1. UNCLASSIFIED Agile – Proficient – Trusted UNCLASSIFIED13 March 2013 Procurement Integrity Carol Wolf Army Contracting Command carol.g.wolf.civ@mail.mil 256-955-5648 North Alabama Chapter, Federal Bar Association Forty-First Annual Symposium on Government Acquisition November 13-14, 2013

2. 2 UNCLASSIFIED Caveats This presentation merely identifies statutes and regulations that restrict or otherwise affect the activities of Federal government personnel, contractors, and others. Because restrictions are dependent on specific facts, and because this information is a summary of the rules, government and contractor employees should contact the legal advisor for their agency or company. Individuals may also consult with their personal attorney. Government employees are subject to laws and regulations in addition to those that apply to everyone; knowledge of those additional rules can help non-government employers and employees understand the limitations that government employees work under. Slide 1 of 472

3. 3 UNCLASSIFIED Procurement Integrity Act – 4 USC 423 Prohibits: Disclosing bid proposal or source selection information (for competitive procurements) Obtaining bid proposal or source selection information (for competitive procurements) Discussing non-Federal employment with certain bidders or offerors Accepting compensation from certain contractors after leaving Federal employment Slide 2 of 472

4. 4 UNCLASSIFIED  Background  Protecting information  Conflicts  Gifts  Employment  Miscellaneous  Resources Overview Slide 3 of 472

5. 5 UNCLASSIFIED Background 1863 - False Claims Act, 31 USC § 3729 – 3733 – response to procurement fraud by both government and contractor employees during the Civil War 1978- Ethics in Government Act, 5 U.S.C. Appx. 4 § 101 – response to Watergate Slide 4 of 472

6. 6 UNCLASSIFIED Background 1989 - Procurement Integrity Act, 41 U.S.C. § 423 - response to discovery of extensive involvement in procurement fraud by both government and contractor employees – PIA had the stated purpose to restore the public’s confidence in public procurement – Operation Illwind resulted in more than 90 convictions and over $622 million worth of fines, recoveries, restitutions, and forfeitures. – 2011 - 41 U.S.C. § 423 repealed and replaced by 41 U.S.C.A. §§ 2101 – 2107 and 41 U.S.C. § 2104 Slide 5 of 472

7. 7 UNCLASSIFIED Protecting Information Slide 6 of 472

8. 8 UNCLASSIFIED Protecting Information Prohibition on Disclosing Procurement Information 41 U.S.C. § 2102. (a) Prohibition on Obtaining Procurement Information 41 U.S.C. § 2102. (b) Slide 7 of 478

9. 9 UNCLASSIFIED Slide 8 of 478 Simplified Rule: Disclosure of certain information is prohibited prior to contract award*. What: Contractor bid or proposal information, or source selection information Who: Ban applies to –Current and former federal employees, –Contractor employees and consultants  Currently advising government on the procurement  Previously advised government on the procurement –*Private-sector organization employee under 5 USC 37 Information Technology Exchange Program, through 3 years after assignment ends Protecting Information - No giving - 41 U.S.C. § 2102. (a )

10. 10 UNCLASSIFIED The Rule: “Except as provided by law, a person shall not knowingly obtain contractor bid or proposal information or source selection information before the award of a Federal agency procurement contract to which the information relates. “ What: Contractor bid or proposal information, or source selection information Who: Ban applies to – “a person who knowingly obtains” Protecting Information - No getting - 41 U.S.C. § 2102. (b) Slide 9 of 478

11. 11 UNCLASSIFIED Protecting Information - Contractor Bid/Proposal Information Submitted to a Federal agency as part of, or in connection with, a bid or proposal to enter into a Federal agency procurement contract, if that information previously has not been made available to the public or disclosed publicly: (A) Cost or pricing data (B) Indirect costs and direct labor rates. (C) Proprietary information about manufacturing processes, operations, or techniques marked by the contractor in accordance with applicable law or regulation. (D) Information marked by the contractor as “contractor bid or proposal information”, in accordance with applicable law or regulation.

