Ethics for an Outsourced Government


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In recent decades, the federal government has greatly expanded its use of contractors to perform services, and now purchases more than $200 billion in services every year. The government increasingly turns to contractors to accomplish its programmatic goals, and contractor personnel are now performing tasks that in the past had been performed by government employees.
While an extensive array of ethics statutes and rules regulate government employees, only a few of these restrictions apply to contractor personnel. The personal conflicts of interest of contractor personnel are largely unregulated.
This presentation describes the rise in outsourcing and outlines several recent developments recommending and imposing conflict of interest standards on some contractor personnel.

Published in: Business, Spiritual
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Ethics for an Outsourced Government

  1. 1. Ethics for anOutsourced GovernmentKathleen ClarkWashington University in St. Louis8th AnnualState & Local Procurement SymposiumNashvilleMay 20131
  2. 2. AcknowledgmentThis research was supported by a contract fromthe Administrative Conference of the UnitedStates (ACUS).
  3. 3. An Illustration of the ProblemDan Jester–Advised Treasury on AIG bailout–Owned Goldman Sachs stock–Handled AIG bailout in a way that benefitedGoldman Sachs -- and himself
  4. 4. Criminal Conflict of Interest Statute18 U.S.C. § 208(a)“employee of the executive branch . . .participates personally and substantially . . .through . . . the rendering of advice, . . .in a . . . particular matter in which, . . .he . . . has a financial interest”
  5. 5. Federal Government Spending
  6. 6. Number of Federal Employees
  7. 7. Spending on Service Contracting
  8. 8. Spending: Services v. Products
  9. 9. Many Ethics Restrictionson Employees• financial influences• use of government position• outside activities• post-government employment• pre-government employment
  10. 10. Few Ethics Restrictionson Contractor Personnel• A few agencies - narrow regulations re:contractor [personal] PCI• Government-Wide Regulations re:contractors’ [organizational] OCI• contractors’ Internal Ethics Codes
  11. 11. Exception: FDIC• Deems some contractor personnel to begovernment employees• Comprehensive regulations for contractorspersonnel–Financial influences - including family–Misuse of government resources - including info–Outside activities–Post-employment
  12. 12. ACUS Recommendation (2011)Optional FAR clauses for contracts with high risk of:• personal conflicts of interest (PCI)• misuse of non-public informationContractors must:• train• internally report PCIs• screen employees• externally report (to government) violations
  13. 13. FAR Clause on PCI (2011)Contractor personnel who performacquisition functionsclosely associatedwithinherently governmental functions13
  14. 14. ABA House of Delegates (2013)Supports 2011 FAR ruleRecommendations:- expand PCI standards to high-risk contracts- require certifications by contractors14
  15. 15. Fiduciary Standards for Bailout Contractors:What Treasury Got Right and Wrong in TARP95 Minn. L. Rev. 1614 (2011)Financial Conflicts In and Out of Government:Ethics, Employees and Contractors62 Alab. L. Rev. 955 (2011)Ethics For An Outsourced GovernmentAdministrative Conference of the United States (2011)Publications
  16. 16. Ethics for anOutsourced GovernmentKathleen ClarkClarkEthicsConsulting@gmail.com8th AnnualState & Local Procurement SymposiumNashvilleMay 201316