The New Year did not bring newer, tougher conflict-of-interest rules for companies working for the Department of Defense, as was feared by industry. Instead of imposing revamped regulations for defense contractors, the Pentagon decided to water down its final proposal affecting large corporations that utilize subsidiaries to complete jobs for the military.

 

The new rule applied to so-called “organizational conflicts of interest,” in which the interests of a contractor are not compatible with the interests of the U.S. government. Writing in Wired, Spencer Ackerman gives the example of a defense company that wins a contract to build a weapon, while one of its subsidiaries gains a separate contract to test the weapon. The subsidiary can stretch the parent company’s contract by sending the weapon back for redesign. Before the new rule was put forth, companies were concerned that they might have to give up part of a project to resolve any Pentagon concerns.

 

But that’s not likely to happen now. The Project on Government Oversight, which uncovered the year-end change, wrote on its website: “Absent from the final rule is the strong language about providing uniform guidance and a tightening of existing requirements. In its place is a rule that was significantly scaled back … and altered in tone.”

 

POGO added that the language in the regulation “reads like a contracting association lobbying letter” because of talk about not getting in the way of contractors winning new deals with the department.

-Noel Brinkerhoff

 

Pentagon Issues Ethics Memo Before Gutting Conflict-of-Interest Rules (by Spencer Ackerman, Wired)

2010 Ends with Contracting Ethics Defeat (Project on Government Oversight)

POGO's Public Comment Regarding Conflicts of Interest in Major Defense Acquisition Programs (Project on Government Oversight)