12. 12 UNCLASSIFIED Protecting Information - Source Selection Information 1.Bid prices 2.Proposed costs or prices 3.Source selection plans 4.Technical evaluation plans 5.Technical evaluations of proposals 6.Cost or price evaluations of proposals 7.Competitive range determinations 8.Rankings of bids, proposals, or competitors 9.Reports and evaluations of source selection participants 10.Other information marked as “source selection information” FAR 2.1 Definitions

13. 13 UNCLASSIFIED Protecting Information - Actions Required  Employee training –What needs to be protected –Types of information –Ways presented Paper documents Electronic documents E-mails Conversations –How to protect it  Standard operating procedures  Report possible violations to the responsible federal agency ASAP - 41 U.S.C. § 2106

14. 14 UNCLASSIFIED Protecting Information – Consequences  Administrative Actions –Cancel or rescind an awarded a contract –Initiate a suspension or debarment –Take adverse personnel action –No protest based on allegation unless reported in 14 days  Criminal –5 years, $50,000, or both  Civil –Individual  $50,000 for each violation  2x amount of compensation offered or received –Organizational (i.e.; corporations, partnerships)  $500,000 for each violation  2x amount of compensation received

15. 15 UNCLASSIFIED Protecting Information – Statutory disclose/receipt exceptions  Persons authorized, IAW agency regulations or procedures, to receive that information;  Contractor may give its own bid or proposal information  A canceled procurement that will not be resumed  Individual meetings between Federal agency officials and an offeror or potential offeror  Congress, the Comptroller General, a Federal agency, or its inspector general  GAO during a protest  Limit other laws that may apply

16. 16 UNCLASSIFIED Protecting Information – Wait, there’s more…  18 USC 1831. Economic espionage  18 USC 1832. Theft of trade secrets  18 USC 1905 Disclosure of confidential information generally (Federal employees only)  18 USC 798 Disclosure of Classified Info.  Uniform Trade Secrets Act (40+ States)  3.104-4 Disclosure, protection, and marking of contractor bid or proposal information and source selection information

17. 17 UNCLASSIFIED Conflicts of Interest

18. 18 UNCLASSIFIED Conflicts of Interest Simplified Rule: Avoid actual or apparent conflicts of interest. What:  Financial Interests  Impartiality (Personal Conflicts of Interest)  Gifts (covered separately)  Employment (covered separately) Who:  Government Employees  Contractor Employees

19. 19 UNCLASSIFIED Conflicts of Interest A personal interest or relationship, as defined by law or regulation, that conflicts with the faithful performance of official duty.

20. 20 UNCLASSIFIED Conflicts of Interest - Financial An employee is prohibited from participating personally and substantially in an official capacity in any particular matter in which, to his knowledge, he or any person whose interests are imputed to him under the statute has a financial interest, if the particular matter will have a direct and predictable effect on that interest. 18 U.S.C. § 208 5 CFR §2635.401 - 403

21. 21 UNCLASSIFIED Conflicts of Interest - Impartiality  Relationship focused  Appearances matter  Financial benefit not always obvious

22. 22 UNCLASSIFIED Conflicts of Interest - Impartiality  "Covered Relationship" (5 CFR 2635.502) –Persons or organizations in which you have or seek a business, contractual, or other financial relationship; –Members of household or relatives (close); –Persons or organizations your spouse, parents or child serves or seeks employment or financial relationship; –Organizations in which you served as officer, director, agent, consultant, or employee within last year; or –Organizations in which you are an active participant.  Romantic involvements and other friends  Philosophical convictions on social, political, environmental, or other areas of concern.

