GUIDE TO LEGAL ISSUES INVOLVED IN PUBLICPRIVATE PARTNERSHIPS AT THE FEDERAL LEVEL
(Dec. 2018)

Prepared by the Public-Private Partnerships Working Group
Office of the Chairman
Administrative Conference of the United States
December 2018

PUBLIC-PRIVATE PARTNERSHIPS WORKING GROUP*
Todd Rubin, Administrative Conference of the United States, Staff Counsel
Name
Ted Adams
Neeta Bhandari
John Basso
Gena Bernhardt
Melissa Brodowski
Cynthia Campbell

Affiliation At Time Of Working Group Meetings
Peace Corps
The U.S. Department of State
The U.S. Department of Veterans Affairs
The U.S. Department of Justice
The U.S. Department of Health and Human Services
The U.S. Department of Housing and Urban
Development
The U.S. Department of Veterans Affairs
The U.S. Department of Energy
The Legal Services Corporation
The U.S. Department of Homeland Security
The U.S. Agency for International Development
The Federal Emergency Management Agency
The U.S. Department of Labor
The U.S. Department of State
The U.S. Department of Housing and Urban
Development
The U.S. Office of National Drug Control Policy
The U.S. Department of Health and Human Services
The U.S. Department of State
The U.S. Department of Housing and Urban
Development
The U.S. Department of Labor
The U.S. Environmental Protection Agency
The U.S. Department of State
The U.S. Department of Veterans Affairs
The U.S. Department of Justice
The U.S. Agency for International Development
The Bureau of Consumer Financial Protection
The U.S. Department of Agriculture
The U.S. Forrest Service
The U.S. Department of Education
The U.S. Department of State
The U.S. Department of Veterans Affairs
The U.S. Department of Housing and Urban
Development
The U.S. Department of Veterans Affairs
The U.S. Department of Homeland Security
The U.S. Centers for Disease Control and Prevention

Doug Carmon
Dan Cohen
Ron Flagg
Hala Furst
Gayle Girod
Robert Glenn
David Hamel
Jason Haserodt
Matthew Hennessy
Helen Hernandez
Gregorio Hunt
Christine Johnson
Micah Lemons
Jennifer Levin
Lucille Liem
Lauren Marks
Jarah Meador
Charlie Moses
Jonathan Ng
Margaret Plank
Carrie Ricci
Ellen Shaw
Kristina Spencer
Jim Thompson
Catherine Trombley
Yennie Tse
Mark Upingco
Karinda Washington
Diana Yassanye

*
We are also grateful for the contributions of Frank Rapoport of P3 Development Partners and Katherine Klem of
the Yale University School of Medicine for providing extremely valuable insights. The Guide to Legal Issues
Involved in Public-Private Partnerships at the Federal Level does not necessarily represent the views of the
members’ or contributors’ organizations.

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TABLE OF CONTENTS
Introduction to the Guide ............................................................................................................. 1
Recent History of Interagency Efforts Regarding P3s .............................................................. 2
Agency Activities Often Associated with P3s ............................................................................. 2
Drafting MOUs ........................................................................................................................... 3
Financial Transactions ............................................................................................................... 3
Evaluating Outcomes .................................................................................................................. 3
Examples of P3s............................................................................................................................. 4
OSHA’s Strategic Partnership Agreements ................................................................................ 4
State Department’s Diplomacy Lab ............................................................................................ 4
DOJ, HHS, and HUD’s Partnership for Freedom ...................................................................... 5
USAID’s Global Development Alliances (GDAs) ....................................................................... 5
Common Legal Issues That Arise in P3s .................................................................................... 5
Authorization and Appropriations .............................................................................................. 6
Endorsement ................................................................................................................................ 6
Personally Identifiable Information Generally ........................................................................... 7
The Freedom of Information Act ................................................................................................. 7
Ownership of Partnership-Related Intellectual Property, including Proprietary Data ............. 8
The Paperwork Reduction Act..................................................................................................... 9
Special Legal Requirements Pertaining to Contracts, Grants, and Other Financial
Transactions ................................................................................................................................ 9
Gift Acceptance Authority ......................................................................................................... 10
Permissible Categories of Partners .......................................................................................... 12
Personal and Organizational Conflicts of Interest ................................................................... 12
Due Diligence ............................................................................................................................... 13
Conclusion ................................................................................................................................... 14

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Introduction to the Guide
Federal agencies, to assist in carrying out their missions, have long participated in public-private
partnerships (P3s).1 There is no binding definition of “public-private partnerships” that spans
across all agencies, but an interagency working group has defined them as “collaborative
working relationships between the U.S. government and non-federal actors in which the goals,
structures, and roles and responsibilities of each partner are mutually determined.”2
There is no bright line distinction between P3s and other forms of collaboration between federal
agencies and the private sector. This Guide does not attempt to adopt a definitive definition of
P3s. Ultimately, it is up to agencies to determine what relationships qualify as P3s and under
what circumstances they should draw upon this Guide.3
P3s are most often formalized through non-binding memoranda of understanding (MOUs) or
memoranda of agreement (MOAs), and sometimes through contracts. Additionally, some P3s are
not formalized at all, but rather arise through informal understandings between the agency and
private partner.
A private sector entity and the federal government may have a variety of reasons for wanting to
partner with one another. Both sectors may find, for instance, that a partnership with the other
allows them to access more resources and expertise. Expanded access to such resources and
expertise may allow them to complement and reinforce their missions, producing outcomes with
greater impact than they could achieve working entirely independently of one another.4 Recent
governmentwide initiatives relating to, among other areas, workforce training5 and government
effectiveness,6 are centered on P3s.
This Guide is the result of discussions by an interagency working group of key federal officials
convened by the Office of the Chairman of the Administrative Conference. Reflecting the
1

