A high-profile federal prosecutor has suggested that lawmakers and regulators consider new requirements for contractors who support defense agencies and military branches in making acquisition decisions.

U.S. Attorney Paul McNulty says no criminal law exists holding those contractors responsible for conflicts of interest that snared former Boeing Co. executive and Air Force official Darleen Druyun and former Boeing CFO Michael Sears, who he prosecuted.

McNulty told an audience of defense services contractors Oct. 13 that current criminal statutes do not apply if an employee of a contractor helping the Army, Navy or Air Force decide a contract award also engaged in inappropriate employment negotiations with a bidding company.

"Right now, the law does not cover that," he said, although government employees caught in such an act still could be prosecuted.

After speaking at the Contract Services Association of America midyear meeting, McNulty told reporters that he was not addressing a similar hypothetical situation involving an employee of a lead systems integrator. The prosecutor - based in Alexandria, Va., and whose domain includes contractor-rich Northern Virginia - said he thought current law could address that scenario.

The issue is important because defense agencies and the military branches increasingly outsource support services, including acquisition decisions. McNulty said that 5-7% of federal procurement spending annually is lost to fraud (DAILY, Oct. 14).