### T3.1.8 Procurement Integrity Act

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|       | Issue Date: September 2000                          |        |
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| [     | [Topics in the Section]{.underline}                 | [Page] |
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| A.    | **Procurement Integrity Act**                       | 1      |
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| 1\.   | Background                                          | 1      |
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| 2\.   | Definitions                                         | 1      |
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| B.    | ###### **Clauses**                                  | 1      |
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| C.    | **Appendix**                                        | 2      |
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## A. Procurement Integrity Act

**1. Background**

As provided by Section 307 of the Wendell H. Ford Aviation Investment
and Reform Act (the Act) for the 21st Century, Public Law 106-181,
approved April 5, 2000, FAA is made subject to Procurement Integrity Act
(41USC 423), except that Subsections (f), Definitions, and (g),
Limitation on Protests, shall not apply. In substitution for Subsection
(f)'s definitions, the Administrator has been directed by the Act to
establish definitions that shall be tailored to FAA's procurements.

**2. Definitions**

For definitions applicable to FAA's Administration of the Procurement
Integrity Act, see the Appendix to this section. The Appendix also
includes a memorandum by the Associate Administrator for Research and
Acquisitions recording the Administrator's July 14, 2000 approval of the
definitions. Also included in the Appendix, for ready reference, is the
text of the Procurement Integrity Act.

##### B. Clauses

See the FAST Procurement Toolbox for applicable clauses.

## C. Appendix

1\. Definitions.

2\. Text of the Procurement Integrity Act.

# 3. Memorandum, subject: "ACTION: Procurement Integrity Act Definitions", dated July 12, 2000, showing the Administrator's approval. 

# **Appendix 1 to T3.1.8 - Procurement Integrity Act**

# 

# **[Procurement Integrity Act, FAA Definitions]{.underline}**

**1. [Background]{.underline}**:

As provided by 49 United States Code (U.S.C.) Section 40122(g)(3),
effective October 1, 1999, the Federal Aviation Administration (FAA) is
subject to the Procurement Integrity Act (the Act) (41 U.S.C. Section
423). However, Subsections (f), Definitions, and (g), Limitations on
Protests, both in Section 423, do not apply to the FAA. In lieu of the
definitions contained in the Subsection (f) of the Act, the FAA
Administrator was directed by Congress to adopt its own definitions,
consistent with the intent of the FAA's Acquisition Management System
(AMS) and the Act. These definitions are provided below. *(The full text
of the Procurement Integrity Act is shown in the following pages.)*

**2. [Definitions:]{.underline}** As used in 41 U.S.C. Section 423:

\(1\) The term "contractor bid or proposal information" means any of the
following information submitted to FAA as part of or in connection with
a Screening Information Request (SIR) or an unsolicited proposal, to
enter into an FAA procurement contract, if that information has not been
previously made available to the public or disclosed publicly:

> \(A\) Cost or pricing data (as defined in Appendix C of the AMS).
>
> \(B\) Indirect costs and direct labor rates.
>
> \(C\) Proprietary information about manufacturing processes,
> operations, or techniques marked by the contractor in accordance with
> applicable law or regulation.
>
> \(D\) Information marked by the contractor in accordance with (1) AMS
> Clause 3.2.2.3-16, "Restriction on Disclosure and Use of Data," or (2)
> other applicable law and regulation.

\(2\) The term "source selection information" means any of the following
information prepared for use by the FAA for the purpose of evaluating
documentation, information, presentations, proposals, or binding offers
which an offeror submits in response to a Screening Information Request
(SIR), or in an unsolicited proposal, to enter into an FAA procurement
contract, if that information has not been previously made available to
the public or disclosed publicly:

