Contract Types While there appears to be many types of contracts, all can be placed in one of two familiesWhile there appears to be many types of contracts,

Contract TypesContract Types

• While there appears to be many types of While there appears to be many types of contracts, all can be placed in one of two contracts, all can be placed in one of two “families”“families”

Fixed-priceFixed-price Cost reimbursementCost reimbursement


• A few contract types have characteristics of both A few contract types have characteristics of both “families”“families”

Fixed-price characteristicsFixed-price characteristics• Detailed specification or other detailed descriptionDetailed specification or other detailed description

• Performance regardless of costPerformance regardless of cost

• Little contract administration on the part of gov’tLittle contract administration on the part of gov’t

• Much contract administration on the part of the contractorMuch contract administration on the part of the contractor

Cost reimbursement characteristicsCost reimbursement characteristics• A less detailed description of the workA less detailed description of the work

• Best efforts on the part of the contractorBest efforts on the part of the contractor

• Greater contract administration on the part of the gov’tGreater contract administration on the part of the gov’t

Contract TypesContract TypesThe Real DifferencesThe Real Differences

Fixed PriceFixed Price Cost Cost ReimbursementReimbursement

Work RequirementsWork RequirementsMeasured exactly to WSMeasured exactly to WS Best EffortsBest Efforts

Default TerminationDefault TerminationNo Cost/no profitNo Cost/no profit Cost/no feeCost/no fee

Convenience TerminationConvenience TerminationAll cost/partial profitAll cost/partial profit all cost/partial feeall cost/partial fee

Change OrdersChange OrdersContractor risk Contractor risk ceiling protectionceiling protection

Gov’t PropertyGov’t PropertyContractor risk of lossContractor risk of loss gov’t risk of lossgov’t risk of loss


Firm-Fixed PriceFirm-Fixed Price• Once price is set it doesn’t change unless there is a contract changeOnce price is set it doesn’t change unless there is a contract change

• Proposals sometimes identify cost and profit separately Proposals sometimes identify cost and profit separately Or in highly competitive situations it may just identify a priceOr in highly competitive situations it may just identify a price However, even when cost and profit are negotiated separately, the contract However, even when cost and profit are negotiated separately, the contract

just identifies a pricejust identifies a price

• The detailed requirements of the SOW or specifications are used to The detailed requirements of the SOW or specifications are used to accept or reject the item or serviceaccept or reject the item or service


Fixed Price – RedeterminableFixed Price – Redeterminable• The contract could be Firm Fixed Price (FFP) except for The contract could be Firm Fixed Price (FFP) except for

One or more areas that could significantly change One or more areas that could significantly change • Example – labor rates, product components, cost of materialsExample – labor rates, product components, cost of materials

• The contract provides for adjustments, up or down, if certain specified The contract provides for adjustments, up or down, if certain specified events occurevents occur


Fixed Price IncentiveFixed Price Incentive• Price is fixed like FFPPrice is fixed like FFP

• But contract shows cost and profit separatelyBut contract shows cost and profit separately

• Profit varies upward or downward with cost outcome to specified Profit varies upward or downward with cost outcome to specified limitslimits


Cost Reimbursement Cost Reimbursement • Cost OnlyCost Only

Appropriate in circumstances where the contractor has a mutual interest in Appropriate in circumstances where the contractor has a mutual interest in the workthe work

No fee is providedNo fee is provided Example, contracts with universities, state and local gov’t, non-profitsExample, contracts with universities, state and local gov’t, non-profits

• Cost SharingCost Sharing Same circumstances as cost only but the contractor’s level of interest in the Same circumstances as cost only but the contractor’s level of interest in the

work is so high that they will assume part of the costwork is so high that they will assume part of the cost Commercial entity has an expectation of receiving substantial benefits Commercial entity has an expectation of receiving substantial benefits Example, R&D may result in products or processes with broad Example, R&D may result in products or processes with broad

applicability and significant commercial potentialapplicability and significant commercial potential


• Cost Plus Fixed FeeCost Plus Fixed Fee Most common typeMost common type Fee is mixed at the beginning but cost may be adjusted up or downFee is mixed at the beginning but cost may be adjusted up or down Fee is fixed regardless of the cost outcomeFee is fixed regardless of the cost outcome

