U.S. Department of Housing and Urban Development
                       Washington, D.C. 20410-3000
 
                           December 24, 1991
 
 OFFICE OF THE ASSISTANT SECRETARY
 FOR ADMINISTRATION
 
                                             Ethics Letter 91-5
    Special Attention of:
         PRINCIPAL STAFF
         ALL REGIONAL ADMINISTRATORS
         ALL FIELD OFFICE MANAGERS
 
    Subject:  "Byrd Amendment" Regarding the Limitation on Payments
              Made to Influence Certain Federal Contracting and
              Financial Transactions
 
                           PART I - INTRODUCTION
 
    A.   PURPOSE.  The purpose of this Letter is to bring to your
         attention and clarify certain collection and monitoring
         responsibilities of Headquarters' Program Offices and the
         Regional and Field Offices in implementing the requirements
         that pertain to the Byrd Amendment.
 
    B.   BACKGROUND.
 
         1.   The Byrd Amendment (Section 319 of the Department of
              Interior and Related Agencies Appropriations Act for
              Fiscal Year 1990, Pub. L. 101-121), was signed into law
              by President Bush on October 23, 1989, and became
              effective on December 23, 1989.
 
         2.   The Office of Management and Budget (OMB) published an
              "Interim Final Rule" on the Byrd Amendment (see
              Attachment I) on February 26, 1990 (55 FR 6736).  The
              Interim Final Rule was supplemented by a Notice
              published by OMB at 55 FR 24540 (see Attachment II) on
              June 15, 1990.
 
         3.   The Interim Final Rule pertains to applicants
              requesting or receiving a Federal contract, grant,
              loan, cooperative agreement, loan guarantee or loan
              insurance.  Indian tribes and tribal organizations are
              excluded from coverage with respect to expenditures
              permitted by other Federal law.  (Therefore, Indian
              Housing Authorities (IHAs) established by an Indian
              tribe as a result of the exercise of their sovereign
              power are excluded from coverage, but IHAs established
              under State law are not excluded from coverage.)  The
              Rule also governs certain post-award actions including
              the extension, continuation, renewal, amendment, or
              modification of contracts, grants, loans, or
              cooperative agreements.
 
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AE: Distribution: W-1, W-2, W-3, W-3-1, W-4, R-1, R-3-1, R-6, R-7, R-8,
                  R-9, O-16
 
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              PART II -- OVERVIEW OF SUBSTANTIVE REQUIREMENTS
 
         The Byrd Amendment imposes requirements on applicants and
    recipients of Federal assistance who use either of the following
    sources of funds to influence Federal decision makers:
 
         o    Funds appropriated to Federal agencies by Congress.
 
         o    Other than appropriated funds from non-Federal sources.
 
         A summary of the requirements follows.  You should refer to
    the rule (see Attachment I) for a detailed description of the
    requirements.
 
    A.   APPROPRIATED FUNDS.
 
         1.   Basic Prohibition.  No appropriated funds may be used
              by a person who receives a Federal contract, grant,
              loan, or cooperative agreement to pay for influencing
              or attempting to influence Executive or Legislative
              branch personnel in connection with the award of any
              Federal contract, the making of any Federal grant or
              loan, or the entering into of any cooperative
              agreement.  This prohibition also applies to payments
              made to influence a Federal official in connection with
              the extension, continuation, renewal, amendment or
              modification of any contract, grant, loan or
              cooperative agreement.
 
         2.   Required Reporting.  Any person who requests or
              receives a Federal contract, grant, or cooperative
              agreement exceeding $100,000, or a Federal loan
              exceeding $150,000, must file a certification (see
              Attachment I, page 6741) that the person has not made,
              and will not make, any prohibited payment from
              appropriated funds.  Additionally, the applicant or
              recipient must certify that a disclosure statement (see
              Attachment I, page 6743) will be filed, as described in
              subparagraph II.B.2.c, below, if a payment is made from
              other than appropriated funds to influence, or attempt
              to influence, Federal personnel.  The certification
              must be filed at the time the application or request to
              enter into an agreement is submitted.  If it is not
              filed at the time of application, it must be filed
              prior to receipt of the award or assistance involved.
              Submission of the certification is a condition for
              receipt of the assistance involved.
 
