Summary
Many defense contractor employees work side-by-side with federal employees in Department of Defense (DOD) facilities performing substantially the same tasks affecting billions in DOD spending. Given concerns with protecting the integrity of DOD operations, GAO was asked to assess (1) how many contractor employees work in DOD offices and what type of mission-critical contracted services they perform, (2) what safeguards there are to prevent personal conflicts of interest for contractor employees when performing DOD's tasks, and (3) whether government and defense contractor officials believe additional safeguards are necessary. GAO reviewed conflicts of interest laws and policies and interviewed ethics officials and senior leaders regarding applicability to DOD federal and contractor employees. GAO judgmentally selected and interviewed officials at 21 DOD offices with large contractor workforces, and 23 of their contractors.
Indications are that significant numbers of defense contractor employees work alongside DOD employees in the 21 DOD offices GAO reviewed. At 15 offices, contractor employees outnumbered DOD employees and comprised up to 88 percent of the workforce. Contractor employees perform key tasks, including developing contract requirements and advising on award fees for other contractors. In contrast to federal employees, few government ethics laws and DOD-wide policies are in place to prevent personal conflicts of interest for defense contractor employees. Several laws and regulations address personal conflicts of interest, but just one applies to both federal and contractor employees. Some DOD offices and defense contractor companies are voluntarily adopting safeguards. For example, realizing the risk from personal conflicts of interest for particularly sensitive areas, the 19 DOD offices GAO reviewed that used contractor employees in the source selection process all use safeguards such as contract clauses that prohibit contractor employees' participation in a DOD procurement affecting a personal financial interest. In certain other tasks, only 3 of the 23 defense contractors GAO reviewed had safeguards requiring employees to identify potential conflicts of interest so they can be mitigated. In general, government officials believed that current requirements are inadequate to prevent conflicts from arising for certain contractor employees influencing DOD decisions, especially financial conflicts of interest and impaired impartiality. Some program managers and defense contractor officials expressed concern that adding new safeguards will increase costs. But ethics officials and senior leaders countered that, given the risk associated with personal conflicts of interest and the expanding roles that contractor employees play, such safeguards are necessary.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change
from "In process" to "Implemented" or "Not implemented" based on our follow up work.
Director:
Team:
Phone:
Cristina T. Chaplain
Government Accountability Office: Acquisition and Sourcing Management
(202) 512-4859
Recommendations for Executive Action
Recommendation: The Secretary of Defense should direct the Under Secretary of Defense (Acquisitions, Technology, and Logistics), to develop and implement policy that requires personal conflict of interest contract clause safeguards for defense contractor employees that are similar to those required of DOD's federal employees.
Agency Affected: Department of Defense
Status: In process
Comments: DOD agrees with the intent of the recommendation. DOD formed the Panel on Contracting Integrity in response to Section 813 of the Fiscal Year 2007 National Defense Authorization Act. The purpose of the panel is to conduct a DOD-wide review to eliminate areas of vulnerability of the defense contracting system that allow fraud, waste, and abuse to occur. DOD established a subcommittee, Contractor Employees Conflicts of Interest, in December 2007, to respond to GAO's concerns and recommendations voiced in the exit conference of the GAO-08-169 report. The subcommittee will have the opportunity to carefully review each recommendation. A plan of action and milestones has not been submitted. DOD will provide updated information regarding timelines. DOD will issue a policy to implement the subcommittee's recommendations upon acceptance by the Panel.
Recommendation: In developing its policy, DOD should include requirements for contractor companies to identify and prevent personal conflicts of interest for certain of their contractor employees who are performing contracted services that provide inputs to DOD's decision-making in such mission-critical areas as the development, award, and administration of government contracts and other advisory and assistance functions.
Agency Affected: Department of Defense
Status: In process
Comments: DOD agrees with the intent of the recommendation. DOD formed the Panel on Contracting Integrity in response to Section 813 of the Fiscal Year 2007 National Defense Authorization Act. The purpose of the panel is to conduct a DOD-wide review to eliminate areas of vulnerability of the defense contracting system that allow fraud, waste, and abuse to occur. DOD established a subcommittee, Contractor Employees Conflicts of Interest, in December 2007 to respond to GAO's concerns and recommendations voiced in the exit conference of the GAO-08-169 report. The subcommittee will have the opportunity to carefully review each recommendation. A plan of action and milestones has not been submitted. DOD will provide updated information regarding timelines. DOD will issue a policy to implement the subcommittee's recommendations upon acceptance by the Panel.
