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Case Study Topic 1: Good Friends: A Case Study in Contracting Ethics and Integrity

• You are a contracting officer at Warren Manor Air Force Base currently on temporary duty (TDY) travel to attend an acquisition community professional development seminar. While at the seminar you are approached during a break by Paul Johnson, the Chief Operating Officer of Water Conservation, Inc., a federal government contractor with whom Warren Manor has had several contracts. You first met Mr. Johnson years ago when he was a Lieutenant Colonel in the Air Force, and the two of you were assigned to the same base. Although you did not work in the same acquisition career field, your paths crossed often because he was the lead engineer on several contracts for which you were the contracting officer. Both of you always had a very cordial but professional relationship. Occasionally, you would also see each other at the officers’ club and at various Air Force social functions.
• Mr. Johnson greets you warmly, hands you his business card, and begins to reminisce about your old working relationship. He asks about some former colleagues who still work with you and makes other small talk. As the seminar is about to reconvene and you excuse yourself to return to your seat, he asks if he could speak with you after the meeting regarding one of his company’s current contracts. You agree to do so, thinking that whatever the issues, a face-to-face meeting with a company senior executive might obviate the need for a week of emails later.
• After the seminar ends, you and Mr. Johnson remain behind to discuss the issues on his contracts. You listen, take notes, and promise to investigate further upon returning to work. You advise him that you will get the right people together to fact-find and resolve the issues. Pleased with your quick-handling of the matter, you gather your belongings to leave the conference room, when Mr. Johnson stops you, saying, “There is something else I want to talk to you about.” He proceeds to tell you how impressed he is with you and how you would “fit right in” with the senior management team at Water Conservation, Inc. “You know, you could make a lot more money than you are making now. A lifestyle change, actually. Plus, you’ve already got enough years to qualify for a Government retirement.” You are flattered and say, “Someday, perhaps.” Mr. Johnson suggests you talk more at the hotel bar during “happy hour” and you agree to meet him there. Over drinks, Mr. Johnson tells you that there is definitely a place at Water Conservation for you—he would only have to say the word to his personnel department and you could pretty much “name your salary.” You tell him a job change is not something you are seeking just yet. “Maybe down the road,” you say.
• By now, you have had several drinks and as you glance at your watch, Mr. Johnson grabs your arm and says quietly, “A job change is not the only way we can help each other out.” He alludes to your past association and confides that his company is trying to increase its business with the government. They are targeting some upcoming acquisitions that he “heard through the grapevine” are coming up for competition. He tells you that this is a fiercely competitive business and asks if there is anything you can do to “help a fellow officer.” Then, out of the blue, he offers to give you a percentage of all contracts that you can direct to his company. He tells you that no one will ever know because he will be discreet.
• Questions:
  What would you do?
  For each of the following three scenarios, discuss the integrity and ethics issues. What laws, if any, have been broken?
  What should the contracting officer report and to whom? Why?
  • Scenario 1
    • You are totally appalled that someone would approach you with a bribe. You ask yourself what is it about you that would make him think that he could approach you in such a manner. Since you are caught off-guard, you make a small joke about it and quickly retire to your hotel room. There you sit at your desk and collect your thoughts as you allow your breathing and heartbeat to return to near-normal levels. You ask yourself, why would he possibly think I would ever agree to such a thing? Is this sort of business conduct now becoming commonplace? You think back to what you had been told in your last ethics brief—that you are supposed to report such incidents to the Air Force Office of Special Investigations immediately, but you wonder if you will be implicated because you did not directly refuse the bribe. You did not even directly refuse the job offer. You remember that your friend is a Special Agent for the Air Force Office of Special Investigations, so you call her and invite her to lunch the following day when you will have returned to your office. She agrees and over lunch you relay the story to her. After lunch, she takes you to her office where you brief the Commander on what has transpired. They ask you to play along with the contractor, and you agree.
  • Scenario 2
    • You cannot believe your luck. You are trying to close on the purchase of a new house and, having just bought a new car, you do not have enough cash for the house down payment. If you do this just once, you should make enough money to make a substantial down payment on the house. If things work out, you can probably take a vacation also. That would make things a lot easier with your spouse who has been with you to spend more time at home instead of all the overtime you have been putting in at work. A voice in the back of your head tells you what you are about to do is wrong, but you convince yourself that it is no different than many other practices that you believe are commonplace in federal procurement—noncompetitive awards; skewed source selections that favor incumbent contractors; organizational conflicts of interest that are “papered over;” senior officials taking high positions in industry. Besides, Water Conservation is not a sham company—they do good work. What is wrong with doing this just once, and who would know? You tell Mr. Johnson that you accept his offer.
  • Scenario 3
    • You replay in your mind what just happened. You convince yourself that this was just a “what if” conversation between two guys away from the office. Since you are very near to retiring, you do not want to get involved in anything controversial. You decide that you will not accept Mr. Johnson’s offer, but you also decide to say nothing further about it—to anyone. You will pretend that the conversation never happened.
  • You decide to inform Mr. Johnson that you will accept his marvelous offer. Within two months, you have an opportunity to direct a sole source award to Mr. Johnson’s company. You inform the requiring activity that you know of a small business, capable of meeting the requirement. You advise them that the company they are currently considering, another small business, is not qualified and does not have the experience that Water Conservation has, and you strongly recommend Mr. Johnson’s company. The requiring activity agrees, and the Department makes the award to Mr. Johnson’s company. After performance begins, you and Mr. Johnson meet for lunch at a quiet restaurant away from the air base, where he gives you your first installment of fifty thousand dollars toward your total payment of two hundred thousand dollars. Over the next few months, you receive the remainder of the “referral fee.”
  • Questions:
    • Discuss the integrity and ethics issues. Have any laws been broken?
    • Discuss how one’s moral compass can be affected by such factors as one’s relationships with others, financial difficulties, or perceptions that misconduct and improper business practices are tolerated in one’s profession.