• Cost Plus Award FeeCost Plus Award Fee Often used where work is on a gov’t siteOften used where work is on a gov’t site The gov’t evaluators are in a position to evaluate contractor performance The gov’t evaluators are in a position to evaluate contractor performance

on a regular basison a regular basis There may be a base feeThere may be a base fee The award fee is earned based on performanceThe award fee is earned based on performance


Cost Plus Percentage of Cost Cost Plus Percentage of Cost • Prohibited – illegal form of contractProhibited – illegal form of contract

• Why illegal – fee is paid as a percent – no incentive to economizeWhy illegal – fee is paid as a percent – no incentive to economize


Mixed ContractsMixed Contracts• Letter ContractLetter Contract

Used in urgent situationsUsed in urgent situations A “letter” type direction to proceed immediately A “letter” type direction to proceed immediately But there are often limitations on detailBut there are often limitations on detail The FAR encourages negotiations of as many definite provisions as The FAR encourages negotiations of as many definite provisions as

possible before issuancepossible before issuance Requires “definitization” in accordance with a strict schedule Requires “definitization” in accordance with a strict schedule


Time and Materials and Labor HourTime and Materials and Labor Hour• Used primarily in a repair situations Used primarily in a repair situations

• Labor is on a Fixed Price Loaded Labor Rate basis Labor is on a Fixed Price Loaded Labor Rate basis

• Material is on a cost plus handling charge basisMaterial is on a cost plus handling charge basis

• The contract contains a capThe contract contains a cap

• Labor hour arrangement does not involve materialsLabor hour arrangement does not involve materials


Indefinite Delivery/Indefinite QuantityIndefinite Delivery/Indefinite Quantity• Contains all the provisions of a contract except the details on specific Contains all the provisions of a contract except the details on specific

orders orders

• Contains a minimum guarantee which is usually a few thousand dollars Contains a minimum guarantee which is usually a few thousand dollars to 5% to 10% of the estimated annual workto 5% to 10% of the estimated annual work

• Sometimes are awarded to multiple contractors and their orders are Sometimes are awarded to multiple contractors and their orders are competed among those contractorscompeted among those contractors

• The “type” of orders may vary – some may be FFP, labor hour/time The “type” of orders may vary – some may be FFP, labor hour/time and materials or Cost Plus Fixed Feeand materials or Cost Plus Fixed Fee

• If varying type orders are allowed, the contract should contain clauses If varying type orders are allowed, the contract should contain clauses covering the different typescovering the different types


Requirement Type ContractsRequirement Type Contracts• Could be the same as IDIQ but there is no money guaranteeCould be the same as IDIQ but there is no money guarantee

• The guarantee is that there will only be one contract awarded for the The guarantee is that there will only be one contract awarded for the covered commodity or service by the agency – if there are any orders covered commodity or service by the agency – if there are any orders they will go to the contractor awarded the requirements contractthey will go to the contractor awarded the requirements contract

FinancialFinancial

Basic Financial Goals of All types of BusinessBasic Financial Goals of All types of Business• Make or offer a saleable product or serviceMake or offer a saleable product or service

• Control costs to be price competitiveControl costs to be price competitive

• Keep cask flowing to assist in controlling costsKeep cask flowing to assist in controlling costs

• Make as much profit as possible Make as much profit as possible

FinancialFinancial Financial Team PlayersFinancial Team Players

• Financial Manager – sometimes known as the CFOFinancial Manager – sometimes known as the CFO• Comptroller – could be same as CFO in small companies Comptroller – could be same as CFO in small companies • Treasurer Treasurer • Auditors – internal and externalAuditors – internal and external

Government PlayersGovernment Players• The Procurement Contracting Officer – negotiates original contract and The Procurement Contracting Officer – negotiates original contract and

primary changesprimary changes• Administrative CO – conducts systems reviews including finance, sets Administrative CO – conducts systems reviews including finance, sets

billing and overhead rates and approves invoicesbilling and overhead rates and approves invoices• Program Manager – agrees on quantities and changes and approves Program Manager – agrees on quantities and changes and approves

invoicesinvoices• Auditor – conducts financial reviews for the COAuditor – conducts financial reviews for the CO

