Sen. David Pryor (D-Ark.) still recalls the snowy day 11 years ago when as a newly elected senator he shared a cab with two Washington consultants who were discussing how much they should charge the federal government for a project.
"One said they should charge $25,000. The other replied that they could get $50,000. I am sure they got the $50,000," recalled Pryor, still angry after all these years about what he believes is a "shadow government" that is completely unregulated.
Pryor has been fighting to curb government hiring of consultants ever since, most recently as a subcommittee chairman on the Senate Government Affairs Committee, where he has run dozens of hearings on the subject. He also has ordered 40 investigations by the General Accounting Office (GAO), probes that he said turned up examples of conflict of interest by consulting firms "who are working both sides of the street" -- holding contracts both from government agencies and contractors doing business with those agencies.
In one case, for example, the Energy Department picked a Fairfax consulting firm, International Energy Associates Ltd. (IEAL), to drum up support for a controversial nuclear cooperation agreement with Japan. It turned out, though, that the firm's client list included a number of Japanese utility companies that stood to gain from the agreement.
In another, BDM International Inc. of McLean was found by investigators from Pryor's subcommittee to hold a Defense Department contract to support testing of the MX missile at the same time that it was helping the Pentagon solve problems with MX basing and survivability. That same company also was hired to support testing for the Strategic Defense Initiative while it was helping design the program.
Despite the hearings and the GAO probes, Pryor described his crusade as "11 frustrating years" without real progress. He received his taste of victory last month, however, when the government published regulations requiring that consultants that receive or subcontract to federal contracts must disclose their other private and public clients. Significantly, the disclosure forms will not be made available to the public.
The registration forms will tell federal contracting officers what companies, countries and government agencies consultants have worked for in the past year, and whether any of that work was related to the work they are proposing to do for the government.
Although Pryor called the regulations "a major step in the right direction," he said they fall far short of what is needed. Consultants' registrations, he argued, should require more details, list clients for the previous three years instead of one and be made public, as are the filings by lobbyists and foreign agents.
Washington's army of consultants has generally accepted the new rules without much more than grumbling -- an indication that the regulations are not expected to significantly affect the way consultants go about their business. While a number of them have complained about the added paperwork burden of the disclosure process, they breathed a sigh of relief that stiffer regulations called for in Pryor-sponsored legislation were not passed by Congress.
"Under the circumstances, I think we would have to characterize it as a pretty fair and balanced approach ... although we would have preferred no regulations," said Mark Schultz, president of the Professional Services Council, the D.C.-based trade association for the consultant industry.
Individual consulting firms in the area were reluctant to comment publicly on the rules, with a number of officials explaining privately that they are taking enough heat from Pryor and his subcommittee without sticking their necks out further. Officials at IEAL, the Fairfax firm that worked for both Japanese companies and the Energy Department on a nuclear agreement with Japan, didn't respond to phone messages. And an official at BDM International referred questions to the trade association.
Although consultants form a major industry group, the GAO was unable last year to determine how much the government spent on consultants or even what a consultant does.
The defense contracting industry favors the most narrow definition of a consultant, limiting it to people who give advice -- such as former government officials, who help defense companies win contracts. But the government generally uses a broader definition, calling a consultant any company that helps the federal government make decisions, develop policy or manage large weapon or computer systems.
Pryor said he got little cooperation from government departments and agencies in his battle to put some controls on the government's use of consultants. In the process, he has developed a list of examples of consultants that supply the same information for separate fees to more than one government agency or consultants that work for both sides on an issue.
Nonetheless, Pryor complained that he found little concern about who the consultants are, who they work for or how much they get paid. The 1988 Pentagon procurement scandal, which found defense consultants involved in fraud and bribery to help clients win government contracts, created a better political climate in Congress for legislation to regulate consultants, he said.
Even so, Pryor said, the opposition was so strong that his original measure was watered down. Instead of legislating rules for consultants, the 1989 defense appropriations bill ordered the government to devise its own regulations. A government official said the bill was unusual in that it set no guidelines for the government action and allows the president to nullify any rules that he finds too burdensome.
In addition, contracting officers are not required to disqualify a company because of a conflict. Instead, they can seek ways to ease the conflict or even ignore a conflict if they find it is in the best interest of the government.