Promoting Real Opportunity, Success and Prosperity Through Education Reform (PROSPER) Act, must still work its way through the House, while an initial Senate version isn’t expected until 2018. Early reactions from colleges and student advocates—all with powerful lobbyists in Washington—suggest actually turning the wish list into law would be a steep uphill battle. …

House GOP to Propose Sweeping Changes to Higher Education
Source: Douglas Belkin, Josh Mitchell, and Melissa Korn, Wall Street Journal, November 29, 2017

The Republican-controlled U.S. House of Representatives this week will propose sweeping legislation that aims to change where Americans go to college, how they pay for it, what they study, and how their success—or failure—affects the institutions they attend.  The most dramatic and far-reaching element of the plan is a radical revamp of the $1.34 trillion federal student loan program. It would put caps on borrowing and eliminate some loan forgiveness programs.  The ambitious package—a summary of which was reviewed by The Wall Street Journal—would be the biggest overhaul of education policy in decades. The rising expense of higher education is deeply troubling to many Americans and many increasingly question its value. Despite a steady rise in the share of high-school graduates heading to college, a skills gap has left more than 6 million jobs unfilled, a significant drag on the economy. …

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Release of Trump infrastructure plan may slip past January

Source: Brianna Gurciullo and Lauren Gardner, Politico, January 9, 2018
 
The White House may be pushing back the release of its long-awaited infrastructure package yet again, just a month after saying it would come out by the end of January.  A White House official said Tuesday that there have been “no decisions yet on timing” for the release. Sen. Ben Cardin (D-Md.) separately told POLITICO — after a meeting with Transportation Secretary Elaine Chao and other officials — that administration officials are still deciding whether to publish legislative principles for the plan before or after the president’s State of the Union address Jan. 30. …

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Mixed signals on infrastructure plan emerge from Trump retreat
Source: Josh Dawsey, Washington Post, January 7, 2018
 
President Trump expressed misgivings about his administration’s infrastructure plan Friday at Camp David, telling Republican leaders that building projects through public-private partnerships is unlikely to work — and that it may be better for the government to pursue a different path.  Then on Saturday morning, Gary Cohn, the president’s chief economic adviser, delivered a detailed proposal on infrastructure and public-private partnerships that seemed to contradict the president. He said the administration hoped $200 billion in new federal government spending would trigger almost $1 trillion in private spending and local and state spending, according to people familiar with his comments. Cohn seemed to present the plan as the administration’s approach, although the president had suggested such an approach might not work. …

Why Trump’s Infrastructure Push Might Stall Again
Source: Mark Niquette, Bloomberg Businessweek, January 5, 2018
 
The first year of Donald Trump’s presidency began with hopes for a unified effort to fix U.S. highways, bridges and airports. His second year begins much the same way. There was talk in 2017 about advancing a sustained infrastructure-improvement program, but there was little progress — a reflection of the president’s priorities and the differences between Republicans and Democrats on how to pay for and carry out such an effort. That hasn’t kept Trump from predicting bipartisan agreement on the issue in 2018. …

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New Higher Education Bill Rolls Back Obama-Era Safeguards

Source: Erica L. Green, New York Times, December 12, 2017
 
Congressional Republicans begin work on Tuesday on an extensive rewrite of the law that governs the nation’s system of higher education, seeking to dismantle landmark Obama administration regulations designed to protect students from predatory for-profit colleges and to repay the loans of those who earned worthless degrees from scam universities.  But in its systematic effort to erase President Barack Obama’s fingerprints from higher education, the measure before the House Committee on Education and the Workforce could undermine bedrock elements that have guided university education for decades. One provision alone could do away with the system of “credit hours” that college students earn to complete their degrees. …

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Education Dept. could scale back help on loans
Source: Maria Danilova, Associated Press, October 30, 2017
 
The Education Department is considering only partially forgiving federal loans for students defrauded by for-profit colleges, according to department officials, abandoning the Obama administration’s policy of erasing that debt.  Under President Barack Obama, tens of thousands of students deceived by now-defunct for-profit schools had over $550 million in such loans canceled.  But President Donald Trump’s education secretary, Betsy DeVos, is working on a plan that could grant such students just partial relief, according to department officials. The department may look at the average earnings of students in similar programs and schools to determine how much debt to wipe away. …

States Sue Over Scrapping of Obama-Era Rules on For-Profit Colleges
Source: Douglas Belkin, Wall Street Journal, Oct. 17, 2017

A coalition of Democratic attorneys general from 18 states and the District of Columbia filed a lawsuit Tuesday against the U.S. Education Department and Secretary Betsy DeVos for not enforcing an Obama-era rule intended to protect students and taxpayers from predatory for-profit schools. In June, Mrs. DeVos suspended the so-called “gainful employment” rules before they took effect. If enacted they would have cut off federal funding for schools where students leave with high debt and end up in jobs with low salaries. The suit, filed in the U.S. District Court in Washington, D.C., calls Mrs. DeVos’s suspension of those rules “unlawful” and accuses her of trying to “run out the clock” through a series of delays until she can implement new regulation…..

