Pentagon to Investigate Defense Contractor Hiring Practices
 
March 15, 2004
 
Jennifer A. Short- Northern Virginia

The Pentagon inspector general’s office has launched an inquiry into the hiring practices of defense contractors that recruit high-level military officials to work for their companies. (See “Pentagon Probes Suppliers’ Hiring,” Wall Street Journal, Jan. 12, 2004 at A3) The investigation was prompted by the Boeing Company’s decision in November 2003 to terminate Michael Sears, the company’s chief financial officer, and Darleen Druyun, a Boeing vice president who previously had served as an acquisition official for the Air Force. Boeing apparently discovered that Sears and Druyun had engaged in job discussions while Druyun was involved in negotiating a refueling tanker lease with Boeing.

The resulting DoD investigation of Boeing was expanded to determine whether any other contracts might have been affected by Sears’ and Druyun’s allegedly improper conduct. Now, the Defense Department has suggested that the activities of other defense contractors are likely to be reviewed, as well. The immediate targets of investigation are likely to be large defense contractors, but the probe could extend to other companies that recruit from the military ranks. Secretary of Defense Donald Rumsfeld also has asked the Pentagon’s General Counsel to review the government’s ethics rules that apply to officials seeking jobs in the defense industry after they leave the government.

While Boeing is the initial focus of the Inspector General’s efforts, both defense and civilian contractors should take this opportunity to examine their own policies and procedures, and to remind their employees of the parameters for interacting with federal workers. More specifically, contractors should:

• Identify each potential employee’s previous government service, and their prior responsibilities, if any, related to the contractor or any of its affiliates. If the potential employee has had responsibility for activities pertaining to the contractor, ensure that the individual has, if appropriate, recused himself or herself from all activities pertaining to the contractor.
   
• Determine whether the potential employee participated in any way in procurement or contract administration decisions.
   
• If appropriate, ensure that the potential employee has requested and obtained an opinion from his or her designated ethics official as to the prospective employment.
   
• Be cognizant of lobbying/advocacy limitations imposed by the Ethics in Government Act on potential employees who were high-level federal officials.
   
• Establish internal procedures to ensure that contacts with any potential employee – if he or she will come from government – do not violate the law.
   
• Refrain from giving gifts, paying for meals, or covering expenses on behalf of government employees.
   
• Ensure that no competitor’s bid and proposal information, or source selection information, is released in violation of the Procurement Integrity Act.
   
• Be aware of the ethics rules that apply to federal employees regarding employment discussions and recusal.
   
• Provide employees with regular training on the rules and practices that limit the hiring of former government officials.
   
• Comply with the limits placed upon former federal officials in representing their new company in matters before the government.

Policies regarding the hiring and employment of former federal employees should be incorporated into a comprehensive compliance program that is designed to prevent, detect and resolve statutory and regulatory violations. An effective compliance program can help a company avoid, or at least mitigate, the potential consequences of improper conduct involving the hiring of former government officials.

For more information, e-mail Jennifer A. Short at jennifer.short@hklaw.com, or call toll free, 1-888-688-8500.