Defense lacks contracting ethics controls, GAO says

The Defense Department continues to fail in its efforts to establish a stronger ethics program among its contracting officers, according to the Government Accountability Office.

In a report (GAO-05-341) issued last week that was based on information gathered between April 2004 and March 2005, GAO found that Defense lacks a centralized method of keeping track of ethics training, violations and contractors' ethics policies.

Federal acquisition regulations require contracting officials to avoid conflicts of interest and the appearance of conflicts of interest. They are banned from receiving gifts from contractors or potential contractors and seeking employment with vendors, among other requirements.

While contracting ethics at Defense, which bought $200 billion worth of goods and services in fiscal 2004, have long been of concern to taxpayers and Congress, the Darleen Druyun scandal, in which a high-ranking Air Force official was fired for unethical behavior in awarding contracts, gave the issue fresh attention.

GAO found that Defense's 2,000 ethics counselors, who are responsible for training and counseling employees, vary in how well they educate contracting officers. When employees left the department, some counselors offered in-depth explanations of their employment restrictions, while others just handed the departing employees pamphlets.

"In an environment where the risk of ethical misconduct can be costly, DoD is missing opportunities to raise the level of confidence that its safeguards protect the public trust," the report stated.

It also found that counselors often are unaware of ethics violations, which prompted GAO to recommend that ethics counselors regularly report on misconduct cases. Defense disagreed and said law enforcement officials are responsible for keeping track of misconduct.

The watchdog agency also recommended that Defense pay closer attention to contractors' ethics programs. GAO found that the agencies responsible for overseeing contractor behavior-the Defense Contract Management Agency and the Defense Contract Audit Agency-had not reviewed contractors' practices in hiring former government employees.

An independent review of a large Defense contractor found that the company failed to follow proper procedures when hiring government employees, and relied on employees to self-monitor. GAO visited seven contractors and found that Defense had not discussed appropriate hiring procedures with any of them.

Defense officials agreed with the recommendation and said it plans to discuss ethics with contractors.