Potential Conflicts of Interest in Contracting for Regulatory Analysis

In response to congressional concern over the use and misuse of a cost benefit analysis as a regulatory decisionmaking tool, GAO analyzed contracts at several executive departments and agencies and independent regulatory commissions to identify situations in which conflicts of interest may arise. A potential conflict of interest was defined as any instance where: the contractor has performed studies in related areas for the regulated industry; the principal investigators of the consulting firms have performed studies in related areas for the regulated industry; the principal investigators have been recently employed by companies in the regulated industry; and the contractor, expert consultant, or principal investigator of a consulting firm who are performing studies commissioned by the agency have testified on behalf of the regulated industry in any enforcement action or rulemaking procedure. GAO identified potential conflict of interest situations in 101 of the 156 contracts analyzed. Organizations' policies and procedures for identifying potential conflicts of interest varied considerably. GAO believed that the Government should address the potential for both organizational and individual conflicts of interest during its contract review process. Each organization addressed to varying degrees the potential for organizational conflict of interest, but none considered the potential for individual conflicts of interest during their contract review.