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Government Contracts

From a business perspective, working under government contracts can be a very
lucrative proposition. In general, a stream of orders keep coming in, revenue
increases and the company grows in the aggregate. The obvious downfalls to
working in this manner is both higher quality expected as well as the extensive
research and documentation required for government contracts. If a part fails to
perform correctly it can cause minor glitches as well as problems that can carry
serious repercussions, such as in the National Semiconductor case. When both the
culpable component and company are found, the question arises of how extensive
these repercussions should be. Is the company as an entity liable or do you look
into individual employees within that company? From an ethical perspective one
would have to look at the mitigating factors of both the employees and their
superiors along with the role of others in the failure of these components. Next
you would have to analyze the final ruling from a corporate perspective and then
we must examine the macro issue of corporate responsibility in order to attempt
to find a resolution for cases like these. The first mitigating factor involved
in the National Semiconductor case is the uncertainty, on the part of the
employees, on the duties that they were assigned. It is plausible that during
the testing procedure, an employee couldnt distinguish which parts they were to
test under government standards and commercial standards. In some cases they
might have even been misinformed on the final consumers of the products that
they tested. In fact, ignorance on the part of the employees would fully excuse
them from any moral responsibility for any damage that may result from their
work. Whether it is decided that an employees is fully excused, or is given some
moral responsibility, would have to be looked at on an individual basis. The
second mitigating factor is the duress or threats that an employee might suffer
if they do not follow through with their assignment. After the bogus testing was
completed in the National Semiconductor labs, the documentation department also
had to falsify documents stating that the parts had surpassed the governmental
testing standards. From a legal and ethical standpoint, both the testers and the
writers of the reports were merely acting as agents on direct orders from a
superior. This was also the case when the plant in Singapore refused to falsify
the documents and were later falsified by the employees at the have California
plant before being submitted to the approval committees (Velazquez, 53). The
writers of the reports were well aware of the situation yet they acted in this
manner on the instruction of a supervisor. Acting in an ethical manner becomes a
secondary priority in this type of environment. As stated by Alan Reder, . ..

if they [the employees] feel they will suffer retribution, if they report a
problem, they arent too likely to open their mouths. (113). The workers knew
that if the reports were not falsified they would come under questioning and
perhaps their employment would go into jeopardy. Although working under these
conditions does not fully excuse an employees from moral fault, it does start
the divulging process for determining the order of the chain of command of
superiors and it helps to narrow down the person or department that issued the
original request for the unethical acts. The third mitigating factor is one that
perhaps encompasses the majority of the employees in the National Semiconductor
case. We have to balance the direct involvement that each employee had with the
defective parts. Thus, it has to be made clear that many of the employees did
not have a direct duty with the testing departments or with the parts that
eventually failed. Even employees, or sub-contractors, that were directly
involved with the production were not aware of the incompetence on the part of
the testing department. For example, the electrical engineer that designed the
defective computer chip could act in good faith that it would be tested to
ensure that it did indeed meet the required government endurance tests. Also,
for the employees that handled the part after the testing process, they were
dealing with what they believed to be a component that met every governmental
standard. If it was not tested properly, and did eventually fail, isnt the
testing department more morally responsible than the designer or the assembly
line worker that was in charge of installing the chip? Plus, in large
corporations there may be several testing departments and is some cases one may
be held more responsible than another depending on their involvement. A process
like this can serve the dual purpose of finding irresponsible employees as well
as those that are morally excused. The fourth mitigating factor in cases of this
nature is the gauging of the seriousness of the fault or error caused by this
product. Since National Semiconductor was repeatedly being reinstated to the
listed of approved government contractors, one can safely assume that the level
of seriousness, in the opinion of For the contractor approval committees, is not
of monumental importance. Yet one has to wonder how this case would have been
different if the lack of testing did cause the loss of life in either a domestic
or foreign military setting. Perhaps the repercussions would have come faster
much more stringent. The fact that National Semiconductor did not cause a death
does not make them a safe company. They are still to be held responsible for any
errors that their products cause, no matter the magnitude. As for the opposition
to the delegating of moral responsibility, mitigating factors and excusing
factors, they would argue that the entity of the corporation as a whole should
be held responsible. The executives within a corporation should not be forced to
bring out all of the employees responsible into a public forum. A company should
be reprimanded and be left alone to carry out its own internal investigation and
repercussions. From a business law perspective this is the ideal case since a
corporation is defined as being a separate legal entity. Furthermore, the
opposition would argue that this resolution would benefit both the company and
the government since it would not inconvenience either party. The original
resolution in the National Semiconductor case was along these lines. The
government permanently removed National from its approved contractors list and
then National set out to untangle the web of culpability within its own
confines. This allowed a relatively quick resolution as well as the ideal
scenario for National Semiconductor. In response, one could argue that the
entity of a corporation has no morals or even a concept of the word, it is only
as moral and ethical as the employees that work in that entity. All of the
employees, including top ranking executives are working towards advancing the
entity known as their corporation (Capitman, 117). All employees, including the
sub-contractors and assembly line workers, are in some part morally responsible
because they should have been clear on their employment duties and they all
should have been aware of which parts were intended for government use.

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Ambiguity is not an excusing factor of moral responsibility for the workers.

