Talk about mixed messages. Congress wants everyone to know just how outraged they are about the Equifax hack and the company’s attempts to keep it quiet. Former CEO Richard Smith appeared before a House Energy and Commerce Committee hearing to endure a public beating over what elected officials called a “travesty”:
Representatives from both parties questioned Smith for nearly three hours on his role at the credit reporting agency and indicated that tighter data security standards are long overdue. At one point Rep. Ben Ray Luján (D-N.M.) called the situation a “travesty.”
Rep. Greg Walden (R-Ore.), the chairman of the House Energy and Commerce Committee, described Equifax’s response to the breach as “ham-fisted” and “unacceptable,” echoing several other lawmakers on the panel. In a dramatic exchange, Walden held up a thick stack of paper, which he said was a Equifax credit report, and asked Smith how such a sophisticated company responsible for so much data could allow the breach to occur. “How does this happen?” he said.
One lawmaker demanded to know why Equifax shouldn’t pay consumers for the potential damage to their credit from Equifax’s incompetence:
Later in the hearing, Rep. Joe Barton (R-Tex.) told Smith that Equifax appears to collect far more data than is needed to determine creditworthiness, and questioned why companies should not be obligated to pay consumers for failing to protect their information. “I think it’s time at the federal level that we put some teeth into this,” he said, referring to data security legislation.
Actually, Barton has it backwards. Taxpayers will pay Equifax, thanks to a decision by the IRS to award a $7 million contract to Equifax — a no-bid contract, for that matter. Why? Oh, you’ll love this, emphasis mine:
The IRS will pay Equifax $7.25 million to verify taxpayer identities and help prevent fraud under a no-bid contract issued last week, even as lawmakers lash the embattled company about a massive security breach that exposed personal information of as many as 145.5 million Americans.
A contract award for Equifax’s data services was posted to the Federal Business Opportunities database Sept. 30 — the final day of the fiscal year. The credit agency will “verify taxpayer identity” and “assist in ongoing identity verification and validations” at the IRS, according to the award.
The notice describes the contract as a “sole source order,” meaning Equifax is the only company deemed capable of providing the service. It says the order was issued to prevent a lapse in identity checks while officials resolve a dispute over a separate contract.
The September 30th date is precisely 23 days after Equifax finally got around to letting everyone know that their credit information had been exposed. In effect, the IRS is giving money to the company that made this project even more necessary than it had been before. They’re rewarding Equifax for its incompetence and dishonesty.
Lawmakers now want an explanation from another very familiar incompetent who’s still running the agency, for some unknown reason:
Rep. Earl Blumenauer, D-Ore., said in a letter to IRS Commissioner John Koskinen that he initially thought his staff was sharing a copy of the Onion, a humor newspaper, until he realized the story about the contract was true.
“I am shocked that the IRS would contract with this firm for activities that they are clearly unfit to carry out,” Blumenauer wrote.
Blumenauer said the news of the Equifax breach was public in early September, giving the agency time to re-evaluate its decision. He requested that the agency share with him the materials used to justify the awarding of the contract.
Well, Congress has often demanded that Koskinen share information with them about their internal operations. Welcome to the party, pal. Blumenauer should be asking why Koskinen still remains in that position after his serial misrepresentations to Congress in the IRS targeting scandal, a question that he can direct both to his own party’s leadership as well as the White House. While he’s at it, perhaps Congress can take up legislation requiring federal agencies to put contracts out for competitive bids, which at least might have avoided this embarrassment.
Good for the House Energy and Commerce Committee in recognizing a travesty when they see one. They need to look around a lot more, obviously. In the meantime, Blumenauer and his colleagues win today’s Captain Louis Renault Award for their shock, shock at discovering a couple of them right in their own casino.