This Guide focuses on P3s that relate to social welfare topics, such as health, labor, education, and diplomacy. The
Guide focuses on these kinds of P3s, as opposed to, for example, infrastructure P3s and research and development
(R&D) P3s, because social welfare topics are areas of expertise for agencies involved in the working group. Readers
who are interested in infrastructure P3s should also consult, among other sources, U.S. Dep’t. of Treas., Expanding
the Market for Infrastructure Public-Private Partnerships: Alternative Risk and Profit Sharing Approaches to Align
Sponsor and Investor Interests (Apr. 2015). Those interested in R&D P3s should also consult, among other sources,
ALBERT N. LINK, PUBLIC/PRIVATE PARTNERSHIPS: INNOVATION STRATEGIES AND POLICY ALTERNATIVES 7–22
(Springer 2006).
2
CMTY. P’SHIPS INTERAGENCY POLICY COMM., BUILDING PARTNERSHIPS: A BEST PRACTICES GUIDE 1 n.1 (2013).
3
For examples of relationships that some agencies consider to be P3s, readers should consult Occupational Safety &
Health Admin., U.S. Dep’t of Labor, Partnership: An OSHA Cooperative Program,
www.osha.gov/dcsp/partnerships/index.html (last visited Aug. 18, 2017); Partnership for Freedom,
https://partnershipforfreedom.org/ (recently ended) (last visited Aug. 18, 2017); and U.S. Dep’t of State, Diplomacy
Lab, https://www.state.gov/s/partnerships/ppp/diplab/ (last visited Aug. 8, 2018).
4
See CMTY. P’SHIPS INTERAGENCY POLICY COMM., supra note 2, at 2.
5
See Exec. Order No. 13,845, 83 Fed. Reg. 35,099 (July 24, 2018).
6
See OFFICE OF MGMT. & BUDGET & GEN. SERVS. ADMIN.: THE GEAR CENTER,
https://www.performance.gov/GEARcenter/ (last visited Aug. 8, 2018).

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expertise of most members of this working group, the Guide is intended primarily for attorneys
in agency general counsel offices (or equivalent government legal offices).
At the outset, the Guide will describe this interagency working group in greater detail and will
briefly mention a previous interagency effort to address issues regarding P3s. It will then point
the reader to the interagency groups’ definition of the term “public-private partnership.” The
Guide will then identify agency activities that are often associated with P3s. These activities are:
1) drafting of the MOU,7 2) financial transactions, and 3) evaluating results. The Guide then
offers some examples of recent P3s in which agencies have participated, followed by a detailed
discussion of some of the major legal issues that arise in P3s. Finally, the Guide discusses the
importance of agencies’ conducting due diligence (vetting) of potential private partners.

Recent History of Interagency Efforts Regarding P3s
In 2012, a federal interagency working group, led by the National Security Council and
consisting of 23 federal agencies, was established to define “public-private partnerships” and to
address a range of cross-agency issues involved in P3s. The group developed a best practices
guide, using the following definition of a P3, which all agency participants in the working group
approved:
“[A] collaborative working relationship[] between the U.S. government and non-federal actors in
which the goals, structures, and roles and responsibilities of each partner, are mutually
determined.”8
In the spring of 2017, at the suggestion of the Administrative Conference’s Committee on
Regulation, the Office of the Chairman of the Administrative Conference convened dozens of
federal officials from 19 different agencies who actively work on P3s. The Office of the
Chairman of the Administrative Conference held three in-person meetings with the group from
July 2017 through February 2018 and engaged in extensive discussions with individual group
members outside of these meetings. The group collaboratively drafted this Guide.

Agency Activities Often Associated with P3s
There are, of course, many kinds of activities that agencies may undertake in developing and
administering P3s, but it would be nearly impossible to list all possible activities. The Guide
calls attention to the three below because they capture particularly well the ways that agencies
and private entities interact with one another as a P3 is developed and carried out. Further, they
relate to the major legal issues encountered in P3s, to be discussed in the section titled Common
Legal Issues that Arise in P3s below.

7

Some agencies use Memoranda of Agreement (MOAs), rather than MOUs, to formalize a P3. This Guide will use
the term “MOU” but the same principles apply to MOAs.
8
See CMTY. P’SHIPS INTERAGENCY POLICY COMM., supra note 2, at 1 n.1.