Also, the fact that some employees failed to act in an ethical manner gives even
more moral responsibility to that employee. While some are definitely more
morally responsible than others, every employee has some burden of weight in
this case. In fact, when the government reached a final resolution, they decided
to further impose repercussions and certain employees of National Semiconductor
were banned from future work in any government office (Velazquez, 54). Looking
at the case from the standpoint of National Semiconductor, the outcome was
favorable considering the alternate steps that the government could taken. As
explained before, it is ideal for a company to be able to conduct its own
investigation as well as its own punishments. After all, it would be best for a
company to determine what specific departments are responsible rather than
having a court of law impose a burden on every employee in its corporation. Yet,
since there are ethical issues of dishonesty and secrecy involved, National
Semiconductor should have conducted a thorough analysis of their employees as
well as their own practices. It is through efforts like these that a corporation
can raise the ethical standard of everyone in their organization. This case
brings into light the whole issue of corporate responsibility. The two sides
that must ultimately be balanced are the self interests of the company, with
main goal of maximum profit, and the impacts that a corporation can cause on
society (Sawyer, 78). To further strengthen this need, one could argue that
there are very few business decisions that do not affect society in way or
another. In fact, with the plethora of corporations, society is being affected
on various fronts; everything from water contamination to air bag safety is a
concern. The biggest problem that all of us must contend with is that every
decision that a business makes is gauged by the financial responsibility to
their corporation instead of their social responsibility to the local community,
and in some cases, the international community. This was pointed out on various
occasions as the main reason why National Semiconductor falsified their reports.

The cost that the full tests would incur did not outweigh their profit margins.

Their business sense lead them to do what all companies want . . . maximum
profit. In the opinion of the executives, they were acting in a sensible manner.

After all, no executive wants to think of themselves as morally irresponsible. (Capitman,
118). The question that naturally arises, in debating corporate responsibility,
is what types of checks and balances can be employed within a company to ensure
that a corporation and all of its agents act in an ethical manner. Taking the
example of the National Semiconductor case, one can notice many failures in
moral responsibility. National Semiconductor would have to review its employees,
particularly the supervisors, for basic ethical values such as honesty. example,
ultimately it was the widespread falsification of the testing documentation that
caused the downfall of National Semiconductor, not the integrity of their
components. In the synopsis of the case it is never mentioned that the employees
initiated this idea, it would seem that it was the supervisors that gave the
order to falsify the documents. In order to accomplish this, the company
executives would have to encourage their employees to voice their concerns in
regards to the advancement of the company. Through open communication, a company
can resolve a variety of its ethical dilemmas. As for the financial aspects of
the corporation, it has to decide whether the long term effects that a reprimand
from the government can have outweighs their bottom line. In other words,
corporations have to start moving away from the thought of instant profit and
start realizing both the long term effects and benefits. These long term
benefits can include a stronger sense of ethics in the work force as well as a
better overall society. To conclude, I must say that I agree with the use of
mitigating factors in determining moral responsibility. A company, as defined by
law, is only a name on a piece of paper. The company acts and conducts itself
according to the employees that work in that entity. I use the word employee
because in ethical thinking there should be no distinction of rank within a
company. There are times when executives can be held directly responsible and at
the same time, there are cases where employees are acting unethically without
the executives knowing. Neither title of executive or employee equates to moral
perfection. Therefore, when a company has acted irresponsibly, its employees
must be held liable in a proportionate amount. As for the future of ethics in
business I would speculate that if employees started to think more in long term
benefits and profits, many of the ethical dilemmas that we face today would be
greatly reduced. As mentioned before, businesses today uses the measuring stick
of profitability. There needs to be a shift to the thinking of total utility for
the social community in order to weigh business decisions. Opponents would argue
that this is a long term plan that require too many radical changes in the face
of business. Also, there is no way that an industry wide standard can be set
since there are too many types of corporations. Plus, companies have different
needs and every moral rule is subjective according to the type of business that
everyone conducts. In response, I would argue that although there are no
industry standards that are feasible, it is possible for every company to
examine their practices as well as the attitude of their employees. There will
be companies that find that they are doing fine with employees that are aware of
their moral values. Yet other companies will find that they do have areas that
need improvement. It is steps like these that start implementing changes. Once a
few companies start to see the benefits of changes, it can help to encourage
other companies to follow suit. After all, as seen in the case of National
Semiconductor, mistakes in one department can cause the deterioration of an
entire corporation. When the costs that are possible are taken into account, the
changes required to rectify this are small in comparison.

Capitman, William. 1973. Panic In the Boardroom. New York: Anchor Press-DoubleDay
Publishing Harris, Kathryn, Chips Maker Feels Attack on Four Sides Los Angeles
Times April 4, 1982. Pg. B1 Pava, Moses. 1995. Corporate Responsibility and
Financial Performance. London Quorum Books Reder, Alan. 1944. In Pursuit of
Principle and Profit. New York: G.P. Putnams Sons Publishing Sawyer, George.

1979. Business and Society: Managing Corporate Social Impact. Boston Houghton
Mifflin Publishing Schuyten, Peter. To Clone A Computer. New York Times February
4, 1979. Pg. 1 Velazquez, Manuel. 1992. Business Ethics: Concepts and Cases. New
Jersey Prentice Hall Publishing


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