23. 23 UNCLASSIFIED Conflicts of Interest Wait, there’s more…  18 U.S.C. § 205 Activities of officers and employees in claims against and other matters affecting the Government.  18 U.S.C. § 209. Salary of Government officials and employees payable only by United States  Pub. L. 112-105 § 9(a) (STOCK Act). Other Federal officials  FAR 3.11 -- Preventing Personal Conflicts of Interest for Contractor Employees Performing Acquisition Functions.  5 U.S.C. § 3110 Employment of relatives; restrictions.  41 U.S.C. § 8701 Kickbacks

24. 24 UNCLASSIFIED Conflicts of Interest Wait, there’s more… 18 U.S.C. § 201. Bribery of public officials and witnesses (government and contractor employees) Navy official

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26. 26 UNCLASSIFIED Conflicts of Interest - Impartiality Appearances matter –If employee thinks that a reasonable person, with knowledge of the relevant facts, might see a conflict, –See supervisor or agency ethics official, and –Either:  No appearance problem  Employee recused from activity  Agency waiver in the interest of the government –2-year disqualification on some private to public employee participation in certain matters 5 CFR 2635.501

27. 27 UNCLASSIFIED Conflicts of Interest - Impartiality Imputed financial interests that will disqualify an employee to the same extent as if they were the employee’s own interests: (i) The employee’s spouse; (ii) The employee’s minor child; (iii) The employee’s general partner; (iv) An organization or entity which the employee serves as officer, director, trustee, general partner or employee; and (v) A person with whom the employee is negotiating for or has an arrangement concerning prospective employment. 5 CFR 2635.402

28. 28 UNCLASSIFIED Conflicts of Interest – Actions Required Employee training – Government & Contractors File financial disclosure reports, keep updated Inform employer (government & contractors) of actual, potential, or apparent conflicts –Disqualification (recusal) –Individual waiver, 18 USC 208(b), FAR 3.1104 –Reassignment/ Change of duties –Divestiture of the financial interest –Regulatory exemptions Contracting officers must use certain clauses (FAR 52.203-13 Contractor Code of Business Ethics and Conduct)

29. 29 UNCLASSIFIED Conflicts of Interest – Consequences  Administrative Actions –Reassignment/ Change of duties –Initiate a suspension or debarment –Take adverse personnel action  Criminal –5 years, $50,000, or both  Civil –“any person” – the greater of $50,000 for each violation amount of compensation offered or received

30. 30 UNCLASSIFIED

31. 31 UNCLASSIFIED Gifts

32. 32 UNCLASSIFIED Gifts A gift is something of value given without the expectation of payment. The social value of giving has been recognized throughout human history. Reciprocity means that, in response to friendly actions, people are frequently much nicer and much more cooperative. Societies support reciprocity, e.g. Quid pro quo, Back Scratching, Potlatch, Miss Manners. A business culture generally has an expectation of reciprocity for any transfer of value. No transfer is really perceived as a “gift.”

33. 33 UNCLASSIFIED Gifts Simplified Rule: Government Employees may not directly or indirectly accept gifts 1) from prohibited sources, or 2) given because of their official position, unless an exception applies. What: Anything of monetary value -unless defined as “not a gift” or -is an “exception”/allowable gift Who: Government Employees, their friends, relations, and charities (Contractor Employees may have own rules.) 5 C.F.R. § 2635.202

34. 34 UNCLASSIFIED Gifts Anything that has monetary value:  Meals, whether provided in-kind, by purchase of a ticket, payment in advance, or post-expense reimbursement  Transportation  Training  Services  Favor  Gratuity  Entertainment  Discounts not offered to the general public  Loans or forbearance not offered to the general public  Lodgings 5 CFR 2635.203

35. 35 UNCLASSIFIED Gifts NOT a gift:  Modest food or refreshments (coffee and donuts, not a meal)  Greeting cards, plaques, and things of little intrinsic value (caution - Perception can be Reality)  Available to the public or a class of people  Prizes from public events  Pensions from a former employer  Paid for by the Government  Loans or discounts available to the general public  Employee recipient pays market value 5 CFR 2635.203(b)

36. 36 UNCLASSIFIED Gifts Exceptions (acceptance permitted)  < $20 AND <$50 aggregate/year from the same source  Based on a personal relationship  Discounts unrelated to their position  Awards & honorary degrees  Based on outside business or employment relationships  Associated with permitted political activities  Widely-attended gathering attendance  Non-prohibited source social events  Reasonable meals and entertainment on business foreign travel  Gifts authorized by supplemental agency regulations  Gifts accepted by specific statutory authority 5 CFR 2635.204