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Drafting MOUs
An MOU is a non-binding, written document that defines the roles and responsibilities of each
party.9 There are many reasons an agency might want to formalize a P3 through one or more
MOUs, including establishing, in writing, the reason or need for the P3; setting up a way to
measure the impact and effectiveness of the P3; specifying the duration of the P3; and clarifying
the expectations of the parties with respect to performance and funding. Some agencies include a
section within their MOU templates titled “Performance Measures.” This section allows both
government and private partners to declare the agreed upon metrics, outcomes, and impacts that
will be captured.
An MOU can also help ensure that both parties stay well within the bounds of ethical and legal
requirements. Numerous agencies have wisely adopted internal policies that require P3s to be
formalized through an MOU, even if a statute does not require it. All MOUs should be drafted in
consultation with the agency’s designated legal counsel.
Financial Transactions
A grant, contract, gift, or other financial transaction between an agency and a private sector
entity or individual does not itself establish a P3. However, P3s might involve such transactions,
which should be reviewed by agency counsel.
At a minimum, agencies and their private partners nearly always spend funds on day-to-day or
operational expenses such as the salaries of employees involved in the activities of the P3. Travel
and the purchase of supplies or equipment may also be involved, depending on the roles of the
partners.
Beyond routine expenses, P3s may involve more substantial expenditures of funds directly in
furtherance of the goals of the P3. For example, an agency and a private foundation that both aim
to reduce childhood obesity might decide to work together to advance their missions by
identifying grassroots organizations that encourage healthy eating habits for children and agree
to each fund one or more such organizations. Funding of this sort is often called an “aligned
investment.”
In this case, the grant from the agency to the organization can be thought of as one part of a large
bundle of actions that comprise the P3. Other actions that comprise the P3 may include the
drafting of the MOU between the agency and the foundation, the joint strategizing of the vision
and mission of the P3, and the joint evaluation of the results of the P3.
Evaluating Outcomes
P3s are often undertaken for a specific policy purpose. A given P3 might be initiated, for
example, to reduce recidivism or homelessness, increase literacy, or remedy water pollution.

9

See CTRS. FOR DISEASE CONTROL & PREVENTION, DEVELOPMENT AND EXECUTION OF MEMORANDA OF
UNDERSTANDING AND MEMORANDA OF AGREEMENT OPERATIONAL POLICY 2 (2013).

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Agencies and their private partners often attempt to evaluate how successful their initiatives have
been in achieving these goals.
Evaluation may consist of hiring an independent third party to collect and analyze data or doing
the data collection and analysis in-house using the agency’s or private partner’s staff (or both in
tandem). Agencies and private partners often work closely with one another as they identify a
suitable third-party evaluator, perform the relevant analyses, interpret the results, and decide
whether to modify, continue, or terminate the P3 based on the evaluation.
In some P3s, evaluation and achievement of outcomes are pre-conditions for government
payment to the provider of the previously obligated government funding. This kind of funding
mechanism is sometimes referred to as “Pay for Success” or “Pay for Results.”10 For example,
the U.S. Department of Veterans Affairs and the Corporation for National and Community
Service are administering a P3 to improve employment outcomes for veterans with posttraumatic stress disorder. Funding for start-up and operating costs for this intervention were
raised from non-government social impact investors by an intermediary. Repayment of these
funds by the government to investors requires that the intervention show, over an 18-month
period, that certain metrics related to employment outcomes for veterans in the P3 project have
been achieved. An independent third party analyzes the data, but the VA itself is also heavily
involved in defining outcomes. The evaluation is a joint enterprise between the VA, an
intermediary, and the third-party evaluator.

Examples of P3s
Occupational Safety and Health Administration’s (OSHA’s) Strategic Partnership
Agreements
Under these agreements, OSHA enters into an extended, voluntary, cooperative relationship with
private sector employers, groups of employers, and labor unions to encourage, assist, and
recognize their efforts to eliminate serious hazards and achieve a high level of worker safety and
health. The partners work with OSHA cooperatively to find solutions to problems related to
worker safety and health. Partnership agreements may include commitments to work with the
agency to collect and analyze relevant data, develop and carry out training programs, develop
guidance about best practices, and engage in other efforts to improve worker safety and health.11
State Department’s Diplomacy Lab
Under this program, the State Department partners with various colleges and universities to
engage Americans in the work of diplomacy and broaden the State Department’s research base.
The State Department provides potential partner institutions with a list of project proposals on
topics including counterterrorism, energy security, and economic policy. Institutions identify
faculty members who can lead teams of typically at least four students to develop work products
10

The recently enacted Social Impact Partnerships to Pay for Results Act, 42 U.S.C. §§ 1397n to 1397n-13 (2018),
authorizes $100 million over a ten-year period, a large portion of which is to be used for outcomes payments.
11
See OCCUPATIONAL SAFETY & HEALTH ADMIN., U.S. DEP’T OF LABOR, PARTNERSHIP: AN OSHA COOPERATIVE
PROGRAM, https://www.osha.gov/dcsp/partnerships/index.html (last visited Aug. 18, 2017).

