# Presentation: 132557

## NO COUNTRY FOR THE ETHICALLY CHALLENGED:

**Dealing with Contractors**
- DOI Business Conference
- 2008
- Melinda Loftin/DOI Ethics Office
- Terry Grush/MMS

## Topics

- The Authorities
- Impartiality
- Prohibited Sources
- Conflicts of Interest
- Gifts
- Final Exam

- Dealing With Contractors

## Why This is Important

- Increasing reliance on contractors to help with our work
- In 2005 an OGE Survey showed that 75% of conflict of Interest prosecutions involved contracts
- High profile incidents hurt all of us
- Appearances are important
- Public trust is the cornerstone

- Dealing With Contractors

## This Should be Important to:

- Everybody, But Especially,
- Contracting Officers
- Contracting Officer Representatives
- Requisitioners
- Anyone involved in Source Selection
- Anyone who is marketed by outside sources
- Program Officials
- Purchase Card Holders
- Employees who interface with contract personnel

- Dealing With Contractors

## Who Says This Matters?

- The Big Dogs:
- FAR Part 3 “Improper Business Practices and Personal Conflicts of Interest”
- Procurement Integrity Act, 41 U.S.C. 423

- Dealing With Contractors

## FAR Part 3: First Words

-     Government business shall be conducted in a manner above reproach and, except as authorized by statute or regulation, with complete impartiality and with preferential treatment for none. Transactions relating to the expenditure of public funds require the highest degree of public trust and an impeccable standard of conduct. The general rule is to avoid strictly any conflict of interest or even the appearance of a conflict of interest in Government-contractor relationships. While many Federal laws and regulations place restrictions on the actions of Government personnel, their official conduct must, in addition, be such that they would have no reluctance to make a full public disclosure of their actions.

- Dealing With Contractors

## Arm’s Length

- In the current environment we:
- 	Interface with contractors
- 	Share office space with contractors
- 	Depend on contractors
- 	Forge business relationships with contractors
- But:
- 	Contract employees ARE NOT government employees!
- 	We took an Oath, Contractors didn’t

- Dealing With Contractors

## Prohibited Sources

- Any organization or individual that:
- Seeks official action by the employee’s agency;
- Does business or seeks to do business with the employee’s agency;
- Conducts activities regulated by the employee’s agency;
- Has interests that may be substantially affected by the employee’s performance of duty; or
- Is an organization composed of members described above.

- Dealing With Contractors

## Prohibited Sources	

- Organizations can be:
- Contractors
- Governments
- Tribes
- Universities
- Foundations
- Not-for-profits
- Lobbyists

- Dealing With Contractors

## Covered Relationships

- Spouse
- Members of your household or close personal relative
- Anyone with whom you have a business relationship
- Anyone for whom your spouse, parent, or child serves as officer, director, trustee, general partner, agent attorney, consultant, contractor, or employee
- Anyone who you served as office director, trustee, etc., within the last year
- Any organization in which you are an active participant (e.g. committee member)

- Dealing With Contractors

## Procurement Integrity Act

- Four Principles:
- 1: Ban on disclosure of procurement information
- Bid/proposal information
- prices
- business strategies
- technology
- 2: Ban on *anyone* from knowingly obtaining procurement information before award, except as permitted by law

- Dealing With Contractors

## Procurement Integrity Act

- 3. If a government employee participates in a contract in excess of $100,000, must report job offers from the contractor and either
- Reject the possibility of employment,
- Disqualify themselves from the contract, or
- Seek ethics clearance

- Dealing With Contractors

## Procurement Integrity Act

- 4.  If a government official participates in a contract over $10 million, there is a one year ban on accepting compensation from the contractor.
- Contracting Officer
- Source Selection Authority
- Member of the Source Selection Evaluation Board
- Chair of the Tech Evaluation Team
- Program Manager
- Deputy Program Manager

- Dealing With Contractors

## Other Impartiality Issues

- Government employees must recuse themselves from any contract involving a spouse’s employer if the agency or the employee determines that a reasonable person would question impartiality.
- 5 CFR 2635.502

