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Ethics Corner 

The Revolving Door Dilemma 

10  2,008 

By Ret. Army Major Gen. John D. Altenburg, Jr. & Sean M. Connolly 

The growing trend — not unnoticed by Congress — of former Defense Department policy and acquisition personnel going directly from their key government positions to work for private sector defense contractors may force the department to step-up compliance measures to monitor the migration.

The backdrop for this new oversight is the FY 2007 National Defense Authorization Act, which required the Government Accountability Office to investigate recent employment of Defense Department officials by major contractors.

More than 86,000 former Defense Department personnel were employed by 52 different defense contractors in 2006, GAO reported in May. Of that remarkably large number, more than of 2,000 were flag-rank officers, senior executives, program managers or contracting officers hired between 2004 and 2006.

GAO emphasized that corporations reported having compliance procedures that address post-government employment restrictions. However, the report questioned the accuracy of these corporate compliance reporting mechanisms, finding that corporations significantly underreported the employment of former Defense Department officials. 

GAO made two significant estimates in its report. First, that hundreds of Defense Department officials working for defense-related corporations in 2006 may have performed work related to contracts of their former government agency or military service. Second, and perhaps more important from an ethics compliance perspective, it estimated that nine former defense officials worked on contracts that they previously oversaw or at least exercised authority over in their former government and military capacities. These estimates may implicate violations of post-employment restrictions, depending upon the nature and degree of the employees’ previous government service involvement with the contracted work. 

Also, the interval between the former official’s departure from government service and follow-on work as a corporate employee is critical to the legal analysis.

In summary, GAO recommended that the department consider whether changes in procurement policy are needed. It said additional contractor reporting and disclosure requirements are needed to ensure compliance with post-employment conflict of interest restrictions and to impose greater transparency of corporate employment of ex-Defense Department officials.

It also recommended that the department incorporate an additional certification requirement for contract awardees showing that the employees who worked on the company’s response to the solicitation complied with post-government employment restrictions. The Defense Department concurred with GAO’s recommendations and has referred it to the Panel on Contracting Integrity.

The heightened scrutiny in this area has also manifested itself in new contractor guidance. The Office of Government Ethics recently updated rules, effective July 25, to instruct further on and implement Congress’ post-employment conflict of interest statute, 18 U.S.C. § 207. The strict prohibitions remain, including: permanent restriction on former government employees on matters they personally and substantially participated; a one-year restriction on former “senior employees” on any issue before their former agency; and a two-year restriction on “very senior employees” as to any matters before their former agency or certain officials.

The OGE rules modified and expanded the existing 5 C.F.R. 2641 guidance for government employees leaving service after Jan. 1, 1991. OGE rules also removed 5 C.F.R. 2637, which applied to those leaving service before Jan. 1, 1991. For example, OGE expanded the definition of “employee” to include “employees serving without compensation,” clarifying that certain post-employment prohibitions apply to them as well.

The new rules also redefined “senior employee,” replacing the Senior Executive Service level 5 rate of pay standard with an 86.5 percent of the Executive Schedule level II rate of pay. “Senior employee” now includes employees assigned from a private sector organization under the Information Technology Exchange Program.

The modified 5 C.F.R. 2641 now extends the cooling-off period from one to two years for “very senior employees” as passed by Congress under the Honest Leadership and Open Government Act of 2007. This includes those employed at pay level I, Executive Schedule.

Congressional scrutiny on this ethics issue, taken in combination with the updated OGE rules, should be the impetus for all government contractors to review and update company ethics programs to ensure they comply with post-employment restrictions for former Defense Department personnel. In addition, as OGE notes, “post-employment restrictions are a relatively frequent subject of legislative action.” 

Continuous rule modification must be monitored.  Companies must actively scrutinize ex-government employees, particularly from Defense. Proactive attention to these matters will help to comply with the department’s inevitable changes to its procurement policies, which may soon include an additional certification requirement when accepting a contract award.

Complying with post-employment conflict of interest restrictions clearly supports the National Defense Industrial Association’s ethical principle of “promoting trust among the defense industry, our government customers, the U.S. public, and our men and women in uniform.”

Major General (ret.) John Altenburg, (altenburgj@gtlaw.com), former deputy judge advocate general of the Army, is a principal in the government contracts  and government affairs groups of the international law firm of Greenberg Traurig, LLP. Sean Connolly (connollys@gtlaw.com) is a senior associate in the government contracts and defense and homeland security practice groups. The views expressed are those of the authors.


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