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for these proposals, and they submit bids for their preferred projects. The final work products
take various forms, including brief policy memoranda, research papers, statistical analyses, and
data sets, which are specified by the Department in its project announcements.12 Students
performing research are given the opportunity to meet with State Department officials such as
career diplomats for the purpose of presenting their findings.
The U.S. Department of Justice (DOJ), the U.S. Department of Health and Human Services
(HHS), and the U.S. Department of Housing and Urban Development’s (HUD’s) Partnership
for Freedom
Under this program, which ended in 2016, HHS’s Administration for Children and Families,
HUD, and various offices within DOJ partnered with an organization called Humanity United to
combat human trafficking. Humanity United provided staff time, expertise, and overall
coordination of the project. Additionally, Humanity United authorized funding for a prize
competition for eligible entities that could demonstrate innovative approaches to combating
human trafficking. The agency partners provided staff time for the overall coordination of the
project and pledged funding for organizations that work on human trafficking initiatives to
participate in the project. The parties also jointly evaluated and monitored results and engaged in
outreach and publicity surrounding the project.13 Responsibilities were memorialized through an
MOU.
U.S. Agency for International Development’s (USAID’s) Global Development Alliances
(GDAs)
A GDA is a partnership involving USAID and the private sector (and possibly other partners) to
co-create and co-implement activities to achieve key development goals that also advance core
business interests. GDAs are based on complementary interests and objectives with the private
sector, utilize market-based approaches and solutions, involve extensive co-creation and shared
responsibility, and require private sector contributions for increased impact. A GDA is not a
procurement mechanism; rather, it is an approach used by USAID to invite the private sector to
identify and define compelling business and development challenges jointly before collaborating
to determine whether and how they, together, can solve those problems and achieve sustainable
impact. Through the GDA process, USAID may award grants to support activity implementation
but USAID funding is not guaranteed or may not be necessary for a particular GDA.14

Common Legal Issues That Arise in P3s
The discussion below describes the most common legal issues of which agency officials should
be mindful as their agencies consider partnering with a private entity and as the P3 is carried out.

See SEC’Y’S OFFICE OF GLOB. P’SHIPS, U.S. DEP’T OF STATE, DIPLOMACY LAB,
https://www.state.gov/s/partnerships/ppp/diplab/ (last visited Aug. 18, 2017).
13
See Partnership for Freedom, supra note 3.
14
See U.S. AGENCY FOR INT’L DEV., GLOBAL DEVELOPMENT ALLIANCES, https://www.usaid.gov/gda (last visited
Oct. 4, 2018).
12

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Authorization and Appropriations
Agencies are creatures of statute.15 As such, they may only act pursuant to statutory authority,
which can be found in the agency’s authorizing statutes and appropriations statutes. Although
agencies generally do not need specific authority to participate in a P3, an agency considering
participating in a P3 must carefully identify the specific actions that it will take under the P3, and
then determine whether it has statutory authority to take those actions or perform those functions.
In addition, if an agency will obligate and expend funds in furtherance of the P3, it must ensure it
has the legal authority to do so.
In other words, an agency may obligate and expend money in furtherance of a P3 only if the
obligation and expenditure is consistent with the terms of the statute appropriating the funds or
another authorizing statute. This includes the use of employee time in furtherance of the P3:
employee time may only be used if such use complies with the agency’s authorizing statutes and
any statutes that provide authority to obligate and expend funds for the salaries of the employees.
The U.S. Government Accountability Office’s Principles of Federal Appropriations Law
(commonly known as “the GAO Red Book”) is a comprehensive, authoritative source for matters
related to appropriations and authorization.16 Agencies should consult the GAO Red Book, along
with their authorizing and appropriations statutes, to ensure that the actions they take in
furtherance of a P3 comply with all requirements.
Endorsement
A variety of ethics considerations arise with respect to P3s. One such consideration is
endorsement. According to the Standards of Ethical Conduct for Employees of the Executive
Branch, “An employee shall not use or permit the use of his Government position or title or any
authority associated with his public office to endorse any product, service or enterprise.”17 The
Standards do not specifically define “endorsement” but note as a hypothetical example a
government official appearing in a commercial encouraging people to buy a product.
Although there is generally a wide prohibition on endorsements, the Standards do provide
exceptions to this general prohibition for authorized statements of an individual employee acting
in an official capacity, when such endorsement is in “furtherance of statutory authority to
promote products, services or enterprises” or “[a]s a result of documentation of compliance with
agency requirements.”18 In addition to the Standards, there are statutes, regulations, and other
policies that may limit the unauthorized use of agency names, logos, seals, decorations, insignia,
or symbols.
In the context of P3s, private partners sometimes wish to highlight their affiliation with a
government agency, or perhaps even use the agency’s logo, on their websites. Although this area
15

