Please check out my article that ran today in LAW360: http://www.law360.com/articles/511079/print?section=governmentcontracts
Don’t Believe That All Gov’t Contractors Are Corrupt
We are wading through another period where we are told in one news story after another that all government contractors are corrupt. “Fat Leonard” stories about prostitutes and bribes. Not-so-small businesses supposedly lie to gain access to lucrative contracts set-aside for small businesses. And, of course, we hear loud indignant voices ringing in the halls of Capitol Hill because there are not enough harsh penalties and debarments to put a stop to these corrupt contractors. Everyone, it seems, is piling on. The government contractor has even become the lazy Hollywood scriptwriter’s modern villain de jour, a reliable bad guy because everyone knows they are bad.
Don’t believe it.
At least, don’t believe all of it. The sweeping proclamations that pass for political and media discourse are unfair to the vast majority of ethical contractors providing needed goods and services to the government. This I know from personal experience.
I have served as a government suspending and debarring official and a fraud remedies director, taught fraud investigation and remediation governmentwide, and overseen suspension and debarment operations for a military department of the U.S. government. In those roles, I have seen some of the most unethical contractors that, by their actions, have helped turn a valuable industry into a convenient target. But I have also seen just as many that worked hard to earn a reputation as a trusted, ethical business partner.
Conveniently forgotten in today’s discussion are the contractors that sincerely embrace corporate ethics and seek to partner with their government customers from a basis of trust. There are still plenty of difficult negotiations and issues to work out with these contractors, but the ability to deal openly and honestly, with transparency, trust and respect for one other yields great results.
During my time in the government, I worked with many contractors that had robust corporate ethics programs and liked to meet with the suspending and debarring official to discuss progress in these programs (though it was sometimes hard to tell if these meetings occurred out of fear of the office or pride in the program — probably both). But one example stands out in my mind of a company that went above and beyond all expectations.
The U.S. Air Force and other U.S. agencies often enter into an “administrative agreement” (a probation agreement in lieu of debarment) with government contractors accused of misconduct. By the terms of such agreements, their restrictions usually apply to acquisitions or divestitures by the contractor. Generally businesses that are being acquired or divested fight to get out from under such provisions. These are, predictably, less than pleasant encounters destined for one conclusion: Live with it.
I was expecting just such as encounter when, in my capacity as a suspending and debarring official, I met with the senior executives of Engility Corporation, a Chantilly, Va.-based government contractor. Engility was created in a spinoff transaction from a large defense contractor that was subject to an administrative agreement. Engility was required to adopt that agreement even though the Engility business had not been involved in the conduct. I was not expecting a pleasant meeting. Was I ever wrong.
Among the first things out of the Engility CEO’s mouth was: “We believe corporate ethics is a differentiator for Engility.” And he and his team proceeded to explain what they meant. The company was created to compete for government services work in a highly cost-competitive environment. But the company, according to its leadership, was committed to partnering with the government and focusing every day on ethics to ensure that low costs did not mean lower ethical standards.
One of the most expensive and difficult to implement elements of many administrative agreements is a requirement to do live ethics training with each employee of the company. When a company, such as Engility, has over 7,000 employees spread across all 50 states and even more countries, this is no small task. Rather than seek relief, the Engility CEO applauded the requirement: what better way to directly communicate with each employee of the company to spread the ethical culture that Engility’s leadership was establishing. The pitch was impressive, even if my staff and I were a bit incredulous.
Over the next several months, however, Engility proved that it did indeed embrace ethics as a core value and a strategic differentiator. Repeatedly, I heard the CEO say (or heard others recount hearing the CEO say) when empowering his employees, “If it’s not illegal, immoral or unethical, I’ve got your back.” And this message was conveyed across the U.S. Department of Defense, no matter who the audience was — debarring officials, program managers, acquisition professionals, etc. In a remarkable moment of “partnership,” Engility’s management invited my office to provide the annual live ethics training to its board of directors. That was a first.
Was Engility’s approach wholly novel? Perhaps not. But it was certainly notable. I received at least four calls from colleagues across the DOD enterprise asking me, “Do these Engility folks really believe what they’re saying?” And, as far as I could tell, they did. And it made dealing with the company from a foundation of trust easy. That did not mean we agreed upon everything — far from it — but it meant that we could trust each other and arrive at solutions relatively easily and quickly.
I often hear, generally from career government professionals, “Contractors are only in it for the money.” I think this complaint stems from a sense that contractors are unwilling to provide everything the government needs, including keeping up with frequent scope changes, for free. (And in our low price, technically acceptable world, contractors should not be expected to do that because they are already bidding at bare minimums just to win the business — it is far from a universal truth that there is such thing as “lucrative government contract”.) But this sentiment also reflects the distrust between the government and industry where each believes the other is trying to get one over.
The inevitable hard conversations that happen in government contract formation, administration and enforcement are so much easier when you know going in you can have an “adult conversation” from a basis of mutual trust and respect. That is why I enjoyed dealing with Engility, even as a suspending and debarring official.
For example, when Engility’s executives briefed us on problems inherited from multiple legacy companies, after we reviewed the evidence, it was easy to trust the representations that the current company had nothing to do with the misconduct but had taken steps to ensure similar problems would not arise again.
There are many contractors that, like Engility, embrace ethics as a corporate value. There are others that go out of their way to advance mutual understanding and improve business processes, like Henry Livingston of BAE Systems PLC, with his expert focus on counterfeit part detection and remediation, who was kind enough to speak at the Air Force law day on this issue without any compensation or benefit to himself. All of this is lost in the current and ever recurring drumbeat about fraud, waste and abuse.
Government contractors, I believe, reflect the population as a whole (as do government employees). We are all alike: some bad, many more good. It is fundamentally unfair to tar the vast majority of ethical, hard-working contractors who assist the government on a daily basis. So, each time you see a condemning headline or hear a harsh soundbite, remember that it is not the whole story.
—By David Robbins, Shulman Rogers Gandal Pordy & Ecker PA
David Robbins chairs the government contracts practice at Shulman Rogers in Potomac, Md. He was previously assistant deputy general counsel (contractor responsibility) for the U.S. Department of the Air Force.
He does not represent any of the companies mentioned in this article.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.