CHAPTER 1
THE BASICS
A single, uniform source of standards of ethical conduct and ethics guidance shall be maintained within the Department of Defense (DoD), and each DoD Agency shall implement and administer a comprehensive ethics program to ensure compliance with such standards and guidance (DoD 5500.07-R).
1.1 Introduction to Ethics in Government Contracting
Personal conflict of interest among government contracting personnel is an important area in government contracting in which clear, concise, and up-to-date regulatory coverage is urgently needed. The Federal Acquisition Regulation (FAR) lists statutory regulations to guide employees who perform acquisition support functions under contracts awarded by federal government organizations. In 2009, new developments were implemented in an attempt to curtail the rise of corruption and unethical occurrences in government contracting.
To act ethically or unethically is the question that employees face when administering government contracts. According to the Office of Personnel Management (OPM), government contracting employees may solicit, evaluate, negotiate, and award contracts to any contractor, vendor, or supplier authorized to do business with government contracting organizations. These employees should uphold the highest standards of ethical integrity since their job requires exercising judgment over public funds.
Federal government contracting is an important component in the United States' success. These organizations are major participants in the acquisition of goods and services from public and private entities, and Congress has enacted statutes and regulations that guide government contracting policies and values. Recent increases in government spending have contributed to unethical behaviors by government contracting employees. To combat this, the Department of Justice (DOJ) has allocated financial resources to fight against contracting fraud. The Office of the Inspector General (OIG), overseen by the Inspector General, monitors and tracks the use of taxpayer dollars through assessments, evaluations, examinations, and inquiries. The Inspector General is required to keep Congress updated about any concerns noted regarding the use of taxpayer funds.
With unethical behaviors continuing to plague the government contracting arena, researchers struggle to fine reasons for such occurrences. Unfortunately, no consensus exists, either about why unethical behaviors occur or about how to prevent them. Contributing to the problem, vaguely defined regulations do not provide enough transparency in the contracting process; furthermore, government contracting organizations may not be clearly defining ethical standards.
In the past decade, unethical behaviors by some government contracting employees have increased.36 Since 2005, increases in unethical behavior by government employees have been reported by the Government Accountability Office (GAO); however, there was a reduction in employees who revealed knowledge of unethical behaviors. For example, employees have taken unauthorized gifts in exchange for unwarranted contracts.
It is highly unethical and improper for government contracting employees to work outside the confines of the FAR (Federal Acquisition Regulations) requirements. As unethical behaviors by employees continue, researchers attempt to understand what leads to such behaviors. This trend in abuse of ethics generated an impression of widespread ethical violations in government contracting organizations. In addition, workplace culture might influence unethical behavior.
1.2 Who Is the Government Contracting Employee?
Although government contracting employees have been subject to an extensive set of personal conflict of interest rules under statute and Office of Government Ethics (OGE) regulations, unethical behaviors by those individuals still plague government contracting organizations. Is it necessary to be ethical in government contracting? Is it acceptable for government contracting employees to take gifts from contractors doing business with the government? Are government contracting employees mindful of ethics in their business relationships with contractors? Government contracting employees are faced with challenges of ensuring that their decisions are ethical and comply with precise standards of conduct whenever doing government business.
In light of recent scandals involving government contracting personnel, we can note that government contracting ethics are not what they used to be. In recent years, business between employees and contractors became a teaming approach. The days of the government conducting business at arms' length are gone. Due to teaming with contractors, one might argue that the government has relaxed its ethical standards in government contracting. Is teaming between government contracting and contractors beneficial to the government or does teaming present employees with ethical challenges and obstacles? Some people postulate that these changes have improved business relationships between government contracting organizations and contractors. Still others speculate that the government has opened avenues for their employees to be unethical. Regulators' mandate is to prevent fraud, waste, abuse, and corruption government contracting; however, government contracting is still plagued with scandals and controversies.
