Two vice presidents of Bath Iron Works (BIW) discovered a document with confidential information about a competitor's cost analysis on a Defense

Two vice presidents of Bath Iron Works (BIW) discovered a document with confidential information about a competitor's cost analysis on a Defense Department project for which the two companies were bidding. After reviewing the document for fifteen minutes, CEO William E. Haggett ordered the two executives to make copies and examine it until he returned to make a final decision. In the meantime, the president of BIW realized that possession of the document was forbidden by the federal Procurement Integrity Act and by the principles of the Defense Industry Initiative. The president ordered that all copies be destroyed and the executives cease their examination. Upon his return, Haggett agreed that he had made an "inappropriate business ethics decision." Possession of the document could result in the suspension or debarment of BIW as a defense contractor. The two vice presidents and CEO Haggett were asked to leave the company.

1. Is possession of confidential information about a competitor more serious in the case of a defense contractor? What specific features of defense industry contracting would account for the greater seriousness of such possession of confidential information?
2. Principle 4 of the Defense Industry Initiative requires signatories to voluntarily report all violations of federal procurement laws. Why would any defense contractor agree to such a strong requirement?