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         3.   Exceptions.  The prohibition on the use of appropriated
              funds does not apply to:
 
              a.   Agency and Legislative liaison Activities and
                   Agency Requirements.  Appropriated funds may be
                   used to pay reasonable compensation to an officer
                   or employee of a person requesting or receiving a
                   contract, grant, loan, or cooperative agreement,
                   if the payment is for:
 
                   (1)  Agency and legislative liaison activities not
                        directly related to the transaction or the
                        post-award action involved; or
 
                   (2)  Providing any information specifically
                        requested by the Department.
 
              b.   Professional and Technical Services.  Appropriated
                   funds also may be used to pay:
 
                   (1)  Reasonable compensation to an officer or
                        employee of a person requesting or receiving
                        a contract, grant, loan, or cooperative
                        agreement, or a post-award action, if the
                        payment is for professional or technical
                        services rendered directly in the
                        preparation, submission, or negotiation of
                        any bid, proposal, or application for the
                        transaction involved, or for meeting
                        requirements imposed by or pursuant to law as
                        a condition for receipt of such assistance.
 
                   (2)  Reasonable compensation to a person, not
                        employed by the person requesting or
                        receiving a contract, grant, loan, or
                        cooperative agreement, or a post-award
                        action, if the payment is for professional or
                        technical services rendered directly in the
                        preparation, submission, or negotiation of
                        any bid, proposal, or application for the
                        transaction involved, or for meeting
                        requirements imposed by or pursuant to law as
                        a condition for receipt of the assistance.
 
              c.   No disclosure forms are required to be filed with
                   respect to payments which are permissible pursuant
                   to the above exceptions.
 
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    B.   OTHER THAN APPROPRIATED FUNDS
 
         1.   Basic Requirement.  The Byrd Amendment does not
              prohibit the use of other than appropriated funds to
              influence, or attempt to influence, a Federal official
              in connection with a Federal contract, grant, loan,
              cooperative agreement, loan guarantee or loan
              insurance, or a post-award action.  If other than
              appropriated funds are used for such purposes, each
              person requesting or receiving a contract, grant, loan,
              cooperative agreement, loan guarantee, or loan
              insurance must file a disclosure form with the
              Department detailing the lobbying activities.  Also,
              any person who requests or receives a commitment for a
              loan guarantee or loan insurance must submit a
              statement whether he or she has made any payments to
              influence a Federal official in connection with that
              loan guarantee or insurance.
 
         2.   Required Reporting.
 
              a.   Certification.  Each person who requests or
                   receives a contract, grant or cooperative
                   agreement exceeding $100,000 or a commitment to
                   guarantee or insure a loan exceeding $150,000 must
                   file the certification described at paragraph
                   II.A.2., above.  The certification must be filed
                   at the time the application or request to enter an
                   agreement is submitted.  If it is not filed at the
                   time of application, it must be filed before
                   receiving the assistance involved.
 
              b.   Statements for Loan Guarantees and Loan Insurance.
                   Each person who requests or receives from the
                   Department a commitment to guarantee or insure a
                   loan exceeding $150,000 must file a statement that
                   the person will file a disclosure form (SF-LLL) if
                   the person has made, or will make, any payment to
                   influence, or attempt to influence, any Executive
                   or Legislative branch personnel in connection with
                   that loan insurance or guarantee.  For single
                   family insurance, each application that involves a
                   mortgage amount that exceeds the minimum dollar
                   threshold, a statement and, if necessary, a
                   disclosure form should be filed.  The statement
                   must be filed at the time the request for
                   guarantee or insurance is made.  If it is not
                   filed at the time of application, it must be filed
                   before receiving the commitment.
 
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              c.   Disclosure Form (SF-LLL).  Every person who
                   requests or receives a Federal contract, grant, or
                   cooperative agreement exceeding $100,000, or a
                   Federal loan, loan guarantee, or loan insurance
                   exceeding $150,000 must disclose any payments
                   made, or agreement to make any payment, from other
                   than appropriated funds for the purpose of
                   influencing, or attempting to influence, any
                   Executive or Legislative branch personnel in
                   connection with the contract, grant, cooperative
                   agreement, loan, loan insurance, or loan
                   guarantee.  These disclosures must be made on Form
                   SF-LLL.
 
                   It is the responsibility of the applicant to
                   determine whether a Form SF-LLL is required to be
                   submitted to the Department.  There are two
                   requirements:
 
                   (1)  The form must be submitted to the Department
                        at the time of application or request.  If it
                        is not filed at the time of request, it must
                        be filed prior to award or agreement.
 
