Fly Right: Avoid Ethics Violations in Government Contracting

You’re starting a bold new career as either a contract pricer or an agency analyst. The world is your veritable oyster. Unlike many private sector positions, though, there are a series of rules you absolutely must follow while executing your work—from avoiding financial conflicts of interest to reporting even a whiff of fraud you detect during contract execution. 

One governing set of guidelines you should check out is the Procurement Integrity Act, which specifies the expected attitudes and behavior of all government employees and their contract counterparts. 

We’ve highlighted the main points of the Act here, along with a few more stipulations we uncovered in our research:

1. Stay away from financial conflicts of interest.

On the contractor and agency sides of proposal negotiation, it’s critical to ensure awards aren’t made and administered due to “undo influence.” (Or, in other words, money shenanigans of some sort.) Even the appearance of impropriety can get you into all kinds of trouble.

Putting it bluntly: It’s against the law to leverage your work on a government contract for your financial gain or that of your life partner, your business partner, your kids, or a potential future employer.

Some specific examples:

• You work on the agency side, but your life partner works for a contractor that authors a winning proposal for that agency. (Their salary could receive a bump, and that’s considered undue financial gain.) 
• You own stock in a contracting company under consideration for a contract award by your agency. 
• You work for an agency but moonlight for a contracting firm that wins a contract with the same agency. 
• You work for an agency yet receive a pension or other compensation from a contracting firm that is involved in an agency procurement. 1     

2. Steer clear of impartiality, or its appearance 

If you’re an agency analyst or Contracting Officer, you must always appear impartial during a proposal or a direct acquisition. Translation: You can never be accused of favoritism in any dealings. 

A few scenarios:

• You’re assigned to work on government procurement that involves one of the following on the selling end:  a former employer or client, your life partner’s employer or client, your close relatives, or others with whom you’re in business of any kind. 
• You become involved in a procurement situation with someone you’re already involved with romantically. 
• You’re in an agency bid evaluation position, and one of the people submitting is your best friend. 

When in doubt, delay or stop your work immediately—after informing your boss and an HR ethics professional.       

3. Just say no to gifts 

A few years ago, the FBI indicted a former army contracting official on bribery and kickback charges. He accepted cash, vacations, a car, and partial ownership in contracting firms that he made the winners. He pleaded guilty. Each faced up to 15 years in prison and hefty fines.

This case is just one in a series of ongoing investigations that allege domestic bribery and bid-rigging during federal contracts. As a result, the government looks at gift-giving very closely. So to keep your side of the street completely clean, follow these rules: 

• What constitutes a gift? Remember that a gift is anything of monetary value that you shouldn’t offer or accept during a procurement. Gifts can include gratuities, favors, discounts, entertainment, hospitality, and loans.

• Gifts from contractors to agency counterparts.  You can’t use your agency position to request or accept valuable gifts from contractors. That said, there are a few things you can receive: light refreshments that don’t include alcohol and that aren’t part of a meal, a small gift worth under $20 at any one time (not to exceed $50 per year from one source), and free attendance at meetings or conferences where you as an agency person are presenting.
  
• Gifts from agency people to contractors. While government ethics rules do not cover gifts to contractors, you must always come from a position of impartiality. A gift can never even seem to signal proposal favoritism for a given contract. 2   
  

4. Take precautions when job hunting while you’re an agency employee

It’s not unusual for a government agency employee to consider working for a contractor they’re currently working with on a proposal or negotiation. If you’re in this situation, there are things you can’t do during your government work—and are, in effect, far ahead of the point when you and a contractor discuss employment specifics.  

These include: 

• Working on government assignments that could affect the financial status of your potential future employer. You can’t talk about employment with a contractor during any phase of a proposal process they’re negotiating with you, should they win the contract and become more financially solvent. This rule applies if you want to initiate an inquiry about a job or receive an invitation from a contractor to work for them. (You can’t do the former and must reject the latter.)
• Entering into a government matter with a contractor after you’ve accepted employment with them. Once you’ve decided to transition from government to industry, there’s no going back. Meaning you can’t serve as an agency-side negotiator on a government proposal with that contractor during the interim before you start. Talk to your agency boss if you need to recuse yourself from an ongoing assignment. 
• Receiving a request or asking for employment from a current offeror. Under the Procurement Integrity Act, if you’re performing specification, solicitation, evaluation, or negotiation on a contractor’s proposal for a contract worth more than $100K, you have to report the request to both your boss and your agency ethics person. Then, turn down the job offer, rescind your request, or stop work on your current procurement.       
  

