Sunday, May 25, 2008

A Day of Reckoning Is Coming

The Government Accountability Office (GAO) weighs in on the use of contractors:

In 2006, 52 major defense contractors employed 86,181 of the 1,857,004 former military and civilian personnel who had left DOD service since 2001. This number includes 2,435 former DOD officials who were hired between 2004 and 2006 by one or more of the contractors and compensated in 2006, according to our match of DOD and IRS data. These officials had previously served as generals, admirals, senior executives, program managers, contracting officers, or in other acquisition positions which made them subject to restrictions on their post-DOD employment. We found 1,581 of the 2,435 former DOD officials—about 65 percent—were employed by seven of the contractors: Science Applications International Corporation (SAIC), Northrop Grumman, Lockheed Martin Corporation, Booz Allen Hamilton, Inc., L3 Communications Holding, Inc., General Dynamics, and Raytheon Company. In addition, to estimate how closely related work assignments of former DOD officials were to their previous assignments at DOD, we examined in greater detail the job histories of a randomly selected sample of former DOD senior and acquisition officials employed by the contractors.

It is no secret that the Pentagon used many former military officers to "help sell the war in Iraq" and other issues. Regular readers will also remember that one company, Booz Allen Hamilton, has divested itself entirely of government contracting work, selling that part of its business to The Carlyle Group.

Does that mean that a day of reckoning is coming, along with massive cuts or changes? Booz Allen Hamilton seems to be betting that the contracting business is about to implode. While that is likely not the case, large cuts or reforms could radically change the relationship between contractors and the Federal government.

One reason for this is the now exposed lack of ethics and accountability in the federal contracting sector. By focusing on individuals and companies who might have faced mandated "cooling off" periods between their government employment or service and their contracting work, the GAO found a number of companies either didn't ask or weren't able to provide proper ethical guidelines memorandum. These memorandums ensure that the contractor is within guidelines, and what it boils down to is this--a general can leave the military, go to work for a private company, and directly influence or benefit from that military service with no consideration as to whether or not that person brings an unfair advantage in exchange for monetary compensation to that contractor.

The GAO provides what is best described as an "oh shit" moment in the making:

Similar to the requirements of defense contractors, no laws or regulations require DOD ethics or acquisition officials to track or monitor former DOD employees after they begin their new contractor jobs to ensure compliance with applicable post-government employment restrictions. As discussed earlier in this report, past legislative requirements to make the employment of former officials with defense contractors more transparent to DOD by having individuals or contractors report to DOD on the post-government employment with contractors were not successful and were repealed by 1995. However, the changed requirements left DOD without a mechanism to obtain information about its former senior and acquisition officials who go to work for its contractors. In our view, and DOD ethics and procurement officials agree, the information currently available to DOD from providing written ethics opinions to former DOD senior and acquisition officials who request them regarding prospective employment restrictions has limited utility for monitoring compliance with post-government employment restrictions once former DOD officials go to work for defense contractors for several reasons:

• while officials have been encouraged to seek an ethics advisory opinion, they were not required to obtain them, nor were contractors required to ask for them;
• DOD’s record-keeping for its written ethics opinions is decentralized at the many defense ethics offices that issued them; and
• DOD lacks a mechanism for providing the information to contracting officers or program managers for a particular contract.

Nonetheless, for DOD’s purposes, ethics advisory opinions may now be more readily available and centrally located because of the 2008 defense authorization act provision that requires former officials to obtain written ethics opinions on applicable post-government employment restrictions from their DOD ethics officials before accepting compensation from defense contractors for a period of 2 years after leaving DOD service. DOD also has a new record-keeping requirement to retain each request and each written opinion provided in a central database or repository for at least 5 years.

While this requirement may help to increase transparency over which former officials are working with contractors and what may raise a potential conflict of interest, its utility may be limited because information is not being tied to specific contracts. Senior ethics officials in DOD’s Standards of Conduct Office and the director of Defense Procurement and Acquisition Policy and Strategic Sourcing (DPAP), for example, told us that DOD currently does not have a mechanism to link information on former officials’ post-DOD work for their new employers for specific defense contracts that are pending or awarded before their former agencies, offices, or commands. They believed that such a mechanism would be valuable to program managers and contracting officers who need to ensure that contracted work being done in their programs is free of conflicts. They also believed that such a mechanism would be relatively cost-effective to implement. After learning of the results of our data collection efforts, in fact, these officials were concerned that current mechanisms do not provide DOD a clear picture of how many former officials are working with contractors and what risks of conflicts are present.

It would seem that, once the Congress catches up to this issue, there will be a day of reckoning, and the idea of "ethics" could be reintroduced to a community that has benefited greatly from large contracts and inside information. Generally when a lack of accountability occurs in a given area, there is a rush to close the loopholes, solve the underlying issues, and enforce the laws. In this case, billions of dollars of taxpayer money are at stake--much of it has been poured down a rabbit hole already. Discovering that there were significant lapses in the enforcement of ethical guidelines only makes the larger issues of where the money spent for the Iraq war, for example, really went an issue for a reform-minded Congress. The end result of any significant reform would mean that a number of prominent, highly placed and well-compensated individuals would either have to comply with ethical guidelines or see their days of feeding at a considerably large and profitable trough ended abruptly.

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