Defense contractors must effectively monitor consultants.

• Author: Fennelly, Padraic
• Position: ETHICSCORNER

* As corporate ethics and compliance programs are reviewed and strengthened to meet increasing competition and government requirements, companies may not recognize the risks posed by consultants and other agents.

Yet consultant missteps may be grounds for civil and criminal liability, organizational conflicts of interest and reputational damage. There also is a greater risk of inadvertent violations by consultants since many are single-person or boutique entities, and hence likely to lack the staff, expertise or controls to assure compliance.

Here are some potentially troublesome scenarios.

A company's consultant also advises the Defense Department pursuant to a contract, and hence has access to department source selection information for a contract the company wants to bid on. What measures must be in place to prevent disclosure of such source selection information to the proposal team, and thereby avoid disqualification?

Here's another scenario. A consultant also advises one of the military services as part of a strategic policy board which does not review source selection data, but does evaluate future weapons and military needs. Through the consultant's participation, is the company receiving valuable insights into future service procurements unavailable to other competitors?

Furthermore, is the consultant giving advice to the service that favors weapons systems, sensors, or platforms the company manufactures?

Here is a quick list of other sticky areas. A consultant, not a registered lobbyist, meets a lawmaker regarding a company's programs. Does this meeting require reporting under the Lobbying Disclosure Act?

A consultant also represents a company's competitors. Is there a conflict of interest? Can the consultant access both firms' proprietary information?

A consultant meets a foreign attache to market a company's product to a foreign government. Gifts are exchanged. Does this violate the Foreign Corrupt Practices Act? What controls are in place to prevent such a violation?

Here's another example. In order to carry out his or her contract with a company, the consultant hires a former senior Defense Department official who resigned from his government position three months ago. Will his new duties cause him to violate his post-employment restrictions?

As these scenarios indicate, actions by consultants and other agents may implicate a company, tar its reputation, disqualify it from procurements and subject it to liability. To avoid...