Defense Ethics Program: Opportunities Exist to Strengthen Safeguards for Procurement Integrity
Published: 2005-04-29T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In fiscal year 2004, the Department of Defense (DOD) spent more than $200 billion to purchase goods and services. To help ensure defense contracts are awarded fairly and current and former employees do not use their knowledge of DOD acquisition activities to gain financial or other benefits, DOD personnel are required to conduct themselves in a manner that meets federal ethics rules and standards. Regulations require DOD to implement an ethics program and provide that contractors meet certain ethics standards. For this report, GAO assessed (1) DOD's efforts to train and counsel its workforce to raise awareness of ethics rules and standards as well as DOD measures of the effectiveness of these efforts and (2) DOD's knowledge of defense contractors' programs to promote ethical standards of conduct.
section_title: What GAO Found
paragraphs: To implement its ethics program, DOD has delegated responsibility for training and counseling employees on conflict-of-interest and procurement integrity rules to more than 2,000 ethics counselors in DOD's military services and agencies. These efforts vary in who is required to attend training and counseling, the content of ethics information provided, and how often the training and counseling is provided. While some variation may be warranted, DOD lacks the knowledge needed to determine whether local efforts are meeting the objectives of its ethics program--in large part because DOD does not systematically capture information on the quality and content of the training and counseling or employee activity as they relate to ethics rules and restrictions. Specifically, ethics counselors were unable to tell us if people subject to procurement integrity rules were trained. Instead, DOD evaluates its ethics program in terms of process indicators--such as the number of people filing financial disclosure forms, the number of ethics officials providing training and counseling services, and the amount of time ethics officials spend on such activities--which do not provide metrics to assess the effectiveness of local training and counseling efforts. DOD also lacks adequate information on the number and status of allegations of potential misconduct related to conflict-of-interest and procurement integrity rules. Ethics officials did not know of 53 reported allegations of potential misconduct referred to inspectors general offices. DOD has taken several actions since October 2004 aimed at enhancing its ethics program. However, without knowledge of training, counseling, and reported allegations of misconduct, DOD is not positioned to assess the effectiveness of its efforts. DOD's knowledge of defense contractor efforts to promote ethical standards is also limited. Defense regulations provide that contractors should have ethics programs, provide ethics training for all employees and implement systems to detect improper conduct in connection with government contracts. Despite these regulations, DOD had not evaluated the hiring practices of the contractors GAO contacted. Neither the Defense Contract Management Agency nor the Defense Contract Audit Agency--the agencies responsible for oversight of defense contractors' operations--had assessed the adequacy of contractors' practices for hiring current and former government employees. An independent review of one of DOD's largest contractors found that the company lacked the management controls needed to ensure an effective ethics program. Instead, the review found that the company relied excessively on employees to self-monitor their compliance with post-government employment restrictions. The review concluded that by relying on self-monitoring, the company increased the risk of noncompliance, due to either employees' willful misconduct or failure to understand complex ethics rules.

section_title: Letter
paragraphs: In fiscal year 2004, officials from the Department of Defense (DOD)  awarded contracts worth more than $200 billion for goods and services.  Federal ethics rules and standards have been put in place to help  safeguard the integrity of the procurement process by mitigating the risk  that DOD employees will use their position to influence the outcomes of  contract awards for future gain and that companies will exploit this  possibility.
Given the sizeable dollars at stake and the risks inherent in federal  contracting, you asked us to determine whether post-government  employment rules are ensuring the public trust. In response, we assessed  (1) DOD’s efforts to train and counsel its workforce to raise awareness of  the rules as well as DOD measures of the effectiveness of these efforts and  (2) DOD’s knowledge of defense contractors’ programs to promote ethical  standards of conduct. To satisfy our objectives, we met with the  designated agency ethics officials, their designee, or ethics counselors in  the Office of the Secretary of Defense, Air Force, Army, Navy, and the  Defense Contract Management Agency and visited seven major defense  contractors. Further details on the scope and methodology of our review  can be found in appendix I. We conducted our review from April 2004 to  March 2005 in accordance with generally accepted government auditing  standards.
