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.

1. Ethics for an
Outsourced Government
Kathleen Clark
Washington University in St. Louis
8th Annual
State & Local Procurement Symposium
Nashville
May 2013
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2. Acknowledgment
This research was supported by a contract from
the Administrative Conference of the United
States (ACUS).

3. An Illustration of the Problem
Dan Jester
–Advised Treasury on AIG bailout
–Owned Goldman Sachs stock
–Handled AIG bailout in a way that benefited
Goldman Sachs -- and himself

4. Criminal Conflict of Interest Statute
18 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. Federal Government Spending

6. Number of Federal Employees

7. Spending on Service Contracting

8. Spending: Services v. Products

9. Many Ethics Restrictions
on Employees
• financial influences
• use of government position
• outside activities
• post-government employment
• pre-government employment

10. Few Ethics Restrictions
on Contractor Personnel
• A few agencies - narrow regulations re:
contractor [personal] PCI
• Government-Wide Regulations re:
contractors’ [organizational] OCI
• contractors’ Internal Ethics Codes

11. Exception: FDIC
• Deems some contractor personnel to be
government employees
• Comprehensive regulations for contractors
personnel
–Financial influences - including family
–Misuse of government resources - including info
–Outside activities
–Post-employment

12. ACUS Recommendation (2011)
Optional FAR clauses for contracts with high risk of:
• personal conflicts of interest (PCI)
• misuse of non-public information
Contractors must:
• train
• internally report PCIs
• screen employees
• externally report (to government) violations

13. FAR Clause on PCI (2011)
Contractor personnel who perform
acquisition functions
closely associated
with
inherently governmental functions
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14. ABA House of Delegates (2013)
Supports 2011 FAR rule
Recommendations:
- expand PCI standards to high-risk contracts
- require certifications by contractors
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15. Fiduciary Standards for Bailout Contractors:
What Treasury Got Right and Wrong in TARP
95 Minn. L. Rev. 1614 (2011)
Financial Conflicts In and Out of Government:
Ethics, Employees and Contractors
62 Alab. L. Rev. 955 (2011)
Ethics For An Outsourced Government
Administrative Conference of the United States (2011)
Publications

16. Ethics for an
Outsourced Government
Kathleen Clark
ClarkEthicsConsulting@gmail.com
8th Annual
State & Local Procurement Symposium
Nashville
May 2013
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