GAO: Post-government employment of Defense contracting officials could pose conflict of interest

More than 400 former top Defense Department officials who left government to work for defense contractors may have handled contracts related to their previous jobs, according to a report released Wednesday by the Government Accountability Office. At least nine of those individuals could have worked on the same contracts they oversaw while employed by Defense.

GAO's study found that in 2006, 52 contractors employed 2,435 former Defense officials who had previously served as generals, admirals, senior executives, program managers, contracting officers or in other acquisition roles that would make them subject to post-government employment restrictions. Approximately 65 percent of those former officials were employed by one of seven contractors: Science Applications International Corp. (SAIC); Northrop Grumman Corp.; Lockheed Martin Corp.; Booz Allen Hamilton Inc.; L3 Communications Holding Inc.; General Dynamics and Raytheon Co. All but one of those companies, Booz Allen Hamilton, ranked in the top 10 of Government Executive's Top 200 Contractors list in 2007. Booz Allen Hamilton was 24th on that list.

To study the post-government employment of Defense contracting officials, GAO matched data from the department for all employees who left during a six-year period with data from the Internal Revenue Service and 52 Defense contractors. The watchdog agency used a stratified random sample of information supplied by contractors to estimate that at least 422 former Defense officials could have worked on contracts related to their former agencies while in their private sector positions. The same method was used to estimate that at least nine could have worked on the same contracts "for which they had oversight responsibilities or decision-making authorities while at DOD."

Cristina Chaplain, author of the report and GAO's director for acquisition and sourcing management, wrote that the information the agency compiled was not designed to identify violations of existing post-employment restrictions, and there could be appropriate justifications for the employment of former Defense officials on contracts related to their government positions.

"Our results indicate that defense contractors may employ a substantial number of former DOD officials on assignments related to their former DOD agencies or their direct responsibilities," she stated in the report.

Most of the contractors who responded to GAO's survey reported a number of programs and practices in place to ensure awareness and compliance with post-government employment restrictions. The contractors, however, struggled to provide GAO with accurate information identifying former Defense officials and significantly under-reported their employment. Contractor-supplied data showed 1,263 former Defense officials employed by the 52 surveyed contractors in 2006, while IRS data indicated 2,435 individuals.

According to GAO, Defense is not required to monitor former officials when they begin jobs with defense contractors. The department does provide guidance in the form of written ethics opinions to former officials who request them, but GAO concluded that the practice offered limited transparency.

Several new requirements were implemented recently to ensure contractors were aware of employment restrictions for former Defense officials. Requirements enacted in January 2008 through the fiscal 2008 Defense Authorization Act were designed to make the written ethics opinions given to former Defense officials more readily available to their contractor employers or potential employers. The department also was required to keep ethics opinions in a central database. But GAO said that database was not designed for Defense to monitor their former officials' post-government employment compliance.

GAO recommended that Defense consider what type of contractor disclosure and certification information on former officials was necessary to ensure compliance with post-government employment restrictions. Chaplain noted that existing laws not only protect against conflicts of interest, but also promote public trust in the integrity of the government's decision-making process.

In a formal response to the report, Shay Assad, director of Defense procurement, acquisition policy and strategic sourcing, said the department agreed with GAO's recommendations and had referred them to its Panel on Contracting Integrity.