On January 20, 2010, President Obama called for a review of contractor certifications of non-delinquency in Federal taxes, which were added to FAR clause 52.209-5, "Certification Regarding Responsibility Matters" in 2008. Citing GAO reports that Federal contracts are awarded to "tens of thousands of companies with serious tax delinquencies," totaling more than an estimated $5 billion, the White House Memorandum directs that within 90 days:
The Commissioner of Internal Revenue review contractor certifications of non-delinquency and report back on their overall accuracy; and
The Director of the Office of Management and Budget, working with the Secretary of the Treasury and other agency heads evaluate practices of contracting officers and debarring officials in response to contractor certifications of serious tax delinquencies and provide recommendations on process improvements "to ensure these contractors are not awarded new contracts, including a plan to make contractor certifications available in a Government-wide database."
The tone of the President's remarks before signing the Memorandum indicates the seriousness with which contractor back taxes will be treated. "It is simply wrong for companies to take taxpayer dollars and not be taxpayers themselves," Mr. Obama said. "We need to insist on the same sense of responsibility in Washington that so many of you strive to uphold in your own lives, in your own families and in your own businesses." This directive comes on the heels of previous presidential directives ordering agencies to overhaul Government contracting in an effort to save $40 billion over two years and to reduce noncompetitive contract awards by 10%. See OMB Issues Guidelines for Increasing Procurement Competition, OMB Issues Memorandum on Improving Government Acquisitions and President Obama Orders Government Contracting Overhaul.
The President's remarks and the language of the Memorandum raise concerns that contractors with IRS tax disputes may be more likely to face show cause notices from suspension and debarment officials or see their government payments diverted to the IRS.