We did not address the effectiveness of the statutory provisions covering  post-government employment restrictions or the extent to which  violations have occurred.
subsections: section_title: Background
paragraphs: Federal statutes and regulations collectively require agencies to establish  an ethics program intended to preserve and promote public confidence in  the integrity of federal officials through their self-reporting of potential  conflicts-of-interest (financial disclosure), through knowledge of post- government employment restrictions (training), and through independent  investigations of alleged wrongdoing. A key objective of an ethics  program is to provide a formal and systematic means for agencies to  prevent and detect ethics violations. The elements of a comprehensive  ethics program include (1) a written policy of standards of ethical conduct  and ethics guidance; (2) effective training and dissemination of  information on ethical standards, procedures, and compliance;   (3) monitoring to ensure the ethics program is followed; (4) periodically  evaluating the effectiveness of the ethics program; and (5) levying  disciplinary measures for misconduct and for failing to take reasonable  steps to prevent or detect misconduct.
The joint ethics regulation is DOD’s written policy establishing its ethics  program. The ethics program emphasizes training and counseling to raise  awareness of standards of ethical behavior and to prevent misconduct.
DOD’s ethics training requirement includes educating employees about the  procedures to follow when considering employment outside of DOD and  the post-government employment restrictions that may apply and to  inform employees of the resources that are available to them to address  ethics questions and concerns. The training includes an initial briefing to  introduce employees to ethics regulations, such as conflict-of-interest and  procurement integrity rules, and exit briefings to discuss restrictions that  may apply once employees leave government service. Additional ethics  briefings are held for certain senior employees on an annual basis. DOD’s  ethics counseling aims to address employee concerns and questions as  they arise. The training and counseling is also to raise awareness so that  DOD employees can recognize misconduct and report the matter to ethics  officials, inspectors general officials, the head of the command or agency,  criminal investigative offices, or any number of DOD hotlines.  Responsibility for recognizing and reporting potential misconduct rests  with all DOD employees. Additionally, the joint ethics regulation requires  ethics officials to track and follow up on reports of potential misconduct.  Finally, the DOD regulation requires periodic evaluations of local  activities, which implement DOD’s ethics program, to ensure they meet  standards.
Defense regulations provide that government contractors should have  standards of conduct and internal control systems to promote ethical  standards, facilitate timely discovery and disclosure of improper conduct  in connection with government contracts, and ensure corrective measures  are promptly implemented. The regulations provide that contractors  should have a written code of business ethics and conduct, an ethics  training program for all employees, and to periodically review practices,  procedures, policies, and internal controls for compliance with standards  of conduct.
The federal government has a host of laws and regulations governing the  conduct of its employees and contractors. The Compilation of Federal  Ethics laws prepared by the United States Office of Government Ethics  includes nearly 100 pages of statutes alone. For the purposes of this  report, however, we note a few laws relevant to DOD officials whose  responsibilities involved participation in DOD’s acquisition process.  The  statutes are complex, and the brief summaries here are intended only to  provide context for the issues discussed in this report.
The principal restrictions concerning employment for federal employees  after leaving government service are found in 18 U.S.C. 207 and 41 U.S.C.  423 (procurement integrity). The title 18 provision generally prohibits  former federal employees and their supervisors from representing non- government entities concerning matters they handled while working for  the federal government. Violation of the statute entails criminal penalties.  In contrast, the title 41 provision more narrowly applies to contracting  officials and also entails civil and administrative penalties. The provision  generally restricts employment with a contractor if the official performed  certain functions involving the contractor and a contract valued in excess  of $10,000,000. The law, however, permits employees to accept  compensation “from any division or affiliate of a contractor that does not  produce the same or similar products or services” that were produced  under the contract.
There are also provisions related to post-government employment that are  applicable to federal employees’ actions while still in federal service.   18 U.S.C. 208 prohibits government employees from participating in  matters in which they have a financial interest. The statute imposes  criminal penalties on federal employees who begin negotiating future  employment without first disqualifying themselves from any duties related  to the potential employer. In addition 41 U.S.C. 423(c) requires officials  who participate personally and substantially in a procurement exceeding  $100,000 to report promptly contacts by bidders or offerors regarding  future employment. The official must either reject the possibility of  employment or disqualify himself or herself from further participation in  the procurement.
section_title: DOD Lacks Information to Evaluate Its Training and Counseling Efforts
paragraphs: DOD’s joint ethics regulation, administered by DOD’s General Counsel,  requires DOD to provide training and counseling to educate employees  regarding applicable ethics laws and regulations. To implement its ethics  program, DOD relies on local ethics counselors within DOD’s military  services and agencies to train and counsel employees on conflict-of- interest and procurement integrity rules. Training is to raise individual  awareness and to enable DOD employees to recognize misconduct and  report any matter to appropriate officials. The joint ethics regulation also  requires ethics officials to track and follow up on reports of misconduct.  However, DOD lacks knowledge to evaluate the ability of its training and  counseling efforts to prevent misconduct and ensure the public trust.