37. 37 UNCLASSIFIED Gifts - Prohibited Sources Prohibited source means:  Any person or entity seeking official action;  Any person or entity who does business or wants to do business with the Agency;  Any person or entity who conducts activities regulated by the Agency;  Any person or entity who has interests which may be affected by your official duties; or  An organization a majority of whose members are described above. 5 CFR 2635.203(d)

38. 38 UNCLASSIFIED Gifts - Prohibited Sources Examples:  Contractors –Contractors may not contribute to group gifts (e.g. retirements, PCS) with Government employees  Charitable Organizations  Spousal Clubs  Private Organizations  Foreign Government Personnel - many also have business interests with the US Forces

39. 39 UNCLASSIFIED Gifts Rule: Government employee may attend a WAG in personal capacity, even when the invitation is from a prohibited source or given because of official position, but only if:  The invitation was unsolicited, and  Supervisor determines that DoD has a specific interest in employee’s attendance (because it furthers your office mission).  Use of government transportation is prohibited. Widely Attended Gathering (WAG) - A gathering expected to have a large number of persons in attendance representing diverse views or interests (i.e., conferences, municipal government functions, charitable events) 5 CFR 2635.204(g )

40. 40 UNCLASSIFIED Gifts - Actions Required  Employee training  Pay attention to appearances –Positions of the giver and receiver –Frequency  Consult with Agency Ethics official  Decline the gift (except, perhaps, from a foreign dignitary)  Return improper gift immediately  Pay for improper gift

41. 41 UNCLASSIFIED Gifts - Consequences (See, Conflicts of Interest consequences)

42. 42 UNCLASSIFIED Employment

43. 43 UNCLASSIFIED Seeking Employment  Begins when employee: –make unsolicited employment contact includes sending resume –respond to unsolicited proposal (except unconditional rejection) –engage in negotiations –excludes requesting job application  Terminates when: –either party rejects proposal and discussions have terminated, or –two months have passed after mailing resume and no response 5 C.F.R.2635.603(b)

44. 44 UNCLASSIFIED Seeking Employment Rule: Unless the requirement is waived, an employee must disqualify himself from participating personally and substantially in a particular matter that, to his knowledge, will have a direct and predictable effect on the financial interests of a prospective employer with whom the employee is seeking employment. 5 C.F.R. § 2635.604(a) Underlined terms defined at 5 C.F.R. § 2635.402(b)

45. 45 UNCLASSIFIED Seeking Employment Rule: Employees who file financial a disclosure form must – notify their ethics officer within 3 business days of starting negotiations for employment, and –file a notification regarding recusal if there is a real or apparent conflict of interest Pub. L. 112-105 § 17 (STOCK Act)

46. 46 UNCLASSIFIED Seeking Employment – Procurement Personnel Rule: Employees with active and significant work on –specification or statement of work; –solicitation; –bid or proposal evaluation, or source selection; –negotiation of price or terms and conditions of the contract; or –contract award review or approval, of a contract in excess of the simplified acquisition threshold must 1) report contacts with a bidder or offeror in the procurement, and 2) reject employment or disqualify self. 41 USC § 2103, FAR 3.104-3 $150,000

47. 47 UNCLASSIFIED Seeking Employment – Actions Required  Employee training  Document actions taken (recommended)  Notify ethics officer of job negotiations within 3 business days  Notify ethics officer regarding recusal  Notify supervisor of need to disqualify  Be disqualified from working on particular matter  Obtain waiver from disqualification  *Report employment contacts to supervisor –* Also to agency ethics official  * Either –Reject the possibility of non-Federal employment, or –Disqualify self until negotiations terminated or decide not to work there *for procurement officials

