Integrity

Question 1

Integrity

Answer 1

Integrity: FAR Parts 3, 24, 31

FAR Part 3 - Improper Business Practices and Personal Conflicts of Interest

FAR Part 24 - Protection of Privacy and Freedom of Information

FAR Part 31 - Contract Cost Principles and Procedures

Question 2

A contractor’s arrangement to pay contingent fees for soliciting or obtaining Government contracts is considered contrary to public policy.

The costs of contingent fees cannot be passed back to the Government

Such an arrangement violates the Truthful Cost or Pricing Data statute

Such arrangements may lead to attempted or actual exercise of improper influence

It indicates a contractor is attempting to use bribery to obtain the contract
FAR 3.402

Answer 2

Such arrangements may lead to attempted or actual exercise of improper influence

Question 3

Costs for contingencies are generally __________ for historical costing purposes.
Allowable
Estimated
Unallowable
Allocated
FAR 31.205-7 (b)

Answer 3

Unallowable

Question 4

Which of the following public relations or advertising costs would be unallowable?

Providing a tour or open house of a facility

Hosting a ceremony to announce a new product

Responding to inquiries on company policies

Participating in community service activities
FAR 31.205-1

Answer 4

Hosting a ceremony to announce a new product

Question 5

The Kickbacks statute forbids a subcontractor from doing what?

Misrepresenting a contingent fee arrangement

Accepting a payment from a prime contractor for any reason

Making a payment for the purpose of obtaining favorable treatment in connection with a prime contract or a subcontract relating to a prime contract

Submitting an offer below anticipated costs, expecting to increase the contract amount after award
FAR 3.502-2

Answer 5

Making a payment for the purpose of obtaining favorable treatment in connection with a prime contract or a subcontract relating to a prime contract

Question 6

Which of the following is NOT true about Advance Agreements?

In writing, executed by both parties

Negotiated after the incurrence of costs

Negotiated before a contract

Negotiated during a contract
FAR 31.109(b)

Answer 6

Negotiated after the incurrence of costs

Question 7

Which of the following would be buying-in?

Submitting an offer at negotiated costs to receive follow-on contracts at artificially high prices

Submitting an offer below anticipated costs to receive follow-on contracts at artificially high prices

Submitting an offer below negotiated costs with the expectation of decreasing the contract amount after award

Submitting an offer above anticipated costs with the expectation of decreasing the contract amount after award
FAR 3.5

Answer 7

Submitting an offer below anticipated costs to receive follow-on contracts at artificially high prices

Question 8

Factors for determining whether a cost is allowable include all of the following except:
Terms of the contract
Allocability
Reasonableness
Total price
FAR 31.201-2

Answer 8

Total price

Question 9

Which of the following is not a reason to allocate a cost to a government contract?

It is necessary to the overall operation of the business.

Bona fide need.

It benefits both the contract and other work, and can be distributed to them in a reasonable manner.

It is incurred specifically for the contract.
FAR 31.201-4

Answer 9

Bona fide need.

Question 10

What law specifies how agencies shall make their records available upon public request, imposes strict time standards for agency responses, and exempts certain records from public disclosure?
Paperwork Reduction Act
Federal Records Act
Freedom of Information Act
Privacy Act of 1974
FAR 24.203(a)

Answer 10

Freedom of Information Act

Question 11

Application of Cost Principles to ____________ contracts and subcontracts shall not be construed as a requirement to negotiate agreements on individual elements of cost in arriving at agreement on total price.
Fixed Price
Architectural
Time and Material
Construction
FAR 31.102

Answer 11

Fixed Price

Question 12

What is the federal policy on standards of conduct?

The general rule is to avoid strictly any conflict in government-contractor relationships

The general rule is to avoid strictly any conflict of interest or even the appearance of a conflict of interest in government-contract relationships.

The general rule is to avoid strictly any conflict of interest except for token gifts or gratuities in government-contractor relationships.

The general rule is to avoid conflict of interest in government-contractor relationships, unless a full public disclosure is made.
FAR 3.101-1

Answer 12

The general rule is to avoid strictly any conflict of interest or even the appearance of a conflict of interest in government-contract relationships.

Question 13

Total cost equals _________ plus indirect costs allocable to the contract.
fixed costs
overhead costs plus fringe costs
cost of goods sold
direct
FAR 31.201-1

Answer 13

direct

Question 14

A cost is ____________ if it does not exceed that which would be incurred by a prudent person in the conduct of competitive business.
bona fide
allowable
reasonable
allocable
FAR 31.201-3

Answer 14

reasonable

Question 15

FAR PART 3, IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST

FAR Part 3 covers the ethical rules of government contracting, including conflicts of interest.

