Improve Procurement Ethics Laws Background Integrity and accountability are two fundamental principles of the federal acquisition process that cannot be compromised. The laws and regulations governing government and contractor behavior must be clear and understood by all affected parties and the consequences must be severe for breaches of improper behavior. Under current laws, procurement officials and contractors are required to sign integrity certifications that identify a number of ethics provisions, including prohibitions against the disclosure of information and postemployment restrictions. Those who violate these statutory prohibitions are subject to a maximum period of imprisonment of five years, as well as criminal and civil fines. Need for Change The need for procurement ethics standards is best illustrated by the Pentagon "Ill Wind" investigations, which revealed many instances where individuals or companies were trafficking in procurementsensitive information. Such conduct undermines the integrity of the federal procurement process and can result in increased contract costs. When those competing for government contracts are not treated fairly, or perceive their treatment as unfair, the government pays more than it would otherwise pay for products or services. Contract costs are increased because the government may be deceived into selecting a company or individual who does not provide the best value or performance. Also, perceptions of unfair treatment can cause contractors to decide not to compete for certain procurements, thus depriving the government of lower contract costs that otherwise would result from increased competition. The procurement integrity laws include provisions to protect certain procurementsensitive information (i.e., proprietary and source selection information) from improper disclosure. But they do not provide clear guidance because of their complexity and the difficulty of applying their restrictions to particular procurements. For example, the statutory definitions are so confusing as to when a procurement has begun or who is a procurement official or a competing contractor that those individuals who must follow these rules do not always know when they apply or whether they are violating a specific provision. Impediments to Open Communications Between Buyers and Sellers. The procurement integrity laws have also had a chilling effect on legitimate and necessary discussions and exchange of information between contractors and federal agencies. In the commercial world, customers expect suppliers to provide them with valuable information regarding new product or service offerings, as well as to suggest solutions the supplier can provide to customer problems. Government customers should be able to gain the benefits of such information. However, the Acquisition Law Advisory Panel to the United States Congress on Streamlining Defense Acquisition Law, known as the Section 800 Panel, found that despite their laudable objectives and purpose, the provisions of the procurement integrity laws seem to have generated more uncertainty and anxiety in the procurement community. By virtue of their complexity and the severity of the penalties for noncompliance, the information disclosure restrictions have imposed what some have characterized as a "code of silence" on both government and industry personnel during the course of a procurement. The former have often feared to offer and the latter feared to seek even the most routine information without specific authorization or, frequently, legal guidance. The Section 800 Panel quoted a senior NASA official who stated that "if there is any doubt about whether a document or information should be discussed during a source selection, it does not get communicated. To guard against the enormous penalties for error, some corporations and government activities are said to have furnished their representatives with 'Miranda cards' that coach them through a litany of preliminary questions each ought to ask the other before safely addressing the business at hand."1 Increased costs for certifications. The procurement integrity laws also contain certification requirements that increase government costs and provide questionable value in return. A lesson learned from the Ill Wind investigations was that the conduct prosecuted was conscious, deliberate, and in some cases highly sophisticated criminal behavior. Such deliberate criminal conduct is unlikely to be deterred by the risk of additional penalties for false certification statement violations or detected as part of the certification process. But these measures are certain to mean higher costs for the government. Contract prices and agency administrative costs are increased by the need to obtain procurement integrity certifications from the thousands of contractors and agency employees who participate in procurements. For example, in at least four sealed bid procurements at the General Services Administration (GSA), the low bidder forgot to sign the certificate and GSA was forced to accept the next lowest bidder who had signed the form.2 GSA incurred the increased costs of going to a higher priced bidder, not because there was any wrongdoing, but because the rules regarding sealed bids did not allow GSA to let that low bidder come back and sign the form. In one of these four cases, the first, second, and third lowest bidders all forgot to sign the form and GSA was forced to go to the fourth lowest bidder. The original low bid was $109,777, and the fourth lowest bid was $133,000.3 The government paid $23,233 more than it should have because of this provision. The costs to the government and taxpayers are significant because GSA's experiences are not unique; they typify the governmentwide experience. PostEmployment restrictions. Finally, a problem exists with the procurement ethics laws regarding postemployment restrictions. The accumulation over time of several duplicative postemployment (revolving door) provisions applicable to agency employees who participate in procurements has resulted in considerable confusion. In this regard, the Director of the Office of Government Ethics (OGE) stated, "Little by little, rule by rule, we have addressed a problem here and a problem there with a quick statutory fix, stacking one on top of another until we have reached a point today that an employee who sincerely wants to do the right thing simply cannot understand what it is he has to do to comply."4 A solution. The Office of Federal Procurement Policy (OFPP) and OGE have proposed revisions to the ethics laws through their legislative proposal jointly submitted to Congress in 1990 and 1991.5 This proposal addresses the issues and problems described above and strikes a proper balance between safeguarding the public against conflicts of interest and deterring qualified people from entering public service, while at the same time removing administrative impediments and barriers to effective communication between government and its business partners. Endnotes 1. Acquisition Law Advisory Panel to the United States Congress, Streamlining Defense Acquisition Law, Executive Summary (January 1993), pp. 6127129. 2. Section 27 of the Official Federal Procurement Policy Act, Procurement Integrity, 41 U.S.C. 423. 3. GAO Protest Decisions: a. HeinWerner Corporation, B247459, 921 CPD 484, June 2, 1992. b. Atlas Roofing Company, Inc., B237692, 901 CPD 216, February 23, 1990. c. Emjay Engineering and Construction Co., Inc., B24360, 911 CPD 590, June 21, 1991. d. Sunbelt Industries, Inc., B245244.2, 912 CPD 279, September 24, 1991. 4. U.S. Congress, House, Committee on Armed Services, Subcommittee on Investigation, "Revolving Door Issues and PostEmployment Restrictions," testimony by Stephen D. Potts, May 9, 1991. 5. The Procurement Ethics Reform Act, 2775, submitted to the 101st Congress on June 20, 1990, and resubmitted to the 102nd Congress on February 14, 1991, introduced as 458 on February 21, 1991.
You can attach your comments to this document. If you enter your email address in the empty box below and click on the submit button, you will receive via email a form that allows you to link your views to the NPR hypertext.
Subscribe Unsubscribe No Action