Clinton administration to issue contractor ethics rules

After making some last-minute changes, the Office of Management and Budget is planning to issue a controversial rule that would require government contracting officers to review a firm's compliance with labor, employment, tax, environmental and antitrust laws before awarding a federal contract. The rule, proposed last July, makes changes to Federal Acquisition Regulation (FAR) Part 9 clarifying what agencies should look at when considering potential contractors. The final version, which OMB has sent to the Federal Register for publication, includes three major changes, reflecting concerns that federal agencies and the business community had with the proposed rule. "We have proposed this regulation and installed it because it will reduce the risk of contracting fraud and abuse. It will save taxpayers money," Joshua Gotbaum, controller of OMB, said Monday. Federal contracting officers are already required by law to do business only with companies with a proven record of integrity and business ethics, but the law lacks specific guidance on how to make that determination, Gotbaum said. "We're trying to give [contracting officers] enough procedural protections to make these determinations on behalf of the taxpayers," he said. But the proposed changes to FAR Part 9 caused an uproar in the business community and were opposed by several federal agencies as well. Critics in industry feared the rule would result in a "blacklist" of companies that were banned from federal contracts. The National Alliance Against Blacklisting, a coalition of businesses that has fought the rule for years, argued the proposed rule lacked clarity as to what is and isn't considered a violation. The final rule includes a hierarchy of violations that contracting officers are supposed to look for, starting with criminal laws and moving down through civil violations. Officials are told to look out for a pattern of violations, rather than one-time offenses. The guidelines say that only actions adjudicated within the last three years "that are objective and... that are most serious," be considered when awarding a contract, Gotbaum said. Determinations made about potential contractors will not be shared among federal agencies. "There is no blacklist. This is not a debarment. It's an individual determination made by an individual contracting officer," said Gotbaum. The final rule also requires that contracting officers first consult with legal counsel before making a determination on whether or not to award a contract and to immediately notify the contractor of a violation that might prevent the firm from winning the contract. Under the rule, contractors can still protest award decisions using normal procedures. In response to agency concerns, OMB also streamlined the paperwork required by the rule. Instead of asking for a detailed explanation of past violations, contractors will be asked to check a box to answer if they have past violations. Contracting officers can ask for more details and contractors can provide mitigating circumstances at a later point if necessary, usually when the contractor is the apparent award winner. "Many contracting officers aren't checking on contractors. Businesses violate laws and pay fines, yet continue to get federal contracts. We think it is important to empower contracting officers by giving them the guidelines and the clarity to chose when to do business with folks and when not to," Gotbaum said.