48. 48 UNCLASSIFIED Seeking Employment - Consequences  Administrative Action –Reassignment / change of duties –Cancel or rescind an awarded a contract –Initiate a suspension or debarment –Take adverse personnel action –No protest based on allegation unless reported in 14 days  Civil –Individual $5,000 for each violation PLUS 2x amount of compensation offered or received –Organizational (i.e.; corporations, partnerships) $500,000 for each violation PLUS 2x amount of compensation received

49. 49 UNCLASSIFIED Seeking-Employment - Consequences  Criminal –1 year, $50,000, or both –5 years, $50,000, or both, for willful conduct

50. 50 UNCLASSIFIED Post-employment Restrictions  Ban on compensation from contractor 41 USC § 2104, *FAR 3.104-3  Ban on representational activities 18 USC 207, 5 CFR 2641

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52. 52 UNCLASSIFIED Post-employment Restrictions Rule: Ban on compensation from contractor – A former federal employee may not accept compensation from a contractor within 1 year, as to a contract greater than $10 million, if they held a certain position or took certain actions.  Compensation from a dissimilar division or affiliate is okay. 41 USC § 2104, *FAR 3.104-3

53. 53 UNCLASSIFIED Post-employment Restrictions “1-Year Ban” roles and functions:  when contract was awarded, the employee served as a –Procuring contracting officer –Source selection authority –Source selection evaluation board member –Chief of a financial or technical valuation team  was a program manager, deputy program manager, or administrative contracting officer for that contract,  personally made the agency decision to – award the contract > $10 million – establish overhead/other rates on contract > $10 million – approve payments > $10 million to that contractor – pay or settle claim >$10 million with that contractor

54. 54 UNCLASSIFIED Post-employment Restrictions Rule: Representational Activities – No former employee’s may make representations to the United States:  Permanently, for particular matter in which the employee participated personally and substantially.  2 years, for particular matter for which the employee had official responsibility  1 year, for aid, or advice to another concerning ongoing trade or treaty negotiation  1 year cooling off, for senior / 2 year for very senior employee to their former agency concerning any matter  1 year, for senior/very senior on behalf of foreign entity 18 USC 207, 5 CFR 2641

55. 55 UNCLASSIFIED Post-Employment – Action Required  Employee training

56. 56 UNCLASSIFIED Post-Employment - Compensation Ban Consequences  Administrative Actions –Cancel or rescind an awarded a contract –Initiate a suspension or debarment (goes to ‘responsibility’) –No protest based on allegation unless reported in 14 days  Civil –Individual $50,000 for each violation 2x amount of compensation offered or received –Organizational (i.e.; corporations, partnerships) $500,000 for each violation 2x amount of compensation received

57. 57 UNCLASSIFIED Post-Employment – Representational Activities Consequences  Administrative Actions –Cancel or rescind an awarded a contract –Initiate a suspension or debarment (goes to ‘responsibility’) –No protest based on allegation unless reported in 14 days  Criminal –1 years  Civil –‘Any person’ for each violation the greater of $50,000 or amount of compensation offered or received –Injunction

58. 58 UNCLASSIFIED Miscellaneous Issues

59. 59 UNCLASSIFIED Miscellaneous Issues  Fundraising –No ‘gifts’ from prohibited sources at work or on own time  Letters of Recommendation –OK if based on personal knowledge  Endorsements, explicit or implied, are prohibited  Awards to contractors are not authorized

60. 60 UNCLASSIFIED References  18 U.S.C. §§ 201 - 209  18 USC §1831  18 USC § 1832  18 USC § 1905  18 USC § 798  5 CFR §2635  5 U.S.C. § 3110  41 U.S.C.A. §§ 2101 – 2107  41 CFR 3 / FAR PART 3  Pub. L. 112-105 § 9(a) (STOCK Act)  Uniform Trade Secrets Act (40+ States)

