Reasons why defense contractors agree to such strong requirement to voluntarily report all federal procurement laws violations
History of defense industry was covered by heavy snow in the early 1980s when words like waste, fraud, and abuse were used to depict the defense procurement between defense contractors and their solely client the US Department of Defense. Condemnation and pressure from within and outside the industry eventually push appointment of the Packard Commission to examine the defense industry regarding unethical issues the and later DII was the fruit of this examination as a suggestion of the direction of reforming aiming to enhance the corporate self governance of the defense contractors.1 We can easily understand the pressure outside the industry because the government absolutely did not want to bear the censure of corruption and collusion with the defense contractors and the main pressure was from the furious tax payers who pay the bills of purchasing weapon from the contractors. So the one target of the Packard Commission’s work was window dressing to show the tax payer that they were trying to fix the issue. On the other hand the pressure from within the industry to regulate the misdeeds was complicated. Regulations, rules and ethics are all about equality, transparency and obedience. Why the defense contractors had an incentive to stop using dirty transactions, require equality and seemingly turn in their interest? Think of this way, most people who uphold the flag of equality are poor economically or politically. They want equality because they are not enjoying the status that some minority enjoy more than they did. So the pressure to change within the defense industry was like this kind, most defense contractors were not the smartest in using dirty tricks and thus they want equality in the biding process. What needs to be point out is that the initiative 18 leading defense contractors who sign the principles to make the establishment of the DII were the most victims of this case because they apparently enjoy most interest from the unethical business transaction.
Buyers’ market was certainly one important reason why every contractor would accept any rigorous requirement. US Department of Defense was the only lawful client that can provide with the contractors orders. There was no reason that they can vote against the government’s suggestion to reform under the circumstances that their secret under table trades were to known to the public. From another point of view, if they did not voluntarily gather to enact the principals and join the Defense Industry Initiative, what could be expected to come with the refusal were severe sanctions, punishments and more rigorous rules. There is an old Chinese saying best describe this situation: eat the soft, or eat the hard, it means that you can eat obediently or be forced to eat. Every one wants the soft approach and avoids harsh ways because there are actually no options.
DII is a club. There is no way DII would only bring restriction but no benefits. The fact that 83 defense contractors are now members of DII reflects the truth that the members are actually making use of this qualification. Firstly being a member of DII is a kind of honor which will be appreciated by its employees, investors, suppliers and the public. When all the successful men have their beautiful wife behind their back, it is time for the successful man whose wife is not charming to get a new one and that is so called updating. Secondly, being a member of DII should put a contractor in advantage in competing with those which are not members in the biding process. If all the candidates provide with similar atomic booms the DII member should have get the bid or the US Department of Defense will be criticized by the public and face the pressure from all other members. Thirdly, there must be pressure for a defense contractor to go a long if it is big enough and expected to join the DII but does not join.