                   (2)  A new disclosure form must be filed at the
                        end of each calendar quarter in which a
                        payment, or an agreement to make a payment,
                        is made which would have otherwise required
                        reporting at the time of application.
                        Moreover, if an event occurs during the
                        calendar quarter which materially affects the
                        accuracy of information reported on a
                        disclosure form previously submitted, the
                        submitter must file a new disclosure form.
                        Events which "materially affect" the accuracy
                        of information already reported include:
 
                        __   A cumulative increase of $25,000 or more
                             in the amount paid or expected to be
                             paid for influencing or attempting to
                             influence a covered Federal action;
 
                        __   A change in the person(s) influencing or
                             attempting to influence; or
 
                        __   A change in the Federal official(s)
                             contacted to influence or attempt to
                             influence a covered Federal action.
 
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         3.   Exceptions.  The disclosure requirements do not apply
              to the following:
 
              a.   No disclosure form (SF-LLL) is required to be
                   filed in connection with professional or technical
                   services rendered directly in the preparation,
                   submission, or negotiation of a commitment to
                   insure or guarantee a loan.
 
              b.   No disclosure form (SF-LLL) is required to be
                   filed with respect to payments of reasonable
                   compensation made to regularly employed officers
                   and employees of the person requesting or
                   receiving the assistance.
 
    C.   SUBCONTRACTORS AND SUBRECIPIENTS
 
         1.   Filing of Certification and Disclosure Forms.
              Subcontractors and subrecipients are subject to the
              requirements of the Byrd Amendment concerning the
              filing of certifications and disclosure forms in the
              case of:
 
              a.   A subcontract exceeding $100,000 at any tier under
                   a Federal contract;
 
              b.   A subgrant, contract or subcontract exceeding
                   $100,000 at any tier under a Federal grant;
 
              c.   A contract or subcontract exceeding $100,000 at
                   any tier under a Federal cooperative agreement; or
 
              d.   A contract or subcontract exceeding $100,000 at
                   any tier under a Federal loan exceeding $150,000.
 
         2.   Reporting by Subcontractors and Subrecipients.
              Certification and disclosure forms required to be filed
              by subcontractors and subrecipients must be submitted
              to the next tier above the submitter.  All disclosure
              forms must be forwarded from tier to tier until they
              are submitted to the Department.  Certification forms
              are to be retained by the tier to whom they are
              submitted.
 
    D.   PENALTIES
 
         1.   Any person who makes a prohibited expenditure is
              subject to a civil penalty of not less than $10,000 and
              not more than $100,000 for each failure.
 
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         2.   Any person who fails to submit or amend the disclosure
              form, when required, is subject to a civil penalty of
              not less than $10,000 and not more than $100,000 for
              each failure.
 
         3.   Failure to submit the required certification or
              statement may result in an application or assistance
              being delayed or denied.
 
                    PART III.  PROCEDURAL REQUIREMENTS
 
    A.   FIELD RESPONSIBILITIES.  Field Offices should adhere to
         previously issued program specific guidance (see B. below).
         The following is a listing of ongoing field responsibilities
         for the implementation of the Byrd Amendment:
 
         1.   Maintenance of Certifications and Statements.  Executed
              certifications and statements should be retained in the
              appropriate program file (e.g. project file, contract
              file) with other material submitted by the applicant or
              requester.
 
         2.   Incomplete Applications.  The Field Offices must review
              each application or request received to determine
              whether it is complete and contains the appropriate
              certification or statement.  If an application
              submitted to the Department does not contain the
              required certification or statement, the applicant or
              requester must be advised that the required documents
              must be submitted before assistance will be provided.
 
         3.   Forwarding and Maintenance of Disclosure Forms.  In
              cases where a disclosure form (SF-LLL) is submitted by
              an applicant or requester:
 
              a.   At the point of receipt make a duplicate of the
                   disclosure form and forward the original to the
                   Office of Ethics (Headquarters, Room 2158).  The
                   Office of Ethics will be the central depository
                   for all disclosure forms filed with the
                   Department.
 
              b.   A duplicate copy of each disclosure form should be
                   retained in the appropriate contract, loan, grant,
                   cooperative agreement file or other similar file.
 
              c.   Disclosure forms which may be submitted at the end
                   of each calendar quarter will be directed to the
                   point where the application or other material
 
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                   submitted to the Department was originally
                   collected.  Disclosure forms received at the end
                   of a calendar quarter shall be forwarded to the
                   Office of Ethics.
 
              d.   Any request from a member of the public for a copy
                   of a disclosure form shall be forwarded to the
                   Office of Ethics for handling.  The Office of
                   Ethics will forward the request to the Executive
                   Secretariat to be handled in accordance with the
                   Department's Freedom of Information Act (FOIA)
                   procedures.
 
         4.   Notice of Violations.  Any suspected violation of
              requirements of the Byrd Amendment should be
              immediately brought to the attention of the Director,
              Office of Ethics.
 
