Group to rank contractors on ethics programs

Think tank to publish first annual ranking in March; major companies signing on to volunteer information.

A business think tank is preparing to publish its first annual ranking of contractors' ethics and compliance programs.

The Ethisphere Institute in New York is collecting information from major contractors to compile the rankings, which will be published in the group's eponymous quarterly magazine at the end of March.

In 2007, Ethisphere published the list of the World's Most Ethical Companies by industry, and Alex Brigham, executive director of the institute, said moving into the area of government contracting this year was a logical progression, especially after the issuance of new federal acquisition regulations that require contractors to self-disclose certain violations and require a contractor code of ethics.

"It is kind of vogue to bash government contractors … because of a few bad apples," Brigham said. "It makes sense to give a lot of credit to the companies that are doing it right, and a tweak on the nose to the companies that aren't aligning with what the new government regulations are."

The group is using a voluntary online questionnaire as the primary means of gathering information. The questionnaire covers four major areas: codes of ethics and business conduct; leadership and tone from the top; internal control systems; and training and communication programs. Various measures and accomplishments in these areas have been assigned weight values, and the institute also will be doing its own research into companies' practices and programs.

Brigham and Associate Director Robert Leffel said they began contacting contractors several weeks ago and have had an extremely positive response. The group said it has had numerous high-profile contractors sign on, including General Dynamics and L-3 Communications Holdings, which ranked fourth and seventh respectively on Government Executive's Top 200 Contractors list in 2007.

Alan Chvotkin, senior vice president for the Professional Services Council, an Arlington Va.-based contractors association, said companies are aware of the upcoming rankings and many are in the process of responding. Only a few questioned the relevance of such a ranking in the government's regulated marketplace, he said.

While contractors doing business with the Defense Department have long been required to have a code of conduct, the governmentwide requirement is a recent development. Some contractors, therefore, are just now in the process of crafting a robust written code. This may give Defense contractors the edge in this survey.

Chvotkin said it's important for any assessment to look not only at the quality of a company's code of ethics but at the quality of its program as well. "That is the really substantive issue," he said. Rankings aside, he said, Ethisphere had developed a good set of questions that companies should be asking themselves about their own programs.

As with any voluntary survey, there is some likelihood of self-selection. Chvotkin and Brigham conceded that companies that feared they would not be well-portrayed by the survey would not participate, but, Brigham said, there are many contractors eager to be recognized for their ethics programs.

"There are a lot of companies here that do work hard creating good ethical behavior inside their organization and fair contracting, and they felt they weren't getting credit for it," he said.

Brigham said the Ethisphere Institute was approached by a number of contractors who appreciated the "nonconfrontational" and "objective" approach used to develop the World's Most Ethical Companies list. This interest was part of what motivated the group to take on federal contracting ethics.