IEC Journal

Lawyers Claim Contractor Self-Reporting Rule Too Vague

Government Executive reports that private sector lawyers are complaining about the new FAR provision requiring contractors to report on fraud, bribery, conflicts of interest, false claims or improper gratuities discovered in conjunction with government contracts:

During a webinar on Tuesday, Reed Smith LLP attorneys Lorraine Campos and Steven Tibbets highlighted a list of terms that are not defined in the regulation, such as "full cooperation," "timely" and "credible evidence." While these terms have common-sense meanings, their legal definitions are vague, the attorneys said. For example, full cooperation includes providing timely and complete responses to government auditor or investigator requests for documents and access to employees with information, but a comprehensive definition is not provided. The original draft of the rule required contractors to report violations when they had "reasonable grounds to believe" one had been committed. During the rule-making process that language was changed to mandate disclosure if there was "credible evidence" of a violation. But the final rule did not define credible evidence, leaving legal advisers to assume the change indicated regulators were willing to let contractors investigate allegations before reporting them to inspectors general.

Edited March 5 to correct typo.

Contractors Get Work Despite Debarment

GAO reports that some contractors continue to get government contracts despite being suspended or debarred. A Government Executive story notes:

[S]ome lawmakers noted the [excluded parties] database suffers from fundamental flaws, such as missing corporate identification numbers, an inadequate search function, obsolete contact information and an incompatibility with other government procurement databases. "The egregious examples of contracting failures found by GAO not only led to waste but endangered lives," said Darrell Issa, R-Calif., the committee's ranking member. "Recommendations for fixing mistakes, including better training and technology, need to be implemented."

Role of Contractors in the Workplace

Government Executive has a story Across the Divide with some ideas on balancing the roles of contractors and civil servants. Their last bullet point sounds an awfully lot like the "code of conduct" for contractors advocated by OGE Director Ric Cusick. Our related post on GAO's view of contractor conflicts of interest and a link to OGE's course on working with contractors are available. Many posts on related topics are archived under the heading Contractors in the Workplace.

Update 9/20: Cecilia Owens points out that due to the OGE web site remodeling, there is an updated link to OGE's course mentioned above.

Organizational Conflicts of Interest

The Washington Post has a story about organizational conflicts of interest. Here's an exceprt:

The case offers a rare glimpse at one of the consequences of the government's unprecedented reliance on contractors to help federal agencies: Consultants sometimes gain insider knowledge and help draft rules that could benefit their own bottom lines, procurement specialists said.

Because the acquisition workforce has not kept pace with the massive expansion of outsourcing in recent years, such conflicts rarely come to light. When they do, the government often is not able to address the problems, specialists said.

"This is the top of the iceberg," said Daniel Guttman, a procurement specialist at Johns Hopkins University who brought the case to the government's attention. "The government has basically never publicly reviewed whether the conflict of interests rules work. They don't."

Thanks to Ellen Peterson for drawing this story to our attention and Eric Rishel for highlighting its significance.

Comment Period Extended on Contractor Employee Conflicts

The OGE mailing list reports that the FAR Council has extended the deadline for comments on the proposed rule on service contractor employees' personal conflicts of interest. The new deadline is July 17, 2008.

Open Compliance and Ethics Group

Government Executive reports on the Open Compliance and Ethics Group, a Phoenix-based nonprofit organization that is trying to assist government contractors and subcontractors in complying with government rules, including the new requirement for contractor codes of conduct:

OCEG's goal was to provide a structured point of reference -- particularly for small and mid-size firms that cannot afford high-priced attorneys or compliance teams -- as well as to reduce the waste of resources that nearly all contractors experience in keeping up with the government's complex amalgam of regulations, according to Switzer. ...

"Federal procurement rules and regulations are complex and the risks can be substantial if contracts are not entered into without sufficient due diligence on the part of the contractor," said Brian Simmons, national director of Ernst & Young's government contract practice.

Key May Due Date Reminders

May 15 is the filing deadline for certain SF 278s that are sent to OGE for final review and certification. DAEOgram DO-08-018 has details. Extensions are possible.

May 27 is the deadline to submit comments on the FAR Council's proposal on addressing service contractor employees' personal conflicts of interest in light of the concerns raised by OGE, the findings of a GAO report, the recommendations of the Services Acquisition Reform Act panel, two recent FAR cases (2006-07 and 2007-06), and some agency approaches to the issue. under 31 U.S.C. § 1353. DAEOgram DO-08-017 has more information.

GAO Report on Contractors in Workplace

A Government Executive article examines a new GAO report on the increasingly blurry line between contractors and civil service employees and possible responses:

"Every day, contractors work side by side with federal employees, and yet the government might not even know when the self-interests of contractors are pitted against the interests of the American taxpayer," Lieberman said. "Given the government's increased reliance on outside contractors, we need an immediate overhaul of federal ethics policies to ensure that conflicts of interest don't impair the impartiality of contractors or their employees."

On Wednesday, the Civilian Acquisition Council and the Defense Acquisition Regulation Council, which recommend changes to the FAR, announced that they were considering new contractor conflict-of-interest clauses. The notice in the Federal Register said the councils want to determine whether the regulation's current guidance "adequately addresses the current needs of the acquisition community."

A Washington Post story on the GAO report is available.

Thanks to Mark Stone for links to the Federal Register notices, summarized as follows:

• Employee PCI: The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (the Councils) are interested in determining if, when, and how service contractor employees’ personal conflicts of interest (PCI) need to be addressed and whether greater disclosure of contractor practices, specific prohibitions, or reliance on specified principles would be most effective and efficient in promoting ethical behavior.
• Organizational Conflicts of Interest:   The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (the Councils) are seeking information that will assist in determining whether the Federal Acquisition Regulation System’s current guidance on organizational conflicts of interest (OCIs) adequately addresses the current needs of the acquisition community or whether providing standard provisions and/or clauses, or a set of such standard provisions and clauses, might be beneficial.

GAO Report on Contractor Conflicts of Interest

Thanks to OGE for alerting us to a new Government Accountability Office report entitled Defense Contracting: Additional Personal Conflict of Interest Safeguards Needed for Certain DOD Contractor Employees (March 2008). Some of the concerns overlap with those expressed by OGE including, Report to the President and to Congressional Committees on the Conflict of Interest Laws Relating to Executive Branch Employment (January 2006).

More on Ethics Resource Center Survey

The January 30 Washington Post story on the Ethics Resource Center survey reported here previously contains a nice chart (not available with online version) and a quote that echoes concerns about contractor ethical issues expressed by OGE Director Rick Cusick:

Ethical issues have become increasingly important, "if for no other reason than the fact that the [federal] government has become increasingly reliant on contracting and grants to independent suppliers, who are providing the government with an increasing range of goods and services," said Kenneth Ryder, a project director at the National Academy of Public Administration. "That puts a premium on having an effective ethics program."

A related Post story suggested ethical problems may be even more common at the state and local levels.