FinancialFinancial

CAS – Cost Accounting Standards BoardCAS – Cost Accounting Standards Board• 1970 Congress created – to implement standards that would achieve 1970 Congress created – to implement standards that would achieve

uniformity and consistency in the cost accounting practices and uniformity and consistency in the cost accounting practices and reporting of costs under negotiated different prime and sub contractsreporting of costs under negotiated different prime and sub contracts

CAS applies to contracts over $500,000CAS applies to contracts over $500,000

• Exceptions to CASExceptions to CAS Contracts under 500KContracts under 500K Sealed bid contractsSealed bid contracts Contracts w/ small business and foreign gov'tContracts w/ small business and foreign gov't Contracts where price is set by lawContracts where price is set by law Contracts and subcontracts performed entirely outside the USContracts and subcontracts performed entirely outside the US FFP contract award on basis of adequate price competition FFP contract award on basis of adequate price competition

FinancialFinancial

• Also, may be waived for a particular prime contract (or sub contract) Also, may be waived for a particular prime contract (or sub contract) under $15 million if the head of the contracting agency determines, under $15 million if the head of the contracting agency determines, in writing, that the performing business is in writing, that the performing business is

1)1) Engaged in the sale of commercial items andEngaged in the sale of commercial items and

2)2) Would not be subject to CAS other than size of contract Would not be subject to CAS other than size of contract

FinancialFinancial

Contractor Obligations under CASContractor Obligations under CAS• Disclose in writing the cost accounting practices by completing a Disclose in writing the cost accounting practices by completing a

disclosure statementdisclosure statement

• Follow the disclosed practices consistently in estimating and reporting Follow the disclosed practices consistently in estimating and reporting costscosts

• Comply with CAS in effect at the time of awardComply with CAS in effect at the time of award

• Agree to price adjustment in the event gov’t shows contractor failed to Agree to price adjustment in the event gov’t shows contractor failed to comply w/ existing CAS or its own approved practicescomply w/ existing CAS or its own approved practices

FinancialFinancial

Costing PrincipalsCosting Principals• Are used when cost analysis is requiredAre used when cost analysis is required

• When negotiating a fixed price contract – used a guide in both the When negotiating a fixed price contract – used a guide in both the pricing and any subsequent changespricing and any subsequent changes

• They apply to proposals and cost incurred after award for cost They apply to proposals and cost incurred after award for cost reimbursement arrangementsreimbursement arrangements

• For post award incurred cost, they only apply to Cost Reimbursement For post award incurred cost, they only apply to Cost Reimbursement situationssituations

• Cost reimbursement does not mean that a contractor will be reimbursed Cost reimbursement does not mean that a contractor will be reimbursed all of their costsall of their costs

• Do be reimbursed a cost must be “allowable”Do be reimbursed a cost must be “allowable”

FinancialFinancial

Costing PrinciplesCosting Principles• To be allowable - FAR 31.201-2 requires that a cost must beTo be allowable - FAR 31.201-2 requires that a cost must be

Reasonable – (vague) prudent person in the conduct of competitive Reasonable – (vague) prudent person in the conduct of competitive businessbusiness

Allocable – if it chargeable, and if it is incurred specifically for the K or Allocable – if it chargeable, and if it is incurred specifically for the K or benefits K and other work (make a pro-rata distribution)benefits K and other work (make a pro-rata distribution)

Meet accounting standards or generally accepted accounting principlesMeet accounting standards or generally accepted accounting principles Meet terms of contractMeet terms of contract Meet FAR principlesMeet FAR principles

FinancialFinancial

• Reasonable means Reasonable means In nature and amount it’s reasonable In nature and amount it’s reasonable It is the type cost that a prudent person would have incurred in the conduct It is the type cost that a prudent person would have incurred in the conduct

of competitive business of competitive business

• Allocable meansAllocable means The cost was incurred specifically for the contract (direct), or The cost was incurred specifically for the contract (direct), or That the cost benefits both the contract and other work and can be That the cost benefits both the contract and other work and can be

reasonablyreasonably That the cost is necessary for overall business operation (G&A)That the cost is necessary for overall business operation (G&A)

• Meets accounting standards meansMeets accounting standards means It meets established CAS, orIt meets established CAS, or It meets generally acceptable principles recognized in the industryIt meets generally acceptable principles recognized in the industry

