Defense department contractors may see new hiring regulations.

• Author: Epstein, Steve
• Position: Ethics Corner

A proposed Defense Department regulation, if implemented, will substantially change how contractors hire, oversee and track certain former civilian and military personnel. As proposed, it will also establish a new suspension and debarment risk for contractors that hire former personnel.

On June 6, the department issued a proposed rule--DFARS Case 2010-D020 "Representation Relating to Compensation of Former DoD Officials"--to require all offerors to submit a representation, upon submission of the offer, that all employees who are former Defense Department "covered officials" (defined in DFARS Clause 252.203-7000), to the best of the offeror's knowledge and belief, comply with:

* Defense Federal Acquisition Regulation Supplement (DFARS) 203.1713 that states that covered Defense Department officials must have received or requested an ethics opinion on post-government employment restrictions;

* 18 U.S.C. 207 and 5 C.F.R. Part 2641, which is the statute and regulations affecting post-government employment of ex-government civilian personnel and military officers; and

* Federal Acquisition Regulation (FAR) 3.104-2, which implements the Procurement Integrity Act.

This proposed rule would likely have the several effects.

For example, it will share responsibility for compliance with post-government employment laws and regulations between ex-government personnel to defense contractors. Current post-government employment laws impose criminal and civil liability on ex-government personnel violations.

It will also require defense contractors to implement new compliance measures. To ensure compliance, defense contractors must establish systems and processes to identify, track, educate, and obtain periodic certifications from all employees, consultants, and others who receive compensation and who are former "covered officials."

The new requirement will burden both smaller contractors that must establish a new compliance program to meet this requirement, as well as larger defense contractors that must levy the requirement on subsidiaries, joint ventures and affiliates, even those entities that are non-government contractors. Any new compliance system obviously will increase contractor overhead costs, which often are passed on to the government.

It will also impose on defense contractors a new liability over which they have no control. Because the proposed regulation does not limit the certification to the activities of the former "covered employees" on a...