FAR Part 3 Summary

Improper Business Practices & Personal Conflicts of Interest

FAR 3.1 Safeguards

• Standards of Conduct – no conflict of interest or even the appearance of one in Gov’t-contractor relationships

• No government employee may solicit or accept, directly or indirectly, any gratuity, gift, favor, etc from anyone seeking business with the employee’s agency or who is regulated by the employee’s agency

FAR 3.1 Safeguards

• Insert 52.203-2, Certificate of Independent Pricing in all FFP or FP/EPA solicitations over the simplified acquisition threshold (SAT)

• Procurement Integrity Definitions (3.104-1)• “Participating personally & substantially in a

Federal agency procurement”• “Official” = an officer, employee, member of

uniformed services, special gov’t employee

Procurement Integrity Act Prohibitions (41 USC 423)

• Must not knowingly disclose or unlawfully obtain contractor bid or proposal or source selection information before the award

• Former federal official may not accept compensation from a contractor for 1 year after the official served as the PCO, SSA or chief of evaluation team –contracts > $10M

• Must reject an offer of possible non-Federal employment or disqualify themselves from further participation in the procurement

• Must report the contact in writing

Disclosure, Protection, Marking Contractor Information

• Mark contractor bid or proposal sensitive information as “Source Selection Information – See FAR 2.101 & 3.104”

• Source Selection information defined in FAR 2-101, 9 areas are listed

• Civil and criminal penalties for failure to comply with Procurement Integrity Act

FAR 3.2 Contractor Gratuities to Government Personnel

• Clause 52.203-3, Gratuities, in solicitations/ contracts over the SAT except personal svcs

• Prohibits contractor offering/giving gratuity to an officer, official or employee of the government

• Violation remedies: terminate contractor’s right to proceed, debarment or suspension, & assess damages if DOD appropriations used

FAR 3.3 Suspected Antitrust Violations

Contracting personnel shall report and refer possible anti-trust violations to the Attorney General & agency debarment office, e.g.,:

• Existence of industry price list or agreement• Sudden change from competitive bidding to

identical bidding• Simultaneous price increases or “follow-the-

leader” pricing

Possible Evidence of Antitrust Violations

• Rotation of bids or proposals • Division of the market: certain competitors bid

low for certain contracts and high on others or for certain products or geographic areas

• Establishment by competitors of a collusive price estimating system

• Filing of a joint bid by two or more competitors when at least one has sufficient ability to perform the contract

Possible Evidence of Antitrust Violations

• Any incident suggesting direct collusion among competitors, such as identical calculation or spelling errors in two or more offers

• Assertions by the employees, former employees or competitors of offerors, that an agreement to restrain trade exists

FAR 3.4 Contingent Fees

• Contingent fee means any commission, percentage, brokerage or other fee that is contingent upon the success a person or concern has in securing a gov’t contract

• Law requires in each negotiated contract a warranty by the contractor against contingent fees – FAR 52.203-5 “Covenant Against Contingent Fees” in all sol/contracts over SAT except for commercial items

• Violations: reject bid/proposal, annul contract, suspend/debar, report to DOJ IAW agency regs

FAR 3.5 Other Improper Business Practices

• Minimize opportunity for “buying-in” by seeking price commitments covering as much of the entire program as is practical

• Anti-Kickback Act of 1986 – deter subcontractors from making payments to contractors for the purpose of improperly obtaining or rewarding favorable treatment

• Clause 52.203-7, “Anti-Kickback Procedures” in sol/contracts over SAT except commercial items

FAR 3.6 Contracts with Government Employees or Their Organizations

• CO shall not knowingly award a contract to a government employee or a business or organization owned or controlled by government employee(s)

• Exception per FAR 3.602 if agency head or designee determines there is a most compelling reason and government’s needs cannot be otherwise met

FAR 3.7 Voiding & Rescinding Contracts

• Applies to contracts related to final conviction for bribery, conflict of interest, disclosure or receipt of contractor bid or proposal or source selection information OR agency head determination of violation

• Agency may declare void and rescind contract and recover amounts expended, and may consider debarment or suspension

FAR 3.7 Notice of Proposed Action

As a minimum, agencies shall provide:• A notice of proposed action to declare void and

rescind the contract, via certified mail• A 30 calendar day period after receipt of the notice

for the contractor to submit pertinent information before final decision is made

• Opportunity for a hearing• Official shall issue a written Notice of Proposed

Action & after consideration of all additional information, issue a Final Agency Decision

FAR 3.8 Limitation on Payments to Influence Federal Transactions

• “Covered Federal action” means awarding any Federal contract, grant or loan, entering into a cooperative agreement, or making modifications to these instruments

• 31 USC 1352 prohibits a recipient of a Federal contract, grant, loan or CA from using appropriated funds to pay anyone for influencing an officer or employee of any agency or Member of Congress

• Exceptions: Agency & legislative liaison by own employees, Professional & technical services

FAR 3.8 Continued

• CO shall obtain certifications as required by clause 52.203-11, “Certification & Disclosure Regarding Payments to Influence Certain Federal Transactions,” in solicitations over SAT

• CO shall include clause 52.203-12, “Limitation on Payments to Influence Certain Federal Transactions,” in solicitations/contracts over the SAT

FAR 3.9 Whistleblower Protections for Contractor Employees

• Government contractors shall not discharge, demote or discriminate against an employee for reprisal for disclosing information to an authorized official of an agency, DOJ or Member of Congress, relating to a violation of law related to a contract or competition

• Aggrieved employee may file an IG complaint• IG shall investigate & report to complainant,

contractor and the HCA (head of the contracting activity)

Whistleblower Protection (continued)

• If valid finding of reprisal is found, HCA may order the contractor to take action to abate the reprisal, order them to reinstate the person, and/or order them to pay the complainant a fair compensation amount

• If contractor fails to comply the HCA shall ask the DOJ for enforcement of such order

• Similar remedies apply to the Recovery Act

FAR 3.10 Contractor Code of Business Ethics and Conduct

• Contractors should have a written code of business ethics & conduct and must conduct themselves with the highest degree of honesty and integrity

• Clauses: 52.203-13, “Contractor Code of Business Ethics & Conduct,” contracts > $5M and performance 120 days or more

• 52.203-14, “Display of Hotline Poster(s)” for noncommercial contracts over $5M performed entirely outside the United States

FAR 3.11 Preventing COI for Contractor Employees Performing Acquisition

• Applies to contractor employees performing acquisition functions closely associated with inherently governmental functions

• Can include supporting or providing advice for acquisition planning, determining what the government will buy, developing contract documents, evaluating proposals, awarding, administering & terminating contracts, and contract cost determinations

Contractor Personal COI (cont.)

• A contractor’s “personal conflict of interest” is a financial interest, personal activity or relationship that could impair the employee’s ability to act impartially and in the best interest of the Government in performing under the contract

• Gov’t policy requires contractors to identify and prevent personal COI via use of 52.203-16, “Preventing Personal Conflicts of Interest,” in solicitations/contracts over the SAT that require these kinds of duties