Where There's Smoke...Who SHould Bear the Burden when a Competing Contractor Hires Former Government Employees?

AuthorLieutenant Colonel Richard B. O'Keeffe, Jr
Pages01

MILITARY LAW REVIEW

Volume 164 June 2000

WHERE THERE'S SMOKE . . .

WHO SHOULD BEAR THE BURDEN WHEN A COMPETING CONTRACTOR HIRES FORMER GOVERNMENT EMPLOYEES?

LIEUTENANT COLONEL RICHARD B. O'KEEFFE, JR.1

The federal government's procurement system should be protected from both the corrupting influence of actual impropriety, and the corrosive effects of procurements tainted by the appearance of impropriety.

The current rules governing the hiring of a former government employee who, while he was in government service, had official duties involving a requirement satisfied by procurement through a contract, by a firm competing for award of such contract, do not adequately protect the integrity of the government procurement system, or the interests of other contractors.

The rules should recognize the full scope of government duties relating to a requirement that could confer an unfair competitive advantage upon the contractor employing a former government

employee, and they should impose the burden of establishing the propriety of the hiring decision and duty assignment with regard to the former government employee primarily upon the contractor who hired him. Such a regime would best harmonize the government's interests in integrity, mission accomplishment, and competition.

I. Statement of the Problem

"Few men have virtue to withstand the highest bidder."

- George Washington2

Federal Acquisition Regulation (FAR) 3.101-1 General. Government business shall be conducted in a manner above reproach and, except as authorized by statute or regulation, with complete impartiality and with preferential treatment for none. Transactions relating to the expenditure of public funds require the highest degree of public trust and an impeccable standard of conduct. The general rule is to avoid strictly any conflict of interest or even the appearance of a conflict of interest in Government -contractor relationships. While many Federal laws and regulations place restrictions on the actions of Government personnel, their official conduct must, in addition, be such that they would have no reluctance to make a full public disclosure of their actions.3

A. An Illustration of the Problem: Timely as Today's Headlines

Energy Official Followed Line to Contractor, Insists He Didn't Cross It

When Thomas P. Grumbly was named an assistant secretary of energy in early 1993, he wanted quick results in the cleanup of the Cold War nuclear weapons facility at Rocky Flats, Colo. He presided over the award of the $3.5 billion contract.

Today, Grumbly wears a different hat. Two years after the Rocky Flats contract was awarded, Grumbly announced that he would join ICF Kaiser International Inc., a partner in the joint venture that won the job. Federal ethics laws prohibit him from dealing directly with the Energy Department. But nothing in the rules restricts Grumbly in his current role: attending quarterly meetings of the joint venture and advising it on how to deal with his former employer on the Rocky Flats project.

The hiring of Grumbly, a high-level political appointee, by ICF Kaiser, a company headed by a major Democratic fund-raiser, illustrates how a handful of huge engineering firms used every means at their disposal after 1993 to cultivate closer ties to the Clinton administration as they fought for a share of a huge new pot of federal dollars: $6 billion a year in contracts to clean up the nation's bomb-making facilities.4

B. What's the Problem?

Why does the circumstance of a former senior government official accepting employment by the awardee of a contract with which he was involved while in public service have the power to raise doubt regarding the former public servant's propriety, and generate sensational headlines?5 Are the rules enacted to avoid impropriety and the appearance of impropriety unfair to persons leaving government service, and corrosive of the government's position in the market for the most highly qualified personnel?6

Are the rules adequate to protect the integrity of the federal procurement system? Is there enforcement of FAR 3.101, which states that "[t]he general rule is to avoid strictly any conflict of interest or even the appearance of a conflict of interest in government-contractor relationships"?7 Before examining these issues, consider the following hypothetical scenario.