FinancialFinancial Meets the terms of the contract meansMeets the terms of the contract means

• It meets any It meets any special provisionsspecial provisions on the contract on the contract

• These provisions cannot violate cost principlesThese provisions cannot violate cost principles

• Examples of some provisions:Examples of some provisions: Special treatment for the projectSpecial treatment for the project Pre-contract costs includedPre-contract costs included

Meets FAR Principles meansMeets FAR Principles means• It does not violate FAR part 31It does not violate FAR part 31

FAR part 31 identifies 53 types of costs and provides guidelines for their FAR part 31 identifies 53 types of costs and provides guidelines for their acceptability (outlined in the text)acceptability (outlined in the text)

UnallowablesUnallowables• Contractors must account for Contractors must account for

Fee or profit pays for unallowablesFee or profit pays for unallowables

FinancialFinancial

Some Selected CostsSome Selected Costs• Many public relation and most advertising – generally non-allowable Many public relation and most advertising – generally non-allowable

but selling costs are allowablebut selling costs are allowable Allowable PR costs – trade shows, public communication, stockholder Allowable PR costs – trade shows, public communication, stockholder

communication, general news/media liaison, community event supportcommunication, general news/media liaison, community event support

• Interest – non-allowableInterest – non-allowable

• Bad debts – non-allowableBad debts – non-allowable

• Compensation for personal servicesCompensation for personal services CAS has guidance for all types of compensationCAS has guidance for all types of compensation

• Executive compensation is a ‘hot’ issue Executive compensation is a ‘hot’ issue Severance pay is also an issue coveredSeverance pay is also an issue covered Salary surveys are conducted within the commercial sector to determine Salary surveys are conducted within the commercial sector to determine

reasonableness reasonableness

FinancialFinancial

Some Selected CostsSome Selected Costs• Employee morale – health and welfare – allowableEmployee morale – health and welfare – allowable

ExamplesExamples• Employer/employee relationsEmployer/employee relations

• Crisis consultation Crisis consultation

• Health clinicsHealth clinics

• Employee publicationEmployee publication

• Dining roomsDining rooms

• Recreation facilitiesRecreation facilities

• Picnics/partiesPicnics/parties

• Awards\Awards\

• Entertainment costs – unallowableEntertainment costs – unallowable

FinancialFinancial

Some Selected CostsSome Selected Costs• Pre-contract costsPre-contract costs

Costs incurred before effective date of contractCosts incurred before effective date of contract Allowable to extent they would have been allowable after awardAllowable to extent they would have been allowable after award If necessary to meet delivery scheduleIf necessary to meet delivery schedule Good idea to get letter of agreement Good idea to get letter of agreement

• Costs of fines, penalties and mischarging – generally unallowableCosts of fines, penalties and mischarging – generally unallowable

• Losses on other contracts – generally unallowableLosses on other contracts – generally unallowable

• Training, education, trade, business, technical and professional activity Training, education, trade, business, technical and professional activity costs - generally allowablecosts - generally allowable

FinancialFinancial

Payment WithholdingPayment Withholding• Payments on CR contracts may be withheld for many reasons Payments on CR contracts may be withheld for many reasons

Failure to make progress on contractFailure to make progress on contract Labor standards violationLabor standards violation Contract violation Contract violation

• Payments withheld for unallowable costsPayments withheld for unallowable costs

• Withholding payment can either involve suspension or disallowanceWithholding payment can either involve suspension or disallowance

• Suspension = temporary withholding pending a final determinationSuspension = temporary withholding pending a final determination

• The ACO, PCO or in some cases, auditor can suspend payments or The ACO, PCO or in some cases, auditor can suspend payments or disallow costsdisallow costs

• If auditor, then ACO makes a final decision on disputed issues If auditor, then ACO makes a final decision on disputed issues

FinancialFinancial

Important Contract Administration Functions Important Contract Administration Functions • Establishes labor rates and material estimates to be used in proposalsEstablishes labor rates and material estimates to be used in proposals

• Establishes company overhead (OH) and general and administrative Establishes company overhead (OH) and general and administrative (G&A) rates(G&A) rates

• Develops cost reports for project managersDevelops cost reports for project managers

• Assures cash flowAssures cash flow

• Obtains money to run projectsObtains money to run projects

FinancialFinancial

Cash Flow AnalysesCash Flow Analyses• When are payments of bills due and how muchWhen are payments of bills due and how much

LaborLabor MaterialsMaterials RentRent UtilitiesUtilities Installment/loan paymentsInstallment/loan payments

• When is income scheduled to come inWhen is income scheduled to come in

• How will income be used to pay billsHow will income be used to pay bills

• Financing necessary?Financing necessary?

