Massive Data Breach at Equifax Results in Multi-Million Dollar IRS Contract

What does it take to score a government contract worth $7.25 million to help prevent future fraud? Apparently, it takes a massive data breach like the one suffered by Equifax back in July, the one that wasn’t reported until September. This breach affected more than 145 million Americans and gave hackers access to information such as names, addresses, credit card numbers, social security numbers, and driver’s license information.

The breach occurred over a five-month period from March to July of 2017 and is considered to be the largest breach of this type in U.S. history. This kind of catastrophe might be thought of as the type of breach that would have a massive negative impact on the company’s credibility. However, in the case of Equifax, it almost seems that these happenings have had quite the opposite effect.

A No-Bid Contract

According to information published by the Department of the Treasury, the IRS contract was published as a “sole source order,” meaning that no bids would be accepted as Equifax was considered to be the only company capable of handling a job of this magnitude. By listing the contract in this manner, the government is not required by law to open the job listing to competitive bidding such as is typically required for this type of contract.

The contract that was struck was for Equifax to help the IRS verify taxpayer identities in order to help prevent continued or furthered fraud. This might seem a bit odd for a company who has fallen victim to not one but two successful hacks this year. What’s more, it took the company several months to report these breaches and did so in such a poor manner that the company’s CEO Richard Smith ended up being forced to resign his position.

Read Also: Adopting a Child: Tax Credit & Assistance Programs

The Situation Gets Better

During a House Energy and Commerce subcommittee meeting, this massive problem managed to act as a bridge, achieving a minor miracle by unitiing both sides of the house with a single cause. The cause was to chastise Smith and Equifax for their handling of this entire situation. Senator Orrin Hatch, Senate Finance Chairman, stated,” In the wake of one of the most massive data breaches in a decade, it’s irresponsible for the IRS to turn over millions of taxpayer dollars to a company that has yet to offer a succinct answer on how at least 145 million Americans had personally identifiable information exposed.”

At the same time, the IRS worked hard to defend their decision saying that Equifax told them that none of their data had been compromised and that they were currently providing the IRS with several similar services. The IRS issued a statement that reads, ” Following an internal review and an on-site visit with Equifax, the IRS believes the service Equifax provided does not pose a risk to IRS data or systems. At this time, we have seen no indications of tax fraud related to the Equifax breach, but we will continue to closely monitor the situation.”

Both Suzan DelBene (D-WA) and Earl Blumenauer (D-OR) sent a letter to IRS Commissioner John Koskinen demanding an explanation as to why the IRS would award this valuable contract to Equifax without opening any competitive bidding opportunities and asked for them to provide information on any other companies that had even been considered in the running.

However, this is only the tip of the iceberg, as it appears that shortly before Equifax announced the security breach, several of the company’s senior executives sold approximately $2 million dollars’ worth of Equifax stock. Whether or not this contract will be allowed to remain in force is yet to be seen, as the company faces a number of state and federal probes including investigations by the FBI, the Department of Justice, and the Federal Trade Commission. The state of Massachusetts and countless others, including thousands of people across the country, are already suing the embattled credit reporting agency. Clearly, the end of this controversy is not on the horizon.


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By |2017-10-27T13:54:25+00:00October 27th, 2017|Blog|0 Comments

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