INFOTECH AND THE LAW

Standing Guard at the Revolving Door

Richard Rector

by Richard Rector

The November presidential election will bring significant changes to the executive branch over the next year, which means the "revolving door" between government and industry will be turning rapidly. For many companies, the turnover in administration will mean contacting, interviewing and hiring more than the usual number of former government officials.

There's nothing wrong with this process, of course, as the transfer of talent between government and industry plays an important role in helping each sector to better understand the requirements and motivations of the other. But there are important and sometimes strict limits on the process.

As industry veterans know, Congress has created a complex set of laws aimed at eliminating personal conflicts of interest and improper use of influence by former government officials. These laws typically limit the activities of certain former officials for a period of time following their departure from the federal government.

The laws also provide for civil and criminal penalties in the event of certain violations. Because many of these penalties can be imposed against both the individual and the organization for whom the individual has worked improperly, companies must be attuned to these laws at every step of the hiring process.

For example, let's say that your company has been impressed by a government program manager and wants to offer that person a similar management position. In the commercial world, there would be almost no problem with such a decision, and making the offer could be as simple as picking up the telephone.

Not so when the program manager is a federal employee. First, if that person currently were overseeing a contract with the company, merely discussing potential future employment could create a problem under "financial interests" laws.

Even if the program manager already had left the government, the company would have to determine if he or she had worked on a contract performed by the company that was valued at $10 million or more. If so, procurement integrity laws would prevent that manager, for one year, from accepting compensation from any division or affiliate of the company that provides the same or similar services as the unit that performed the contract.

Once past those hurdles, the company also would have to limit the former program manager's duties to ensure that he or she did not run afoul of other conflict-of-interest laws. For instance, all former employees of the executive branch (including the armed services) are prohibited, for life, from attempting to influence the government on matters in which the former employee was personally and substantially involved while working for the government.

Therefore, the former program manager could not represent the company in negotiating a contract modification with a former agency if he or she had been
personally and substantially involved in formulating specifications for the modification. Similarly, that person could not attempt to influence the negotiations by communicating with former superiors regarding the matter.

The law also prohibits a former executive branch employee from attempting to influence the government on matters that were pending under the employee's direct authority in the last full year before termination of employment. Thus, in the preceding example, even if the former program manager were not personally and substantially involved in formulating the specifications, the same prohibition would apply for a two-year period if the specifications were prepared under the manager's direct authority.

There are numerous other conflict-of-interest laws relevant to hiring and assigning former government officials. These include laws aimed at former senior employees of the executive branch, former members of Congress and their employees, and former executive branch employees involved in trade or treaty negotiations.

Similarly, procurement integrity laws cover various other procurement-related employees, such as contracting officers, deputy program managers and certain source-selection officials and contract performance officials.

Thus, as the revolving door begins to turn over the next year, companies should know the relevant laws and be diligent in screening former government officials. Making uninformed decisions in this area can expose both the company and its new employees to unseen and sometimes harsh risks.

Richard Rector is a partner in the Government Contracts Group of Piper & Marbury LLP in Washington. His e-mail address is rrector@pipermar.com.

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