oversight

Information on Former High-Ranking Coast Guard Officials' Employment with Major Contractors

Published by the Government Accountability Office on 2012-12-20.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

United States Government Accountability Office
Washington, DC 20548



          December 20, 2012

          The Honorable John D. Rockefeller IV
          Chairman
          The Honorable Kay Bailey Hutchison
          Ranking Member
          Committee on Commerce, Science and Transportation
          United States Senate

          The Honorable John L. Mica
          Chairman
          The Honorable Nick J. Rahall II
          Ranking Member
          Committee on Transportation and Infrastructure
          House of Representatives

          Subject: Information on Former High-Ranking Coast Guard Officials’ Employment with Major
          Contractors

          The United States Coast Guard, a component of the Department of Homeland Security,
          manages a broad, multibillion dollar major acquisition portfolio. This portfolio includes
          acquisitions to modernize ships, aircraft, command and control systems, and other
          capabilities used to perform its missions. As a result of these acquisitions and other
          purchases, contractors receive substantial funding from Coast Guard contracts.

          In previous work, we found that each year some individuals leave government employment
          (hereafter referred to as former government officials) and go to work for federal government
          contractors—potentially the same contractors whose contracts they oversaw or were
          otherwise involved with prior to leaving. 1 Last year, we reported that about half of the high-
          ranking officials who separated from the Coast Guard from 2005 through 2009 were
          compensated by a Coast Guard contractor at some point from the time they left through
          calendar year 2010. 2 Former government officials employed by contractors are subject to
          laws restricting their post-government employment activities. The purpose of these laws is,
          in part, to protect against conflicts of interest—such as former government officials using
          their prior relationships, standing, or position in the government for the improper benefit of
          the contractor or to the detriment of the government, or both. Violation of these laws may



          1
           GAO, Defense Contracting: Post-Government Employment of Former DOD Officials Needs Greater
          Transparency, GAO-08-485 (Washington, D.C.: May 21, 2008).
          2
           GAO, Coast Guard: Communication of Post-Government Employment Restrictions Can Be Strengthened,
          GAO-12-174 (Washington, DC: Dec.15, 2011). This report was based on an analysis of those contractors that
          received obligations from the Coast Guard in calendar year 2010.



                                                                                             GAO-13-153R Coast Guard
result in criminal, administrative, or civil penalties for former government officials and, in
some instances, the contractors that employ them.

The Coast Guard Authorization Act of 2010 requires GAO to report annually, no later than
December 31 of each year, on the extent to which former high-ranking Coast Guard officials
have been compensated by Coast Guard contractors. 3 This act defines a Coast Guard
contractor as any person that received at least $10 million in contract awards from the Coast
Guard in the calendar year covered by the annual report (hereafter referred to as major
Coast Guard contractors). Further, the act defines Coast Guard officials as individuals who
were compensated at a rate of pay of the grade O-7 or above, which are Rear Admirals,
Vice Admirals, and Admirals and members of the Senior Executive Service (SES). For the
purposes of this report, we refer to these individuals as “high-ranking officials.” This report
(1) examines the extent to which former high-ranking Coast Guard officials who left
government service between January 1, 2006 and December 31, 2010 have been
compensated by Coast Guard contractors in calendar year 2011, and (2) compares the
responsibilities assigned to these former officials by the Coast Guard with those assigned by
major Coast Guard contractors. 4

To determine the extent to which former high-ranking Coast Guard officials were
compensated by Coast Guard contractors, we identified which officials separated from the
Coast Guard from 2006 through 2010 using Coast Guard personnel data. We obtained a list
of contractors that received any obligations from the Coast Guard in calendar year 2011
using USAspending.gov data. 5 We contacted each contractor that received more than $10
million dollars in obligations from the Coast Guard to confirm employment of and obtain
compensation levels for the former officials we identified. We used the Internal Revenue
Service Information Returns Master File to corroborate employment and compensation data
collected from the major Coast Guard contractors and to identify the number of officials
employed by all other Coast Guard contractors. Based on the results of this corroboration,
we found the data obtained from major contractors to be sufficiently reliable to meet our
reporting requirements. To compare Coast Guard and contractor responsibilities for the
former high-ranking officials, we obtained and analyzed position descriptions and other
information from major contractors and the Coast Guard that described each individual’s
official roles and responsibilities. We did not assess whether the actual duties performed by
the former officials were in compliance with post-government employment laws.

We conducted this performance audit from May 2012 through December 2012 in
accordance with generally accepted government auditing standards. Those standards
require that we plan and perform the audit to obtain sufficient, appropriate evidence to
provide a reasonable basis for our findings and conclusions based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.