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HUD Secretary Carson launches centers to drive households to self-efficiency

Source: Kelsey Ramírez, Housing Wire, December 7, 2017

U.S. Department of Housing and Urban Development Secretary Ben Carson announced a new initiative to help HUD-assisted families achieve self-efficiency. Carson announced HUD will launch its new EnVision Centers, which will be located on or near public housing developments. HUD explained these centers will be hubs for what it calls the four key pillars of self-sufficiency: character and leadership, educational advancement, economic empowerment and health and wellness. The centers will form partnerships with federal agencies, state and local governments, non-profits, faith-based organizations, corporations, public housing authorities and housing finance agencies. EnVision Centers will utilize public-private resources to impact the community. … Carson previously explained his vision to HousingWire in an exclusive interview with Editor-In-Chief Jacob Gaffney, who wrote: One of Carson’s main initiatives is establishing “envision centers” of learning, especially for teenage mothers who, more often than not, end their educational trajectory once they give birth. New York City is seen as a potential spot for one of the first such centers where young, low-income parents can access day care while learning to code and “balance a checkbook or unclog a toilet,” the secretary told me. … HUD will start by launching ten pilot EnVision Centers across the U.S. …

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America’s public housing crisis may worsen with Trump budget
Source: Lawrence Vale, Associated Press, July 12, 2017
 
… As someone who has spent 25 years researching and writing about the travails of public housing in the U.S., I had this immediate thought: Could the same thing happen here?  Various commentators have pointed out that American regulations require sprinklers and do not permit the use of cladding materials with combustible plastic cores in high-rise structures.  Yet while the facades of American public housing may be less flammable, the system suffers from a toxic convergence of long-deferred maintenance, squeezed budgets and cost-cutting measures. Privatization policies, deeply rooted suspicions about the character of public housing residents and long-term inattention all threaten the capacity of stigmatized low-income families to remain in their homes. …

Ben Carson reckons with proposed HUD budget cuts
Source: Jonathan Easley, The Hill, June 30, 2017

… Now, as HUD secretary, Carson controls the $46 billion government agency that oversees housing for the poor. President Trump’s proposed 2018 budget would cut HUD spending by $6 billion. “We will use whatever resources we have very efficiently,” Carson said. “The other thing to keep in mind is that the traditional view of HUD and government is we ride in on a white horse with a bucket of money … and go off to the next thing,” he continued. “That particular model has led us to the point where we have three to four times as many people in need of affordable housing and it’s getting worse.” Carson, who had no experience in government before becoming HUD secretary, is grappling with decisions about which programs to keep, which to shutter, and how to improve the ones that remain. …

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Report on immigration detention centers raises questions of ‘perverse financial incentive’

Source: Esther Yu Hsi Lee, ThinkProgress, November 30, 2017

An analysis of the nation’s 201 immigration detention facilities contracted through the U.S. Immigration and Customs Enforcement (ICE) agency is raising concerns about inadequate standards, contracting practices, and limited accountability. … A spreadsheet analysis by the nonprofits Detention Watch Network and the Center for Constitutional Rights found that an average of 35,929 people per day were detained in immigration detention centers nationwide during the 2017 fiscal year through July 10, a number that does not include family detention centers or women detained at Hutto, an all-women detention center in Texas. Of that total number, 73 percent (or 26,240 people) were held in facilities contracted to private prison operators, the documents show. The two major private prison operators are GEO Group and CoreCivic, which charge the federal government a per diem rate anywhere between $30 per bed to detain immigrants for a short-stay facility to $168.64 per day, according to Transactional Records Access Clearinghouse data from 2016.

… The experts said that the findings suggest an “irresponsible” ICE agency, which requested increased congressional funding this year in part on claims of a cost increase in detainees’ chronic health care needs, while at the same time, lowering levels of detention standards. Advocates previously alleged that lowered detention standards contributed to repeated violations of ICE’s own standards of care. That meant detainees routinely received unsanitary food and substandard health and mental care. … What’s more, the spreadsheet outlined 159 out of the 201 detention centers that do not have a contract expiration date, drawing attention to the process of renewing a contract that would require facilities to undergo reviews that address chronic problems at facilities. Already, 12 immigrant detainees have died after being held in immigrant detention facilities during the 2017 fiscal year. … Findings from the spreadsheet also suggest detention facilities are increasingly cropping up in localities that have a “perverse financial incentive” to participate in two federal programs that solicit local law enforcement to detain immigrants. ….

Are Private Prisons Using Forced Labor?