See, e.g., Atl. City Elec. Co. v. F.E.R.C., 295 F.3d 1, 8 (D.C. Cir. 2002).
See U.S. GOV’T ACCOUNTABILITY OFFICE, GAO-04-261SP, PRINCIPLES OF FEDERAL APPROPRIATIONS LAW (3d
ed. 2004).
17
5 C.F.R. § 2635.702(c) (2018).
18
Id.
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is highly fact-dependent, such actions could appear to constitute “endorsements,” even if an
agency official is not involved in the private partner’s decision to highlight the partner’s
affiliation with the agency. Therefore, the MOU should specify to what extent a private partner
may highlight its affiliation with the government agency or use agency logos and ensure that the
private partner obtain written permission from the agency before it publishes any statement
highlighting its affiliation with the agency or uses the agency logo. Before such permission is
granted, the agency’s designated counsel should review the proposed statement or use of the logo
to ensure it does not create the perception of an impermissible endorsement or violate other
relevant law.
Personally Identifiable Information Generally
Agencies are required to develop, implement, document, maintain, and oversee an agency-wide
privacy program that includes people, processes, and technologies. Agencies’ privacy programs
are led by Senior Agency Officials for Privacy (SAOPs). SAOPs manage privacy risks, develop
and evaluate privacy policy, and ensure compliance with all applicable statutes, regulations, and
policies regarding the creation, collection, use, processing, storage, maintenance, dissemination,
disclosure, and disposal of personally identifiable information (PII) by programs and information
systems. The term “PII” refers to information that can be used to distinguish or trace an
individual’s identity, either alone or when combined with other information that is linked or
linkable to a specific individual.
P3s may, at times, entail the sharing of PII between government and private partners. There are a
series of federal requirements of which agencies must be aware with respect to any material that
may contain PII. The Privacy Act of 1974,19 privacy provisions of the E-Government Act of
2002, the Federal Information Security Modernization Act of 2014, and the Office of
Management and Budget’s (OMB’s) implementing guidance (e.g., OMB Circular A-130) are
some of those key authorities. Agencies’ privacy programs are required to ensure that entities
that create, collect, use, process, store, maintain, disseminate, disclose, or dispose of information
on behalf of a Federal agency or that operate or use information systems on behalf of a Federal
agency comply with the privacy requirements in law and OMB policies.
Among other responsibilities, this includes documenting and implementing policies and
procedures for privacy oversight of contractors and other entities and ensuring that privacy
controls selected for information systems and services used or operated by contractors or other
entities on behalf of the agency are effectively implemented and comply with National Institute
of Standards and Technology standards and guidelines and agency requirements. Agencies’ P3
staff should consult with their agencies’ SAOP and/or privacy program staff for additional
guidance.
The Freedom of Information Act
All information or records a private partner submits to a federal agency are subject to public
disclosure under the Freedom of Information Act (FOIA). If an agency receives a FOIA request
for agency records, it may assert several statutory exemptions. For example, FOIA exempts from
19

See 5 U.S.C. § 552a (2012).

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release certain confidential or proprietary information (known as a (b)(4) exemption).20 It also
exempts from release information that would invade another individual’s personal privacy,
provided that there is not a sufficiently overriding public interest for the release of the
information (known as a (b)(6) exemption).21
In the MOU, agencies should include a clause covering FOIA applicability that instructs
partners, before they turn over any documents to the agency, to mark as proprietary any
communications that might reveal trade secrets or confidential business information, which
generally includes financial information and organizational processes and operations.
Additionally, the MOU should note that the private partner should label any names or personal
information associated with documents they hand to the agency, such as addresses or phone
numbers, as PII. The MOU should, in addition, note that such marking does not guarantee that a
document or piece of information will, in fact, be protected from disclosure, since an agency
determination that the information is exempt could be challenged in court.
If the agency receives a FOIA request, agency counsel should carefully review all materials that
the private partner marked as confidential or as containing PII to ensure that such designations
are correct and should review other materials to determine whether a potential exemption
applies. If there is a relevant FOIA request, and the information qualifies as agency records, the
agency must release to the requestor all relevant agency records that do not meet one of the
statutorily delineated exemptions.
Ownership of Partnership-Related Intellectual Property, including Proprietary Data
Agency counsel should be mindful of the fact that intellectual property, including proprietary
data, may be developed during the course of a P3. This may result in disputes between the
agency and the private partner, or between an agency’s employee and the agency, as to who
owns the property. For example, a private sector partner may enter a P3 with technology that it
owns, but then, during the course of the P3, both the public and private entities improve upon or
otherwise work on it. Disputes could arise about which partner owns the improvements and
whether the other partner must license its use.
Who owns intellectual property, including proprietary data, and under what conditions are highly
fact-dependent inquiries that elude generalization. Counsel should be very familiar with the
relevant statutes, regulations, and guidance that pertain to ownership of intellectual property22
and should consider including a statement in the MOU that these statutes, regulations, and
guidance will be used to resolve questions of ownership and use of any intellectual property,
including proprietary data, created or modified during the course of the P3.

20

Freedom of Information Act, 5 U.S.C. § 552(b)(4) (2018).
5 U.S.C. § 552(b)(6) (2018).
22
See ENVTL. PROT. AGENCY, FEDERAL TECHNOLOGY TRANSFER ACT AND RELATED LEGISLATION,
https://www.epa.gov/ftta/federal-technology-transfer-act-and-related-legislation.
21

