Contract Rigging
Taxpayer watchdogs are quick to pounce when military contracts appear to be handed out as sweetheart deals. Case in point: when a Navy procurement official directed $15 million of contracts to his own wife, federal prosecutors were not far behind with conflict of interest charges.
The case involved oil containment booms at Pearl Harbor. William Nesmith, a civilian logistics manager at the naval station, reportedly sent two hefty contracts to his wife’s construction firm.
In their defense, attorneys argued that the conflict of interest did not cost the American taxpayer any extra money. Nesmith is said to have designed the plans on his own.
Ethics of DOD Contract Awards
Regardless of whether contracts are awarded over lower bids, a conflict of interest charge looks bad for contractors and the government. Taxpayers expect that their government solicits bids on a competitive basis, whether it’s a billion-dollar aircraft investment or a run-of-the-mill DOD material handling equipment purchase.
Contract rigging can lead to steep fines and even prison time. In this case, Nesmith faced up to 5 years in jail and a quarter-million dollar fine. Federal prosecutors may choose to settle, but the fallout could include civilian firings and contractors being suspended from bidding.
While it’s hard to say how often DOD contracts are awarded amidst such conflicts, what is clear is that taxpayer groups fight hard against these cases if they ever come to light.
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