Source: Josh Eidelson, Bloomberg Business Week, November 8, 2017 

On Nov. 15 the 10th Circuit Court of Appeals in Denver will hear arguments in a case that could change the future of the $5 billion private prison industry. Judges will decide whether a district court was correct in February when it certified a class action on behalf of around 60,000 current and former detainees who are suing Geo Group Inc., one of the largest U.S. private prison companies, for allegedly violating federal anti-trafficking laws by coercing them to work for free under threat of solitary confinement. The case was first filed in 2014 by a group of immigrants who had been detained at an Immigration and Customs Enforcement facility run by Geo in Aurora, Colo. Their key claim rests on the assertion that Geo violated the Trafficking Victims Protection Act, a law designed to stop human trafficking—a scourge many associate with sexual exploitation by gangs, not with government contractors’ treatment of detained immigrants. Their lawsuit argues that Geo violated the law’s prohibition on using threats to obtain labor. …

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How a Private Prison Company Used Detained Immigrants for Free Labor
Source: Madison Pauly, Mother Jones, April 3, 2017

… The GEO Group, the private prison company that operates Aurora, allegedly forced more than 50,000 immigrants like Ortiz to work without pay or for $1 a day since 2004, according to a lawsuit that nine detainees brought against the company in 2014. On February 27, a federal judge ruled that their case could proceed as a class action, breathing new life into a suit that exposes the extent to which the for-profit company relied on cheap or unpaid detainee labor to minimize costs at the Aurora facility. … GEO incarcerates more immigrants (and receives more public money to do so) than any other detention center operator, according to an analysis by the anti-detention group CIVIC. And its business detaining immigrants for ICE is only expected to grow “with this increased and expanded approach to border security,” CEO George Zoley said in a February earnings call. …

Thousands of ICE detainees claim they were forced into labor, a violation of anti-slavery laws
Source: Kristine Phillips, Washington Post, March 5, 2017

Tens of thousands of immigrants detained by U.S. Immigration and Customs Enforcement were forced to work for $1 day, or for nothing at all — a violation of federal anti-slavery laws — a lawsuit claims.  The lawsuit, filed in 2014 against one of the largest private prison companies in the country, reached class-action status this week after a federal judge’s ruling. That means the case could involve as many as 60,000 immigrants who have been detained.  It’s the first time a class-action lawsuit accusing a private U.S. prison company of forced labor has been allowed to move forward. … At the heart of the dispute is the Denver Contract Detention Facility, a 1,500-bed center in Aurora, Colo., owned and operated by GEO Group under a contract with ICE. The Florida-based corporation runs facilities to house immigrants who are awaiting their turn in court. … The lawsuit, filed against GEO Group on behalf of nine immigrants, initially sought more than $5 million in damages. Attorneys expect the damages to grow substantially given the case’s new class-action status. … The original nine plaintiffs claim that detainees at the ICE facility are forced to work without pay — and that those who refuse to do so are threatened with solitary confinement. Specifically, the lawsuit claims, six detainees are selected at random every day and are forced to clean the facility’s housing units. The lawsuit claims that the practice violates the federal Trafficking Victims Protection Act, which prohibits modern-day slavery. … GEO Group also is accused of violating Colorado’s minimum wage laws by paying detainees $1 day instead of the state’s minimum wage of about $9 an hour. The company “unjustly enriched” itself through the cheap labor of detainees, the lawsuit says.

… The class-action ruling by Kane, a senior judge in the U.S. District Court in Colorado, came at a critical time, DiSalvo said, noting President Trump’s pledge to deport 2 million to 3 million undocumented immigrants. Advocates say private prison companies that have government contracts stand to benefit significantly from the president’s hard-line policy of detaining and deporting a massive number of immigrants. … Notably, the stocks of the two biggest private prison operators, Geo Group and CoreCivic (formerly known as Corrections Corporation of America), have surged since Trump’s election. The companies donated a total of $500,000 to Trump’s inaugural festivities, USA Today reported. Since Trump took office, his administration has reversed the Obama administration’s policy to end the country’s reliance on private prisons. … Under ICE’s Voluntary Work Program, detainees sign up to work and are paid $1 a day. … Jacqueline Stevens, who runs Northwestern University’s Deportation Research Clinic, said the program does not meet the criteria for what qualifies as volunteer work under labor laws. … Prison labor, Stevens added, has two purposes: to punish prisoners after they’ve been convicted of a crime and to rehabilitate them. Those don’t apply to immigrant detainees, she said. … In 2015, Kane, the federal judge, partially denied the motion to dismiss. Although he agreed with GEO Group that Colorado’s minimum wage law is inapplicable, he ruled that the other claims can stand. … Kane granted class-action status a few days after the Justice Department directed the Bureau of Prisons to, again, use private prisons, a significant shift from the Obama-era policy of significantly reducing — and ultimately ending — their use. …