Thank you for sharing!

Your article was successfully shared with the contacts you provided.
A dark cloud is passing across the face of U.S. public purchasing. Last month, Darleen Druyun, until recently the top career procurement officer in the U.S. Air Force, was sentenced to nine months in prison as a result of her tainted employment negotiations with the Boeing Co. Druyun’s initial plea agreement conceded that she improperly hammered out an employment deal (in an airport conference room, among other places) while negotiating a controversial $20 billion aircraft tanker lease with Boeing. That violated the law, cost Druyun her job at Boeing, and subjected her to criminal penalties. It also implicated Michael Sears, Boeing’s chief financial officer (previously thought to be in line to head Boeing), who also was fired. Although saddened by any scandal that taints the procurement process, when Druyun’s initial plea agreement was released, many observers took comfort in viewing her transgression as a technical violation of the Defense Department’s complex, burdensome, and seemingly arcane employment restrictions. In other words, despite the media frenzy, it appeared that what Druyun had done was merely technically improper and, to the extent she should have (indeed, must have) known better, foolish. It seemed, at the time, that the only losers in this story would be Druyun, Sears, and possibly Boeing’s shareholders. A subsequent independent investigation by former Sen. Warren Rudman permitted observers to conclude that Druyun’s woes derived from an isolated misstep, rather than any widespread neglect of the rules. Sadly, after a failed polygraph examination, Druyun surprised us by supplementing her earlier plea. This time, she admitted far more, specifically that she improperly favored Boeing, both in the tanker lease negotiations and in other significant transactions. Druyun went so far as to admit that she agreed to an inflated price on the tanker lease deal as a “parting gift to Boeing.” She also stated that she steered other contracts to Boeing, and settled a huge dispute in a manner advantageous to Boeing. Druyun’s supplemental statement implied that she did all this to secure, and later protect, her son-in-law’s and daughter’s employment at Boeing. Upon reviewing this shocking plea, some of Druyun’s most ardent supporters now feel that she got off lightly. Others find her admissions so dramatic that they fear she may have embellished her misdeeds under pressure from the prosecutors or for personal reasons. But nobody can argue that the Druyun sentencing and any future actions stemming from the scandal could have come at a worse moment for the U.S. procurement system. UNFORTUNATE EPISODE OR TREND? The public image of government contractors is having a bad year. Uncle Sam’s massive outlay of money for Iraq’s reconstruction has failed to produce the (unrealistic and optimistic, but nonetheless) promised results. The broad role of Halliburton subsidiary Kellogg Brown & Root (KBR) in Iraq and Halliburton’s ties to the Bush administration have been heavily scrutinized. Criticism of this relationship likely will increase in light of the recent letter to Congress from Bunnatine Greenhouse, the Army Corps of Engineers’ senior civilian acquisition official. Indeed, the Federal Bureau of Investigation is looking into the matter. News reports assert that Greenhouse complained of the absence of competition and the level of KBR’s involvement during the contracting process. Meanwhile, the public rarely hears how effectively KBR has cared for U.S. troops in Iraq, providing essential services such as food, shelter, showers, and laundry. Instead, the media repeatedly trumpet the billions of dollars of work that KBR has obtained without competition, and KBR’s accountability woes seem never-ending. Allegations that contractor personnel took part in the alleged prisoner abuse at Abu Ghraib also leave no doubt that the federal government must devote more resources to contract management and oversight, particularly in light of the sustained pressure to outsource the government’s work. A stream of audits suggest that the badly understaffed Coalition Provisional Authority, subjected to unrealistic time pressure, lacked the resources or the will to utilize common oversight tools and, accordingly, failed to protect adequately against the waste of Iraqi and U.S. funds. And bad news continues to accumulate. A deluge of investigations, reports, and prosecutions has disclosed government charge-card improprieties. A Defense Information Systems Agency contracting officer recently was indicted for using government purchase cards to steer business to a company in return for more than $500,000 in cash and benefits. Last year, the former head of the Pentagon’s small business office was convicted of extortion and money laundering and sentenced to decades in prison. SYSTEMIC CHANGE We fear that the recent flood of bad news reflects a fundamental shift in the principles that underlie the U.S. procurement system. Until recently, that system drew deeply on traditions of competition and transparency. Despite the system’s complexities, inefficiencies, and occasional lapses, those core values worked to squeeze out corruption over time. Developing countries looked to the United States as a model for how public integrity could emerge, naturally and inevitably, through a truly competitive and transparent system. During the 1990s effort to reinvent government, however, transparency and competition were brushed aside to inject more efficiency into the system. Simpler and faster forms of contracting dominated. Nowhere is this more evident than in the proliferation of interagency indefinite-delivery contract vehicles, where the perverse incentives that derive from this kind