Ethics Oversight of Consultants
Consultants often fall between the cracks of government ethics. They
are contractors, but professionals rather than suppliers or
construction companies, and they often act just like government
officials, only they're not on the payroll. And yet the ethics rules
that apply to government officials often do not apply to consultants.
Often, ethics commissions don't even have jurisdiction over consultants.<br>
<br>
<a href="http://controller.lacity.org/stellent/groups/electedofficials/@ctr_cont…; target="”_blank”">An
audit
report done by the Los Angeles City Controller</a> for the Los
Angeles Unified School District (LAUSD) just came out. It was commissioned after a consultant acting as a
government employee allegedly funneled business to a company he
co-owned. The school district, which had done a huge school
construction program, wanted to see if there were other conflicts of
interest. It calls its consultants CPs, that is, contract professionals.<br>
<br>
Needless to say, the controller found conflicts, especially for the
period 2002-2006, before more oversight procedures were established.
"While LAUSD has a requirement that CPs selected to participate in
hiring panels should not be from the same firm as the CP seeking to be
hired, we found that in more than 225 instances during this time, a CP
or a regional director sat on a panel which selected a person employed
by their employer – thus creating a potential conflict of interest."<br>
<br>
In fact, 80 CPs were hired without any panel being involved at all. But
the biggest concern of the auditor was four instances where someone
participating in a hiring panel "stood to receive a direct financial
benefit because they selected a CP from a firm in which they had an
investment." In other words, a direct conflict is far more serious than
indirect conflicts.<br>
<br>
But in the real world, this isn't true. Anyone who knows that
consultants are picking people from their own firms or are getting jobs
without any vetting at all will think that the process is rigged and
that the people involved are just helping their friends help
themselves. This audit shows that even limited oversight prevented much
abuse of the contracting process.<br>
<br>
The controller recommends that consultants file a statement of economic
interests not only once a year, but every time they are hired and when
their contract period ends. It also recommends that consultants get
ethics training.<br>
<br>
Ethics rules should apply to consultants, as the LAUSD has apparently
done with its <a href="http://ethics.lausd.net/FTP/Contractor_Code_of_Conduct.pdf" target="”_blank”">Contractor
Code
of Conduct</a>. It is good to pull out rules that apply especially
to contractors, with training that uses case studies that contractors
will recognize, but I'm not sure whether a separate code is really
necessary. This code of conduct goes far beyond ethics laws, and makes
references to state and local laws. As long as the enforcement process
is clear and the enforcer independent, this would seem to be a good way
of giving contractors guidance on the many issues they face when
working for a city. But here's the enforcement passage in the LAUSD
code:<ul>
While Contractors and their Representatives are expected to
self-monitor their compliance with this Contractor Code of Conduct, the
provisions of this Code are enforceable by LAUSD. Enforcement measures
can be taken by LAUSD’s Procurement Services Group or Facilities
Contracts Branch in consultation with the Contract Sponsor, the Ethics
Office, the Office of the General Counsel, and the Office of the
Inspector General. The Office of the Inspector General may also refer
matters to the appropriate authorities for further action.</ul>
This setup leaves a lot of room for conflict between enforcers, for
enforcers not to take responsibility for oversight, and for misconduct
to fall between the cracks.<br>
<br>
The rules should include serious fines for being on a panel that
selects someone from your own firm, and any contract not approved by an
independent panel should be automatically void (as in Section D(1) of
the LAUSD Contractor Code of Conduct (p. 3)), with money paid under the
contract returned. Training is good, disclosure is good, but
when a big construction regime is in process, it is important that it
be accompanied by heightened procedures (including review of disclosure
forms for possible conflicts) and both more focused rules and the full
application of regular ethics rules to consultants.<br>
<br>
In smaller cities and towns, school construction projects
such as this one are often overseen by an ad hoc, volunteer school building
commission, with the ethics commission brought in only when there is a complaint. This is not enough. Oversight responsibilities must be clearly delineated and
the personnel must be professional, even if yet other consultants are
required.<br>
<br>
This extensive use of consultants makes me question the adequacy of the
City Ethics Model Code <a href="http://www.cityethics.org/content/full-text-model-ethics-code#0.1_TOC48…; target="”_blank”">consultants
provision</a>, which only applies certain provisions to consultants, at
least with respect to large cities and large projects.<br>
<br>
By the way, it's worth a visit to the LAUSD <a href="http://ethics.lausd.net/" target="”_blank”">Ethics Office website</a>. The first treat is
its Ethics News flashes at the top of the homepage, with links to
news sources on the web. The ethics news stories involve local
governments as well as national, non-governmental ethics matters.
There's an <a href="http://ethics.lausd.net/FTP/LAUSD_Ethics_Self_Test.pdf" target="”_blank”">ethics
IQ test</a>, <a href="http://ethics.lausd.net/web/quiz/index.html" target="”_blank”">a
quiz specially for contractors</a> and, for post-secondary officials, <a href="http://ethics.lausd.net/ethicsu/" target="”_blank”">there's an Ethics U</a>. For the more
old-fashioned official, there are several <a href="http://ethics.lausd.net/resources/ethics_tools.shtml">publications</a>,
including
an "Ethics Gift Wizard" and, more relevant to the rest of this
post, "Doing Business Ethically with LAUSD."<br>
<br>
And best of all, there's an Ask Ethics Helpline. What a great idea!<br>
<br>
Robert Wechsler<br>
Director of Research-Retired, City Ethics<br>
<br>
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