The Fat Leonard scandal is staggering and easily the worst corruption scandal in the Navy’s history, and it’s not even close to over. The scandal is also a great excuse to examine how people are vulnerable to procurement indignities and how a smarter process can nudge people back toward their better, more ethical selves. Rules aren’t enough. To do procurement right, you need to understand behavioral science.
The details have shocked us since a sting operation in three states and seven countries rolled up Leonard Glenn Francis and many of his co-conspirators in 2013. Already, a retired Real Admiral, three captains, five commanders, and a petty officer have pleaded guilty. 29 others have been charged so far. Thanks to Francis’ cooperation while he sits in prison, the criminal ethics investigation has widened to include 60 admirals and 440 active-duty and retired sailors.
What went on is even worse. He would have classified information about warship and submarine movements and, knowing where they were headed, got them to use his company’s facilities. Once docked, Francis would overcharge them for supplies (for a rough total of $35 million) and fuel while taking officers out for booze-soaked meals and more. Some got vacations. Some got cash. Another guy even traded state secrets for Lady Gaga tickets. One former Naval officer told me that this has been “a massive, humiliating black-eye.” The only thing Francis didn’t do to the Navy was sink a boat.
There are reasons why we have rules against excessive wining and dining. Following the rules might mean you don’t get to go on vacation or see Lady Gaga live, but it also means you’re not in danger of going to Club Fed. These rules were in place before the Fat Leonard saga, though, and won’t be particularly useful in avoiding the next big procurement scandal.
The problem isn’t the rules, but rather, the fundamentally flawed assumption that people always behave in line with their beliefs. If you ask anyone on a Sunday whether they plan to eat healthy throughout the following week, they will almost inevitably say yes. Though, we all know, come Wednesday the vending machine chips seem much more appealing than that apple. It’s easy to forget that people are human, and as aspirational as we like to be, often act in ways contrary to our ambitions and values. The best way to make the rules work is to deal with humans as they are—and not the way we wish they’d be.
In the case of Fat Leonard, there was a very slippery slope. When in port, officers are supposed to “fly the flag,” which means engaging in public life to build professional relationships. Often, this requires going to receptions and cocktail parties, but this easily evolves into increasingly lavish dinners which then turn into wild parties.
Interestingly, most of these crimes were committed in foreign countries, where an officer could rationalize that he was far from home (where the normal rules applied). While there is well documented evidence that changing someone’s environment can motivate their behavior for the better, it stands to reason that the inverse is also true. Many convinced themselves that getting wined and dined was in keeping with local culture and part of doing business in these Western Pacific countries. They knew that the law was the law no matter where they were on the planet, but that got lost in translation somewhere along the way.
The place to stop a slide is at the top of the slippery slope. To avoid procurement scandals, then, the place to address the problem is at the beginning of the process.
Recognize that people are human and act accordingly. You tell yourself you’d never break the rules until the opportunity arises and the upside seems so much more real and immediate than a possible prison sentence. In other words, it’s often more tempting to say “one bag of chips isn’t that bad” than reach for that apple. Take a lesson from behavioral science and make the downside more obvious and explicit.
There is a reason every Major League locker room posts a threatening ban for betting on baseball. People are sensitive to averting a loss and are very adept at anticipating regret. Forgoing millions in salary outweighs playing marginally better. Do the same with procurement and include a slide describing the prison sentences for breaking ethics laws early in any deck about the project, ideally before any mention of how lucrative the project would be.
Also, think of the workplace and what you have on the walls. Studies have shown that displaying moral symbols, such as a poster of Dr. Martin Luther King Jr., or using reminders of childhood are proven to result in measurably more ethical behavior.
Finally, have people restate their ethical and moral beliefs before engaging in potentially fraught behavior, like attending a cocktail reception where vendors might be, for example. By reminding yourself that you have a moral code, such as being honest and not stealing, then you’re much less likely to lie and steal.
Behavioral science only gets us part of the way there. Some structural change is needed. “Fat Leonard” is, or perhaps was, a “people person” who could get along with anybody. Getting along with people should be a goal (and it is – “flying the flag”), and we should not put people in situations where they need to avoid that. After all, the way to totally avoid corruption is to stay on the ship and never go into port, which would result in terrible relationships with port cities.
The Navy has addressed this by instituting Two Person Integrity, which has become the practice in Navy husbanding. No one person can sign off on any arrangement without a sign-off from a peer or a superior. This accountability is likely to work for the same reason auto repair estimates are lower when you ask for an itemized list of charges. Having to “show your work” gets you out of your head where you can unthinkingly rationalize bad behavior.
Most of us would say that we want to be honest people. Certainly, the Navy expects its officers to be above reproach when flying the flag, literally and figuratively, around the world. But here we are, and, for the most part, it’s not because the Navy didn’t have good ethics rules. What they had were hundreds of people who acted badly, but in a way behavioral science can anticipate and work with human psychology to prevent. For a procurement process that won’t land you in the brig, admit that we’re all human and deal with that first.
Lilly Kofler is the U.S. Director of Behavioral Science at Hill+Knowlton Strategies. She is based in New York, NY.