Closing Doors

Moving from the public sector to the private has grown more hazardous in recent months. Lawyers urge extra caution to avoid conflicts of interest in accepting jobs with federal contractors. Former federal executives are turning down work that might raise concerns that they are cashing in on government careers.

Antennae for potential scandal are up and quivering across government since former Air Force executive Darleen Druyun got caught in the revolving door. A demanding but widely respected procurement manager, she pleaded guilty to a single count of conspiracy in federal court in April for lining up a job with Boeing while negotiating a multibillion-dollar deal to lease tanker aircraft from the company. Druyun, who has declined all interviews, will be sentenced in August and faces up to five years in jail and up to $250,000 in fines.

In the wake of Druyun's downfall, Defense Secretary Donald Rumsfeld has ordered a review of the Pentagon's revolving door rules. The General Accounting Office is examining the issue for the first time since 1990. The White House has tightened rules for top political appointees negotiating future jobs. Congress might put new limits on the type of work former federal employees can do. Contractors are updating corporate ethics laws and increasing ethics training for former federal workers.

"Darleen's conviction has had a very strong impact on the procurement community. It has made everyone step back and be more careful. They see if it could happen to Darleen Druyun, it could happen to them," says Christopher Yukins, associate professor of government contracts law at The George Washington University in Washington.

The potential for fallout has prompted lawyers to tighten the reins on former officials. Angela Styles, ex-chief of the Office of Federal Procurement Policy and now an attorney with Miller & Chevalier in Washington, got the go-ahead from ethics advisers at the Office of Management and Budget last winter to advise a client on outsourcing matters. But a few months later, after the Druyun scandal, those same attorneys told her not to do the work to avoid any potential conflicts. "I sense that they wanted to be very careful about not crossing any lines," says Styles.

Dov Zakheim, who stepped down as Pentagon comptroller in May, also was buffeted by ill winds following the Druyun case. Zakheim says he didn't even consider taking a job with Defense weapons makers, such as Boeing and Lockheed Martin, because he feared raising conflict of interest questions. Instead, the longtime defense industry insider took a job with consulting giant Booz Allen Hamilton, where he'll work on global technology issues. "Everybody has been much more sensitive on this issue," says Zakheim.

On Alert

At the White House, Chief of Staff Andrew Card wrote a Jan. 6 memorandum to all agency heads prohibiting them from granting ethics waivers to political appointees negotiating jobs with companies they regulate or do business with. The tightening of the waiver rule came after Thomas Scully, former administrator of the Centers for Medicare and Medicaid Services, took a job with a law firm and investment company that works on health care issues. Scully had received a waiver from the Health and Human Services Department to negotiate the job last fall, while Medicare legislation was pending before Congress.

Stan Soloway, president of the Professional Services Council, an Arlington, Va., trade group representing scores of federal contractors, says many companies are double-checking their ethics policies to ensure they have proper safeguards. After a decade of mergers and acquisitions in the defense industry, Soloway says, companies must go over with a "fine-tooth comb" the potential conflicts of interest among newly hired employees, especially those who once worked in government.

Boeing, which fired Druyun and its chief financial officer Michael Sears over the illegal job negotiations last fall, paid former Sen. Warren Rudman, R-N.H., to review its ethics rules. He did not find lack of knowledge or concern about ethics at the government's second-largest contractor. However, the examination, which included interviews with dozens of former federal executives now working for Boeing, found that more safeguards were needed, such as setting up a central system for monitoring conflicts of interest, providing more training on hiring rules and auditing hiring practices every two years.

Ken Mercer, a Boeing spokesman, says the company recently has created a code of ethical conduct that was sent to all employees. Boeing also held an "ethics recommitment day," which included reviews of rules, and established an Office of Internal Governance to oversee policy.

Ill Wind

For senior executives and general officers, post-employment rules mandate a one-year cooling-off period during which they cannot contact their former agencies, but can provide advice to contractors about how those agencies operate. All federal employees are permanently barred from representing contractors on issues in which they were directly involved while working for the government. There are civil and criminal penalties for violating the rules.