> \(A\) Proposed costs or prices submitted in response to a FAA SIR, or
> lists of those proposed costs or prices.
>
> \(B\) Source selection plans.
>
> \(C\) Technical evaluation plans.
>
> \(D\) Technical evaluations of responses to SIRs or unsolicited
> proposals.
>
> \(E\) Cost or price evaluation plans.
>
> \(F\) Cost or price evaluations of responses to SIRs or unsolicited
> proposals.
>
> \(G\) Downselect determinations identifying SIR responses that are
> most likely to receive contract award.
>
> \(H\) Any ranking of offerors developed by the FAA during the source
> selection process.
>
> \(I\) The reports, evaluations and recommendations of source selection
> panels, boards, or advisory councils.
>
> \(J\) Other information marked as "source selection information" based
> on a case- by-case determination made by the FAA Associate
> Administrator for Research and Acquisition, his or her designee, or
> the Integrated Product Team, that its disclosure would jeopardize the
> integrity or successful completion of the FAA procurement to which the
> information relates.

\(3\) The term "Federal agency" means the FAA.

\(4\) The term "Federal agency procurement" means the acquisition (by
using competitive or non-competitive procedures and awarding a contract)
of goods or services (including construction) from non-Federal sources
by the FAA using appropriated funds.

\(5\) The term "contracting officer" means a person who, by appointment
in accordance with FAA policy, has the authority to enter into a FAA
contract on behalf of the Government and to make determinations and
findings with respect to such contract.

\(6\) The term "protest" means a written objection by an interested
party to the award or proposed award of a FAA procurement contract.

\(7\) The term "official" means the following:

> \(A\) An employee of the FAA, as defined in the FAA's Personnel
> Management System.
>
> \(B\) An officer (as defined in 5 U.S.C. Section 2104) of any non-FAA
> federal agency (as federal agency is defined in 40 U.S.C. Section
> 472).
>
> \(C\) An employee (as defined in 5 U.S.C. Section 2105) of any non-FAA
> federal agency (as federal agency is defined in 40 U.S.C. Section
> 472).
>
> \(D\) A member of the uniformed services, as defined in 5 U.S.C.
> Section 2101(3).

\(8\) The term "other applicable law or regulation" as used at 41 U.S.C.
Section 423(e)(3)(A)(iv), includes the FAA Personnel Management System.

\(9\) The term "Comptroller General of the United States", as used at 41
U.S.C. Section 423(h)(6), means the FAA Office of Dispute Resolution for
Acquisition.

\(10\) The term "program manager" as used at 41 U.S.C. Section
423(d)(1)(B), includes a FAA Integrated Product Team (IPT) Lead or
Acting Lead, or a Product Team (PT) Lead or Acting Lead.

\(11\) The term "deputy program manager" as used at 41 U.S.C. Section
423(d)(1)(B), includes a Deputy or Acting Deputy to an FAA IPT Lead, or
a Deputy or Acting Deputy to a PT Lead.

\(12\) The term "Federal Acquisition Regulation" as used at 41 U.S.C.
Section 423(e)(3)(A)(iii), means the FAA AMS.

**Appendix 2 to T3.1.8 - Procurement Integrity Act**

# **[Text of the Procurement Integrity Act 49 U.S.C. Section 423]{.underline}**

*Below is the text of the Procurement Integrity Act, 49 U.S.C. Section
423 (omitting only its Subsections (f) and (g), which are not applicable
to FAA). This Act, as it applies to the FAA, is to be read in
conjunction with the FAA Procurement Integrity Act definitions (which
are also shown in this Toolbox Appendix). Please take special notice of
49 U.S.C. Section 423(h) below, which contains "Savings provisions", or
situations where the Procurement Integrity Act does [not]{.underline}
apply.*

**§ 423**. **Restrictions on disclosing and obtaining contractor bid or
proposal information or source selection information**

(a) Prohibition on disclosing procurement information.

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(1) A person described in paragraph (2) shall not, other than as
    provided by law, knowingly disclose contractor bid or proposal
    information or source selection information before the award of a
    Federal agency procurement contract to which the information
    relates.

(2) Paragraph (1) applies to any person who---

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(A) is a present or former official of the United States, or a person
    who is acting or has acted for or on behalf of , or who is advising
    or has advised the United States with respect to, a Federal agency
    procurement; and

(B) by virtue of that office, employment, or relationship has or had
    access to contractor bid or proposal information or source selection
    information.

