FAR Part 3 Flashcards
FAR Part 3
Improper Business Practices and Personal Conflicts of Interest
3.101 Standards of conduct.
Government business shall be conducted in a manner
above reproach and,
except as authorized by statute or regulation, with complete impartiality and
with preferential treatment for none.
Transactions relating to the expenditure of public funds require
the highest degree of public trust and an impeccable standard of conduct.
The general rule is to avoid strictly any
conflict of interest or even the appearance of a conflict of interest in Government-contractor relationships.
While many Federal laws and regulations place restrictions on the actions of Government personnel, their official conduct must, in addition,
be such that they would have no reluctance to make a full public disclosure of their actions.
As a rule, no Government employee may solicit or accept, directly or indirectly,
any gratuity, gift, favor, entertainment, loan, or anything of monetary value from anyone who
(a) has or is seeking to obtain Government business with the employee’s agency
(b) conducts activities that are regulated by the employee’s agency, or
(c) has interests that may be substantially affected by the performance or nonperformance of the employee’s official duties. Certain limited exceptions are authorized in agency regulations.
Subpart3.2-Contractor Gratuities to Government Personnel
3.202 Contract clause.
The contracting officer shall insert the clause
at 52.203-3, Gratuities, in solicitations and contracts with a value exceeding the simplified acquisition threshold,
except those for personal services and those between military departments or
defense agencies and foreign governments that do not obligate any funds appropriated to the Department of Defense.
Subpart 3.3 - Reports of Suspected Antitrust Violations
3.301 General.
(a) Practices that eliminate competition or restrain trade
usually lead to excessive prices and may warrant criminal, civil, or administrative action against the participants.
Examples of anticompetitive practices are collusive bidding, follow-the-leader pricing, rotated low bids, collusive price estimating systems, and sharing of the business.
Contracting personnel are an important potential source of investigative leads for antitrust enforcement and should therefore be sensitive to indications of unlawful behavior by offerors and contractors. Agency personnel shall
report, in accordance with agency regulations, evidence of suspected antitrust violations in acquisitions for possible referral to-
(1) The Attorney General under 3.303; and
(2) The agency office responsible for contractor debarment and suspension under subpart 9.4.
Bona fide agency means
an established commercial or selling agency, maintained by a contractor for the purpose of securing business, that neither exerts nor proposes to exert improper influence to solicit or obtain Government contracts
nor holds itself out as being able to obtain any Government contract or contracts through improper influence.
Bona fide employee means
a person, employed by a contractor and subject to the contractor’s supervision and control as to time, place, and manner of performance,
who neither exerts nor proposes to exert improper influence to solicit or obtain Government contracts
nor holds out as being able to obtain any Government contract or contracts through improper influence.
Contingent fee
means any commission, percentage, brokerage, or other fee that is contingent upon the success that a person or concern has in securing a Government contract.
Improper influence means
any influence that induces or tends to induce a Government employee or officer to give consideration or to act regarding a Government contract on any basis other than the merits of the matter.
Contractors’arrangementsto
pay contingent fees for soliciting or obtaining Government contracts have long been considered contrary to public policy because such
arrangements may lead to attempted or actual exercise of improper influence.
In
10 U.S.C. 3321(b) and 41 U.S.C.3901, Congress affirmed this public policy but permitted certain exceptions
Buying-in
asusedinthissection,meanssubmittinganofferbelowanticipated costs, expecting to-
(1) Increase the contract amount after award (e.g., through unnecessary or excessively priced change orders); or
(2) Receive follow-on contracts at artificially high prices to recover losses incurred on the buy-in contract.
Buying-in may decrease competition or result in poor contract performance. The contracting officer must take
appropriate action to ensure buying-in losses are not recovered by the contractor through the pricing of-
(1) Change orders; or
(2) Follow-on contracts subject to cost analysis.
(b) The Government should minimize the opportunity for buying-in by seeking a price commitment covering as much of the entire program concerned as is practical by using-
(1) Multiyear contracting, with a requirement in the solicitation that a price be submitted only for the total multi-year quantity; or
(2) Priced options for additional quantities that, together with the firm contract quantity, equal the program requirements (see subpart 17.2).
(c) Other safeguards are available to the contracting officer to preclude recovery of buying-in losses
(e.g., amortization of nonrecurring costs (see 15.408, Table 15-1, paragraph A, column
(2) under “Formats for Submission of Line
Item Summaries”) and treatment of unreasonable price quotations (see 15.405).