FinancialFinancial

Labor Rate CompositesLabor Rate Composites• Example – the contract may have 3 fixed price labor categoriesExample – the contract may have 3 fixed price labor categories

EngineerEngineer $75 p/h$75 p/h 5000 max. hours5000 max. hours

Technician Technician $45 $45 80008000

AnalystAnalyst $60$60 1000010000

How does the Finance Manager calculate – justify the calculationsHow does the Finance Manager calculate – justify the calculations

FinancialFinancial

Overhead Rate DevelopmentOverhead Rate Development• Direct cost of unitDirect cost of unit

• Sales of unitSales of unit

• Overhead pool expensesOverhead pool expenses ExampleExample

• Product direct cost per unitProduct direct cost per unit $1.00$1.00

• Estimated annual sales (units)Estimated annual sales (units) 100,000100,000

• Direct cost of productDirect cost of product $100,000$100,000

• Estimated annual overhead costEstimated annual overhead cost $100,000$100,000

• Overhead to be applied to each unitOverhead to be applied to each unit 100%100%

• Total cost of each unitTotal cost of each unit $2.00$2.00

• Add profit (assume 10%) Add profit (assume 10%) .20.20

• Unit selling priceUnit selling price $2.20$2.20

FinancialFinancial

How much money is needed?How much money is needed?• Fixed –Price ContractsFixed –Price Contracts

Payment upon acceptable delivery is normal rulePayment upon acceptable delivery is normal rule But progress payments are possibleBut progress payments are possible Delivery may be broken into segments with payment scheduleDelivery may be broken into segments with payment schedule May be able to get advance on contract (rare)May be able to get advance on contract (rare)

• Cost Reimbursement ContractsCost Reimbursement Contracts Periodic payments every 2 weeks or once a month possiblePeriodic payments every 2 weeks or once a month possible But payment delays may occur after approval of invoicesBut payment delays may occur after approval of invoices Advance available Advance available

FinancialFinancial

Truth in Negotiation Act (TINA) 1962Truth in Negotiation Act (TINA) 1962• Applies to negotiated contracts or modifications with a value of Applies to negotiated contracts or modifications with a value of

$550,000 or more.$550,000 or more.

• Exempted from TINA if there is adequate price competition, Exempted from TINA if there is adequate price competition, procurement of commercial items or service, or price set by law or procurement of commercial items or service, or price set by law or waiver from requirementswaiver from requirements

• Requires certification of cost or pricing data (by prime contractors and Requires certification of cost or pricing data (by prime contractors and sub-contractors)sub-contractors)

• Cost or pricing data is defined asCost or pricing data is defined as• All factsAll facts

• Existing at the date of the agreement of priceExisting at the date of the agreement of price

• That are significant to price negotiations That are significant to price negotiations

FinancialFinancial TINATINA

• Certification requires that data must be Certification requires that data must be AccurateAccurate CurrentCurrent CompleteComplete Use standard forms 1411 and 1448Use standard forms 1411 and 1448

• Data is information that is Data is information that is Factual, historical – not estimatesFactual, historical – not estimates

FASA amended TINA – FASA amended TINA – • raised the threshold from $500K to $550Kraised the threshold from $500K to $550K• Made exceptions to TINA mandatoryMade exceptions to TINA mandatory• Broadened exemption categoriesBroadened exemption categories

Created commercial item exceptionCreated commercial item exception

FinancialFinancial TINATINA

• Certification is as of the date of the agreement Certification is as of the date of the agreement All info to be submitted before award is madeAll info to be submitted before award is made

• Contract clause provides for defective price audit – FP or CR (both)Contract clause provides for defective price audit – FP or CR (both)• If defective pricing is found – remediesIf defective pricing is found – remedies

Repayment of excessRepayment of excess Interest on excessInterest on excess PenaltyPenalty Criminal prosecution if fraud (disbarment/suspension)Criminal prosecution if fraud (disbarment/suspension)

