Post-Government Employment of Former DOD Officials Needs Greater Transparency
GAO-08-485: Published: May 21, 2008. Publicly Released: May 21, 2008.
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Department of Defense (DOD) officials who serve in senior and acquisition positions and then leave for jobs with defense contractors are subject to the restrictions of post-government employment laws, in order to protect against conflicts of interest. Congress required GAO to report on employment of such officials by contractors who received more than $500 million in DOD's 2005 contract awards. In response, this report (1) provides information on how many former DOD employees worked for contractors in 2006 and estimates how many worked on contracts that were related to their former agencies or to their direct responsibilities and (2) identifies the practices used to monitor restrictions and information challenges in monitoring post-DOD employment. To do this work, GAO matched data from DOD for all employees who left DOD over a 6 year period with data from the Internal Revenue Service (IRS) and from 52 contractors; conducted surveys; and interviewed DOD and contractor officials.
In 2006, 52 contractors employed 2,435 former DOD senior and acquisition officials who 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. Most of the 2,435 former DOD officials were employed by seven contractors. On the basis of a stratified random sample of contractor-supplied information, GAO estimates that at least 422 former DOD officials could have worked on defense contracts related to their former agencies and that at least nine could have worked on the same contracts for which they had oversight responsibilities or decision-making authorities while at DOD. The information GAO obtained from contractors was not designed to identify violations of the restrictions. While contractors could have employed quite a few former DOD officials on assignments related to their prior DOD positions, there could be appropriate justification for each of these situations. Most of the contractors who responded to our survey reported using a range of practices to ensure awareness and compliance with post-government employment restrictions, although GAO's request proved challenging for contractors to provide accurate information identifying their former DOD officials. According to the surveyed contractors, they can identify former DOD officials with post-government employment restrictions and track their assignments during their cooling-off periods. However, GAO's analysis found a significant under-reporting of the contractors' employment of former DOD officials. Specifically, contractor-supplied data showed they employed 1,263 former DOD officials in 2006, while IRS data showed the contractors employed 2,435. New post-government employment requirements enacted in January 2008 are likely to make written ethics opinions for former DOD officials more readily available to contractors. DOD also must now keep ethics opinions in a central database. This information was not designed to provide a mechanism for DOD to effectively monitor former DOD officials' post-government employment compliance after they begin working for contractors on specific contracts.
Recommendations for Executive Action
Status: Closed - Implemented
Comments: Defense Federal Acquisition Regulation System Case Number 2010-D020, entitled "Representation Regarding Compensation of Former DOD Officials" was published in the Federal Register Vol. 76, No.223, on November 18, 2011 as a final rule, which implements GAO's recommendation. The rule amends the Defense Federal Acquisition Regulations (DFARS) to require offerers to represent whether former DOD officials who are employees of the offerer are in compliance with post-employment restrictions and that all former DOD officials covered by the Procurement Integrity Act are in compliance with post-employment restrictions set forth in DFARS 203.171-3 and DFARS 252.203-7000. It also requires a representation that former DOD employees employed by the contractor are in compliance with additional post-employment restrictions of 18 USC 207 and 5 CFR parts 2637 and 2631 including FAR 3.104.
Recommendation: To provide greater transparency during the acquisition process given the fact that former DOD officials can and do work on defense contracts related to their prior agencies or their direct responsibilities, the risk of conflicts of interest and the appearance of conflicts of interest, and the need to maintain public trust in the integrity of defense contracting, the Secretary of Defense should direct the Under Secretary of Defense (Acquisition, Technology, and Logistics) to consider the relevant recent statutory changes and determine if changes in procurement policy are needed to impose additional reporting requirements or other requirements to guard against violations of the government's post-employment rules. For example, DOD could consider requiring defense contractors who are awarded a contract, within a set number of days after contract award, to (1) disclose to the contracting officer the names of employees who are certain former DOD officials (e.g., civilian senior executives, high-level military officers, or acquisition officials) who worked on the response to the solicitation and (2) certify that these employees are in compliance with the applicable post-government employment restrictions.
Agency Affected: Department of Defense
Status: Closed - Implemented
Comments: Defense Federal Acquisition Regulation System Case Number 2010-D020, entitled "Representation Regarding Compensation of Former DOD Officials" was published in the Federal Register Vol. 76, No.223, on November 18, 2011 as a final rule, which implements GAO's recommendation. The rule requires offerers to submit representations regarding post-government employment at the time of contract award. In so doing, DOD made the determination after consideration not to apply a similar mechanism throughout the term of the contract.
Recommendation: After assessing the benefits and costs associated with the certification process, DOD should consider whether and to what extent it should apply a similar mechanism throughout the term of the contract. In responding to a recent report we issued on contractor employee personal conflicts of interest, DOD tasked its Panel on Contracting Integrity to examine issues we raised and potential solutions. It may also want to do the same with regard to post-government employment reporting.
Agency Affected: Department of Defense