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(b) Prohibition on obtaining procurement information. A person shall
    not, other than as provided by law, knowingly obtain contractor bid
    or proposal information or source selection information before the
    award of a Federal agency procurement contract to which the
    information relates.

(c) Actions required of procurement officers when contacted by offerors
    regarding non-Federal employment.

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(1) If an agency official who is participating personally and
    substantially in a Federal agency in a Federal agency procurement
    for a contract in excess of the simplified acquisition threshold
    contracts or is contacted by a person who is a bidder or offeror in
    that Federal agency procurement regarding possible non-Federal
    employment for that official, the official shall---

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(A) promptly report the contract in writing to the official's supervisor
    and to the designated agency ethics official (or designee) of the
    agency in which the official is employee; and

(B) \(i\) reject the possibility of non-Federal employment; or

> \(ii\) disqualify himself or herself from further personal and
> substantial participation in that Federal agency procurement until
> such time as the agency has authorized the official to resume
> participation in such procurement, in accordance with the requirements
> of section 208 of title 18, United States Code, and applicable agency
> regulations on the grounds that \--

\(I\) the person is no longer a bidder or offeror in that Federal agency
procurement; or

\(II\) all discussions with the bidder or offeror regarding possible
non-Federal employment have terminated without an agreement or
arrangement for employment.

(2) Each report required by this subsection shall be retained by the
    agency for not less that two years following the submission of the
    report. All such §reports shall be made available to the public upon
    request, except that any part of a report that is exempt from the
    disclosure requirements of section 552 of title 5, United States
    Code, under subsection (b)(1) of such section may be withheld from
    disclosure to the public.

(3) An official who knowingly fails to comply with the requirements of
    this subsection shall be subject to the penalties and administrative
    actions set forth in subsection (e).

(4) A bidder or offeror who engages in employment discussions with an
    official who is subject to the restrictions of this subsection,
    knowing that the official has not complied with subparagraph (A)
    or (B) of paragraph (1), shall be subject to the penalties and
    administrative actions set forth in subsection (e).

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(d) Prohibition on former official's acceptance of compensation from
    contractor.

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(1) A former official of a Federal agency may not accept compensation
    from a contractor as an employee, officer, director, or consultant
    of the contractor within a period of one year after such former
    official---

> \(A\) served, at the time of selection of the contractor or the award
> of a contract to that contractor, as the procuring contracting
> officer, the source selection authority, a member of the source
> selection evaluation board, or the chief of a financial or technical
> evaluation team in a procurement in which that contractor was selected
> for award of a contract in excess of \$10,000,000;
>
> \(B\) served as the program manager, deputy program manager, or
> administrative contracting officer for a contract in excess of
> \$10,000,000 awarded to that contractor; or

(C) personally made for the Federal agency---

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(i) a decision to award a contract, subcontract, modification of a
    contract or subcontract, or a task order or delivery order in excess
    of \$10,000,000 to that contractor;

(ii) a decision to establish overhead or other rates applicable to a
     contract or contracts for that contractor that are valued in excess
     of \$10,000,000;

(iii) a decision to approve issuance of a contract payment or payments
      in excess of \$10,000,000 to that contractor; or

(iv) a decision to pay or settle a claim in excess of \$10,000,000 with
     that contractor.

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(2) Nothing in paragraph (1) may be construed to prohibit a former
    official of a Federal agency from accepting compensation from any
    division or affiliate of a contractor that does not produce the same
    or similar products or services as the entity of the contractor that
    is responsible for the contract referred to in subparagraph (A),
    (B), or (C) of such paragraph.

(3) A former official who knowingly accepts compensation in violation of
    this subsection shall be subject to penalties and administrative
    actions as set forth in subsection (e).

(4) A contractor who provides compensation to a former official knowing
    that such compensation is accepted by the former official in
    violation of this subsection shall be subject to penalties and
    administrative actions as set forth in subsection (e).

