Corruption

• Conflicts of interest, insider dealings and kickbacks in the competition for lucrative contracts
• Price-fixing or bid-fixing, fraud and misconduct
• Revolving door between government and contractors leads to undue influence

Government contracting and privatization opens the door to many varieties of corruption and misconduct. Private companies may bribe government officials to win lucrative contracts, engage in insider dealings, cover up scandals that affect contract performance, and use campaign contributions to influence decisions counter to the public interest.

In November 2009, reports surfaced that defense contractor Blackwater attempted to bribe Iraqi government officials to prevent revocation of the company’s operating license following the Nisoor Square shootings. This type of corruption raises serious concerns about the ability of private companies to circumvent proper oversight. In February 2009, two Pennsylvania judges pled guilty to accepting $2.6 million in kickbacks to send teenagers to two private detention centers. Many of the teenagers who appeared before the judges received unfair sentences for extremely minor offenses, and may be profoundly affected for the rest of their lives.

Revolving door issues between the government and contractors can significantly undermine adequate scrutiny and oversight of the contracting process. Cozy relationships between governmental agencies and companies are common as employees move between private companies and high-level government positions, giving the company an unfair competitive advantage and access to sensitive information. In San Diego, an employee left privatization consulting firm Grant Thornton for a position with the city overseeing the hiring of Grant Thornton, and then returned to work for the company. To protect the best interests of citizens and taxpayers, effective contract management depends on objective government oversight, which is severely compromised in such circumstances.