Weaknesses in the tax area continue to expose the fed. gov¿t. to significant losses of tax revenue & increase the burden on compliant taxpayers to fund gov¿t. activities. Over the last several years, the author investigated the DoD & GSA contractors that abused the fed. tax system. 122 contractors were referred to IRS for further investigation & prosecution. This testimony highlights the key findings from prior testimonies & related reports. It: (1) describes the magnitude of tax debt owed by fed. contractors; (2) provides examples of fed. contractors involved in abusive & potentially criminal activity related to the fed. tax system; & (3) describes current law & proposed fed. reg¿s. for screening contractors with tax debts prior to the award of a contract. Illus.