Conflicts of Interest Rules Causing Conflicts

Personal and organizational conflicts of interests are red hot topics circulating around the federal government right now. (Organizational conflicts are created when a contractor has other activities or relationships with the government that could lead to partiality or an unfair competitive advantage--see FAR Subpart 9.5).

The GAO recently released three reports--GAO-08-169, GAO-08-572T & GAO-08-360--that discuss concerns with potential conflicts of interest when the government relies (or in some instances over-relies) on contractor employees. For example, government officials are governed under different rules than contractor employees, even those who work side by side. Additionally, some contractors have been questioned about their impartiality in awarding government contracts and making policy determinations.

In one recent case, the Calyptus Consulting Group was hired by GSA to help with past-performance evaluations on the Alliant IT contract. According to news reports, Calyptus evaluated the performance of two of its clients, Lockheed and Raytheon, raising questions of organizational conflict. That contract award was protested, and the Court of Federal Claims has set aside the awards in question and ordered appropriate injunctive relief.

Although there are rules aimed at preventing contractor employees from doing work that must be performed by public servants, ethics rules are very lax and require a high degree of self reporting. In an effort to head off any legislative action, the executive branch has been very active in proposing new ethics rules and requirements. As POGO has noted, however, these rules do not go far enough. Additionally, someone inside the government added a material exemption that has caused Members of Congress to question the government's commitment to holding contractors accountable.

Just yesterday, the FAR Councils put out two advanced notices seeking comments on whether additional personal and organizational conflict of interest regulations are needed to protect the integrity of the contracting process.

In what some are calling a warning shot to the executive branch, Sen. Joe Lieberman (D-CT) urged federal agencies "to step up efforts to guard against conflicts that could cost taxpayers millions of dollars a year."

All of these efforts have been made in response to the dramatic increase in federal contract spending, increased reliance on contractors to perform work once performed by government employees, and a call for greater contractor accountability. POGO will follow all of the bills and regulations, and we will counter any industry efforts to keep the status quo.