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## Other Impartiality Issues

- Government employees should not participate in a contract if a contractor employee, with whom they reside, is working on the same contract.   (Unless potential conflict of interest and impartiality issues are resolved)
- 5 CFR 2635.502

- Dealing With Contractors

## Other Impartiality Issues

- Government employees should consider any potential impartiality questions before participating in a decision to give a contract to a personal friend.
- 5 CFR 2635.502

- Dealing With Contractors

## Bribes

- What is a Bribe?
- 	A bribe is a gift (of any value) that is offered in expectation of influence in an official matter.
- 		18 USC Section 201
- 	Accepting or offering a bribe is a criminal offense!!!!

- Dealing With Contractors

## Gifts

- What is a gift?
- 	A gift is anything of value that is not specifically excluded by regulations.
- 	Gifts do not have to be money or merchandise, or even anything tangible.  If value is conveyed to the recipient, it’s a gift.

- Dealing With Contractors

## Gifts

**Industry practice ≠ Government rules**
- “Business gifts” are part of commerce.
- Many vendors don’t know that gifts offered to government employees present ethical problems
- It’s up to employees to know the rules

- Dealing With Contractors

## Gifts

- You can’t accept a gift:
- From a prohibited source
- If it is offered because of your position

- Dealing With Contractors

## Gifts

- But maybe it ISN’T a gift!
- Snacks, when not a meal
- Prizes in contests open to the public
- Presentation items with no intrinsic value
- Discounts offered to the public or to all government employees
- Anything you pay for *at market value*

- Dealing With Contractors

## Gifts

- Even if it is a gift, it might be ok to accept it.
- Some  exceptions to the gift rule:
- 	Less than $20 in market value (max $50/yr from a source)
- 	Personal relationships
- 	Discounts to groups
- 	Based on outside business or employment
- 	Widely attended gatherings

- Dealing With Contractors

## Would You?Actual (edited) Email received April 2008

- 	Take A Brief Survey on Telework Investments.
- 	**Receive a $20 Online Gift Certificate or a $20 USO Donation** Please take a moment to participate in this **five-minute** online survey and share your opinions on telework investment trends. In appreciation of your time, every respondent who completes the survey will have the option to select a **$20 online gift certificate** or a **$20 USO donation**. _[TAKE THE SURVEY NOW](http://rs6.net/tn.jsp?e=0016JIcSbkZHMFaUS8_ghlnZzKAx67v8IKTrtmJRAjAP-Q-svIilvn2Rkt1cz3E3Qrn0_lVz-dbsg0FsztMYw36FdlGCNL83L2PHpTb1oObmTEjqOwridCNaB12VCSupTIUCqthtl13kWdOeq-ga_XwelvUB52Rselb)_ If the hyper link above does not work, please copy the following into your browser to take the survey: http://www.www.www
**	****---------- & Company** ----- King Street, Alexandria, VA ------. If you do not wish to receive future e-mails from us, please e-mail: unsubscribe@----.com.

## Gifts

- Life in the cubicles:  Office issues
- 	Cannot solicit gifts for yourself or for another government employee from contractors.
- 		-Retirements
- 		-Holidays
- 		-Life events
- 	Small gifts to contract employees: ok, with discretion

- Dealing With Contractors

## Gifts

- When you get an improper gift:
- Return it
- Pay market value for it
- If it is perishable
- Give to charity
- Share within the office

- Dealing With Contractors

## Appearances

- It may be legal, but how does it look to observers?
- Secretary Kempthorne:
- Question shouldn’t be “Can I . . .”, but
- “Should I”

- Dealing With Contractors

## When To Seek Advice

- Trigger words:
- Possibly
- Maybe
- It Depends
- In Some Cases
- Generally No
- Not Necessarily

- Dealing With Contractors

## Where To Seek Advice

- Bureau Ethics Officer
- DOI Ethics Office (for Ethics Concerns)
- Solicitor (for Acquisition Issues)
- Office of Government Ethics

- Dealing With Contractors

## The Final Exam

- Gut wrenching scenes to test your mettle.
- Ridicule for wrong answers is encouraged
- Your credibility as an ethical human is at stake
- OGE is taking notes
- 4.  No pressure!

