McCaskill targets widespread waste in sprawling food service contracts

Senator: "Every dollar lost through rebate schemes is a dollar we cannot use to feed our soldiers and school children"

WASHINGTON, D.C. - Every day, the federal government pays for meals for soldiers, veterans, and school children-and according to U.S. Senator Claire McCaskill, some of the contractors providing that food may be cheating taxpayers out of millions of dollars.

McCaskill chaired a Senate hearing today to examine the billions of taxpayer dollars that are spent annually on contracts to supply food for military bases, government buildings, hospitals, and schools.

When food service contractors buy food for the government, they often receive rebates from suppliers and vendors. However, when contractors then submit invoices to the government for those purchases, many do not list the rebates received from the supplier or vendor, meaning that taxpayers then pay the full amount of the invoice and the contractor pockets the difference.

McCaskill questioned this practice, saying, "when contractors buy food with the taxpayers' money, they shouldn't get to keep the change."

"In this time of belt-tightening, we need to be more careful than ever to ensure that taxpayer dollars aren't being wasted-particularly because every dollar that is lost through rebate schemes is a dollar we cannot use to feed our soldiers and school children," said McCaskill, Chairman of the Senate's Subcommittee on Contracting Oversight. "We're not doing enough to ensure that the government isn't getting cheated."

McCaskill heard from U.S. Department of Agriculture Inspector General Phyllis Fong, New York Assistant Attorney General John Carroll, and Charles Tiefer, former Commissioner on the U.S. Commission on Wartime Contracting. The witnesses discussed the challenges of overseeing food service contracts and how a lack of transparency leads to waste, fraud, and abuse.

Possible solutions were also discussed, including stronger rebate and audit provisions in contracts, greater transparency for invoices, and increased use of suspension and disbarment, a move McCaskill said could be supported through legislation.

While food service contractors have come under increased scrutiny by law enforcement officials, McCaskill said today that contractors have turned to new practices in order to avoid passing rebates on to the government or to pad their profits-such as simply calling the rebate another name on invoices, such as "marketing incentives" or "vendor consideration."

McCaskill also announced that the Subcommittee on Contracting Oversight would continue its investigation into rebate practices and would be submitting information requests to leading food service contractors and agencies.

McCaskill closed the hearing by thanking federal Inspectors General, auditors, and investigators for their continued work to root out waste, fraud, and abuse in the government.

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