subsections: section_title: Training and Counseling Results Are Not Measured
paragraphs: DOD has delegated responsibility for training and counseling to more than  2,000 ethics counselors assigned to commands and organizations  worldwide. These ethics counselors administer ethics training and  briefings, provide advice and counseling, and review employees’ financial  disclosure documents as outlined in the joint ethics regulation. At the   12 DOD locations we visited we found training and counseling efforts  varied in the content of ethics information provided, who is required to  attend training and counseling, and how often the training and counseling  is provided. For example, some ethics counselors conduct extensive  discussions about employees’ plans upon separation at the exit briefing,  some provide written advice, and others distribute pamphlets summarizing  employment restrictions. Some ethics counselors have supplemented their  annual training because they do not believe that the minimum  requirements in the joint ethics regulation—an annual ethics briefing—are  sufficient to ensure employees understand employment restrictions both  during and after they leave government service. For example, a Navy  ethics office offers live, interactive ethics training to all personnel at its  location approximately three to four times a year.
DOD currently evaluates its ethics program’s performance in terms of  process indicators—such as the number of financial disclosure forms  completed, the number of ethics counselors, and the amount of time spent  by ethics counselors on training and counseling services. According to  DOD officials, the information on the number of ethics counselors at each  location and the amount of time they spend with employees can provide  insight into the level of resources used. However, these process indicators  do not provide DOD knowledge of which employees are subject to  restrictions, which employees receive training and counseling, the quality  and content of training, and who is leaving DOD for employment with  contractors. For example, DOD does not know if the population critical to  the acquisition process, those employees covered by procurement  integrity restrictions, are trained. Further, many ethics counselors could  not provide evidence that employees received the annual ethics training.  Additionally, DOD does not know whether the training and counseling  includes all relevant conflict-of-interest and procurement integrity rules.  As shown in Table 1, we found that the ethics counselors we interviewed  did not consistently include information on the restrictions provided for in  18 U.S.C. 207, 18 U.S.C. 208, and 41 U.S.C. 423 in their annual ethics  briefings for the past 3 years.
section_title: Training and Counseling is to Facilitate Identification and Reporting of Misconduct, but Alleged Misconduct Is Not Being Tracked
paragraphs: Training is to raise awareness of procurement integrity and conflict-of-  interest rules so DOD employees are able to recognize misconduct and  report matters to appropriate officials. Ethics counselors are required to  (1) review the facts of an allegation of misconduct and report the  allegation to appropriate investigative organizations or the head of the  DOD command of the suspected violator and the appropriate contracting  officer, if applicable; (2) follow-up with the investigative office until a final  determination is made on the allegation; and (3) periodically report on the  status of the allegation of misconduct to the military service and defense  agencies head ethics official. However, when we asked the ethics officials  for information on allegations of misconduct and the status of  investigations, they were not tracking or following-up on the status of  alleged misconduct cases. For information on reported allegations of  potential misconduct the ethics officials referred us to the inspectors  general offices. According to inspectors general officials, DOD has not  made an attempt to determine the extent that potential misconduct in  terms of conflict-of-interest and procurement integrity is reported. The  information on reports of potential misconduct is maintained in various  files and databases by multiple offices. As a result, DOD has not  determined if reports of potential misconduct are increasing or decreasing  and why such a change may be occurring. DOD Inspector General’s  hotline official told us that anecdotal evidence indicates post-government  employment misconduct is a problem, but DOD has no basis for assessing  the severity.
At the locations we visited, we obtained information from the inspector  general officials demonstrating at least 53 cases of potential misconduct  reported in the last 5 years. However, ethics officials at the Office of  Secretary of Defense and the military headquarters we spoke with were  not tracking the status of the reports of potential misconduct. Lacking this  knowledge DOD has no assurance that ethics-related laws and regulations  are properly followed and that appropriate administrative or disciplinary  action is taken. Also, the information on potential misconduct can help  DOD understand the extent of the problem and the risk such behavior  poses.
section_title: Ongoing Actions to Prevent Misconduct
paragraphs: Concerned about the effectiveness of its efforts to minimize misconduct  and prevent violations of conflict-of-interest and procurement integrity  rules, DOD has taken actions aimed at enhancing its ethics program. In  October 2004, the Deputy Secretary of Defense required (1) personnel who  file public financial disclosure reports to certify that they are aware of and  have not violated employment restrictions, (2) DOD components to  include training on employment restrictions in annual ethics briefings to  financial disclosure filers, and (3) DOD components to provide guidance  on employment restrictions to all personnel leaving government service.  While this directive clarifies the content required in DOD’s training and  counseling, no provisions were made to provide knowledge about whether  the policy is implemented. Therefore, it is unclear at this time the extent  that the actions called for in the directive will improve DOD’s effort to  prevent violations of post-government employment restrictions.
