20 May 2010

New Rules for Contractors

New ethics rules are rolling out for US DoD contractors.

Northrop Grumman cut TASC loose after the government announced it would be taking a harder stand on potential organizational conflicts of interest -- or cases in which a company provides multiple services that could have conflicting interests, such as building a system and then performing the tests to see if it works.

But whether such divestitures are necessary remains to be seen. The Defense Department recently released its draft rules for governing organizational conflicts of interest. In many cases, the government would allow contractors to take steps to mitigate potential conflicts, such as setting up institutional firewalls to separate groups.

Stan Z. Soloway, president and chief executive of the Professional Services Council, a trade group for contractors, said the proposed regulations still need to spell out more clearly what the industry needs to do to avoid running afoul of the rules, and the draft does not appear to take into account the integrated nature of the information technology industry.

But he said he was pleased the proposed rules leave the door open for companies to propose solutions. "I think the idea that you can never mitigate a potential conflict of interest is not only incorrect but could potentially ... have a truly chilling effect, not only on industry but on government as well and the ability to access the right kinds of solutions and capabilities," he said.

By: Brant

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