Congress’ first attempt to tackle the underlying causes of the Pentagon contract fraud scandal--legislation requiring Pentagon consultants to register and list their clients--has been thwarted by opposition from the Administration and groups representing government consultants.
The Pentagon fraud investigation has focused on the role of consultants to major defense contractors, who allegedly bought and sold confidential information illegally obtained from Pentagon officials. Prosecutors predict a number of indictments of Pentagon officials and defense consultants by the end of the year.
Sen. David Pryor (D-Ark.), sponsor of the consultant registration bill, said Thursday that the measure was an effort to force consultants, currently a wholly unregulated group, to disclose their employers and reveal potential conflicts of interest.
The bill was modeled on similar legislation requiring lobbyists and representatives of foreign governments to register and reveal their affiliations, he said.
But his amendment to the Pentagon’s budget bill met stiff opposition from lawyers, accountants and the legion of consultants from Washington-based firms that sell studies and services to the federal government.
A “very, very watered-down” version of the bill finally emerged from a House-Senate conference committee last month that would allow consultants and the Defense Department to continue business as usual, Pryor complained.
“I got beat,” the senator said. “The lawyers and accountants came and they hit me full force.”
Attempt at Clarity
The Pentagon annually contracts out an estimated $2 billion to $3 billion to consultants for studies, engineering work, computer services, legal opinions and other research, according to Defense Department officials.
The original bill’s aims and requirements were relatively modest. It would have forced consultants doing business with the Pentagon to register and provide a client list and a general description of their business. Consultants also would have had to certify that they comply with existing conflict-of-interest laws.
The legislation was drafted to try to unravel the complicated web of relationships tying the Pentagon to its suppliers, a system that makes it difficult at times to tell where the government ends and the private sector begins.
Pryor cites the case of BDM International Inc., a big consulting firm in suburban Virginia that advises the Pentagon on what new weapons are needed and counsels private firms on how to win Pentagon weapons contracts. Pryor contends that the two roles constitute an inherent conflict of interest.
Another consulting outfit, which Pryor did not name, won a multimillion-dollar research contract to provide data to the Pentagon’s “Star Wars” program and then sold the same data to private firms for $2.7 million.
Trade Secrets Imperiled
In a September hearing on the bill, a Pentagon official testified that the measure was vague, unnecessary and would create a paper work nightmare. Officials estimated that keeping track of the forms would require hundreds of new workers and cost tens of millions of dollars.
Dennis H. Trosch, assistant general counsel for the Defense Department, also noted that the required disclosure forms might contain trade secrets and could be used against a company by its competitors. He said the problem should be addressed by regulation, not by law.
The proposal was also attacked by lawyers and accountants who argued that disclosing their client lists would violate pledges of confidentiality.
“The registration alone, in and of itself, is not necessarily objectionable,” said Jeff Lovitky, a federal procurement specialist with the Washington law firm of Epstein, Becker & Green. “The problem is what would be required of the registrant. To require him to list all his clients and to go further and tell what he has done for his clients . . . impinges on the confidentiality of relationships people have with consultants.”