Conflict-of-interest plight can be avoided.

• Author: Reeder, Joe
• Position: Ethics Corner

Recently, one of the nation's largest government contractors faced a federal jury verdict that it violated the False Claims Act and breached two contracts with an independent federal agency based on failure to disclose conflicts of interest.

While some actual or potential organizational conflicts of interest are unavoidable, this contractor could have taken steps to neutralize or mitigate the conflicts and "perceived" conflicts by disclosing a plan to the concerned federal agencies. Alternatively, the contractor could have identified and avoided the conflicts altogether along with the allegations and embarrassing publicity.

The contract required technical assistance to the agency on rulemaking options for radioactive material under two prime contracts. Each contract highlighted the importance of the contractor's neutrality and the agency's concern that any conflict of interest with even an appearance of bias would taint the contractor's advice. The contractor assured the agency that it had no conflicts of interest and promised to disclose any if they were discovered throughout the contracts' terms. The agency learned that the contractor had actually engaged in conduct that potentially biased its advisory role in the agency's rulemaking process, and the jury agreed.

First, the contractor teamed with another company to win a contract with a second federal agency for handling radioactive material. The government argued that the success of this contract with the second agency was dependent upon standards to be adopted by the first agency, for which the contractor was already providing advice. The contractor also won a subcontract for research and review work related to radioactive metals for the same second agency--work that was very similar to the work it was providing the first agency.

Finally, the agency argued that the contractor violated its agreement in connection with an industry trade association that advocated for the reuse of radioactive and contaminated materials. While the contractor was responsible for assisting the agency with setting standards to recycle and reuse radioactive materials, it collaborated with an association formed to advocate in favor of recycling and reusing radioactive materials. A contractor vice president, who also apparently played a role in the contractor's work with the agency, served on the trade association board and reportedly drafted papers designed to persuade government officials to support recycling...