of fee-based purchasing continue to expose troubling pathologies that require correction and constraint. Too often, agencies that administer contracts for other agencies, for a fee, yield to pressures to reduce transparency and competition in contracting to accommodate their customer agencies’ thirst for efficiency. That race to the bottom � to ever-more streamlined contracting, with ever-fewer safeguards � is a very dangerous race. At one level, we’d like to agree with those eager to put the Druyun story to rest. Some prefer to paint the whole episode as an isolated example, unlikely to be repeated soon. Others throw up their hands, believing that neither rules nor oversight regimes can deter individuals intent upon transgression. But we believe that both perceptions are too convenient. As episodic transgressions become more routine, it is not enough to retort that, typically, the government receives good value for its money. Rather, Congress, the media, the contractor community, and the public must look into the process to determine whether the government’s contracting practices remain appropriately effective, efficient, and fair. Without systemic credibility, claims that the contracts awarded represent the best deals possible cannot sustain a public procurement regime. Druyun’s tragedy played out against this backdrop of hotly debated reforms and seemed to grow out of the new flexibilities in federal procurement. Many had considered Druyun’s outspoken and, at times, flamboyant disregard for rule-bound procedures and flexible approach to deal making a success story. Her agency, the Air Force, was often cited as a model government purchaser, one of the most innovative in contracting policy. For example, the Air Force has been a leader in embracing alternative dispute resolution as a means of handling contract disputes. Like most recent procurement reforms, ADR promotes greater efficiency and more flexibility, yet less transparency. Against this backdrop, Druyun’s downfall seems to warn that without responsible implementation, innovation carries real dangers. At the same time, her misdeeds seem stereotypically old-fashioned. The scandal resulted from a huge aircraft procurement, involved an apparently troubled major defense contractor (recall the aspersions once cast at the “military-industrial complex”), and was caused by the failure to follow a stunningly complex set of procurement integrity rules. A BIG DEAL Upon closer examination, the procurement system’s current woes contributed mightily to this scandal. Druyun crossed the line while negotiating an aircraft tanker deal that was notoriously closed and noncompetitive. Depending upon your perspective, the deal might be described as innovative (and potentially a triumph of flexible, reformed procurement) or unconventional (and thus a departure from the careful, standardized, risk-averse regime envisioned by Congress). Either way, the deal, specially crafted to lift Boeing’s fortunes, required unattractive machinations to exclude meaningful competition from Boeing’s nemesis, Airbus. The transaction was so clouded that even Congress struggled to get the Air Force to disgorge the details of the negotiations. (We have no reason to believe that these events were the proverbial “last straw” that prompted the pending U.S./Boeing versus European Union/ Airbus proceedings on the question of government subsidies for airplane manufacturers, but little in the tanker-lease deal bodes well for the U.S. position in that matter.) Had the Boeing tanker lease been negotiated more openly, under more traditional competitive processes, the risks of corruption would have been sharply reduced. While it’s always possible for a sophisticated and determined individual to corrupt a well-planned competition, it’s much more difficult. Let’s also not forget that the scandal was revealed as a result of a congressional staff review of Boeing. The investigation � which, in retrospect, merits kudos for uncovering the conspiracy � arose not from any hint of an ethical breach, but instead due to the highly unusual size and nature, and the controversy surrounding the economic wisdom, of the tanker-lease deal. (Reportedly, neither Boeing nor the Air Force sensed trouble even when Druyun sold her home to a Boeing attorney � somehow, they failed to see that as an apparent conflict of interest.) Frankly, we find it surprising that, despite the attention of Congress, the media, and the European Union, the combined ethics and compliance resources of the Air Force and Boeing failed to uncover any of Druyun’s misdeeds. Nor, in light of the scope of Druyun’s admissions, can we envision a scenario where this investigation ends with Druyun’s sentencing. The revolving door, and the rules that regulate it, will continue to spin. The cross-fertilization of government and contractor employees is not the problem, nor should the revolving door’s rotation be hampered. Similarly, empowering purchasing professionals with discretion and granting them flexibility is an important element of a successful procurement regime. But less obvious, and arguably more important, is a simple lesson: When our purchasing regime abandons openness, reliance upon competition, and investment in meaningful oversight for other ends, we must brace ourselves for failures in integrity. When the public trust is at stake, that result is unacceptable. Professors Steven L. Schooner and Christopher R. Yukins teach government contracts law at the George Washington University Law School. Both served in the Justice Department and have represented government contractors in private practice. Schooner also served as associate administrator for procurement law and legislation at the Office of Management and Budget.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.