In November 2004, the acting Undersecretary of Defense asked the  Defense Science Board to establish a task force to assess whether DOD  has adequate management and oversight processes to ensure the integrity  of acquisition decisions. The task force report was due January 31, 2005,  and is expected to recommend options for improving checks and balances  to protect the integrity of procurement decisions. Currently, the Defense  Science Board is briefing preliminary findings to senior DOD officials and  Congress.
Acknowledging the risk to the acquisition process the United States  Attorney for the Eastern District of Virginia announced, in February 2005,  the creation of a procurement fraud working group to increase prevention  and prosecution of fraud in the federal procurement process. This working  group will facilitate the exchange of information among participating  agencies, including DOD, and assist them in developing new strategies to  prevent and to promote early detection of procurement fraud. Among the  ideas and initiatives to be undertaken by the working group are efforts to  detect ethics violations and conflicts of interest by current and former  agency officials.
section_title: DOD Needs More Knowledge of Government Contractors’ Standards of Conduct Efforts
paragraphs: Defense acquisition regulations provide that government contractors  should have standards of conduct and internal control systems that  promote ethical standards, facilitate timely discovery and disclosure of  improper conduct, and ensure corrective measures are promptly  implemented. However, DOD cannot identify nor take action to mitigate  risks because it lacks knowledge of its contractors’ efforts to promote  ethical standards. Recently a major defense contractor chartered an  independent review of its hiring processes of current and former  government employees. This review found both gaps in the company’s  procedures and a failure to follow written policy, in some cases.  Weaknesses in the contractor’s policies, procedures, and structure were  identified, and recommendations were made for actions to be taken to  mitigate risks.
subsections: section_title: DOD Does Not Have Adequate Knowledge of Its Contractors’ Policies and Practices for Hiring Former and Current DOD Employees
paragraphs: Defense regulations provide that government contractors must conduct  themselves with the highest degree of integrity and honesty. Specifically,  defense regulations provide that contractors should have (1) a written  code of ethical conduct; (2) ethics training for all employees; (3) periodic  reviews of its compliance with its code of ethical conduct; (4) systems to  detect improper conduct in connection with government contracts; and  (5) processes to ensure corrective actions are taken. The seven  contractors we visited indicated that DOD had not discussed or reviewed  their practices for hiring current and former government employees.
While DOD evaluates components of contractors’ financial and  management controls, neither the Defense Contract Management Agency  nor the Defense Contract Audit Agency—the agencies responsible for  oversight of defense contractors’ operations—had assessed the adequacy  of contractors’ practices for hiring current and former government  employees. DOD’s lack of knowledge of the contractors’ hiring practices  and policies prevents DOD from being assured that effective controls are  in place to address the risks posed by contractors.
section_title: Independent Review of Defense Contractor Finds Weaknesses in Controls for Managing Former Government Employees
paragraphs: In February 2004, a major defense contractor hired an outside entity to  conduct an independent evaluation of its hiring policies and practices.   This review found that the company relied excessively on employees to  self-monitor their compliance with post-government employment  restrictions. The review concluded that by relying on employees to  monitor their own behavior, the company increased the risk of  noncompliance, due to either employees’ willful misconduct or failure to  understand complex ethics rules. The independent evaluation of the  company’s hiring policies and practices illustrates an opportunity for DOD  to leverage knowledge of contractors’ practices to identify and mitigate  risks.
In general, the review identified lack of management controls as a  weakness in the company’s ethics program. Specifically, the review found  the company lacked (1) a single focal point for managing its hiring  process; (2) centralized management of its hiring process, which made it  difficult to implement consistent procedures and effectively monitor  efforts; (3) consistent maintenance of pre-hire records; (4) internal audits  of its process for hiring former government employees; and (5) sufficient  emphasis from senior company management to the ethics program in  general and the training program in particular, among other things. As a  result of these weaknesses, the company did not know whether employees  were following its written policies and procedures addressing post- government employment restrictions.
