Ethics, Employees and Contractors: Financial Conflicts In and Out of Government

Abstract

In recent decades, the federal government has greatly expanded its use of contractors to perform services, and now purchases more than $260 billion in services every year. The government has increasingly turned 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 government employees are subject to strict ethics standards, most of these standards do not apply to contractor personnel. If a federal employee makes a recommendation on a matter that could affect her financial interest, she could be subject not only to administrative discipline but also to criminal prosecution. In most cases, a contractor employee who has that same financial interest and makes the same recommendation is not subject to any consequences. In fact, the government does not have any systematic way of even finding out when contractor personnel have such conflicts of interest. The personal conflicts of interest of contractor personnel are largely unregulated.

This article the disparity between the strict regulation of employees and the lax regulation of contractor personnel; explores possible explanations for the wide disparity in standards for these two groups; and suggests several research questions that should be answered prior to deciding whether to impose strict financial conflict standards on contractor personnel.

Keywords: corruption, ethics, fiduciary duty, public law, conflict of interest, bailouts, public procurement, government contract, outsourcing, acquisition workforce