Peters Bipartisan Legislation to Prevent Conflicts of Interest in Federal Contracting Heads to President to be Signed Into Law

WASHINGTON, D.C. – The House has passed bipartisan legislation authored by U.S. Senator Gary Peters (MI) to help identify and mitigate potential conflicts of interest between taxpayer-funded projects and government contractors’ other business opportunities. The federal government contracts with private companies to support important government functions – such as the delivery of services and the approval of prescription drugs. However, many contractors also conduct business with the private sector or other outside entities, and this can raise questions about the reliability of consultations, advice, or projects under federal contracts if not handled appropriately. The bill requires updates to existing rules to improve services while allowing contractors to continue pursuing business opportunities to the greatest extent possible.  The bill passed the Senate in August, and now moves to the President to be signed into law. 

“The government needs to help ensure parts of a federal contractor’s business do not conflict with their service to the American people. That is why federal agencies should know about these private companies’ potential conflicts of interest before they receive a contract,” said Senator Peters. “This bipartisan, commonsense legislation will ensure that federal contractors work in the best interests of Michiganders and the American people, and not outside interests. It will also ensure these companies provide transparency about whether outside relationships could be influencing taxpayer-funded work.” 

Reports have highlighted the need to prevent conflicts of interest within companies that are awarded federal contracts. For example, McKinsey & Company, a management consulting corporation often hired by the federal government, was paid more than $140 million dollars since 2008 by the Federal Drug Administration (FDA) to help support their oversight work of pharmaceutical companies – including determining the safety and efficacy of prescription pain medications. At the same time, McKinsey had not disclosed to the FDA that they were also consulting for several opioid manufacturers on how these companies could effectively market their products. This has called into question whether consultants from McKinsey were providing biased advice to the FDA, and whether that advice was influenced by their relationship with the drug makers whose business practices are a root cause of the opioid epidemic. Peters’ legislation will give federal agencies a process to evaluate similar potential conflicts of interest to ensure that federal consultants and other contractors are using taxpayer dollars to work in Americans’ best interests.

The Preventing Organizational Conflicts of Interest in Federal Acquisition Act would require agencies to identify potential conflicts for specific contracts early in the process. Federal contractors would be required to disclose other business relationships with entities that conflict with the specific work that an agency has hired them to do. Private companies under contract with the U.S. government would also have to disclose new potential business that opposes ongoing services they are providing to the American people. The bill would ensure federal contractors are aware of disclosure requirements and how working with agencies could impact other parts of their business. Finally, the legislation requires federal agencies to assess and update their procedures for determining whether contractors could have a conflict of interest.

Below are statements in support of Peters’ bipartisan legislation:

“The U.S. government increasingly relies on government contractors for their expertise on matters that threaten our nation's safety and security. Yet, based on current federal contract regulations, agencies cannot always discern whether government contractors have business relationships with foreign governments and private entities that could create a conflict of interest,” said Noah Bookbinder, President of Citizens for Responsibility and Ethics in Washington. “To protect the integrity of services provided to the United States, CREW endorses the Preventing Organizational Conflicts of Interest in Federal Acquisition Act, which would require greater transparency in contractor business relationships in order to prevent conflicts of interest.”

“Companies perform mission-critical government functions. Organizational conflicts present one type of ethics risk to the government, and they must be identified and avoided through careful government oversight,” said Scott Amey, General Counsel for the Project on Government Oversight. “Without more guidance, organizational conflicts of interest can result in unfair competitive advantages and biased contract awards—both of which compromise the impartiality of the federal government and the integrity of the contracting process.”

“When government policymaking is tainted by conflicts of interest, it weakens the legitimacy and credibility of the entire process. That erodes public confidence in government and harms democracy,” said Scott Greytak, Director of Advocacy for Transparency International U.S. “This bill promotes greater transparency and accountability to ensure the public can trust that government is making decisions with their best interests at heart.”

In his role on the Homeland Security and Governmental Affairs Committee, Peters has worked to ensure government is effectively serving the American people. His bipartisan legislation to strengthen protections for Inspectors General so they can conduct independent oversight to root out waste, fraud and abuse of taxpayer dollars has advanced in the Senate. Peters also led several efforts to investigate multiple instances of wasteful spending and conflicts of interest during the previous Administration.

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