GAO Recommends Government Require Disclosures From Private Contractors

The military hires so many private contractors that it should consider forcing them to disclose their financial interests so as to avoid any conflicts of interest, according to a congressional audit.

In a report released Monday, the Government Accountability Office found that contractors outnumber Defense Department employees in many offices and perform such sensitive tasks as developing contract details and advising award fees. Yet unlike federal employees, contractors are not bound to most government ethics laws and regulations.

Defense officials agreed that tougher standards are probably needed and said they were looking into it. Some officials told GAO privately that they were concerned about the cost of enforcing new rules, an argument GAO rebuffed as dangerous.

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 stated.

While the Defense Department has not determined the total number of contractors it employs, the numbers are substantial. For example, there are more than 163,000 contractors working in Iraq and some 36,500 in Afghanistan -- about the same number of troops in those regions, a senior defense official told Congress in testimony last month.

In its audit of 21 defense offices, GAO found that 15 of them had more contractors on staff than Defense Department employees. In several offices, including an Army human resources group and an engineering unit at the Missile Defense Agency, contractors comprised more than 80 percent of the workforce.

Under federal laws and regulations, contractors are prohibited specifically from accepting bribes or kickbacks, and companies working with the military must have written ethic policies. Also, several defense offices have instituted ethics safeguards on a voluntary basis.

But there isn't a department-wide requirement that contractor employees be free from personal conflicts of interest. Further, most companies' ethic policies prohibit an employee from having a financial stake in its competitors, but do not require them to disclose potential conflicts of interest as their work relates to the Defense Department.

GAO recommended that the Pentagon establish requirements for companies to identify and prevent conflicts of interest. Included in the new code should be a prohibition of employees accepting gifts such as cash, meal or trips in connection to their jobs, GAO stated.