New ethics policies might hurt competition, industry group says

The Defense Department’s implementation of new policies on organizational conflicts of interest could create long-term negative consequences for competition and the industrial base if not handled with a “balanced approach,” according to a  federal contractor organization.

Alan Chvotkin, executive vice president of the Professional Services Council, delivered his comments Dec. 8 at a public meeting on the department’s implementation of provisions of the Weapon Systems Acquisition Reform Act of 2009. Under that law, the department would prohibit contractors from participating in the construction of major weapons systems on which they are advising the department and would tighten rules on organizational conflict of interest.

Chvotkin said that “one-size-fits-all” solutions will not serve the department or industry well. He urged the department to “take a balanced approach that recognizes the symbiotic partnership that must exist for success because DOD policies of the past have contributed significantly to the current environment.”

Different segments of the weapons systems market have different dynamics, including varying levels of diversity and number of markets served, he said. New regulations may significantly affect discrete segments of the market, with short-term negative effects on competition and long-term implications that may harm the industrial base that serves the department’s needs, Chvotkin said.

Chvotkin asserted that existing approaches to organizational conflicts of interest would be effective if clarified and followed by DOD and its contractors.

The Obama administration also is considering a proposal to order contractors to police their employees more closely for personal conflicts of interest.