         5.   NOTE:  Even if the loan or grant amounts are not large
              enough to trigger the certification and disclosure
              requirements, the prohibitions against the use of
              Federally appropriated funds for influencing or
              attempting to influence the actions of Federal
              officials apply.  Accordingly, Field Office staff must
              be alert to possible violations, which must be reported
              to the Office of Ethics.
 
    B.   HEADQUARTERS RESPONSIBILITIES.  Any Headquarters Program
         Office which receives initial applications or other similar
         materials submitted to the Department must adhere to the
         procedures described for Field Offices in paragraph A.
         above.  In addition, the head of each major office who has
         responsibility for a program involving contracts, grants,
         cooperative agreements, loan guarantees or loan insurance
         has issued program specific guidance ensuring compliance
         with the procedural requirements.  A listing of each
         office's guidance is shown below.
 
         1.   Administration--Office of Ethics
 
              a.   February 9, 1990 -- Interim Notice
                   -- "Implementation of the "Byrd Amendment" Regarding
                   the Limitation on Payments Made to Influence
                   Certain Federal Contracting and Financial
                   Transactions" -- Interim Notice 90-01 ADM I
                   (expired June 8, 1990).
 
         2.   Administration--Office of Procurement and Contracts
 
              a.   January 11, 1990 -- Memorandum to OPC Contracting
                   Staff and Regional Contracting Officers
                   -- "Implementation of the limitation on the payment
                   of funds to influence Federal transactions"
 
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              b.   February 6, 1990 -- Memorandum to OPC Contracting
                   Staff and Regional Contracting Officers
                   -- "Limitation on the payment of funds to influence
                   Federal transactions"
 
              c.   May 4, 1990 -- Memorandum to OPC Staff and
                   Regional Contracting Officers -- "SF-LLL,
                   Disclosure of Lobbying Activities"
 
              d.   July 5, 1990 -- Memorandum to OPC Staff and
                   Regional Contracting Officers -- "Clarification
                   Regarding the Lobbying Restrictions"
 
              e.   August 8, 1990 -- Memorandum to OPC Staff and
                   Regional Contracting Officers -- "Lobbying
                   Certifications on Indefinite Quantity Contracts"
 
         3.   Office of Housing
 
              a.   April 13, 1990 -- Notice H 90-27 - "OMB's Guidance
                   on New Government-wide Restrictions on Lobbying"
                   (expired April 30, 1991)
 
              b.   April 19, 1990 -- Memorandum from Office of
                   Insured Single Family Housing -- "Single Family
                   Development-OMB's Guidance on New Government-Wide
                   Restrictions on Lobbying-the Byrd Amendment"
 
              c.   April 26, 1990 -- Coinsuring Lender Letter No.
                   90-3 -- "OMB's Interim Final Guidance on
                   Government-Wide New Restrictions on Lobbying"
 
              d.   April 26, 1990 -- "Mortgagee Letter 90-13
                   -- "OMB's Guidance on Government-wide New
                   Restrictions on Lobbying"
 
         4.   Community Planning and Development
 
              a.   December 21, 1989 -- Memorandum to All Regional
                   Administrators and All Category "A" Field Office
                   Managers -- "Revised Certification, CDBG
                   Entitlement Program Prohibition of Use of Federal
                   Funds for Lobbying"
 
              b.   Notices for Funding Availability (NOFA) for the
                   Rental Rehabilitation Program for last two fiscal
                   years
 
         5.   Public and Indian Housing
 
              a.   April 27, 1990 -- Memorandum to All Public Housing
                   Authorities and Resident Management Corporations
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              b.   July 10, 1990 -- Memorandum to All Regional
                   Administrators And All Field Office Managers
                   -- "FY 1990 CIAP Implementation of the Byrd
                   Amendment"
 
              c.   Notices concerning the Public Housing
                   Development/Major Reconstruction of Obsolete
                   Public Housing Processing in FY 1990 and 1991
 
         6.   Fair Housing and Equal Opportunity
 
              a.   September 4, 1990 -- Memorandum to All Regional
                   Office Directors for Fair Housing and Equal
                   Opportunity -- "Implementation of Byrd Amendment"
 
         7.   Policy Development and Research
 
              a.   PDR does not have field counterparts, therefore,
                   no field guidance was issued.
 
         8.   Government National Mortgage Association
 
              a.   GNMA does not have field counterparts, therefore,
                   no field guidance was issued.
 
    In addition to the above listed program specific guidance, all
    NOFAs published in the Federal Register contain Byrd Amendment
    language.
 
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