Peters, Grassley, Hassan & Ernst Bipartisan Legislation to Prevent Conflicts of Interest in Federal Contracting Passes Senate

WASHINGTON, D.C. – The Senate has passed bipartisan legislation authored by U.S. Senators Gary Peters (D-MI), Chairman of the Senate Homeland Security and Governmental Affairs Committee, Chuck Grassley (R-IA), Maggie Hassan (D-NH), and Joni Ernst (R-IA) 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.

“Companies that receive taxpayer dollars from federal contracts should not turn around and advise clients to take actions that are against the interests of the American people,” said Senator Peters. “This bipartisan, commonsense legislation will require federal contractors to disclose any potential conflicts of interest before they are awarded a federal contract to ensure they are effectively serving taxpayers. I was proud to lead this bill through the Senate, and I urge my colleagues in the House to pass it as soon as possible.”

“Federal contractors are entrusted to provide critical goods and services to the federal government as it serves the American people. If we don’t know whether they are serving other, potentially conflicting interests, we can’t be confident that Americans are getting exactly what they pay for,” said Senator Grassley. “We’ve put together a good government bill that takes steps to eliminate these potential conflicts of interest to rebuild public trust in our contracting process.” 

“McKinsey has time and again shown the dangers that conflicts of interests in government contracting can pose to the American public. This bipartisan bill will ensure that companies that work for the federal government are acting in the best interest of the American people – not Big Pharma,” said Senator Hassan. “I’m glad to see our bipartisan bill sail through the Senate and urge the House to pass it so we can continue to crack down on waste, fraud, and abuse of taxpayer dollars in the federal government.”

“There needs to be more transparency in our federal contracting. This bipartisan measure will help crack down on any conflicts of interest and ensure taxpayers are getting what they deserve and paid for,” said Senator Ernst.

“My Committee’s groundbreaking investigation into McKinsey & Company’s conflicts of interest painted an alarming picture of how secretive consulting firms like McKinsey leverage their federal contracts in the name of corporate greed.  McKinsey partners simultaneously worked for opioid manufacturers and FDA on drug safety projects—even bragging about their government access to generate more business from Purdue—yet hid from FDA the fact that they were playing both sides,” said U.S. Representative Carolyn B. Maloney (NY-12), Chairwoman of the House Committee on Oversight and Reform. “Congress has a responsibility to protect American taxpayer dollars and ensure those safeguarding our public health are not being advised by contractors with conflicts of interest. I am proud to have introduced this bipartisan, commonsense legislation in the House and applaud Senator Peters’ and my Senate colleagues’ unwavering leadership in getting this across the finish line. I vow to fight to get this critical legislation passed in the House and signed into law.”

Recent 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. The senators’ 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 currently 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 the senators’ 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.”

###