  1. The Setting

    ABC Corporation, an experienced government contractor in the field of environmental remediation, just lost the competition for a $35,000,000 Army contract to perform the cleanup of the now defunct Toxic Gulch Ammunition Depot, in Badwater, Nevada. Two days following the announcement of contract award, ABC learns that the winner of the contract, Green Services, Inc., had employed a former Army employee who, while employed for the government, had been the contracting officer's representative for the predecessor remediation contractor. At ABC's debriefing, its general counsel (GC) asked the procuring contracting officer (PCO) about the former employee. The PCO assured the GC that the PCO had been fully aware that the former employee was hired by Green Services; that the former employee, an environmental engineer, had retired from government service, the Army, over fourteen months ago, and had taken only a limited role in the procurement while in the government's employ; that he would personally vouch for the honesty and integrity of the former employee (the PCO had worked with him for nearly ten years); and, that Green Services had reportedly not detailed the former employee to assist in preparing its proposal.

    Upon returning to his office, the GC and the chief of the proposal preparation team discussed the matter. ABC's proposal, the GC was told, was very competitive in price with that of Green Services, but had been downgraded by government evaluators for a perceived lack of understanding of the requirement and other supposed technical deficiencies. The proposal team chief, however, stated that they could not evaluate whether the former employee had somehow given Green Services an unfair competitive advantage, without obtaining a great deal of additional information, including access to the Green Services proposal preparation team members.

    The GC researched bid protest cases in which a former government employee went to work for a successful offeror on a government contract with which he had been officially involved in some way while employed by the government. The results of his research were discouraging. Of the several dozen GAO cases fitting into this broad fact situation over the past decade, the GC found that the rate at which protests were sustained on procurement integrity or conflict of interest grounds was far beneath the overall sustain rate. The GAO employed a variety of ways to uphold contracting officers' decisions to award contracts to firms that had hired former government employees with official duties relating to contracts or procurements in which they had a competitive interest.

    Researching bid protests in the courts yielded a smaller number of cases, but an apparently more sympathetic forum, based upon the rates at which revolving door protests were sustained. Nevertheless, the sample was too small, the decisions often confusing or difficult to reconcile, and the costs of federal court litigation too high, for the GC to recommend a judicial bid protest, especially when ABC did not have the kind of "hard facts" evidence of a violation of the procurement integrity and "revolving door" laws and regulations.

    Further, those laws and regulations lacked clarity and precision, and covered a limited spectrum of post-government employment conduct. Moreover, even if a violation may have occurred, ABC, in order to prevail in a protest, would have to demonstrate that Green Services gained an "unfair competitive advantage" through its hiring of the former government employee-a nearly impossible burden in view of the limited discovery available before the GAO. In addition, the PCO had become increasingly reluctant to discuss the issue during the GC's conversation with him, and finally terminated the call by indicating that he wanted to consult with his lawyer before discussing the matter further. The GC's attempts to learn more by talking to other friends in the contracting activity were completely unavailing, as people either claimed poor memories, or simply refused to discuss the issue.

    It appeared to the GC that it would be impracticable to get the specific facts from which a valid assessment of the competitive effects of Green Services' hiring of the former government employee could be made, especially given the short period during which an automatic stay could be obtained. In view of this circumstance and the protester's burden in such cases, the GC concluded that a protest should not be undertaken.

    The GC met with the proposal team chief and the company CEO to discuss the matter, and presented the results of his research and analysis, recommending that they not protest the award to Green Services. The CEO was upset that there was no means of addressing what he believed was an injustice. In the end, the CEO saw the wisdom of just moving on to the next project. He did, however, resolve that, before the next important competition, they would hire their own government employee, and maybe things would be different.

    The essence of the above scenario is a fair depiction of events in a significant number of cases.8 The specific situation, which is the subject of this article, is one in which a non-clerical federal employee leaves government service and accepts employment of some type with a contractor. The contractor is competing for a contract to be awarded to fulfill a requirement with which the former government employee had substantial involvement while in public service, either in the instant procurement or in the administration of a predecessor contract (the "FGE case" scenario).9

  2. So What?

    (a) A Statistical...

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