WASHINGTON U.S. hires companies based overseas

Companies say tax laws force them to move headquarters to other countries.
WASHINGTON (AP) -- Companies that reduced their U.S. tax bill by incorporating overseas did $1 billion worth of business with the federal government last year, an Associated Press computer analysis of federal contracts showed.
The Bermuda-based consulting company Accenture Ltd., a spinoff of the former Big Five accounting firm Arthur Andersen, was the biggest federal customer. It received $662 million in contracts between Oct. 1, 2001, and Sept. 30, 2002, mostly from the Transportation Security Administration.
The engineering firm Foster Wheeler Ltd. received $293.2 million. Ingersoll-Rand Co. Ltd., which boasts that its equipment helped carve Mount Rushmore, received $7.6 million.
During the federal fiscal year that ended in September 2001, companies with offshore headquarters received $846 million in federal contracts, according to the House Ways and Means Committee's Democratic staff.
"It's outrageous that we would do business with these folks," said Rep. Richard Neal, D-Mass., who has introduced legislation to continue taxing companies that move their headquarters overseas. "They are shirking their citizenship."
How it's done
The process is known as corporate inversion: A company moves its headquarters -- sometimes nothing more than a post office box -- to a low-tax enclave such as Bermuda or the Cayman Islands while leaving its operations and employees in the United States.
The Senate twice has passed legislation to prevent the new Homeland Security Department from doing business with companies that relocate overseas, but both times the provision was removed from the final bill by House Republican leaders.
Corporations that have moved overseas spent $5 million to lobby Congress and the federal agencies and donated $1.2 million to campaigns in 2001 and 2002, according to an AP analysis of data from Political Money Line, an Internet site.
Why it's done
Company officials said the tax breaks that result from moving their headquarters overseas keep them competitive.
"We felt that American companies, based upon the tax laws that are written today, are clearly put at an economic disadvantage to foreign companies," said Victoria Guennewig, a spokeswoman for Cooper Industries Ltd., a company that makes electrical products and tools. It moved from Houston to Bermuda in 2002 and received $3.6 million in government contracts last year.
Lawmakers estimate corporations that have moved to low-tax countries cost the U.S. treasury $4 billion a year.