- Dealing With Contractors

## 1st Question

- You deal frequently with a company located in New Orleans.  On Fat Tuesday, a bakery truck pulls up, and the driver brings a King Cake to the front desk and asks for you.  A note on the box from the company says that these cakes are a tradition in New Orleans, and they hope you enjoy it.
- What should you do?

- Dealing With Contractors

## 2nd Question

- A colleague in another division has a temporary project to finish.  The onsite contractor agrees to hire someone for a couple of months to complete it. Your kid is on summer vacation and looking for work, so you figure you’ll mention it to the contractor’s site manager. You don’t have anything to do with that office, so there’s nothing wrong this this.
- Right?

- Dealing With Contractors

## 3rd Question

- It’s the holiday season.  The custodian that services your offices is a jewel of a person, always cheerful, and does a terrific job.  You’d like to give him a little gift to show your appreciation.
- OK?

- Dealing With Contractors

## 4th Question

- You need to get a new projector for the conference room.  You peruse the catalogs, but you know that the local distribution company your wife works for can beat anybody’s price by at least $100.  You ask your purchase card holder to buy it from her company because it will save so much money.  You didn’t make the purchase yourself, so no foul.
- OK?

- Dealing With Contractors

## 5th Question

- You’ve dealt with a local cabling company for some time, with a series of small orders.  One day the owner is chatting with you in the office and offers you a pair of tickets to a local college basketball game.  He says he has season tickets but can’t go to this game. You look at the tickets and see that they are $8 each.
- What should you do?

- Dealing With Contractors

## 6th Question

- You regularly write requisitions for network supplies and send them on to procurement.  The buyer often places the orders with a local company because the price is good and the delivery is prompt.  Your roommate just took a job with the company.
- Now what?

- Dealing With Contractors

## 7th Question

- Remember the company from New Orleans that sent the King cake?  Well this time, another truck pulls up.  The driver gets out a handcart and rolls up the sidewalk with a large case of frozen Omaha Steaks.
- What do you do this time?

- Dealing With Contractors

## 8th Question

- The owner of that cabling company drops past your office.  He thanks you for doing business with him, and mentions that he has more tickets to basketball games.  Same seats as last time.  When he gets the next order and happens to be in the building he will drop them off to you.
- Cool, huh.

- Dealing With Contractors

## 9th Question

- You’ve travelled to Naples, Florida to visit a contractor facility.  The owner says he’d like to talk business with you, and why don’t you do it over dinner, Dutch treat.  You meet at a really nice cafe.  You figure what the heck, I’ll blow today’s per diem on a really nice meal, and it comes to $55.  The owner just orders soup.  When the check comes he says “Let’s just split this down the middle.”
- Ok?

- Dealing With Contractors

## 10th Question

- You’re been the COR for a service contract for some time.  An old college fraternity brother works for the company.  You stay in touch, and occasionally your families get together for dinner.  One evening you are the host, and he shows up at the door with a fairly expensive bottle of wine.
- Now what?

- Dealing With Contractors

## 11th Question

- You’re a scientist at your agency.  A Regent from a large research university asks you and your husband to attend a football game in a sky box with her.  You know that the school has some research grants from your bureau and therefore is a prohibited source.  But DANG, you’d love to see that game.  Is there any way you can do this?
- Thinking caps on, please.

- Dealing With Contractors

## 12th Question

- You are a published principal investigator in a scientific discipline, and your program is about to award some big grants.  One afternoon, you get a call from the president of a large research university saying that they would like to confer you with an honorary doctorate.
- Any problems here?

- Dealing With Contractors

## Pencils Down, Please

- Thanks for your attention!
- Terry Grush
- 703-787-1073

- Dealing With Contractors