Revolving Door Risk: Failure to Follow Best Practices Can Have Severe Consequences

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Not surprisingly, private industry frequently considers hiring current and former federal government employees for their experience, knowledge base, and skill sets. As a reaction to the continuing perception, however, that high-level federal employees jump from the government to private industry and take sensitive government information with them, Congress has reacted over the years with complex and often overlapping revolving door legislation that places post-government employment restrictions on certain employees. While many government employees successfully transition to the private sector, failing to observe the revolving door laws and regulations can result in severe consequences for both the contractor and the government employee. A recent example of what can go wrong for both is the case of Timothy Cannon and The Gallup Organization (“Gallup”).

THE CANNON GUILTY PLEA -

On April 9, 2013, Judge Jackson from the District Court for the District of Columbia sentenced Timothy W. Cannon, former Director of the Human Capital Division at the Federal Emergency Management Agency (FEMA) to two years of probation for conflict of interest violations. According to Mr. Cannon's plea, he helped Gallup acquire a $6 million contract while at the same time pursuing an employment position with the company. Gallup, as a result of its alleged employment discussions with Mr. Cannon and related conduct, faces potential liability for civil damages and penalties under the False Claims Act (FCA) and Procurement Integrity Act, including treble damages and disgorgement of all money received under the contract. Moreover, these types of cases always raise the risk of the contractor’s suspension or debarment, which would preclude any new contract awards for up to three years. This case is a good reminder for private contractors that wish to hire a current or former government employee that they must have rigorous internal controls in place to ensure compliance with the post-government employment requirements.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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