In the late 1980s, a federal investigation called Operation Ill Wind uncovered a series of procurement scandals that led to more than 60 convictions of federal workers and contractors. As a result, Congress passed the 1988 Procurement Integrity Act, which specifically covers federal procurement officials. The act's rules limit the compensation that procurement officials can receive from contractors during the first year after they leave government, and prohibit them from disclosing bid and proposal information to their post-government employers.

Federal employees routinely are reminded of ethics rules. On the heels of the Watergate scandal, Congress in 1978 created the independent Office of Government Ethics to prevent conflict of interest breaches among executive branch employees. The office oversees ethics policy for federal workers, provides training for agency ethics advisers and offers legal opinions on potential conflicts. All new federal employees receive copies of ethics rules within 90 days of entering government, and subsequently receive ethics training every year. All federal agencies have designated ethics officers.

Rules Upon Rules

Most of the ethics attorneys, former and current government employees, and contractors who were interviewed by Government Executive believe the ethics rules should be consolidated. Right now, a civilian procurement employee working for one of the armed services not only must follow general federal ethics guidelines, but also additional rules set by the military service as well as the provisions of the Procurement Integrity Act. Defense Department Regulation 5000.7-R purports to be a "single source" for employee ethics, but has 17 footnotes referring employees to other rules covering the work they do after government.

"There are a gazillion laws on the books that are scattered in different codes, sectors, policies and memos," says James Mc-Aleese, a government contracts attorney in McLean, Va. He says the rules are fractured because they grew out of various scandals, such as Watergate and Operation Ill Wind. "The question is, where can you put them so they are in the same place," McAleese adds.

Since the Druyun scandal, the revolving door has captured the attention of lawmakers. Sen. John McCain, R-Ariz., chairman of the Senate Commerce, Science and Transportation Committee, might hold hearings on ethics concerns in July and has characterized the relationship between the Defense Department and defense industry as "incestuous."

Sen. Robert Byrd, D-W.V., has proposed expanding from one to two years the period during which procurement employees are banned from receiving compensation from contractors. Additionally, his proposal would cover all employees GS-13 and above, not only procurement officials. "With one eye toward the greener pastures of a high-paying job with a defense contractor, how vigorous will a watchdog at the Pentagon be about holding that same contractor's feet to the fire?" Byrd asks.

Sen. Peter Fitzgerald, R-Ill., a member of the Senate Governmental Affairs Committee, says current ethics rules are "laughable" and says Druyun's case spotlighted a problem that arises every day in government. "I don't think it would hurt to tighten the rules, and if we do it right, it might prevent people from being corrupted," Fitzgerald says.

The House Armed Services Committee, meanwhile, has requested a General Accounting Office investigation into the revolving door at the Defense Department. But the Pentagon general counsel's office has conducted several reviews of revolving door ethics rules and is wary of making changes. "There's nothing major here. We have yet to find any glaring deficiency," says a Pentagon ethics attorney who asked not to be identified. Since 1988, the Defense Department's Inspector General has conducted about 50 inquiries into allegations that former Defense workers took actions that could have benefited companies they later worked for-but only two employees were found in violation, a Defense spokesman said.

Federal procurement managers warn against a knee-jerk reaction to a single case of abuse by one employee among thousands who have moved from government to contractors. "The problem in Druyun's case wasn't that the rules weren't clear, it was that she flat out decided not to follow them," says David Drabkin, deputy assistant administrator for acquisition policy at the General Services Administration. He says the existing procurement rules have been "tried and tested," noting there have been few abuses since Operation Ill Wind.

Drabkin says his greatest concern is that new ethics rules would slow the acquisitions reforms put in place in the 1990s. The reforms replaced rigid government contracting rules with practices that are common in industry and they require far greater communication between government and company employees. Drabkin says new rules could limit which federal employees could talk to contractors and would slow down the procurement process, ultimately costing the government more money.

Stephen Busch, a former Air Force procurement officer who is now an Air Force contractor, predicted a "wholesale exodus" of personnel from federal procurement organizations if such rules were proposed. Before that, Drabkin hopes, those calling for tighter rules will realize the Darleen Druyun affair was an aberration.