Financial Disclosure for Military Mentors Called a Necessary StepOctober 22, 2010

 

Retired generals and admirals who serve as consultants to the Pentagon now must file public disclosure forms showing which defense or aerospace contractors they are affiliated with and how much they earn from those ties.

These consultants, or "mentors" as they are often called, help the military during war games and other planning efforts. The conflict of interest issue arises because they can influence Defense Department purchase decisions, according to the latest article in a series published in USA Today over the past year. 

The issue has gone back and forth since earlier this year when Defense Secretary Robert Gates capped these advisers' pay at $179,000 and required public financial disclosure, according to the article. But within months, the Department of Defense backed off saying the advisers could just file confidential disclosure forms.

Now the Pentagon says a new rule will require any adviser making more than $119,553 to file public disclosure forms—a move lauded by open-government advocates.

While the amount—$119,553—seems arbitrary, Eric W. Orts, a professor of Legal Studies and Business Ethics at Wharton, says it probably makes sense to have some minimum level that allows former military officials to provide advice to contractors and the government without imposing high transaction costs that could discourage the collection of a broad range of informed opinions.

“Given the size of contemporary defense contracts, it would not be surprising to see lobbying payments in much greater denominations—and those are obviously much more likely to be decisive in ‘paying for influence’ cases,” he said.

Disclosure, therefore, is at least one means to try to assure that conflicts of interest do not poison public decisions to make investments for best value for the government in military contracting.

"Lobbying will occur regardless—and trying to ban it would probably be counterproductive and only succeed in driving it underground," he said, adding that as Justice Brandeis said, 'sunshine is the best disinfectant.'" Effective disclosure may at least help to improve transparency and remind participants of mutual obligations.

But at the end of the day, notes Orts, the integrity of the process requires that participants disclose to each other any potential conflicts of interest. The pluses and minuses of each weapon system should be discussed openly in the public interest rather than for private gain. But there will always be limitations when so much money is involved.

"Regulation, such as disclosure, can only go so far," said Orts. "It can encourage—but never effectively establish—the personal integrity of both government and business representatives that is essential."