The Anti-Kickback Act of 1986 (now codified at 41 U.S.C. chapter 87, Kickbacks,) was passed to deter subcontractors from making payments and contractors from accepting payments for the purpose of
improperly obtaining or rewarding favorable treatment in connection with a prime contract or
a subcontract relating to a prime contract.
The Kickbacks statute-
(a) Prohibits any person from-
(1) Providing, attempting to provide, or offering to provide any kickback;
(2) Soliciting, accepting, or attempting to accept any kickback; or
(3) Including, directly or indirectly, the amount of any kickback in the contract price charged by a subcontractor to a prime contractor or a higher tier subcontractor or in the contract price charged by a prime contractor to the United States.
(b) Imposes criminal penalties on any person who knowingly and willfully engages in the prohibited conduct addressed in paragraph (a) of this section.
(c) Provides for the recovery of civil penalties by the United States from any person who knowingly engages in such prohibited conduct and from any person whose employee, subcontractor,
or subcontractor employee provides, accepts, or charges a kickback.
Subpart 3.10 - Contractor Code of Business Ethics and Conduct * 3.1002Policy.
(a) Government contractors must conduct themselves with the highest degree of integrity and honesty.
(b) Contractors should have a written code of business ethics and conduct. To promote compliance with such code of business ethics and conduct, contractors should have an employee business ethics and compliance training program and an internal control system that-
* (1) Are suitable to the size of the company and extent of its involvement in Government contracting;
* (2) Facilitate timely discovery and disclosure of improper conduct in connection with Government contracts; and
* (3) Ensure corrective measures are promptly instituted and carried out.
Personal conflict of interest means a situation in which a covered employee has
financial interest, personal activity, or relationship that could impair the employee’s ability to act impartially and in the best interest of the Government when performing under the contract. (A de minimis interest that would not “impair the employee’s ability to act impartially and in the best interest of the Government” is not covered under this definition.)
Among the sources of personal conflicts of interest are-
(i) Financial interests of the covered employee, of close family members, or of other members of the
covered employee’s household;
(ii) Other employment or financial relationships (including seeking or negotiating for prospective employment or business); and
(iii) Gifts, including travel.
Federal Policy o n Standards of Conduct
Government business shall be conducted in a manner above
reproach and with complete impartiality and with preferential treatment for none. Transactions relating to the expenditure of
public funds require the highest degree of public trust and an impeccable standard of conduct.
The general rule is to avoid strictly any conflict of interest or even the appearance of a conflict of interest in government- contractor relationships.
No government employee may solicit or accept, directly or indirectly, any gratuity, gift, favor, entertainment, loan, or anything of monetary value from anyone who:
Has or is seeking to
obtain government business with the
employee’s agency
Conducts activities
that are regulated by the employee’s agency
Has interests that may be
substantially affected by performance or
nonperformance of the employee’s official duties
For solicitations expected to result in firm-fixed-price contracts or fixed-
price contracts with economic price adjustment, offerors must certify that:
The prices ni their offer have been arrived at independently, without, for the purpose of
restricting competition, any consultation, communication, or agreement with any other offeror or competitor relating to:
* Those prices
* The intention to submit an offer, or
* The methods or factors used to calculate the prices offered;
The prices ni the offer have not been and wil not be knowingly disclosed by the offeror,
directly or indirectly, to any other offeror or competitor before bid opening or contract award; and
No attempt has been made or will be made by the offeror to induce any other concern to submit or not to submit an offer for the purpose of restricting competition.
Government officials who have or had access to contractor bid
or proposal information or source selection information must
not
knowingly disclose contractor bid or proposal information or source selection information before the award of a federal
agencyprocurement contract to which the informationrelates.
Contractors may not offer or give a gratuity, such as
entertainment or a gift, to an officer, official, or employee of the government, with intent to obtain a contract or favorable treatment under a
contract
Contractors Offering o r Giving Gratuities to Federal Employees
If a violation occurs, the government may:
Terminate the contractor’s
right to
proceed;
Initiate debarment or suspension measures, and
Assess exemplary damages, fi the contract uses money appropriated to the Department of Defense.