3
 Pub. L. No. 111-281, § 402(a) (codified at 14 U.S.C. § 569).
4
 For the purposes of this report, we use “official responsibility” for the statutory terms “oversight responsibility”
and “decision-making authority,” which include program oversight and direct authority exercisable alone, with
others, or through subordinates, to direct government action.
5
 USAspending.gov is a free, publicly accessible website established by the Office of Management and Budget
containing data on federal awards (e.g., contracts, loans, and grants) across the government. The Federal
Procurement Data System-Next Generation, the primary governmentwide contracting database, is one of the
main data sources for this website.



Page 2                                                                                       GAO-13-153R Coast Guard
Summary
A total of 22 of the 39 former high-ranking officials (admiral-level and SES officials) who
separated from the Coast Guard from 2006 through 2010 were compensated at some point
from 2006 through 2011 by contractors that received obligations from the Coast Guard in
calendar year 2011. We found that 12 of these former officials were compensated in
calendar year 2011 by major Coast Guard contractors—those contractors receiving more
than $10 million in obligations during that calendar year. The responsibilities of these
officials vary, but 9 of these 12 officials were assigned by major contractors to positions
involving the development of new business.

Background
Congress has been concerned about contractors hiring former government officials because
these individuals can be put in a unique position to make or influence decisions that
positively or negatively affect the relationships between contractors and the government and
has passed laws subjecting these individuals to certain post-government employment
restrictions (see table 1). Employment with a contractor after leaving government service is
not a violation of post-government employment laws. Rather, there are restrictions on the
timing of the employment and on certain employment activities that take place. There are
potential benefits of post-government employment for the government and the contractor.
For example, the former government official may possess unique knowledge, skills, and
familiarity that could strengthen the relationship and communication between the
government and contractor. Conversely, these attributes could also be used to improperly
benefit contractors to the detriment of the government.

Table 1: Summary of Post-Government Employment Laws

 Prohibition          Duration of bar   Summary
 18 U.S.C.            Lifetime          Former federal employees are barred from knowingly making, “with the
 § 207(a)(1)                            intent to influence,” any communication to or appearance before a U.S.
                                        employee on behalf of any other person (i.e., business entity or individual)
                                        on the same particular matters in which the former employees
                                        participated personally and substantially when working for the federal
                                        government (e.g., specific contract, legal investigation, etc.).
 18 U.S.C.            2 Years           Former federal employees are barred from knowingly making, “with the
 § 207(a)(2)                            intent to influence,” any communication to or appearance before a U.S.
                                        employee on behalf of another person (i.e., business entity or individual)
                                        on a particular matter involving a specific party or parties, in which (1) the
                                        United States is a party or has a direct and substantial interest, and (2)
                                        the person knows or should know this particular matter was actually
                                        pending under the “official responsibility” of the employee during the last
                                        year of government service.
 18 U.S.C.            1 year            Former high-ranking federal employees are barred from knowingly
 § 207(c)                               making, “with intent to influence,” any communication to or appearance
                                        before an employee of an agency in which they served during their last
                                        year of government service, if that communication or appearance is made
                                        on behalf of a person (i.e., business entity or individual) on a matter on
                                        which the former senior-level employees seek official action from the
                                        agency’s employee.
 The                  1 year            Former specified acquisition officials who performed certain procurement
 Procurement                            duties for the government on a contract valued in excess of $10 million
 Integrity Act                          are barred from accepting any compensation (e.g., as an employee,
 (41 U.S.C.                             independent contractor, or consultant) from the contractor involved within
 § 2104(a))                             1 year after performing those duties.
Source: GAO summary of U.S. Code




Page 3                                                                                      GAO-13-153R Coast Guard
As we reported in 2011, the Coast Guard uses multiple approaches to inform its service
members and civilian employees of the aforementioned post-government employment laws. 6
For example, individuals separating from the Coast Guard have the option to request ethics
advice and opinions on future employment opportunities from the Coast Guard’s ethics
attorney. Ethics opinions provide a legal interpretation of the applicability of post-government
restrictions for a particular official. An ethics opinion is prepared by the ethics attorney using
information disclosed by the official regarding their previous government experience and
prospective employers, including specific contracts and programs under their official
responsibility. With complete and accurate disclosure, these optional ethics opinions may
provide officials a safeguard against violations that might otherwise result in criminal,
administrative, or civil penalties. Ethics opinions may also detail whether prospective
employment with a particular contractor is permitted under the post-government employment
laws or provide more generalized advice, including a reiteration of potential restrictions.

