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Defense contractors' ethics policies questioned: GAO finds little oversight of compliance with conflict-of-interest rules.

The Defense Department said it will increase scrutiny of contractors' ethics policies and practices after the Government Accountability Office The Government Accountability Office (GAO) is the audit, evaluation, and investigative arm of the United States Congress, and thus an agency in the Legislative Branch of the United States Government.  found the department was paying little attention to whether companies are complying with ethics rules.

"Defense acquisition regulations provide that government contractors A government contractor is a private company that produces goods or services under contract for the government. Often the terms of the contract specify cost plus – i.e., the contractor gets paid for its costs, plus a specified profit margin.  should have standards of conduct and internal control systems that promote ethical standards, facilitate timely discovery and disclosure of improper conduct, and ensure corrective measures are promptly implemented," GAO said. "However, DOD (1) (Dial On Demand) A feature that allows a device to automatically dial a telephone number. For example, an ISDN router with dial on demand will automatically dial up the ISP when it senses IP traffic destined for the Internet.  cannot identify nor take action to mitigate risks because it lacks knowledge of its contractors' efforts to promote ethical standards."

Defense regulations require contractors to have standards of conduct, training in ethics and internal controls to ensure compliance.

The law generally prohibits former federal employees and their supervisors from representing contractors concerning matters they handled while they were working for the government. "While DOD evaluates components of contractors' financial and management controls, neither the Defense Contract Management Agency nor the Defense Contract Audit Agency--the agencies responsible for oversight of defense contractors' operations--had assessed the adequacy of contractors' practices for hiring current and former government employees," GAO said.

GAO said one major defense contractor Noun 1. defense contractor - a contractor concerned with the development and manufacture of systems of defense
armed forces, armed services, military, military machine, war machine - the military forces of a nation; "their military is the largest in the region";
 commissioned an independent evaluation of its ethics practices: "This review found that the company relied excessively on employees to self-monitor their compliance with post-government employment restrictions."

The auditors said the DOD inspector general's office "told us that anecdotal evidence anecdotal evidence,
n information obtained from personal accounts, examples, and observations. Usually not considered scientifically valid but may indicate areas for further investigation and research.
 indicates post-government employment misconduct is a problem, but DOD has no basis for assessing its severity."

In response to the GAO report, Daniel J. Dell'Orto, deputy Defense Department general counsel, said the department "intends to call upon companies throughout the defense industry to reexamine re·ex·am·ine also re-ex·am·ine  
tr.v. re·ex·am·ined, re·ex·am·in·ing, re·ex·am·ines
1. To examine again or anew; review.

2. Law To question (a witness) again after cross-examination.
 their ethics programs and share best practices."

Alluding to the Air Force scandals involving former acquisition executive Darleen Druyun Darleen A. Druyun (born November 7, 1947), a former United States Air Force civilian official and Boeing executive. Education
Druyun graduated from Chaminade University of Honolulu and the executive education program at the Kennedy School of Government at Harvard
, GAO noted that "the risk of ethical misconduct can be costly." After Druyun's conviction, the U.S. attorney in Alexandria, VA, created a procurement fraud working group to monitor the procurement process.
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Publication:Set-Aside Alert
Date:May 13, 2005
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