Bill Seeks to Put Spotlight on Consultants : Defense Firm Advisers Would Have to Register

Times Staff Writer

Legislation to regulate government consultants, which failed last year because of opposition from the Administration and groups representing consultants, was reintroduced in the Senate on Wednesday.

The bill, sponsored by Sen. David Pryor (D-Ark.) is the first congressional effort to address one of the underlying causes of the current Pentagon procurement scandal.

The bill would require outside consultants doing business with the government to register and list their clients. It would also force government agencies to disclose the extent and cost of their use of consultants.

The “Ill Wind” investigation into Pentagon procurement fraud has focused on the role of unregulated consultants who allegedly bought and sold confidential information obtained from Defense Department officials to help their clients win Pentagon contracts.


“This bill is intended to shed some sunshine on the all-too-often shadowy world of consultants,” Pryor said.

Hearings last year uncovered widespread government use of outside consultants with little or no oversight. The Office of Management and Budget, asked to disclose how much money the federal government spends annually on consultants, could not provide an answer, Pryor said.

Made Huge Payments

A special Defense Department study late last year uncovered what auditors called excessive and unjustified use of consultants by major defense firms, who billed their consultant costs to the government.

A survey of 12 top arms manufacturers showed that they paid outside consultants $236 million for services ranging from engineering to lobbying, and billed the Pentagon for the charges. Auditors said $43 million of the consultant costs were not legally reimbursable in government contracts.

The legislation introduced Wednesday is modeled after similar laws requiring lobbyists and representatives of foreign governments to register and reveal their affiliations.

The bill was drafted to try to unravel the complicated web of relationships tying the Pentagon to its suppliers, a system that blurs the line between government and the private sector. The Defense Department annually contracts out an estimated $2 billion to $3 billion for studies, engineering work, computer services, legal opinions and other research.

Pryor’s measure met stiff opposition from lawyers, accountants and the legion of consultants from Washington-based firms that sell studies and services to the federal government.

Consultants argued that disclosing their client lists would violate pledges of confidentiality. And government officials said the detailed disclosure forms required of consultants might contain trade secrets that could be used against a company by its competitors.