Open season: The hunt is on for contracting conflicts

These days, government oversight officials are searching for any possible conflicts, and companies are looking, too, just in case.

Government officials are more candid these days about keeping contractors at a distance to avoid undue influence on their programs. And contractors are trying to figure out how far away they should stay.

Companies need to find the line between jobs they can and cannot do, and beyond that, ask themselves a lot of questions to make certain they are free of any conflicts of interest.


Related articles:

7 do's and 1 don't for avoiding conflicts of interest

TASC sale triggers more questions

Army, SAIC too cozy on Future Combat Systems, IG says

White House says companies must police employee conflicts of interest


As businesses in recent years have increased their presence in new areas based on the government’s demands, companies now must assess how far their various divisions have spread. Sometimes that soul-searching has companies facing the decision of which side of the project they want to be on: consulting or working on a project.

Executives say they can’t be sure if their business has crossed the line into forbidden territory without a clear definition of inherently governmental functions. Companies’ ideas about organizational conflicts of interest are questionable until officials draw distinct lines.

Arnold Punaro, executive vice president at Sciences Applications International Corp., said companies need that bright line because gray areas create headaches.

“The government has to come to grips with what is and isn’t inherently governmental,” he said.

Congress gave the Office of Federal Procurement Policy one year to craft a definition. It was due in the fall, but everyone is still waiting.

However, government experts, former officials who struggled with a definition in the early 1990s and industry executives say it isn’t as easy as it seems to distinguish what kind of work only government employees should do.

Nevertheless, “the challenge of appropriately defining inherently governmental remains,” said Lisa Mascolo, managing director of Accenture Ltd.'s U.S. Federal Client Service Group.

Once a definition is released, companies must track down possible organizational conflicts of interest. These days, government oversight officials are diligently hunting for any possible conflicts.

For example, the Defense Department Inspector General's Office scolded the Army for letting SAIC get too close to influencing a program in its own favor.

SAIC had been the primary commercial contractor for advisory and assistance services to the Army’s Future Combat Systems program office since 1999, according to a DOD IG report released in January.

In addition to performing advisory services, the report states that SAIC and another company were serving as lead systems integrators for system development and demonstration of the FCS program. However, the Army’s contract solicitation explicitly excludes a company with significant involvement in developing defense systems.

SAIC told the IG that its service development and demonstration contract was a systems integration contract, not a systems development contract, according to the report. In a separate statement, SAIC said the IG’s conclusions are fundamentally flawed, and the IG “pushes an extreme and unprecedented policy position.”

“The IG espoused an organizational conflict of interest that isn’t in regulation,” Punaro said.

That is why the bright lines of regulation become so important, and companies are waiting to hear about inherently government functions in addition to more rules about conflicts based on the Weapons Systems Acquisition Reform Act, which President Barack Obama signed into law last year.

The government has been cracking down on such organizational conflicts of interest because officials want to prevent companies from getting an unfair advantage and influencing a program.

John Chierichella, partner at Sheppard Mullins Richter and Hamilton law firm, said corporations need to appraise all of the services that their divisions offer to government clients. They must think enterprisewide and across their whole family of businesses.

One of the most prominent examples of a major company recognizing a potential conflict of interest was the Northrop Grumman Corp. and TASC situation. TASC, a former unit of Northrop Grumman, provides advanced systems engineering, technical assistance, and other analysis and advisory services, primarily to the Defense Department and intelligence agencies. Other parts of Northrop Grumman then competed with other contractors to win awards to build and maintain those systems.

As a result, Northrop Grumman announced in November 2009 that it had signed an agreement to sell its TASC unit for $1.65 billion to an investment group led by General Atlantic LLC and Kohlberg Kravis Roberts and Co.

The sale was necessary because Northrop Grumman was feeling pressure to comply with new organizational conflicts of interest laws, experts say. Northrop Grumman declined to comment.

David Langstaff, TASC's chairman of the board, said government officials are searching for consultants with independent advice and companies that can handle the work of building the system.

When it comes to avoiding conflicts, “companies have to decide which side of the fence they want to play on,” he said. And that decision will ultimately help the customer, making government officials more confident that agencies are getting a fair deal.

Joan Wolfle, vice president at Booz Allen Hamilton Inc., said the company’s reputation depends on how it serves its clients and that the company strives to meet the highest standards. Booz Allen has policies and programs to avoid even the perception of a conflict, she said. The company also has tested processes for uncovering and resolving potential conflicts.

“Our overarching policy is to avoid rather than mitigate conflicts of interest" by continually monitoring the company’s work, she said.

Preparing for different scenarios, SAIC has devised various mitigation plans to meet the new definition of an inherently governmental function and the regulations on organizational conflicts that officials are developing, Punaro said. He and the rest of industry are waiting to find out what the new regulations say and how industry will need to respond when government customers begin asking about their plans.

“We want to be ready so we can answer that question quickly," he said.

NEXT STORY: Army readies $243M email contract

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.