In addition, the Coast Guard requires training on post-government employment restrictions
for certain employees. We reported in 2011 that this training was only mandatory for new
employees and ethics advice is optional, so officials leaving the Coast Guard at that time
may not have been fully aware of current post-government employment restrictions. In
response to our recommendation to provide timely and relevant information on post-
government employment restrictions to all admirals and members of the SES as they enter
and leave these senior positions, the Coast Guard issued a memo in January 2012
implementing this recommendation.

Our 2011 report also found that most of the major contractors we examined use a variety of
practices to help ensure their employees comply with post-government employment
restrictions. Examples include having policies and guidance in place concerning these
issues, providing training for employees, using controls during the hiring process such as
requesting ethics opinions for self- or contractor-identified former government officials, and
using monitoring mechanisms such as a hotline to receive anonymous reports of conflicts of
interest or potential violations. Several of these contractors reported that they use these
practices, not only to help ensure compliance with post-government employment laws, but
also to avoid the risk of ethical misconduct and costly civil and criminal penalties.

More Than Half of Former High-Ranking Coast Guard Officials Were
Compensated by Coast Guard Contractors in Calendar Year 2011
Of the 39 former high-ranking Coast Guard officials who were admiral-level or members of
the SES and separated from the Coast Guard from 2006 through 2010, 22 were
compensated at some point from 2006 through 2011 by contractors to which the Coast
Guard obligated funds in calendar year 2011. We confirmed contractor data indicating that
14 of the 22 former officials were compensated by major Coast Guard contractors—those
contractors receiving at least $10 million in obligations from the Coast Guard during
calendar year 2011. Of these 14 former officials, 12 received compensation from major
contractors in calendar year 2011. Compensation for the 12 former Coast Guard officials in




6
GAO-12-174.



Page 4                                                                       GAO-13-153R Coast Guard
calendar year 2011 ranged from $30,000 to $287,061 with over half receiving more than
$200,000 in compensation. 7

Figure 1: Compensation of 39 Former High-Ranking Coast Guard Officials by Coast Guard Contractors
from 2006 through 2011




a
Some of the individuals compensated by major Coast Guard contractors may have also been compensated by other Coast
Guard contractors at some point during this period.


Responsibilities Assigned to Former Coast Guard Officials Compensated by
Major Contractors Varied
Of the 12 former Coast Guard officials that were compensated by major Coast Guard
contractors in calendar year 2011, 9 were employed by major contractors to develop or
expand business, at times in the area of homeland security. Examples of business
development activities in these officials’ position descriptions are: identifying and developing
new business opportunities, drafting and implementing strategies, and coordinating
interactions with new and existing customers. These types of activities are generally
permitted, but could be limited by the representation restrictions in post-government
employment laws. Most Coast Guard and contractor position descriptions we reviewed did
not provide insight into specific activities such as programs and contracts that were under an
individual’s official responsibility. Based on the information contained in these position
descriptions, it was not possible to determine if these individuals continued to work on
programs for which they had official responsibility while in the Coast Guard. For those
former officials compensated by major contractors and not involved in business
development, the responsibilities described in their position descriptions varied and included
providing consultation on a specific Coast Guard project and leading intelligence analysis
supporting homeland security. Further, Department of Homeland Security Hotline, Coast
Guard Investigative Service, and GAO’s FraudNet officials told us that they had not received
allegations of violations of post-government employment restrictions for any of the officials.



7
 For the purposes of this report, compensation refers to salary and monetary bonuses received by individuals. It
does not include the value of benefits supplied by contractors to its employees.



Page 5                                                                                     GAO-13-153R Coast Guard
Eleven of the 12 officials who were compensated by major Coast Guard contractors in
calendar year 2011 received ethics advice concerning potential restrictions on post-
government employment. Three officials received generic ethics memos outlining the
standard post-government employment restrictions and eight received ethics opinions for
employment with specific major contractors. Once a current or former Coast Guard official
requests a contractor-specific ethics opinion, it is prepared by the Coast Guard’s ethics
attorney using a questionnaire that the high-ranking official completes. This questionnaire
collects information about an individual’s previous Coast Guard experience, including
programs and contracts under their official responsibility, as well as the anticipated duties,
potential programs, and related contracts associated with a prospective employment.
Further, the questionnaire makes clear that the resulting ethics opinion is only as good as
the information disclosed by the official and that incomplete or inaccurate information could
result in advice that is of little or no use to the official or prospective employer. According to
the Coast Guard ethics attorney, to help ensure completeness, he will follow-up with the
official through email or in-person meetings to clarify questionnaire data and to address any
ethics questions. Most of the ethics opinions reiterated the representation restrictions placed
upon officials separating from government service and none of the officials were barred from
accepting employment with a major contractor.

