Raytheon’s Win in Conflicts Case Serves as a Vetting Reminder

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By Daniel Seiden

People come, people go. Outside to inside the beltway. Public to private to public again. That’s life in Washington, but the transience can cause complications for government contractors, such as conflicts of interest.

Contractors that want to employ desirable experts with government experience need to know how to prevent conflicts of interest when submitting bids, as illustrated by a recent Raytheon cybersecurity contract award protested by Northrop Grumman.

Northrop Grumman couldn’t show that Raytheon’s employment of former government officials — and their alleged access to competition information — tainted the award, but the attempt serves as a reminder for contractors of the importance of vetting their high-profile hires.

The issue isn’t prevalent in bid protests “because hiring a former official who can provide, or even appear to provide, a competitive advantage is a high-stakes gamble that both the contractor and former official try to avoid,” John G. Horan, a partner at Dentons LLP, Washington, told Bloomberg Government.

However, it is “essential that contractors have guidelines in place to avoid these conflicts of interest, as well as to ensure compliance with all other hiring and representation restrictions on former government officials because the stakes are very high,” he said.

“A contractor can be disqualified from award of the very contracts it intended the former official to work on and, in egregious cases, be suspended or debarred from government contracting. The official could face criminal charges,” he added.

Agencies’ contracting officers are required to assess whether organizational conflicts of interest exist under Federal Acquisition Regulation, and mitigate significant potential conflicts, such as an unequal access to information, before making contract award decisions.

Inside Knowledge

Screening new employees should be part of a contractor’s process for identifying, mitigating, and avoiding conflicts of interest, Michelle Litteken, an associate at PilieroMazza PLLC, Washington, told Bloomberg Government.

“Contractors should gain an understanding of the new employee’s prior level of authority and obtain the employee’s former job description,” she said. “Contractors should also obtain a copy of the employee’s ethics opinion if one was prepared by the former employee.

“New employees may need to be firewalled from activities for which they have competitively useful non-public information,” she added.

In some situations, “a contractor may want to have the new employee sign representations and certifications regarding the information provided,” she said. “Additionally, it cannot be forgotten that former federal employees are often subject to post-employment restrictions that limit what the employee can do in the private sector.”

Revolving Door

A revolving door connecting government officials to private contractors is quite active, Horan said, as illustrated by a Defense Department-operated database called the “After Government Employment Advice Repository,” which tracks the propriety of defense officials working for defense contractors.

Fifty-two contractors employed 2,435 former Defense Department senior and acquisition officials that were subject to restrictions on their post-government employment, according to a 2008 Government Accountability Office report.

“The good news is that the GAO also reported that most of the major defense contractors surveyed in 2008 had established practices for ensuring awareness and compliance with post-government employment restrictions, and those practices have likely become more common and more robust in that last 10 years,” Horan said.

Further, 22 out of 40 former high-ranking officials who left the Coast Guard from 2005 through 2009 received compensation from Coast Guard contractors, a 2011 GAO report said.

Outdated Information

Northrop Grumman believed it could upend Raytheon’s cybersecurity award by calling attention to the unfair competitive advantage Raytheon gained by hiring two former DHS officials with allegedly unlimited access to information concerning the department’s cybersecurity requirements.

However, the department reasonably concluded that the officials didn’t have access to competitively useful information concerning this procurement, the GAO said Oct 4.

Specifically, the officials may have had access to cybersecurity contract documents, but the fact that the officials left DHS more than two years before the protested contract competition started made that information outdated, the GAO said.

Another recent conflicts protest fell short in Harkcon Inc. v. United States, whereby a former Coast Guard captain who joined a training services contractor as a consultant didn’t taint an $84 million award, the U.S. Court of Federal Claims said in August.

The captain didn’t have access to competitively useful information while he was with the Coast Guard, and retired before the service finalized its contract competition plan, the court said.

Highly Valued

Although the protests were unsuccessful, every prospective contractor and subcontractor should be aware of the potential for conflicts, said Matthew Schoonover of Koprince Law LLC, Lawrence, Kan.

“It’s no secret that former agency employees are highly valued as private-sector employees,” he said. “Large businesses in particular are generally eager to bring them onboard. So, we see these concerns arise with some frequency.”

Robust ethical compliance or organizational conflict of interest mitigation plans are necessary for contractors to rectify potential conflict issues, such as understanding whether any former government employees had access to competitive information, Schoonover said.

To contact the reporter on this story: Daniel Seiden in Washington at dseiden@bna.com

To contact the editor responsible for this story: Daniel Ennis at dennis@bna.com

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