61. 61 UNCLASSIFIED Resources  U.S. Office of Government Ethics http://www.oge.gov/ http://www.oge.gov/ –Compilation of Federal Ethics Laws http://www.oge.gov/Laws-and-Regulations/Statutes/Statutes/ http://www.oge.gov/Laws-and-Regulations/Statutes/Statutes/ –Employee Standards of Conduct http://www.oge.gov/Laws- and-Regulations/Employee-Standards-of-Conduct/Employee- Standards-of-Conduct/http://www.oge.gov/Laws- and-Regulations/Employee-Standards-of-Conduct/Employee- Standards-of-Conduct/ –job aids, brochures, pamphlets, and web based training.  U.S. Department of Defense Standards of Conduct Office (SOCO) http://www.dod.mil/dodgc/defense_ethics/ http://www.dod.mil/dodgc/defense_ethics/ –‘Ethics Resource Library’ – presentations, handouts, checklists, forms, links to other ethics websites

63. 63 UNCLASSIFIED Any Questions? 63

64. 64 UNCLASSIFIED Definitions +

65. 65 UNCLASSIFIED Principles of Conduct 1.Public service is a public trust; Loyalty to laws over private gain 2.No Financial conflicts of interest with the government 3.No use of nonpublic government information for private gain 4.No soliciting or accepting gifts 5.Put forth an honest effort at work 6.No making unauthorized commitments 7.No use of public office for private gain 8.Avoid giving preferential treatment to person or organization 9.Protect and conserve federal property 10.No outside employment or activity that conflicts with gov’t duties 11.Disclose fraud, waste, abuse, and corruption 12.Good-faith effort and fulfilling obligations as a citizen 13.No discrimination IAW Equal Opportunity laws 14.Avoid appearance of legal or ethical obligations 5 CFR 2635.101

66. 66 UNCLASSIFIED “Participate Personally and Substantially”  Participate: decision, approval, recommendation, investigation or rendering advice  Personally: directly, and includes the participation of subordinate when actually directed by Government employee  Substantially: of significance to the matter: You or an actively supervised subordinate have active & significant involvement in: –drafting, reviewing, or approving the specification or statement of work; –preparing or developing the solicitation; –evaluating bids or proposals; –selecting a source; –negotiating price or terms and conditions; or –reviewing and approving the award. 5 CFR 2365.402(b)(4)

67. 67 UNCLASSIFIED “Personal & Substantial” – NOT Disqualifying Activities Participation in:  Agency-level organizations that review program milestones, evaluate and recommend alternate approaches for broad agency-level issues;  General, technical, engineering, or scientific effort with broad application;  Reviews conducted solely to determine compliance with regulatory, administrative, or budgetary procedures;  A-76 activities concerned with transferring a government performed commercial activity to a contractor; and  Clerical functions.

68. 68 UNCLASSIFIED “Particular Matter”  Something that involves deliberation, recommendation, decision, or action, and  that is focused on the interests of specific persons, or a discrete and identifiable class of persons.  Includes: –judicial or other proceeding, –request for a ruling or other determination, –contract, claim, or controversy, –charge, accusation or arrest –narrowly focused legislation or policy-making –> $150,000 (simplified acquisition threshold)  It does not extend to broad policy options or considerations directed toward the interest of a large and diverse group of personnel. 5 CFR 2365.402(b)(3)

69. 69 UNCLASSIFIED “Direct and Predictable Effect” Direct: a close causal link between any decision or action in the matter and any expected effect of the matter on the financial interest  Affect need not be immediate  Results are real, not speculative  Magnitude of effect is immaterial NOT “direct and predictable” if  Chain of causation attenuated  Contingent on independent and unrelated matters Predictable: a real, as opposed to speculative possibility that the matter will affect the financial interest (magnitude of gain/loss is immaterial) 2635.402(b)(1)

70. 70 UNCLASSIFIED “Simplified acquisition threshold”  $150,000 (Increased from $100,000 as of 1 OCT 2010; next 5-year adjustment in 2015)  Except for acquisitions of supplies or services that, as determined by the head of the agency, are to be used to support a contingency operation or to facilitate defense against or recovery from nuclear, biological, chemical, or radiological attack the term means— –$300,000 for any contract to be awarded and performed, or purchase to be made, inside the United States; and –$1 million for any contract to be awarded and performed, or purchase to be made, outside the United States.