• SubcontractorSubcontractor Sub should certify to primeSub should certify to prime Prime certifies to governmentPrime certifies to government No privity of contract between sub and gov’tNo privity of contract between sub and gov’t Always in a prime contract with a sub – have provision that sub will make prime Always in a prime contract with a sub – have provision that sub will make prime

whole in the case of defective pricingwhole in the case of defective pricing

Fraud & EthicsFraud & Ethics

Civil FraudCivil Fraud• False Claims Act – allows recover of damages/penalties from anyone False Claims Act – allows recover of damages/penalties from anyone

who submits a false claim to a federal agencywho submits a false claim to a federal agency Knowingly presents or causes to be presented to the gov’t a Knowingly presents or causes to be presented to the gov’t a

false/fraudulent claim for payment or approvalfalse/fraudulent claim for payment or approval Uses a false record or statement to get claim paid/approvedUses a false record or statement to get claim paid/approved Conspires to defraud gov’t by getting a false claim paid/approvedConspires to defraud gov’t by getting a false claim paid/approved Knowingly uses a false record/statement to conceal; avoid or decrease an Knowingly uses a false record/statement to conceal; avoid or decrease an

obligation to pay or transmit money or property to gov’tobligation to pay or transmit money or property to gov’t


False Claims ActFalse Claims Act• Burden of Proof – on gov’t by a preponderance of the evidenceBurden of Proof – on gov’t by a preponderance of the evidence

Knowledge = actual knowledge or “deliberate ignorance”Knowledge = actual knowledge or “deliberate ignorance” Innocent mistakes/negligence (even gross negligence) not enough for a Innocent mistakes/negligence (even gross negligence) not enough for a

convictionconviction

““Qui Tam” whistleblower provision of law – fixed by 1986 Qui Tam” whistleblower provision of law – fixed by 1986 amendment to False Claims Actamendment to False Claims Act• Made it more attractive Made it more attractive

Especially in areas of Medicare/Medicaid – Especially in areas of Medicare/Medicaid – Syracuse exampleSyracuse example


““Qui Tam”Qui Tam”• Exceptions Exceptions

Suits between members of military and gov’tSuits between members of military and gov’t Suits based on info known to gov’tSuits based on info known to gov’t Suits based on allegations that are subject of a civil suit to which gov’t is Suits based on allegations that are subject of a civil suit to which gov’t is

a partya party


False Statements ActFalse Statements Act• Widely used in prosecuting criminal fraud casesWidely used in prosecuting criminal fraud cases

• Supreme Court – has repeatedly stated that statute should be Supreme Court – has repeatedly stated that statute should be “broadly and liberally” interpreted “broadly and liberally” interpreted

• Practical effect – gov’t may use this statute, even where a more Practical effect – gov’t may use this statute, even where a more narrowly defined and more specific statute could be applied.narrowly defined and more specific statute could be applied.

Conviction requires a showing ofConviction requires a showing of1)1) A statement was madeA statement was made

2)2) The statement made was falseThe statement made was false

3)3) The person making the statement knew it to be false when the statement was The person making the statement knew it to be false when the statement was mademade

4)4) Statement was material Statement was material

5)5) Statement concerned a matter w/in federal jurisdictionStatement concerned a matter w/in federal jurisdiction


Major Fraud Act of 1988Major Fraud Act of 1988• Covers Gov’t prime contracts over $1,000,000Covers Gov’t prime contracts over $1,000,000

Subcontractors are also subject to statute Subcontractors are also subject to statute Contains whistleblower protection and rewardsContains whistleblower protection and rewards


Government CorruptionGovernment Corruption Anti-Kick Back Act – 1986Anti-Kick Back Act – 1986

• Covers prohibited conduct – forbids any individual or business fromCovers prohibited conduct – forbids any individual or business from Providing/attempting to provide any kickbacksProviding/attempting to provide any kickbacks Soliciting or accepting (or attempting to accept) a kickbackSoliciting or accepting (or attempting to accept) a kickback Includes the amount of any kickback that may be in the price charged by a Includes the amount of any kickback that may be in the price charged by a

subcontractor to a prime contractor (or a higher tier subcontractor) in the subcontractor to a prime contractor (or a higher tier subcontractor) in the price charged by the prime to the Gov’tprice charged by the prime to the Gov’t