Some contractors we spoke with stated that they used the lessons learned  from the company’s independent review to assess their own policies for  recruiting, hiring, and assigning of current and former government  employees to ensure they are complying with ethical standards. For  example, some of the contractors are reviewing company personnel files  to identify employees trained as well as former government employees  hired. Some contractors were in the process of identifying methods to  ensure that information on the hiring and training of former government  employees is readily available, such as corporate personnel systems that  will provide electronic files to allow the contractor to identify employees  with prior DOD experience including contracts on which they worked as  well as monitor employees’ post-government career path. Similarly,  knowledge of conditions at the company and at other contractors could  provide DOD with information to better identify and understand risks to  its acquisition process.
section_title: Conclusion
paragraphs: In an environment where the risk of ethical misconduct can be costly,  DOD is missing opportunities to raise the level of confidence that its  safeguards protect the public trust. Better knowledge of training and  counseling efforts is essential to ensuring that the large numbers of  employees who leave DOD for contractors each year are aware of and  abide by conflict-of-interest and procurement integrity rules. Finally,  enhanced awareness of contractor programs would enable DOD to assess  whether the public trust is protected.
section_title: Recommendations
paragraphs: We are making three recommendations to the Secretary of Defense to take  actions to improve DOD’s knowledge and oversight of its ethics program  and contractors’ ethics programs to raise the level of confidence that  DOD’s business is conducted with impartiality and integrity:    Regularly assess training and counseling efforts for quality and content, to  ensure that individuals covered by conflict-of-interest and procurement  integrity rules receive training and counseling that meet standards  promulgated by DOD Standards of Conduct Office.
Ensure ethics officials, as required by the joint ethics regulation, track and  report on the status of alleged misconduct to the military services and  defense agencies head ethics officials.
Assess, as appropriate, contractor ethics programs in order to facilitate  awareness and mitigation of risks in DOD contracting relationships.
section_title: Agency Comments
paragraphs: DOD provided written comments on a draft of this report. DOD concurred  with two of our recommendations and partially concurred with the third.   DOD concurred with our recommendation to regularly assess training and  counseling efforts for quality and content, and stated that it currently  assesses and will continue to assess agencies’ training and counseling  efforts to ensure that personnel required to receive such training do so in  accordance with applicable standards. As discussed in this report, DOD  currently assesses its ethics program’s performance in terms of process  indicators—for example, number of financial disclosure forms completed,  the number of ethics counselors, and the amount of time spent by ethics  counselors on training and counseling. However, as DOD moves forward,  its assessments should also provide DOD knowledge of which employees  are subject to restrictions, which employees receive training and  counseling, and the quality and content of training to ensure its ethics  program achieves the goal of raising awareness of conflict-of-interest and  procurement integrity rules in order to prevent ethical misconduct.
DOD concurred with our recommendation that DOD assess, as  appropriate, contractor ethics programs, and stated that it intends to call  upon companies throughout the defense industry to reexamine their ethics  programs and share best practices. DOD also stated that the  recommendation is currently implemented when contracting officers  make, prior to awarding a contract, an affirmative determination of  responsibility, which includes consideration of the potential contractor’s  business practices and the potential contractor’s integrity.  We believe  assessments of contractor ethics programs would enhance contracting  officers’ ability to make such determinations. Knowledge about  contractors’ policies and practices for hiring former and current DOD  employees would provide DOD more assurance that effective controls are  in place to address the risks posed by potential violations of post  government employment restrictions. As recent GAO bid protest decisions  illustrate, lapses in ethical behavior can have significant consequences.
DOD partially concurred with our recommendation that the Secretary of  Defense ensure that ethics officials, as required by the joint ethics  regulation, track and report on the status of alleged misconduct to the  military services and defense agencies head ethics officials. DOD stated  that responsibility for tracking and reporting on the status of alleged  misconduct resides with Departmental and federal law enforcement  agencies, rather than ethics officials. While we agree that responsibility for  enforcement should not reside with ethics officials, we believe senior DOD  ethics officials should be knowledgeable concerning the scope and extent  of ethics violations within the Department. Tracking alleged misconduct  cases would provide senior DOD ethics officials knowledge about whether  ethics-related laws and regulations are properly followed and that  appropriate administrative or disciplinary action is taken. Also,  information on alleged misconduct can position DOD to assess the  effectiveness of its training and counseling efforts and understand the  extent of the problem and the risk such behavior poses. As DOD revises its  Joint Ethics Regulation, it should ensure its reporting structure provides  for relaying misconduct information to senior DOD ethics officials.