Agency Comments
We provided a draft of this report to DHS for comment. DHS provided written comments,
noting that it remains committed to ensuring proper performance of government business.
DHS’s comments can be found in enclosure II. DHS also provided technical comments,
which we incorporated as appropriate.

We are sending copies of this report to the Commandant of the Coast Guard and the
Secretary of Homeland Security. In addition, this report is also available at no charge on the
GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact me at (202) 512-
4841 or huttonj@gao.gov. Contact points for our Offices of Congressional Relations and
Public Affairs may be found on the last page of this report. GAO staff who made key
contributions to this report are listed in enclosure III.




John P. Hutton
Director
Acquisition and Sourcing Management

Enclosures – 3




Page 6                                                                      GAO-13-153R Coast Guard
Enclosure I: Scope and Methodology
To determine the extent to which former high-ranking Coast Guard officials have been
compensated by Coast Guard contractors in calendar year 2011, we obtained personnel
data from the Coast Guard to identify those individuals, admiral-level (O-7 and above) or in
the Senior Executive Service (SES), who separated from the Coast Guard between January
1, 2006 and December 31, 2010. We used USAspending.gov data to identify all contractors
that received obligations from the Coast Guard in calendar year 2011. We narrowed this list
to major contractors by determining which received more than $10 million in obligations that
year. Due to the lack of data on government subcontractors in USAspending.gov, we did not
assess whether the former officials were compensated by Coast Guard contractors via
subcontracts. We contacted all of the major contractors, provided the list of identified former
high-ranking Coast Guard officials, and requested information on whether any of the officials
had been compensated, by how much, and for what purposes between January 1, 2006 and
December 31, 2011. We then corroborated the information collected from the major Coast
Guard contractors by comparing it to Internal Revenue Service Information Returns Master
File data. We also used the Internal Revenue Service Information Returns Master File data
to identify those high-ranking officials on our list who were compensated by any other Coast
Guard contractor in 2011. 8 Based on the results of this corroboration, we found the data
received from contractors to be sufficiently reliable to meet our reporting objectives.

To compare the responsibilities of former Coast Guard officials compensated by major
Coast Guard contractors to those which they held while in the Coast Guard, we obtained
and reviewed position descriptions and other information from these major contractors on
the roles and responsibilities assigned to the former officials they compensated. We also
obtained and reviewed position descriptions, ethics advice or opinions, and additional
information from the Coast Guard on the former officials’ roles and responsibilities for the 5
years prior to their separation. We then compared the Coast Guard and major contractor
information on the officials’ responsibilities to determine if an individual may have worked on
programs or contracts in both government and as a contractor. As noted in our finding, we
were not able to make this determination as most position descriptions did not provide
information on specific programs or contracts for which former Coast Guard officials had
responsibility. We did not assess whether the actual duties performed by the former Coast
Guard officials were in compliance with post-government employment restrictions; however,
we queried the Department of Homeland Security Hotline, the Coast Guard Investigative
Service, and GAO’s FraudNet regarding whether they had received any allegations of
violations of post-government employment laws by the former officials in our analysis.

We conducted this performance audit from May 2012 through December 2012 in
accordance with generally accepted government auditing standards. Those standards
require that we plan and perform the audit to obtain sufficient, appropriate evidence to
provide a reasonable basis for our findings and conclusions based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.




8
 This methodology was used due to restrictions associated with use of IRS data. To ensure we did not act on
IRS data, it was only used at the end of our audit work. Instead, we identified major contractors that
compensated former officials using the above approaches, followed up regarding the officials’ roles and
responsibilities, and only afterwards verified our list of former officials using IRS data.



Page 7                                                                               GAO-13-153R Coast Guard
Enclosure II: Comments from the Department of Homeland Security




Page 8                                                  GAO-13-153R Coast Guard
Enclosure III: GAO Contact and Staff Acknowledgments
GAO Contact
John P. Hutton, (202) 512-4841 or huttonj@gao.gov

Acknowledgments
In addition to the contact named above, Penny Berrier, Assistant Director; Peter Anderson;
Helena Brink; Stephen Caldwell; Virginia Chanley; Julia Kennon; James Lager; Sylvia
Schatz; Tom Twambly; and James Ungvarsky made key contributions to this report.




(121079)




Page 9                                                                 GAO-13-153R Coast Guard
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