By Cliff Montgomery – Sept. 26th, 2009
The U.S. Government Accountability Office (GAO) often is called “the congressional watchdog” and “the investigative arm of Congress.” On September 22nd, GAO released a report on the Pentagon’s oversight of its major contractors.
The conclusion? “Opportunities Exist to Improve DOD’s Oversight of Contractor Ethics Programs.”
We offer quotes from the GAO study below:
“Until recently, ethics programs and practices of defense contractors were self-policed. Given the significant sums spent to acquire goods and services, the Federal Acquisition Regulation (FAR) was amended twice starting in December 2007 to first mandate and later amplify contractor ethics program rules.
“Before FAR changes were finalized in December 2008, Congress required GAO to report in 2009 on the ethics programs of major defense contractors.
“This report (1) describes the extent that contractors had ethics programs before the finalization of the FAR rules that included practices consistent with standards now required by the FAR and (2) assesses the impact the new FAR rules have on Department of Defense (DOD) oversight of contractor ethics programs.
“To do this work, in September 2008 GAO surveyed all 57 contractors—those receiving more than $500 million in 2006 DOD contract awards—and interviewed DOD contractor oversight agency officials on the impact of the new FAR rules on oversight.”
“All 57 contractors responded to GAO’s survey, and 55 reported having ethics programs that include many of the practices consistent with standards now required for compliance with the FAR. The ethics practices information GAO obtained was from before the FAR rules were finalized and thus was not designed to test contractor compliance with the rules that came later.
“In response to the new FAR rules, DOD has made two key oversight improvements by revising its contract audit guidance to cover the new ethics requirements and establishing the Contractor Disclosure Program to implement the mandatory disclosure requirement.
“However, opportunities exist to improve DOD’s oversight in two other key areas.
“For example, in verifying implementation of contractor ethics programs during contract administration, the impact of the FAR rules on oversight at this point is negligible. GAO found that DOD had no plans to change contract administration offices’ oversight because authority for oversight is not explicit nor is organizational responsibility clear.
“Also, with regard to contractors’ hotline poster displays, the new FAR rules could reduce DOD’s awareness of potential violations. The rules exempt contractors with ethics programs that include their own hotlines from the requirement to display DOD hotline posters. If contractor employees report violations to company hotlines instead of DOD hotlines, the employees do not receive the same protections from whistleblower laws. Whistleblower protections for employees unaware of the DOD hotline could be jeopardized.”