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The Paperwork Reduction Act
The Paperwork Reduction Act (PRA) applies when the federal government seeks to collect
information from non-federal actors. Generally, if an agency intends to collect “information”
from at least ten people, not acting in their capacity as federal employees, it must submit an
information collection request to the Office of Information and Regulatory Affairs, within OMB,
for review.
The PRA is potentially relevant to many different activities carried out under a P3. For example,
it applies to any applications that an agency puts forward to participate in a P3 (just as it applies
to grant applications). It also potentially applies to reporting obligations that are part of the P3,
any recordkeeping requirements, any required disclosures that are part of the MOU, and any
collections used to evaluate the P3.
It is important to note that “information” is a term of art as used in the PRA. Under some
circumstances, if an agency requests certain kinds of “information,” the PRA might not apply.
For example, the PRA does not apply to general solicitations of information or feedback.23 An
agency that runs a prize competition, for example, need not concern itself with the PRA as long
as it frames its request for ideas in an open-ended way that “permits respondents to create their
own submissions.”24 However, if it requires participants to answer standardized questions (other
than those questions necessary to contact the contestant), including demographic questions, the
PRA does apply.25
Agency counsel should carefully review the PRA and associated guidance to determine whether
the information collection requirements apply to a particular activity envisioned by its agency in
relation to a P3. The applicability of the PRA will vary on a case-by-case basis.
Special Legal Requirements Pertaining to Contracts, Grants, and Other Financial
Transactions
As stated above, a contract, grant, or other financial transaction between an agency and a private
sector entity or individual does not itself establish a P3. However, P3s might involve these kinds
of transactions or arrangements, which should be reviewed by agency counsel.
Agencies considering awarding grants or contracts or making other financial transactions
pursuant to a P3 (or otherwise) must first locate their authority to do so in any relevant
authorizing or appropriations statutes. Those provisions will instruct the agency on how much
they may spend or obligate, the time period during which they may spend or obligate, who may
receive the funding, and the purposes for which funds may be used.
23

See 5 C.F.R. § 1320.3(h) (2018).
OFFICE OF MGMT. & BUDGET, EXEC. OFFICE OF THE PRESIDENT, FREQUENTLY ASKED QUESTIONS RELATED TO
CHALLENGES AND PRIZES 1 (2010), available at
https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/assets/inforeg/challenge-and-prizes-faqs.pdf.
25
OFFICE OF MGMT. & BUDGET, EXEC. OFFICE OF THE PRESIDENT, MEMORANDUM FOR THE HEADS OF EXECUTIVE
DEPARTMENTS AND AGENCIES, AND INDEPENDENT REGULATORY AGENCIES 7 (Apr. 7, 2010), available at
https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/assets/inforeg/SocialMediaGuidance_04072010.pdf.
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Beyond authorizing and appropriations statutes, there are several government-wide authorities
that agencies must consult before engaging in any financial transaction. These include the
Federal Acquisition Regulation (FAR), the Procurement Integrity Act, relevant supplemental
agency regulations for procurement, and the OMB Uniform Guidance for grants and cooperative
agreements. Furthermore, the DATA Act, Executive Order 13,576, the Federal Financial
Accountability and Transparency Act of 2006, and the Federal Grant and Cooperative
Agreement Act are some of the authorities that structure OMB guidance and internal agency
procedures concerning grants and cooperative agreements.
The FAR is the primary regulation applicable to all Federal Executive agencies in their
acquisition of supplies and services with appropriated funds. For contracts below the simplified
acquisition threshold, the FAR Part 13 lays out simplified acquisition procedures.26 The
threshold changes periodically. The 2018 Defense Authorization Act increased the simplified
acquisition threshold from $150,000 to $250,000.27
In general, contracts, grants, and other financial transactions must be competed. However, there
are some exceptions to this general rule. The FAR, for example, allows agencies to award “sole
source” contracts under certain circumstances.28 Agencies that wish to award grants, contracts, or
other financial transactions to any entity on a sole source basis must adhere strictly to the
relevant authorities, which almost always require transparent analysis justifying the deviation
from open competition.29
Most acquisition and procurement-related information can be found at acquisition.gov. There is a
tab at the top of that website that allows users to search the FAR and another tab that allows
users to search the supplemental agency regulations.
Gift Acceptance Authority
As discussed above, financial transactions such as gifts do not in themselves establish P3s.
However, P3s sometimes involve gifts from a private sector entity or individual to an agency.
Absent statutory authority, agencies may not augment their appropriations from sources outside
the government, including from gifts. Many federal agencies, however, have gift acceptance
authority, which can override augmentation concerns if the authorization is not limited in its
applicability. Gifts may include both in-kind and monetary resources. The parameters of an
agency’s gift acceptance authority vary. For instance, some agencies may not accept conditional
gifts or gifts of real or personal property. Other agencies have broad authority to accept and use
gifts and property and to use the services and facilities of various entities with or without
reimbursement.30
Conditional gifts are especially relevant to P3s because donors often wish to place limits on the
use of the gift funds; at times, donors have asked the agency to sign grant agreements or similar
26

