New PCI Regulations Mean New Costs

According to a 2008 GAO report, the government employees closest to the PCI situation, DoD program managers, generally agree that standard safeguards are needed for contractor employees participating in the acquisition process.

However, most departments of the DoD already have safeguards in place against PCI, and “a number of program managers…expressed concern that adding new safeguards will increase costs for the government and are unnecessary since government officials—not contractors—are the ones ultimately making the decisions.”

The report goes on to say “DoD oversight officials as well as Office of Government Ethics (OGE) officials, however, believed additional safeguards are necessary to maintain public confidence, particularly since contractors are increasingly being involved in spending decisions, though this could be achieved through changes in policy and practice and changes in regulations rather than changes in the law.”

In other words, the push for new PCI regulations is largely a political maneuver, as protecting “public confidence” is the impetus for new regulations.

All of the 19 offices reviewed by GAO had already established safeguard procedures through PCI clauses in contracts or self-certification protocols to prevent PCI issues for contractor employees involved in the acquisition process.

Additionally, six offices had safeguards for contractors performing other types of advisory and assistance tasks. For example, the Army’s Communications Electronics Lifecycle Management Command and the Air Force’s Electronics Systems Center have developed contract clauses for other types of contractor employees who directly advise and assist federal decision-makers.

In fact, for contractors not involved in the acquisition process, some program managers feel that additional PCI safeguards could create a cost and oversight burden. From GAO’s report, “these managers also stressed that government officials are ultimately responsible for decision-making, not contractor employees.”

When GAO asked DoD officials to detail cases of improper conduct involving contractor employees, “some officials also pointed out that very few cases of actual conflicts of interest or other ethics problems involving contractor employees have been publicly identified and in most of these cases, the situations were handled informally.”

These program managers are also concerned that requiring contractor employees to abide by certain safeguards, i.e. submitting financial disclosure forms or submitting to government ethics audits “could chase away qualified contractors from federal work.”

Basically, DoD program managers are worried that new PCI regulations will mean more paperwork and higher costs, while the government already suffers from a shortage of acquisition personnel and ballooning federal deficits threaten to cut into DoD funding.

Next week, PCI and Government Contractor Employees