If your company does business with the U.S. government, there are a number of regulations and serious compliance issues to be aware of before you interview a current or former U.S. government employee.
The penalties for noncompliance can be quite severe and have the potential to impact the bottom line of companies of any size (Boeing’s recruiting and hiring of the U.S. Air Force’s chief acquisition official in 2002 in violation of these regulations was the principle factor that led to a $615 million dollar penalty, over a billion dollars in lost contracts for Boeing, and prison time for Boeing’s then-CFO who was actively involved in the inappropriate recruiting decisions).
Most large companies that do business with the government (defense contractors, infrastructure companies, etc.) are aware of these restrictions and have policies and processes in place to identify and mitigate potential problematic employment discussions and hires. But many small and mid-size companies are totally lacking in these processes (and some large ones as well). In most organizations, it is Human Resources, and specifically Talent Acquisition, that is best positioned and most responsible for avoiding these costly blunders. Yet many recruiters and talent acquisition leaders have only a vague sense or are totally unaware of the rules and regulations that govern post-government employment. This short article is written to provide a broad overview of some potential conflict of interest areas and outline some of the steps organizations can consider in developing a robust review process; it is by no means complete and in no way should be interpreted as legal advice.
Current Government Employees
If your company contracts with or has a business relationship with the U.S. government, there are a number of things that should be considered before you have any employment discussions with a current government employee. By “employment discussion,” I mean any direct or indirect employment-oriented information exchange, including not just formal on-site interviews but emails, conferences, social meetings, networking, etc.
This also holds true of conversations with recruiting agencies and search firms representing a government employee. The Boeing example I mention above was tied to a “non-meeting” in which job details were discussed while the candidate was still a government employee.
Government employees interested in seeking employment with your company cannot have participated “personally and substantially” on any government matter where your company has a financial interest. Sound kind of vague? It is.
The vagueness of a lot of the relevant regulations makes the government employment conflict of interest analysis process particularly tricky and subject to interpretation. In general, given the serious potential consequences, it is better to be safe than sorry. “Personally and substantially” certainly includes procurement decisions but also can include various kinds of input including financial or technical direction.
What to do when an individual falls into this category? Well, before any conversation can take place, the potential candidate must report the contact to their supervisor and ethics official, and then receive permission to discuss after being excluded from and relieved of the problematic activity. Even if there is no possible conflict, potential candidates should notify their supervisor and provide your company with a letter affirming that there are no areas of potential conflict. All such documentation should be time stamped in one way or another and made part of your company’s permanent record. Getting the go-ahead to hold employment discussions has nothing to do with any potential post-government employment restrictions, and a legal/ethics review must be conducted for all post-government employees before making any offer.
Military officer and civilian government personnel are considered “current” employees during terminal leave (their final accrued leave taken before separation).
Former Government Employees
Government procurement officials may not accept any compensation from a government contractor for one year after separation if the government official had certain interactions with that contractor, including serving in a source selection authority capacity, leading technical or financial evaluation teams, etc. Very small procurement decisions may not incur this restriction, although certainly all decisions over $10 million will. Additional U.S. Department of Defense regulations push this ban out to two years for any “covered DoD officials” including procurement officials and also program managers, administrative contracting officers, etc.
The One-Year Ban
Senior government employees are subject to the one-year ban and may not communicate or appear before an employee of the agency or program in which they worked for a period of one year after termination of service. These individuals may not use their contacts to influence any matters related to their former agency for a period of one year. For “very senior” officials this ban is extended to two years. There is also a two-year ban for officials with responsibility for a particular matter (or managing someone with that responsibility) in communicating or representing their new employer as it relates to that particular matter (usually a matter assigned by legislation, regulation, or executive order).
The Lifetime Ban
There is a lifetime ban on trying to influence the government regarding any particular matter involving specific parties that a government employee participated in “personally and substantially.” Employees may not communicate or appear on behalf of anyone else with the intent to influence any decisions related to that particular matter.
Trade and Treaty One-Year Ban
Individuals involved in trade or treaty negotiations may not aid, advise, or represent anyone regarding these negotiations for a period of one year after leaving government service. This restriction does not necessarily apply to enlisted military personnel.
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Revolving Door Restrictions
Executive agency employees are banned from communicating with employees of their former agency with an intent to influence for a period of two years. And they may not lobby any non-career senior executive service appointee or covered executive branch official for the remainder of the term of the executive administration.
And There’s More …
The above are just some examples of current and former government employee restrictions and conflicts of interest. This is a complex subject with a lot of ambiguity and regulations that can be interpreted to mean different things. Different agencies and branches of government will have different regulations governing post-government employment. And this article is only discussing federal government conflicts of interest. Most states have additional regulations for state workers restricting employment in cases where there is a potential conflict.
Your company can mitigate its potential risk by making sure that all current and former government employees obtain advisory ethics opinions from a responsible government ethics official before you make any offer of employment (this is in addition to the interview restrictions already discussed for current government employees). Be aware that the ethics official will probably want a detailed job description for the role you’re looking to fill. It’s rare that an opinion would say that someone can’t work for your company at all (although it is theoretically possible) but it is not uncommon for an opinion to prohibit the accepting of a particular job or limit what an individual is allowed to do in that job.
Opinions also might limit what someone can do for your company in a future role (if they are promoted, etc.) These opinions should be part of an employee’s permanent record and should be made available to anyone involved in determining that employee’s roles and responsibilities for as long as they are employed by your company.
What a Talent Acquisition Leader Can Do
First of all, if your company does business with the government and you aren’t familiar with these regulations and the conflict of interest analysis process, then you need to make sure that someone who works for your company is (or you need to hire someone who is). Make certain that you have procedures in place to identify and address any potential problems before your company makes an inappropriate interview or hiring decision.
In some cases, talent acquisition departments designate a subject matter expert in post-government employment conflict of interest analysis and have recruiters and sourcers consult with this subject matter expert before contacting any current government employee and before making an offer to anyone who has worked for the government in the past. This subject matter expert might be home-roomed in HR or in your legal department. Just make sure the lines of communication are open and everyone is comfortable contacting the designated expert; this is an area where one “rogue agent” in talent acquisition can do a whole lot of damage.
Another, more ambitious, idea is to automate a lot of the initial analysis work to more efficiently screen for those potential candidates where a possible conflict exists while allowing the normal recruiting process to move forward for everyone else. I’ve been involved in developing applications like this and it really requires a subject matter expert to work very closely with your IT department (or a good programmer in HR, etc.) to design a flowchart based system with a simple, intuitive user interface. Of course, just like any technology based solution, problems can creep up unless everyone knows when and how to use the application (and takes the time to do so).
Talent acquisition leadership should put a system in place to prevent damaging their company but individual recruiters and sourcers also should be familiar with these regulations. That goes for both corporate and agency recruiters who work for or with companies that do business with the government. Educating hiring managers on the relevant restrictions also makes a lot of sense. This is serious stuff and the more safeguards in place the better. The rule of thumb for everyone involved should always be, if you are unsure if there is a conflict, then ask someone who will know before you take any action.