Recommendation: In developing its policy, DOD should include the following requirements for defense contractor companies: require a written code of business ethics and conduct applicable to contractor personnel working on certain DOD mission-critical advisory and assistance type services to (1) prohibit contractor personnel from participating in a government contract in which they have a personal conflict of interest; (2) require contractor personnel to avoid the appearance of loss of impartiality in performing contracted duties for DOD; (3) require contractor personnel to disclose personal conflicts of interest to their employer prior to beginning work on these contracts; (4) require the contractor to review and address any personal conflicts of interest its employees might have before assigning them to deliver contracted services; (5) prohibit contractor personnel from using non-public government information obtained while performing work under the contract for personal gain; (6) prohibit contractor employees providing procurement support services from having future employment contact involving a bidder in an ongoing procurement; (7) impose limits on the ability of contractors and their employees on accepting gifts (defined as almost anything of monetary value, such as cash, meals, trips, or services) in connection with contracted duties; and (8) prohibit misuse of DOD contract duties to provide preferential treatment to a private interest.
Agency Affected: Department of Defense
Status: In process
Comments: DOD agrees with the intent of the recommendation. DOD formed the Panel on Contracting Integrity in response to Section 813 of the Fiscal Year 2007 National Defense Authorization Act. The purpose of the panel is to conduct a DOD-wide review to eliminate areas of vulnerability of the defense contracting system that allow fraud, waste, and abuse to occur. DOD established a subcommittee, Contractor Employees Conflicts of Interest, in December 2007, to respond to GAO's concerns and recommendations voiced in the exit conference of the GAO-08-169 report. The subcommittee will have the opportunity to carefully review each recommendation. A plan of action and milestones has not been submitted. DOD will provide updated information regarding timelines. DOD will issue a policy to implement the subcommittee's recommendations upon acceptance by the Panel.
Recommendation: In developing its policy, DOD should include requirements for contractor companies to report any contractor personnel conflict of interest violations to the applicable contracting officer or contracting officer's representative as soon they are identified.
Agency Affected: Department of Defense
Status: In process
Comments: DOD agrees with the intent of the recommendation. DOD formed the Panel on Contracting Integrity in response to Section 813 of the Fiscal Year 2007 National Defense Authorization Act. The purpose of the panel is to conduct a DOD-wide review to eliminate areas of vulnerability of the defense contracting system that allow fraud, waste, and abuse to occur. DOD established a subcommittee, Contractor Employees Conflicts of Interest, in December 2007, to respond to GAO's concerns and recommendations voiced in the exit conference of the GAO-08-169 report. The subcommittee will have the opportunity to carefully review each recommendation. A plan of action and milestones has not been submitted. DOD will provide updated information regarding timelines. DOD will issue a policy to implement the subcommittee's recommendations upon acceptance by the Panel.
Recommendation: In developing its policy, DOD should include requirements for contractor companies to maintain effective oversight to verify compliance with personal conflict of interest safeguards, and have procedures in place to screen for potential conflicts of interest for all employees in a position to make or materially influence findings, recommendations, and decisions regarding DOD contracts and other advisory and assistance functions. This screening can be done on a task-by-task basis or on an annual basis, such as a financial disclosure statement.
Agency Affected: Department of Defense
Status: In process
Comments: DOD agrees with the intent of the recommendation. DOD formed the Panel on Contracting Integrity in response to Section 813 of the Fiscal Year 2007 National Defense Authorization Act. The purpose of the panel is to conduct a DOD-wide review to eliminate areas of vulnerability of the defense contracting system that allow fraud, waste, and abuse to occur. DOD established a subcommittee, Contractor Employees Conflicts of Interest, in December 2007, to respond to GAO's concerns and recommendations voiced in the exit conference of the GAO-08-169 report. The subcommittee will have the opportunity to carefully review each recommendation. A plan of action and milestones has not been submitted. DOD will provide updated information regarding timelines. DOD will issue a policy to implement the subcommittee's recommendations upon acceptance by the Panel.