Finally, DOD expressed concern that our report may be misinterpreted  because it does not accurately capture the full extent of DOD programs.   We recognize that the Department’s programs are broader than reflected  in our report. Our report identifies opportunities to improve (1) DOD’s  efforts to train and counsel its workforce to raise awareness of ethics rules  and standards as well as DOD measures of the effectiveness of these  efforts and (2) DOD’s knowledge of defense contractors’ programs to  promote ethical standards of conduct. Notwithstanding its concerns,  however, we note that DOD agreed that our report identifies opportunities  to strengthen safeguards for procurement integrity.
DOD’s comments are included in appendix II.
We are sending copies of this report to the Secretary of Defense and  interested congressional committees. We will provide copies to others on  request. This report will also be available at no charge on GAO’s Web site  at http://www.gao.gov.
If you have any questions about this report or need additional information  please contact me at (202) 512-4125 or Blake Ainsworth, Assistant  Director, at (202)512-4609. Other major contributors to this report were  Penny Berrier, Kate Bittinger, Anne McDonough-Hughes, Holly Reil, and  Karen Sloan.
section_title: Appendix I: Scope and Methodology
paragraphs: To address DOD’s oversight of its agencies’ implementation of ethics  regulations we compared DOD’s practices to established management  guidelines. We did not determine the effectiveness of post-government  employment legal restrictions or the extent to which violations of these  restrictions may be occurring.
In assessing DOD oversight of its programs, we used the Standards for  Internal Control in the Federal Government, Internal Control Management  and Evaluation Tool, Office of Management and Budget Circular A-123  regarding management accountability and control, and the United States  Sentencing Commission Guidelines Manual. We applied the management  control framework to DOD and DOD component ethics programs.
To assess DOD’s efforts to train and counsel its workforce to raise  awareness and DOD measures of the effectiveness of these efforts, we met  with the designated agency ethics official, their designee or ethics  counselors in the Office of the Secretary of Defense, Air Force, Army,  Navy, Defense Contract Management Agency. In addition to headquarters  offices, we selected locations that according to the Federal Procurement  Database System and DOD officials spent a large amount of money on  acquisitions. Specifically, we met with officials from: (1) Standards of  Conduct Office, General Counsel, Office of the Secretary of Defense;   (2) General Counsel—Ethics and Personnel Office, Defense Contract  Management Agency; (3) Associate Counsel—Ethics and Personnel,  Eastern Region, Defense Contract Management Agency, (4) Ethics Office  and Associate General Counsel (Fiscal & Administrative Law), Air Force;  (5) Air Force Materiel Command, Wright Patterson Air Force Base, Air  Force; (6) Electronic Systems Center, Hanscom Air Force Base, Air Force,  (7) Deputy General Counsel (Ethics & Fiscal) and Standards of Conduct  Office, Army; (8) Army Materiel Command, Fort Belvoir, Army;   (9) Communications-Electronics Command Fort Monmouth, Army;   (10) Office of General Counsel, Navy; and (11) Naval Air Systems  Command, Patuxent River, Navy, (12) Naval Air Warfare Center Weapons  Division, China Lake, Navy. We met with five contracting/acquisition  offices and nine investigative offices at these locations.
To assess DOD’s knowledge of defense contractors’ programs to promote  ethical standards of conduct, we interviewed seven defense contractors  about their ethics programs and hiring practices of former government  employees. Six of the contractors are ranked in the top 10 of defense  contractors based on DOD spending in fiscal year 2003. The seventh is a  contractor that was in the top 100 of defense contractors based on DOD  spending. We attended the annual Defense Industry Initiative Annual Best  Practices Forum, 2004. In addition, we reviewed a report to the chairman  and board of directors of one major defense contractor responding to  concerns about the company’s policies and practices for the hiring of  government and former government employees.
As part of these efforts, we reviewed relevant Federal ethics laws, the  Federal Acquisition Regulation, Defense Federal Acquisition Regulation,  DOD policies, directives and guidance governing conflict of interest and  procurement integrity rules. We supplemented the DOD and DOD  component ethics program information we collected by interviewing  officials from the Office of Government Ethics, Department of Justice,   Army Contracting Agency, Defense Acquisition Regulations Council,  Office of Secretary of Defense Acquisition, Technology, and Logistics  Office, World Policy Institute, and the American Federation of  Government Employees. We also attended the 26th Annual Council of  Governmental Ethics Laws Conference, 2004.
We conducted our review from April 2004 to March 2005 in accordance  with generally accepted government auditing standards.
section_title: Appendix II: Comments from Department of Defense