Regulating the Defense Industry’s Revolving Door

Veterans leave the military with a wide variety of skills, ranging from bomb disposal techniques to aerial combat strategies. These skills make veterans and civilian officials who leave the U.S. Department of Defense attractive hires for businesses that contract with the Defense Department, such as Raytheon, Lockheed Martin, and Boeing.

But when senior military and civilian officials begin working for defense contractors after leaving their government positions—as more than 1,700 did from 2014 to 2019—concerns of potential conflicts of interest arise. The movement of personnel from their roles in government to relevant industries, and sometimes back again, is known as a revolving door, and the Defense Department restricts former personnel from certain employment activities with defense contractors.

But the existing post-government employment regulations may not be strict enough, according to a recent report by the U.S. Government Accountability Office (GAO), the government oversight arm of the U.S. Congress. Specifically, GAO recommends that the Defense Department amend the Defense Federal Acquisition Regulation Supplement (DFARS) to require that defense contractors affirm their employees’ compliance with updated lobbying restrictions in any contract proposal.

The Defense Department contracts with private companies to provide a wide range of goods and services. When a business wants to “win” a contract with the Defense Department—whether to supply aircraft or equip naval vessels with new radar—the company must submit a contract proposal for consideration, providing details including pricing and completion timelines. In these proposals, the business must also certify that they meet a range of DFARS requirements, such as cybersecurity minimums and proper ammunition labeling.

This self-certification model means that companies—known as contractors—implement internal control programs for each of the DFARS requirements. Companies that fail to comply could face hefty fines and penalties.

Now, in its recent report, GAO recommends amending DFARS requirements to reflect updated lobbying restrictions from the National Defense Authorization Act (NDAA) requiring contractors to certify their compliance with the NDAA’s post-government employment restrictions.

The NDAA prohibits former flag officers—generals and admirals—and their civilian equivalents from lobbying the Defense Department or other executive branch officials about defense matters for up to two years after departing their government positions. Private companies compete for contracts, and the federal legislation ensures former officers don’t use their relationships—through lobbying current officials—to assert improper influence the contract selection process.

Although the NDAA and other ethics laws forbid such lobbying efforts, GAO suggests that amending the DFARS would give defense contractors more incentives to prevent their own employees from lobbying. Strong constraints on the defense industry’s revolving door are critical to promote the “public integrity of the government’s decision-making processes,” GAO emphasizes.

The DFARS changes, GAO argues, would reinforce ongoing efforts by the government to address lobbying and other ethical concerns about post-government employment by creating a “sense of shared accountability between the employees and the contractors who hire them.” Furthermore, a regulation updated to follow GAO’s recommendation would safeguard the Defense Department from approving contracts with “companies whose employees violate the lobbying restriction with their employers’ knowledge.”

One reason GAO recommends adding a self-certification requirement on lobbying activity to contractor proposals is that defense contractors currently have “varying forms of compliance practices in place to address lobbying.”

For example, of the 11 major defense contractors that responded to GAO’s survey, nine have a formal program in place to monitor compliance with the NDAA’s lobbying restrictions—but the programs have differing and potentially ineffective protocols. Just six contractors reported that their standard job application procedures involve asking candidates whether they are subject to any lobbying restrictions.

Separate from the recent NDAA lobbying restrictions, however, defense contractors already certify their employees’ compliance with several other post-government employment restrictions that were issued by a 2011 DFARS amendment. In fact, GAO found that defense contractors generally had effective internal programs in place to promote awareness and compliance with these previous post-government employment restrictions—suggesting that adding the NDAA’s updated lobbying restrictions to the contractor self-certification requirement could be just as effective.

GAO previously reported on the Defense Department’s post-government employment regulations in 2008, then recommending the need for greater contractor disclosure of compliance with the applicable restrictions. The Defense Department concurred with that earlier GAO report and, according to the latest report, implemented all recommendations for executive action.

In its recent report, in addition to calling for more effective internal contractor compliance programs, GAO also found that the Defense Department has since “taken steps designed to increase employee awareness” of post-government employment restrictions. These measures include a publicly accessible website for the Department of Defense Standards of Conduct Office, which publishes digital toolboxes for ethics training and procedural guides for current personnel seeking employment with a defense contractor.

The Defense Department has concurred with GAO’s latest recommendation to amend the DFARS to require contractor compliance with updated lobbying restrictions, internally referring the recommendation to the Under Secretary of Defense for Acquisition and Sustainment for further action.