See 48 C.F.R. pt. 13 (2017).
See 2018 Defense Authorization Act, Pub. L. No. 115-91, 131 Stat. 1283.
28
See 48 C.F.R. §6.303-1 (2017) (requirements for awarding sole source contracts).
29
See 48 C.F.R. §6.303-1 to 6.303-2 (2017).
30
See, e.g., 5 U.S.C. § 595(c) (2012).
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documents. If an agency lacks the statutory authority to accept conditional gifts, the gifts that
place a duty, burden, or condition upon the government cannot be accepted.31
Given that gift funds are public funds, certain requirements attach. If the gift funds will be used
to acquire services or to make a grant, they may need to be competed. Agencies may wish or be
bound to follow established procedures, including publication in the Federal Register of notices
of awards made with gift funds. It may also be advisable to notify Congress. For example, the
Explanatory Statement accompanying HUD’s annual appropriation directs HUD to notify
Congress when it establishes a new program, even with a gift. HUD did so with the Strong Cities
Strong Communities (SC2) Fellowship Program, funded by a gift from the Rockefeller
Foundation, by including the $2.5 million gift in its FY 2012 budget justifications.
The gift of services, which commonly arises when a private partner offers the time and efforts of
its employees to the agency, presents other complexities. First, agencies should check whether
their authorizing statutes specifically permit them to accept voluntary services and under what
circumstances. Such language will be controlling.
Generally, agencies may accept the free services of students pursuing a degree, provided that the
agency intends to provide educational experiences for such students through the assigned work.32
To accept voluntary services from any private sector individual other than students, agencies
must be aware of at least two statutes that apply governmentwide: the Intergovernmental
Personnel Act (IPA)33 and the Antideficiency Act.34 The IPA permits agencies to accept
detailees, without paying them, provided that the detailee is permanently employed by an eligible
entity, which includes non-profit organizations that the agency has certified as eligible to
participate as an IPA sponsor. Agency counsel should be familiar with the IPA and its
regulations before accepting an IPA detailee.
If an agency accepts voluntary services from any non-student other than a detailee approved
pursuant to a valid IPA agreement, and if the agency does not have specific statutory authority to
accept services from such volunteers, it runs a high risk of violating the Antideficiency Act.
Although the agency may be able to avoid an Antideficiency Act violation if it receives a written
waiver of payment from the prospective volunteer, the far safer course for the agency seeking
voluntary services from non-student private sector individuals is to accept a detailee from an
eligible entity using the IPA process.35

31

See Story v. Snyder, 184 F.2d 454, 456 (D.C. Cir. 1950). For example, the Department of State is generally
permitted to accept conditional gifts “at the discretion of the Secretary.” 22 U.S.C. § 2697(a) (2012).
32
See 5 U.S.C. § 3111 (2012) (permitting voluntary services rendered by student interns).
33
5 U.S.C. §§ 3371–75 (2012).
34
See 31 U.S.C. §§ 1341–54 (2012).
35
See Dep’t of the Treasury—Acceptance of Voluntary Services, B-324214, 2014 WL 293545 (Comp. Gen. Jan. 27,
2014).

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Permissible Categories of Partners
Most agencies do not have a general statutory or other regulatory or ethical bar to partnering with
certain kinds of organizations (e.g., for-profit organizations). However here, as elsewhere, the
agency’s authorizing statute should be the guide.
Assuming there is no statutory prohibition to partnering with certain kinds of organizations,
agencies have broad discretion to select the kind of partner. In general, an agency may engage in
partnerships with both non-profit and for-profit enterprises, including private businesses,
foundations, financial institutions, philanthropists, investors, business and trade associations,
faith-based organizations, international organizations, universities, civic groups, and service
organizations.36
Agencies’ ethics counsel may wish to limit that discretion on a case-by-case basis or more
broadly based on political or other agency-specific considerations. Some agencies, such as the
Food and Drug Administration and HUD, primarily partner with non-profit organizations based
on guidance from ethics counsel, whereas other agencies, such as the Department of State and
USAID, regularly work with for-profit partners.
Personal and Organizational Conflicts of Interest
Agencies must be aware of the potential for conflicts of interest in the selection of partners and
must take safeguards to protect against such conflicts. Conflicts can arise both with respect to
individual employees (“personal conflicts of interest”) and with respect to the agency as a whole
(“organizational conflicts of interest”). A personal conflict of interest arises when an employee
of an agency has a financial or imputed financial stake in a particular private entity that seeks a
partnership with the agency. That employee would therefore have a financial interest in securing
a partnership between the agency and the entity. Under federal law, the employee would be
disqualified from taking part in the agency’s decision to partner with the entity, subject to
criminal and civil penalties. To comply, the agency must guard against the possibility of such
conflicts of interest arising.
An agency should require employees, before they become involved in the consideration and
selection of private sector partners, to commit to informing agency counsel if they have a
financial stake in the entities they are considering for partnership. Additionally, the agency might
consider having agency counsel review available records such as previously filed financial
disclosure reports to determine whether such employees would have a disqualifying financial
interest in a partnership the agency is considering. Agencies may also consider requiring such
employees to file confidential financial disclosure reports, if they are not already required to do
so.37
The legal basis for the avoidance of such conflicts is found in the Standards of Ethical Conduct
for Employees of the Executive Branch38 and the criminal conflict of interest statutes, which
See CMTY. P’SHIPS INTERAGENCY POLICY COMM, supra note 2, at 6.
5 C.F.R. § 2634.904(a)(1)(i) (2018).
38
5 C.F.R. pt. 2635 (2018).
36
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prohibit executive branch employees from participating in government matters that will affect
their financial interests.39 The financial disclosure requirements that are overseen by the U.S.
Office of Government Ethics are intended to uncover and eliminate potential conflicts of this
sort.40
Organizational conflicts of interest can arise when potential partners have applied for grants or
contracts in the recent past with the agency or plan to do so in the future. They may also arise
when a partner is lobbying Congress on issues relevant to the agency; has activities, products, or
interests directly in conflict with the agency’s mission; is regulated by the agency; or has
meetings planned in which the partner is seeking favorable agency action.41 To guard against
organizational conflicts, agency ethics counsel should conduct due diligence and vetting of
potential partners.
If agency P3 staff and counsel determine that a given P3 would reflect poorly on the agency or
that a private entity is attempting to gain preferential treatment from the agency, the agency
should exclude that private sector entity from consideration. Furthermore, once a partner is
selected, it is incumbent on the office participating in the P3 to ensure that personal and
organizational conflicts do not arise during the course of the P3.
Within such boundaries, agency staff should feel free to explore potential P3s. A recommended
best practice to avoid preferential treatment concerns is to issue a general notice to, or have
discussions with, a broad audience of potential partners, rather than approaching partners
individually. The selection should be made based on objective criteria rooted in the agency’s
interests for choosing the partner. Once a partner is selected, the agency should be prepared to
articulate why that partner was selected.