(5) Regulations implementing this subsection shall include procedures
    for an official or former official of a Federal agency to request
    advice from the appropriate designated agency ethics official
    regarding whether the official or former official is or would be
    precluded by this subsection from accepting compensation from a
    particular contractor.

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(e) Penalties and administrative actions.

\(1\) Criminal penalties. Whoever engages in conduct constituting a
violation of subsection (a) or (b) for the purpose of either---

(A) exchanging the information covered by such subsection for anything
    of value, or

(B) obtaining or giving anyone a competitive advantage in the award of a
    Federal agency procurement contract, shall be imprisoned for not
    more than 5 years or fined as provided under title 18, United States
    Code, or both.

\(2\) Civil penalties. The Attorney General may bring a civil action in
an appropriate United States district court against any person who
engages in conduct constituting a violation of subsection (a), (b), (c),
or (d). Upon proof of such conduct by a preponderance of the evidence,
the person is subject to a civil penalty of not more that \$50,000 for
each violation plus twice the amount of compensation which the
individual received or offered for the prohibited conduct. An
organization that engages in such conduct is subject to a civil penalty
of not more that \$500,000 for each violation plus twice the amount of
compensation which the organization received or offered for the
prohibited conduct.

(3) Administrative actions.

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(A) If a Federal agency receives information that a contractor or a
    person has engaged in conduct constituting a violation of subsection
    (a), (b), (c), or (d), the Federal agency shall consider taking one
    or more of the following actions, as appropriate:

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(i) Cancellation of the Federal agency procurement, if a contract has
    not yet been awarded.

(ii) Rescission of a contract with respect to which---

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(I) the contractor or someone acting for the contractor has been
    convicted for an offense punishable under paragraph (1), or

(II) the head of the agency that awarded the contract has determined,
     based upon a preponderance of the evidence, that the contractor or
     someone acting for the contractor has engaged in conduct
     constituting such an offense.

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(iii) Initiation of suspension or debarment proceedings for the
      protection of the Government in accordance with procedures in the
      Federal Acquisition Regulation.

> \(iv\) Initiation of adverse personnel action, pursuant to the
> procedures in chapter 75 of title 5, United States Code \[5 USCS §§
> 7501 et seq.\], or other applicable law or regulation.

(B) If a Federal agency rescinds a contract pursuant to subparagraph (A)
    (ii), the United States is entitled to recover, in addition to any
    penalty prescribed by law, the amount expended under the contract.

(C) For purposes of any suspension or debarment proceedings initiated
    pursuant to subparagraph (A) (iii), engaging in conduct constituting
    an offense under subsection (a), (b), (c), or (d) affects the
    present responsibility of a Government contractor or subcontractor.

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(h) Savings provisions. This section does not---

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(1) restrict the disclosure of information to, or its receipt by, any
    person or class of persons authorized, in accordance with applicable
    agency regulations or procedures, to receive that information;

(2) restrict a contractor from disclosing its own bid or proposal
    information or the recipient from receiving that information;

(3) restrict the disclosure or receipt of information relating to a
    Federal agency procurement after it has been canceled by the Federal
    agency before contract award unless the Federal agency plans to
    resume the procurement;

(4) prohibit individual meetings between a Federal agency official and
    an offeror or potential offeror for, or a recipient of, a contract
    or subcontract under a Federal agency procurement, provided that
    unauthorized disclosure or receipt of contractor bid or proposal
    information or source selection information does not occur;

(5) authorize the withholding of information from, nor restrict its
    receipt by, Congress, a committee or subcommittee of Congress, the
    Comptroller General, a Federal agency, or an inspector general of a
    Federal agency;

(6) authorize the withholding of information from, nor restrict its
    receipt by, the Comptroller General of the United States in the
    course of a protest against the award or proposed award of a Federal
    agency procurement contract; or

(7) limit the applicability of any requirements, sanctions, contract; or
    penalties, and remedies established under any other law or
    regulation.

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