Senate passes bill to crack down on conflicts of interest in federal contracting

WASHINGTON, DC - JULY 21: Chairman Gary Peters (D-MI) listens as Transportation Security Administrator David Pekoske speaks during his confirmation hearing before the Senate Homeland Security and Governmental Affairs committee (Photo by Anna Moneymaker/Getty Images).

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The Senate Tuesday passed a bipartisan bill aimed at rooting out any instances of conflict of interest in federal contracting by removing any conflicts between taxpayer-funded projects and federal government contractors’ other business opportunities.

The Senate passed the Preventing Organizational Conflicts of Interest in Federal Acquisition Act, led by Senator Gary Peters, D-MI., the Chairman of the Senate Homeland Security and Governmental Affairs Committee, that would require federal agencies to identify potential conflicts for specific contracts early in the process. The bill is expected to pass the House as well.

“Federal contractors are entrusted to provide critical goods and services to the federal government as it serves the American people. If we don’t know whether they are serving other, potentially conflicting interests, we can’t be confident that Americans are getting exactly what they pay for,” said Senator Chuck Grassley, R-IA., a lead co-sponsor of the legislation. “We’ve put together a good government bill that takes steps to eliminate these potential conflicts of interest to rebuild public trust in our contracting process.” 

Many major federal government contractors, like McKinsey & Company or Booz Allen Hamilton also conduct business with the private sector entities, and this can raise questions about the reliability of consultations, advice or projects under federal contracts.

The new legislation aims to increase transparency in the federal contracting process by requiring Federal contractors to disclose other business relationships with entities that conflict with the specific work that an agency has hired them to do. 

Private companies currently under contract with the U.S. government would also be required under the law to disclose new potential business that opposes ongoing services they are providing to the government or the public at large. 

The bill would also ensure federal contractors are aware of how working with agencies could impact other parts of their business and will require federal agencies to assess and update their procedures for determining whether contractors could have a conflict of interest.

A House Committee on Oversight and Reform investigation from earlier this year uncovered evidence that McKinsey & Company consultants, including senior partners, frequently worked on Food and Drug Administration (FDA) contracts while also working for opioid manufacturers, including Purdue Pharma.

The investigation found that McKinsey’s conflicts, which the firm apparently did not disclose to the FDA, raised serious questions about McKinsey’s ability to provide objective advice and its compliance with the terms of its contracts and federal law.

The senators’ legislation will give federal agencies a process to evaluate other similar potential conflicts of interest to ensure that federal consultants and other contractors are not misusing taxpayer dollars.

“Companies that receive taxpayer dollars from federal contracts should not turn around and advise clients to take actions that are against the interests of the American people,” said Senator Peters. “This bipartisan, commonsense legislation will require federal contractors to disclose any potential conflicts of interest before they are awarded a federal contract to ensure they are effectively serving taxpayers.”

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Bipartisanship, contractors, federal contracting, House Committee on Oversight and Reform, McKinsey & Co., Sen. Gary Peters, Senate Homeland Security and Governmental Affairs Committee
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