The ethics of contracting: Still an open question

Government contracting experts today disagreed on whether the types of inappropriate procurement actions at the Homeland Security Department outlined in a report from the department's inspector general are common happenings or rare occurrences in federal agencies.

DHS Inspector General Richard Skinner reported that staff members and executives of DHS' Science and Technology Directorate engaged in actions that created an appearance of impropriety in four procurements in 2007 but did not violate ethics rules.

Procurement lawyers disagreed on whether such cases — in which federal officials come close to making an ethics violation, possibly unknowingly, but are corrected before damage occurs — are common.

Kenneth Weckstein, partner in the government contracts group at the Brown Rudnick law firm, said he believes they are.

“These kinds of issues do come up all the time,” Weckstein said. “The lines are not clear, and all of the contracting officials and contractors need to have a strong moral compass and there needs to be regular training.They were not aware that their activities were close to crossing the line.”

But John Chierichella, partner in the government contracts practice at the Sheppard Mullin law firm, said he has not seen many cases of federal officials acting with ethical impropriety, or creating an appearance of impropriety, in his 37 years of practice.

“I certainly cannot sit here and tell you this is a pervasive problem and this is something the [IGs] need to clamp down on," Chierichella said. "I don’t hear a lot about it from clients and industry association meetings. This may be an oddball occurrence."

At the same time, it is likely that inexperienced acquisition personnel occasionally do things that create improper appearances because they do not know any better, he said.

“I think that part of what you are seeing here is the complaint that many people have — that there has been so much attrition in the experienced procurement workforce that you have a lot of folks who are inexperienced and don’t have that 10 to 30 years of seasoning and well-calibrated antennae to know when they are getting in trouble,” Chierichella said.

Workers who are close to violating an ethics rule but don't actually cross the line rarely receive any punishment, Chierchella added.

“I don’t think I’ve ever heard of a government official being fired, demoted or really sanctioned for near-violations or appearances, so the answer is unless they actually break a rule, there won’t be any sanction,” Chierichella said.

Skinner said the situations indicate the need for better understanding of or regard for procurement standards.

“The rules for communicating during the procurement process were established to prevent competitors from gaining an unfair advantage and ensure that the government reaps the benefits of competition. S&T should train its staff in competitive procurement and ethical rules, and S&T management must model and enforce those rules.”

In the DHS case, “Circumstances surrounding four procurements created an appearance that staff members intentionally directed funding to specific acquaintances, though further review indicated that [the directorate's] staff did not violate conflict of interest or other ethical rules,” the IG report said.

“Directorate staff appeared to provide an unfair advantage to specific individuals or companies,” Skinner wrote. “Upon examination, the companies did not receive an unfair advantage, but staff members’ actions were not appropriate.”

In one case, a senior official there started a procurement based on a concept marketed by one of his business acquaintances interested in bidding on the work — and the official even named the project after the acquaintance, the report said.

In another case, two senior officials met “unwittingly” with a representative of a company that had submitted a proposal to an open Broad Agency Announcement, and during the meeting the representatives presented information related to their proposal. However, the company received no competitive advantage because it was dropped from the competition for other reasons, Skinner wrote.

Skinner did not name individuals or companies in the report.