• Kick-back is defined as: Kick-back is defined as: money/fee/commission/credit/gift/gratuity/thing of value or money/fee/commission/credit/gift/gratuity/thing of value or compensation of any kind (directly or indirectly) for the purpose of compensation of any kind (directly or indirectly) for the purpose of improperly obtaining or rewarding favorable treatment in connection improperly obtaining or rewarding favorable treatment in connection w/ a government contractw/ a government contract

• Applies to all government contracts Applies to all government contracts


Procurement Integrity Act – 1996 (as amended)Procurement Integrity Act – 1996 (as amended) Conflicts of interestConflicts of interest Improper disclosures andImproper disclosures and Receipt of procurement information Receipt of procurement information

• Restricts acceptance of employment by former agency officials with Restricts acceptance of employment by former agency officials with gov’t contractors and employment contracts/consultants for gov’t contractors and employment contracts/consultants for procurements over $10 million for one yearprocurements over $10 million for one year

• Loophole – no restriction on working for another division or affiliate Loophole – no restriction on working for another division or affiliate of the contractorof the contractor

• ““designed to restore public confidence in gov’t procurement process”designed to restore public confidence in gov’t procurement process”


Procurement Integrity ActProcurement Integrity Act• Also prohibits current and former federal official from “knowingly Also prohibits current and former federal official from “knowingly

disclosing or knowingly obtaining” contractor bid or proposal disclosing or knowingly obtaining” contractor bid or proposal information before the award of a contract, to which info relates to, is information before the award of a contract, to which info relates to, is awardedawarded

• Example – cost/pricing data, indirect costs, labor costs, trade secrets, Example – cost/pricing data, indirect costs, labor costs, trade secrets, other proprietary informationother proprietary information


Lobbying RestrictionsLobbying Restrictions• Byrd Amendment – gov’t-wide restrictions on contractors use of Byrd Amendment – gov’t-wide restrictions on contractors use of

federally appropriated funds for legislative and executive branch federally appropriated funds for legislative and executive branch lobbying (looking to deal with improper influence peddling?!)lobbying (looking to deal with improper influence peddling?!)

• Lobbying Disclosure Act – 1995Lobbying Disclosure Act – 1995 Created more gov’t employees by creating a comprehensive scheme for Created more gov’t employees by creating a comprehensive scheme for

reporting and registering lobbyistsreporting and registering lobbyists


Suspension & DebarmentSuspension & Debarment• May preclude contractor from getting contracts for up to 3 yearsMay preclude contractor from getting contracts for up to 3 years

• FAR procedure - suspensionFAR procedure - suspension Notice to contractor – stating when suspension will take effect/causeNotice to contractor – stating when suspension will take effect/cause Contractor has 30 days to submit information in opposition but no right to Contractor has 30 days to submit information in opposition but no right to

a pre-suspension hearinga pre-suspension hearing May obtain a post-suspension fact-finding hearing based on the strength of May obtain a post-suspension fact-finding hearing based on the strength of

submission submission

• DebarmentDebarment Right to a detailed statement of reasons for proposed debarment Right to a detailed statement of reasons for proposed debarment 30 days to respond 30 days to respond

Fraud & EthicsFraud & Ethics Protests – contentsProtests – contents

• Must be signed by the protestor or legally authorized agent and Must be signed by the protestor or legally authorized agent and addressed to GAOaddressed to GAO

• Protestor’s – name/address/phone and fax numbersProtestor’s – name/address/phone and fax numbers• Name of contracting agency and solicitation #Name of contracting agency and solicitation #• A detailed statement of the legal factual grounds of protestA detailed statement of the legal factual grounds of protest• Copies of relevant documentsCopies of relevant documents• All info establishing that protestor is an interested party and protest is All info establishing that protestor is an interested party and protest is

timelytimely• Request for a ruling by GAORequest for a ruling by GAO• Statement of relief requestedStatement of relief requested

Example – protective order, hearing, specific documentsExample – protective order, hearing, specific documents

• GAO – decision issued w/in 100 daysGAO – decision issued w/in 100 days

Documents

Contract Types While there appears to be many types of contracts, all can be placed in one of two familiesWhile there appears to be many types of contracts,