Due Diligence
Running afoul of relevant legal requirements can result in severe consequences for the agency,
including unfavorable inspector general reports, congressional inquiries and investigations,
litigation, and financial penalties. These consequences, in addition to the underlying agency
action that led to them, cast the agency in a negative light. However, even if the agency complies
with all relevant laws, its reputation may suffer if it partners with an entity that does not, or if
that entity exhibits otherwise unethical conduct.
Therefore, before any partner is selected, the agency must perform due diligence and research the
potential partner for any positive or negative impacts a relationship may have on the agency’s
39

See 18 U.S.C. §§ 201–209 (2012).
See 5 U.S.C. app. §§ 101–111 (2012); 5 C.F.R. pt. 2634 (2018).
41
The Centers for Disease Control and Prevention (CDC), for example, considers the following to be sources
excluded from partnerships with the agency: tobacco corporations or foundations related to tobacco corporations;
private interests involved in the manufacture, sale, or distribution of products or services that in CDC’s view directly
conflict with agency missions and do unequivocal harm to the public’s health; private entities that seek to fund an
investigation into their own conduct and practices; and entities that seek to exercise undue influence over the design,
management, reporting of results, or the dissemination of findings and will not agree to modifications that permit the
CDC to maintain control of all phases of the project and avoid undue influence, either in fact or appearance.
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reputation. The scope of the review is at the discretion of the agency and its ethics counsel, but
the public image and motivation of the private partner, its financial soundness, dedication to
social and environmental responsibility, adherence to non-discrimination laws, and conflicts of
interest as described above comprise some relevant factors.
Due diligence requires a substantial amount of time and resources. Commonly, agency ethics
counsel research publicly available information and conduct reference checks. Such research
informs an evaluation of the risks and benefits of an association with the presumptive private
partner. Some of the factors relevant to a due diligence inquiry include whether the private entity
is likely to be an effective partner; any legal claims made against the partner or substantiated
claims of impropriety; whether the partner is party to any pending legal action brought by or
against a government agency; and whether the partner is complying with industry standards and
practices, as well as applicable laws and regulations. If social and environmental responsibility is
a significant issue, the partner’s reputation, labor policies and practices, the nature of the goods
or services from which it profits, and how much a share of its business such activities account for
should all be considered. Finally, the public image of the partner and its motivation for pursuing
the P3 (both subjective qualities, to some extent) are basic elements of the due diligence process.
The multifaceted nature of this inquiry is, at its core, an effort to arrive at a prudential judgment
about how a potential P3 might affect the agency’s reputation.

Conclusion
Given the many legal and policy issues involved in P3s, it is important for offices within
agencies to work closely with one another to share their expertise, ideally as early as possible in
the formation of the P3. Some key questions that agencies should ask internally regarding P3s
are:

1) Are the activities envisioned being undertaken as part of the P3, and the kinds of partners
we are considering, consistent with our authorizing and appropriations statutes?
2) What safeguards ought we put in place in our MOU to avoid the appearance and reality
of improper endorsement?
3) What PII might be shared during the course of the P3 and how can we best involve
SAOPs and/or privacy program staff to ensure that all privacy-related requirements are
complied with?
4) How should the MOU address FOIA requests and marking of privileged or confidential
material?
5) How should we best structure the MOU so that it is clear that any disputes related to
intellectual property are governed by relevant statutes, regulations, and guidance?
6) Which activities carried out under the P3 might trigger the PRA and how should we best
prepare and plan for the PRA process?
7) If the P3 involves contracts, grants, or other financial transactions, have we consulted all
relevant government-wide authorities, in addition to our authorizing and appropriations
statutes, to ensure we are in compliance?

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8) If a private partner offers a gift to the agency, whether it be monetary, in-kind, or
voluntary services, have all relevant legal authorities been consulted and have we
determined whether and under what circumstances we may accept the gift?
9) Have we fully analyzed potential personal and organizational conflicts of interest that
may arise during a P3 and have we instituted appropriate safeguards?
10) Have we vetted the potential private partner to determine the reputational impact the P3
may have on the agency?

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