Comment on this:

Scenario 1

In scenario one, the unethical behaviors include bribery and corruption from the Chief Operation Officer (CIO) at Water Conservation Inc. The CIO presented the job opportunity inappropriately by suggesting the job could ensure more money and lifestyle change. Suggesting that I could name my salary was also inappropriate because it creates pressure and incentive for me to consider acting unethically. In addition, the CIO had a hidden agenda which was to get in on an upcoming government contract. He offered the job as a bribe which would incentivize me to want to also engage in the government contract. As the contracting officer, I would indeed speak to my friend who is a Special Agent for the Air Force Office of Investigations to seek clarification on how to proceed. This is necessary because the ninth ethical principle for the federal government set forth by the Joint Ethics Regulation (JER) is to expose corruption wherever discovered. This encounter should be reported to the Commander. Senior management is supposed to be the leaders and role models of an organization. Since this bribe and corruption came from a CIO, it may cause me to consider accepting the offer. If an individual with respect and power is openly and actively in such a manner it may cause others to rationalize this behavior.

Scenario 2

Scenario two represents a situation where an individual begins to rationalize their behavior and believes that their actions will not be criminal. The integrity issues are that the contracting officer is willing to knowingly make the wrong decisions because it is believed that other malpractices occur in federal contracting, such as senior officials taking high positions in industry. To add, there are a number of unethical behaviors shown. First, the contracting officer has broken the first and second principles which state they should be loyal and uphold the constitution. A loyal individual would report the CIO for breaking the laws and regulations outlined in the Constitution. Next, the CIO has broken the fifth and sixth principles which prohibits individuals from granting favors and being unfair. Principles nine and ten would also be broken by accepting the offer because the contracting officer chooses to engage in corruption and not report suspicious activity. As seen in this scenario, the contracting officer’s moral compass was impacted by this interaction. The contracting officer insinuates there are many other malpractices that are commonplace in federal procurement which drove them to ultimately accept the offer.

Scenario 3

Scenario three describes an unethical behavior known as collusion. Collusion is a secret agreement or cooperation for an illegal or deceitful purpose. In this case, the contracting officer makes the conscious decision to not report the CIO’s bribe. The contracting officer then accepts the offer and does not uphold the fifth and sixth ethical principles of the JER. By advising the requiring activity that Mr. Johnson’s company is a small business that meets the requirements, the opportunity for fair acquisition of a contract was taken away from the company they were originally considering. Lastly, accepting money over a period of time as a referral fee was another act of criminal behavior from both the contracting officer and Mr. Johnson. This can cause both parties to receive jail time, and they may be required to pay back all of the money they obtained throughout the scandal.

To conclude, laws were broken in each of the scenarios because the ethical principles not being followed are derived from the United States Constitution. As mentioned in the reading, ignorance is not a defense for being unethical; therefore, the contracting officer is still at fault for not directly declining the bribe and job opportunity, even though they eventually reported the situation. In each scenario I would report the interactions, and would be inclined to educate the individual being unethical. Sometimes being called out on poor decision-making can make someone reflect and reconsider their behavior. However, this can create more problems, so I would allow the relevant authorities to discipline the individual and provide corrective action.