What is ethics? Merriam Websterdefines ethicsas a set of principles that governs the individual. However, before we can determine what ethical standards an employee is required to follow, we should first understand who the government contracting employee is. The Office of Personnel Management (OPM) classifies the contracting employee series (1102) this way:
Positions in the contracting series are concerned with: (1) soliciting, evaluating, negotiating, and awarding contracts with commercial organizations, educational institutions, nonprofit organizations, and State, local or foreign governments for furnishing products, services, construction or research and development to the Federal Government; (2) administering contracts by assuring compliance with the terms and conditions of contracts, including resolution of problems concerning the obligations of the parties; (3) terminating contracts by analyzing, negotiating, and settling claims and proposals; (4) analyzing and evaluating cost or price proposals and accounting systems data; (5) planning, establishing, or reviewing contracts, programs, policies, or procedures; (6) formulating and administering policies and procedures to insure achievement of Federal socioeconomic goals, such as those affecting small business, labor surplus areas, and disadvantaged business firms; (7) developing acquisition strategies and directing or managing procurements; and (8) providing staff advisory services in one or more of the specializations in this occupation (OPM, 1983, retrieved from http://www.opm.gov).
As we can see, government contracting employees wear various hats. Can we then say these individuals are experts in their fields? Are they qualified, extensively trained individuals who are versed in the fundamentals of government contracting? We would hope so. The aforementioned employees are known by different names. Some may say they are civil servants, some may call them GS employees, and still some may simply call them thieves. Yes, thieves.
You may be scratching your head on the last description. Why would anyone describe these experts as thieves? Well, this is where our dilemma begins.
The United States Office of Government Ethics has a division dedicated to preventing conflicts of interest within the executive branch of the government. With so many agencies under one umbrella, there became a need to establish one uniform regulation to govern all employees of the Executive Branch. On February 3, 1993, 5 C.F.R. Part 2635 was codified and directed so that the aforementioned employees were now regulated by a set standard of ethical conduct for employees of the executive branch.
Managers and supervisors are required to emphasize ethics and moral integrity during annual ethics training. Federal government contracting employees must avoid negative behaviors such as bribery, misappropriation of public funds, fraud, conflicts of interest, payoffs, and kickbacks when doing their jobs. The public is watching. What a few employees do may have negative and lasting effects on what is thought about the entire organization.
We see it every day. How many times have we picked up a newspaper, turned on the television, gotten a news ping on our smartphones, or read an article on the Internet regarding another government employee scandal? Have you asked yourself why? What is causing the negative behavior? What can be done about it? In addition, when will it stop?
To answer those questions, I decided to take a journey to a group of subject matter experts (SMEs). Not experts in the area of bribery, fraud, and kickbacks, but experts in the area of contracting. Those individuals may have witnessed the above behaviors or may have insights into the cause and effect of the whys of said behaviors. Let us start with the experts. We do not need to go back very far to find cases of employees taking bribes from contractors. For example, in July of 2010, the Department of Defense (DoD) Standards of Conduct Office, a part of the Office of General Counsel published cases concerning U.S. federal government contracting employees convicted of unethical conduct. Cases included employees who used their positions to award unapproved contracts. One employee received fifteen years in prison for accepting bribes to issue contracts to unqualified organizations, while another who accepted bribes was fined more than $250,000 in addition to a prison sentence.
Authority
5 C.F.R. (Code of Federal Regulations) Part 2635
DoD (Department of Defense) 5500.07-R
Federal Acquisition Regulation (FAR)
Office of Personnel Management (OPM)
Note: "Always do right; this will gratify some people, and astonish the rest." (M. Twain)
1.3 The Problem
This behavior is detrimental to government contracting organizations because it threatens the national defense and increases wasteful spending of taxpayer funds. When employees fail to act ethically, the reputation of the previously mentioned organizations deteriorates. In 2013, the Department of Justice Office of the Inspector General reported cases of employees accepting bribes totaling more than $540 million within a six-year period.
The general business problem of this study, as mentioned previously, the Inspector General noted increases in occurrences of unethical conduct, but the number of employees willing to reveal such occurrences has decreased. In addition, oversight by government contracting managers has not alleviated such unethical behaviors. One might argue that managers lack the knowledge required to regulate unethical behaviors.
1.4 The Case
The purpose of this qualitative case study was to provide an understanding of the knowledge required by managers to regulate unethical behaviors of government contracting employees. This study formed the basis for researching and understanding the worth of management and leadership development in government contracting.
What is value-based performance? The concept of value-based performance is grounded on a customer-oriented system centered on ethical values. Incorporating principles of competence raises an organization's ethical performance standards. For an organization to demonstrate value, it must incorporate core principles into its performance base. In value-based management within an organization, managers must ensure they consistently maximize ethical principles and pass them on to their employees.
