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Big Four Firms, AICPA Report Lobbying on Federal Contractor Conflicts Bill

Bill Flook  Editor, Accounting and Compliance Alert

Bill Flook  Editor, Accounting and Compliance Alert

A bill to implement new conflict-of-interest safeguards for federal contracting drew the attention of lobbyists at the AICPA and three Big Four firms in the second quarter of 2022, according to quarterly lobbying disclosures filed with Congress in July.

The main accounting industry trade group, along with Ernst & Young LLP, KPMG LLP, and Deloitte LLP, listed the Preventing Organizational Conflicts of Interest in Federal Acquisition Act on their lobbying activity for the months of April, May, and June. The Senate on Aug. 1 unanimously passed its version of the bill (S. 3905), sponsored by Sen. Gary Peters, a Michigan Democrat. The House version (H.R. 7602), sponsored by Rep. Carolyn Maloney, a New York Democrat, last month cleared the Committee on Oversight and Reform on a 24-17 vote.

Neither the firms nor the AICPA would immediately comment on their positions on the measure or any concerns they may have.

The bill was at least in part a response to a controversy surrounding management consulting firm McKinsey & Company’s previous overlapping work as a contractor to the Food and Drug Administration (FDA) and as a consultant to opioid manufacturers, prompting an Oversight Committee investigation. McKinsey, in an April statement in response to a report by the House panel, said it stopped advising clients on opioid-related business in 2019 and has not advised the FDA “on regulatory decisions or on specific pharmaceutical products.”

“More broadly, we understand and accept the scrutiny around our past client service to opioid manufacturers,” the firm stated. “This work, while lawful, fell short of the high standards we set for ourselves.”

In 2021, the firm reached a nearly $600 million settlement with nearly all 50 state attorneys general related to its role in the opioid crisis advising manufacturers.

The Preventing Organizational Conflicts of Interest in Federal Acquisition Act would direct the Federal Acquisition Regulatory Council to revise the Federal Acquisition Regulation to, among other things, provide executive agencies with solicitation provisions and contract clauses for avoiding conflicts “that require contractors to disclose information relevant to potential organizational conflicts of interest and limit future contracting with respect to potential conflicts of interest with the work to be performed under awarded contracts.” The bill would also direct executive agencies to update their anti-conflict procedures to implement the changes.

“Companies that receive taxpayer dollars from federal contracts should not turn around and advise clients to take actions that are against the interests of the American people,” said Peters in a statement following the Senate passage. “This bipartisan, commonsense legislation will require federal contractors to disclose any potential conflicts of interest before they are awarded a federal contract to ensure they are effectively serving taxpayers.”

 

This article originally appeared in the August 4, 2022 edition of Accounting & Compliance Alert, available on Checkpoint.

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