Corporate self-governance remains an imperative.

• Author: Farrell, Lawrence P., Jr.
• Position: President's perspective - Defense industry initiative

The ethics-related issues that have put the defense industry on the front pages in recent weeks obviously have prompted concerns among business leaders.

As the industry prepares to deal with the long-term implications of these latest developments, it is important for NDIA to reaffirm that ethics and self-governance are imperatives in the defense sector.

Some of our National Defense readers may recall I made the same point two years ago, when I raised the issue of business ethics in light of the imminent defense buildup the nation was about to begin, in preparation for the war against terrorism.

My point then was that the expected surge in defense spending came with the potential for procurement irregularities. Many of you remember that the defense buildup of the 1980s unfortunately spawned a number of procurement scandals and investigations, most notably Operation Ill Wind.

Between 1986 and 1990, a number of companies and individuals were convicted of misconduct in dozens of defense programs. In my January 2002 editorial, I noted that we needed to remember those lessons, and make a special effort to avoid the errors of the '80s.

The NDIA Board of Directors had raised that very issue in our 2001 fall meeting. The board deemed it an appropriate time to reaffirm the principles of the Defense Industry Initiative (DII) on Business Ethics and Conduct, a consortium of companies created to foster a heightened standard of ethical conduct by every employee in the defense industry.

As of January 2003, 45 defense companies were signatories of the DII.

The DII is an outgrowth of the 1986 Blue Ribbon Commission on Defense Management (known as the Packard Commission), established by President Ronald Reagan. At the time, public confidence in the defense industry had been eroded by reported instances of fraud and waste. The commission concluded that the defense acquisition process, as well as the defense business environment, could be improved by placing greater emphasis on corporate self-governance. As a result of this recommendation, defense contractors voluntarily embraced and promoted the principles of this initiative.

DII promotes self-policing as a means of confirming management's commitment to abide by ethical standards--even when they exceed legal requirements--and of discovering and correcting instances when conduct falls below these standards. It also encourages companies to share best practices in dealing with ethics and...