Government contracting personnel from an organization in the mid-Atlantic region participated in semi-structured interviews to share their insights about the strategies needed to limit employees' unethical behaviors. The completion of this study will help managers learn strategies to reduce unethical behaviors within their organizations. Findings from this study may also contribute to positive social change by improving training and ethical standards, which could enhance society's trust in government contracting organizations. In addition, the study might encourage socially accountable, transparent federal contracting processes that reduce fraud.
Questions for Review:
How is ethics defined? (Remember: there is no one right answer.)
Who is the deciding factor on what is or is not ethical?
Why would a government contracting employee behave unethically when administering government contracts?
What may cause the negative behavior?
What can be done about it?
1.5 Nature of the Study
The inquiry used for this study is a qualitative case analysis. Qualitative researchers collect, analyze, and interpret data based on participants' characterization of real-world events. In contrast, quantitative researchers use statistical data and hypothesis to draw conclusions. As a mixed method approach combines both qualitative and quantitative data to reach conclusions, such an approach will not be suitable for this study since it would require including statistical data from a quantitative study. A primary aim of conducting this qualitative case study is to communicate an understanding of the individual's insights. Conducting this study allowed me to focus on a particular case, incorporate rich description of the circumstance, and provide heuristics by illuminating the reader's understanding of the phenomenon.
A qualitative researcher classifies the study based on the research design. Strategic research for qualitative studies include case study, narrative study, ethnography, grounded theory, and phenomenology. The research question determines the appropriate research design.
A single case study design comprises the nature of this study. Although both single and multi-case studies involve interviews, data management, and interpretations, a multi-case design does not fit this study, because it involves researching a collection of embedded cases to find a suitable meaning. The single case study method allows qualitative researchers to retain holistic and significant characteristics of events such as individual life cycles as well as organizational and managerial processes. As a result, narrative, ethnographic, grounded theory, and phenomenological designs did not suit this study.
Narrative researchers seek to understand the life of an individual for the purpose of relaying stories about the experiences of that individual. Using narrative research for this study was inappropriate because the focus for this study was on the understanding required by a group of mid-level managers in a specific organization. The unit of analysis in ethnography is the study of a culture-sharing group, which was not the goal for this study. In grounded theory, the qualitative researcher attempts to develop a theory based on data from participants in the field. Since grounded theory may be inductive in nature because it involves building a theory from the bottom up, it was not suited for this study. With a phenomenological study, the goal is to describe and show the merging and differing interrelations of a phenomenon on participants in the research. The goal for this study was not to study several individuals commonly engaged in their experiences. Neither was there a plan to describe participants' personal experiences. The case study design provided a means for me to focus on a single entity.
A concise question was central to the research process. Arriving at a topic and question that had social significance was challenging. There is no guide to creating a research question, and each research question results in a different outcome. Likewise, creating quality research questions assists researchers in gaining and maintaining the interest of individuals. Therefore, to understand the knowledge required by individuals managing government contracting employees, I created this research study to answer one precise question: What knowledge do government contracting managers need, in order to mitigate unethical behavior of government contracting employees when administering contracts?
Questions for Review:
What issues might government contracting managers have in encouraging employees to behave unethically?
What fundamentals might a manager use to assist government contracting employees in understanding how to perform their duties ethically?
What are the elements of the organization's philosophy that a manager might use to address government contracting employees' unethical behaviors?
What challenges might a manager confront in determining ethical implementation of the organization's philosophy?
What training and/or development methods can managers use to guide employees to act ethically?
How can training and/or development methods be improved and incorporated as an integral part of government contract administration?
What benefits can be derived from employees' ethically administering government contracts?
1.6 Conceptual Framework
Stakeholder theory, advanced by Freeman, formed the conceptual basis for this study. The concept of stakeholder theory should encourage business managers to consider the principles of organizational and public ethics when determining business compliance. Freeman devised concepts that integrated ethical notions into corporate strategies. The conceptual framework of this study incorporated a review of participants' views regarding strategies that government contract managers need to reduce employees' unethical behaviors. The conceptual framework of this study aligned stakeholder values with the idea of ethical/unethical behaviors by employees when administering government contracts.