5. Work for a contractor after the government only under certain conditions

If you played specific roles while in a federal procurement position for an agency, several restrictions apply once you leave to join a contractor you worked with that detailed proposals for more than $10M:

• You may be unable to make a salary for up to one year. If you made procurement-related decisions for a contractor while with an agency, you can’t receive compensation for your first year of employment with that contractor. Part of the Procurement Integrity Act, this rule prohibits you from being paid as an employee or consultant of the contractor for 12 months. 
• You’re permanently banned from representing the contractor on the same contract you worked on as a federal employee. Some may construe this as a way to influence the government improperly, and it even applies to such small actions as signing a letter, making a call, attending a meeting, and of course, making a presentation. If the contract was under your supervision at the agency and you didn’t directly work on it, you’ll likely be unable to represent the contractor for two years. 

Exception: If you take a position with a different division of the contracting firm that creates a product or service dissimilar from the one you purchased as a federal employee, these restrictions don’t apply. 1 

6. Don’t share pre-award proposal or bid information on a contract. 

Also, under the Procurement Integrity Act: Once you begin an industry job search while still an agency employee, you can’t share the source, proposal, or contractor information on any bid at the pre-award stage. But, once a contract is awarded, all this information becomes public domain.

Source selection information includes:

• Bid prices
• Proposed costs 
• Technical evaluation plans
• Competitive ranges.

Proposal information includes:

• Indirect costs 
• Direct labor rates 
• Proprietary manufacturing techniques. 3
  
  7. Contractors, establish a Code of Business Ethics and Conduct

Government contractor ethics are just as critical as agency rules in keeping procurements legal, fair, and unbiased. Therefore, it’s in your best interest to establish a Code of Business Ethics and Conduct, socialize it with everyone in your company for input, then publish the final verbiage on your website and intranet. 

If you’re in contention for government contracts worth $5M, such a code is required for your proposal submission and ratification process. 

If you receive an award on a contract of more than $5M, you must also provide proof of ethics and compliance training for your employees (certain small businesses are exempt from this requirement; however, it’s always good to supply this training from the launch of your business).4     

8. Disclose suspicions of fraud as soon as you’re aware of them. 

Afghanistan war fraud. Iran reconstruction fraud. In the early aughts, fraud seemed everywhere in the contracting space. Now, the FAR states that contractors and their agency counterparts must disclose credible evidence of law violations and overpayments in connection with the performance of a federal contract award as soon as they detect any suspicious activity. It’s a federal crime not to.

Make no mistake: Contractors have made great strides in self-policing over the past decade. Internal codes of conduct and control systems are, in large part, responsible for the compliance up-level. 5

9. Stay compliant by using secure proposal pricing software. 

Another excellent way to ensure compliance of your data and narrative text during the proposal stage is to adopt ProPricer on both the contractor and agency sides of a negotiation.

Contracting firms: ProPricer Contractor Edition can help you avoid low-balling contract price to win your first contract, as the relevant agency will expect you to exceed their pricing compliance and performance expectations from that point on. In addition, with one click, Contractor Edition can help you flag questionable rate and cost adjustments throughout a negotiation. Your final price is your benchmark for all future work, so approach it wisely. 

Agencies: ProPricer Government Edition helps all parties who deal with pricing compliance use the same data; it includes an indexing mechanism for all data attributes involved in a federal contract, which is vital for price determination and proposal comparison analysis. In addition, the ability to automate the import of a contractor’s pre-determined data model into your system can save you a ton of stress and session work.

Request a 1-on-1 demo and free ProPricer trial here. 

Fly straight. Fly right. Your pricing future depends on it.      

Sources 

1. Brochure: Ethics and Procurement Integrity - What You Need to Know as a Federal Employee Involved in the Procurement and Acquisition Process
2. eBook: Ethics and Federal Government Contractors 
3. Department of Justice Website: Procurement Integrity 
4. Cohen Seglias Article: Government Contracting Database - Ethics in Federal Contracting
5. FAR Mandatory Disclosure Rules: You Do Not Have the Right to Remain Silent
6. Federal Department of Justice Press Release: Former Army Contracting Official Indicted on Federal Charges