GAO: Contractors Need Conflict-of-Interest Rules The Government Accountability Office is urging the Defense Department to develop personal conflict-of-interest rules for contractor employees, similar to the ones that apply to federal workers. DOD said it is considering the issue. GAO said while many contractor personnel work side-by-side with federal employees in sensitive positions, the laws and regulations governing their conduct are far different. Federal employees have certain restrictions on future employment; contractors do not. Contractor employees are not required to disclose their financial interests or avoid the appearance of impartiality. No rules prohibit them from participating in a matter that affects their personal interest; accepting travel and gifts; using nonpublic information for personal gain; or misusing their positions to provide preferential treatment to a private interest. All those activities are prohibited for federal workers. While regulations require large DOD contractors to have written ethics policies, GAO said those policies typically prohibit company employees from conflicts with their employer’s interest, not the government’s. “No departmentwide or FAR policy obliges DOD offices using contractor employees to require that they be free from personal conflicts of interest,” the auditors said. They said the “costs of contractor employees constructing options for their personal gain - an outcome increasingly likely based on sheer numbers - would likely never be known, let alone calculable as long as there is no transparency.” GAO found contractor employees’ duties are often “similar to functions performed by federal employees,” such as assisting in acquisitions. Many program offices have imposed their own conflict-of-interest rules for contractors involved in source selection, but not for other functions such as developing requirements or cost estimates. Many industry executives told the auditors that no new rules were needed because government officials, not contractor employees, make the decisions. The executives also said administering conflict of interest rules would add to the government’s costs. DOD said it has created a subcommittee to examine the GAO recommendations.