Antitrust acts
Federal and state statutes to protect trade and commerce from unlawful restraints, price discriminations, price fixing, and monopolies
The existence of an “industry price list” or “price agreement” to which
contractors refer in formulating their offers
A sudden change from competitive bidding ot identical bidding
Simultaneous price increases or follow-the-leader pricing
Rotation of bids or proposals, so that each competitor takes a turn in
sequence as low bidder, or so that certain competitors bid low only on some sizes of contracts and high on other sizes
Division of the market, so that certain
competitors bid low only for contracts
let by certain agencies, or for contracts ni certain geographical areas, or on certain products, and bid high on al other jobs
Establishment by competitors of a collusive price estimating system
The filing of a joint bid by two or more
competitors when at least one of the competitors has sufficient technical
capability and productive capacity for contract performance
Any incidents suggesting direct
collusion among competitors, such as the appearance of identical calculation
or spelling errors in two or more competitive offers or the submission by one firm of offers for other firms
Assertions by the employees, former employees, or competitors of offerors, that an agreement to restrain trade exists.
Contingent fee
Any commission, percentage, brokerage, or other fee that is contingent upon the success that a person or concern has in securing a government contract
Contractors’ arrangements to pay contingent fees for soliciting or obtaining government contracts have long been considered contrary to public policy because such arrangements may lead to attempted or actual exercise of improper influence.
Negotiated contracts require a warranty by the contractor against contingent fees.
Permit, as an exception to the warranty, contingent fee arrangements between contractors and bona fide employees or bona fide agencies.
Provide that, for breach or violation of the warranty by the contractor, the Government may recover the full amount of the contingent fee.
Buying in
Submitting an offer below anticipated costs, expecting to increase the contract amount after award or receive follow-on contracts at artificially high prices to recover losses incurred
on the buy-in contract
Kickback
Any money, fee, commission, credit, gift, gratuity, thing of value, or compensation
of any kind which is provided, directly or indirectly, to any prime contractor, prime
contractor employee, subcontractor, or subcontractor employee for the purpose of improperly obtaining or rewarding favorable treatment in connection with a prime
contract or in connection with a subcontract relating to a prime contract
Contracts with Government Employees
In general, contracts shall
not be awarded to government employees or to organizations owned or
controlled by government employees.
Contracts may be voided or rescinded by the government if an ethical violation has occurred:
There has been a final conviction for bribery,
conflict of interest, disclosure, or selling of bid or proposal information; or
The agency head determines that bid or proposal information has been sold.
n general, federal contract recipients may not pay
any person with appropriated funds for exercising
influence over an officer of any agency, a member of Congress, an employee of Congress, or an employee of a member
of Congress.
Aformer official of a federal agency may not accept compensation from a contractor that
has been awarded a contract within a period of 1 year after such former official:
Served as the procuring contracting officer,
the source selection authority, a member of
a source selection evaluation board, or the chief of a financial or technical evaluation
team in a procurement in which that contractor was selected for award of a
contract in excess of $10,000,000
Aformer official of a federal agency may not accept compensation from a contractor that
has been awarded a contract within a period of 1 year after such former official:
Personally made for the federal agency a
decision to:
Award a contract, subcontract, modification of a contract or subcontract, or a task order or delivery order in excess of $10,000,000 to that contractor;
Establish overhead or other rates applicable to a contract or contracts for that contractor that are valued in excess of
$10,000,000;
Approve issuance of a contract payment or payments in
excess of $10,000,000 to that contractor; or
Pay or settle a claim in excess of $10,000,000 with that
contractor. in excess of $10,000,000 awarded to that contractor
Contractor Compensation o f FormerFederalOfficials
The 1-year prohibition begins on the date:
Of contract award, or the date of contractor selection if the official w a s not
serving in the position on the date of
award,
The official last served in one of the
positions described, or
The official made one of the decisions
previously described.
It is not prohibited to accept compensation from a division or affiliate that does not produce the same or similar products or services as the contractor that is responsible for the contract.
Whistleblower Protections for Contract Employees
Government contractors shall not discharge, demote or otherwise discriminate against an employee as a
reprisal for disclosing information to a Member of Congress, or an authorized official of an agency or of the Department of Justice, relating to a substantial violation of law related to a contract (including the
competition for or negotiation of a contract).
Contractor Codes of Business Ethics and Conduct
Government contractors must conduct themselves with the
highest degree of integrity and honesty. Contractors should have a written code of business ethics and conduct