I have a question concerning ethics, conflicts of interest, improper business practices, and other such topics. What should I do?

Answer 15

You need to get a legal opinion from your company’s attorney, or you need to ask for a legal opinion from the agency’s attorney or ethics official. Remember, my book is not legal advice. Hire an attorney for legal advice.

Question 16

FAR PART 3, IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST

FAR Part 3 covers the ethical rules of government contracting, including conflicts of interest.

What is a conflict of interest?

Answer 16

The classic case of a conflict of interest is when you serve two masters. Your loyalty to one master conflicts with your loyalty to the other master.

For example, you’re suing another company over a government contracting dispute. Would you want to have the same attorney as the other company? In another example, let’s say you’re buying a house.
Would you want your buyer’s agent to be the same
person as the agent representing the seller? In both cases, the attorney or real estate agent has a classic conflict of interest.

Question 17

FAR PART 3, IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST

FAR Part 3 covers the ethical rules of government contracting, including conflicts of interest.

Can you provide a classic example of a conflict of interest in government contracting?

Answer 17

Sure, let’s say your company provides onsite support services for a federal agency. Your employees assist the government contracting officer in designing the statement of work and crafting the request for proposals for a multi-million-dollar contract for project XYZ. Your company has a classic conflict of interest if it wants to submit a proposal for project xYZ.

Since your employees helped to write the statement of work and request for proposals, they have insider information about project XYZ that your competitors do not have. Since your employees’ government contract requires them to support the federal client, their dual loyalty to your company creates a conflict of interest between the federal client and their employer (your company). Your employees may write the statement of work or request for proposals ina way that favors your company. Your employees may “leak”-purposefully or accidentally-insider information that will give your company an unfair advantage in the competition. In this situation, your company has a classic “organizational conflict of interest” in competing for project XYZ.

Question 18

FAR PART 3, IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST

FAR Part 3 covers the ethical rules of government contracting, including conflicts of interest.

Why do conflicts of interest matter in government contracting?

Answer 18

Federal agencies spend taxpayer money on federal contracts, meaning agencies have a special duty to protect the interest of taxpayers. For this reason, the ethics rules for government contracting are stricter than for private-sector business deals. Government business must be conducted in a manner “above reproach,” with “complete impartiality,” and with
“preferential treatment for none.” The government’s policy is to avoid any conflicts of interest or even the appearance of a conflict of interest in government-contractor relationships.

Question 19

FAR PART 3, IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST

FAR Part 3 covers the ethical rules of government contracting, including conflicts of interest.

What can my company do to avoid or mitigate conflicts of interest?

Answer 19

Create a written Code of Business Ethics and Conduct and tailor your documents to comply with government contracting policy. Designate an “ethics official” for your company, who is responsible for all such issues, including fielding questions from your employees.

Provide your employees thorough and regular training about ethics. Train your employees to recognize when the work they perform may “conflict out” your company (may prevent your company from proposing to win an upcoming government contract because of a conflict of interest). If necessary, set up “firewalls” (physical or abstract separations or preventative measures) between your employees who perform onsite support services versus employees who write proposals and develop new business (win contracts). If you do not have a qualified expert on staff, hire an outside consultant to help you with these processes.

Question 20

FAR PART 3, IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST

FAR Part 3 covers the ethical rules of government contracting, including conflicts of interest.

Are there any types of government contracting work that require additional training or scrutiny?

Answer 20

If you have employees who perform services onsite or in support of the government, especially related to contracting or acquisitions functions, these employees may require further training and scrutiny. Also beware any employees who support government clients performing inherently governmental functions (read more about this topic in Part 7, Acquisition Planning).

Question 21

FAR PART 3, IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST

FAR Part 3 covers the ethical rules of government contracting, including conflicts of interest.

What are some examples of employees who require additional training or scrutiny?

Answer 21

Keep an eye on employees who perform support services-for the government client-related to any acquisition or contracting functions, such as:

Acquisition planning
Developing statements of work
Determining what the government should buy
Developing any contracting documentation
Evaluating proposals
Awarding, administering,
modifying, and
terminating contracts
Determining whether contract costs are reasonable, allowable, and allocable

If you have employees supporting the contracting, finance, legal, engineering, or program office or any function related to acquisition or contracting-you must be extra cautious. These types of onsite support services often generate conflicts of interest and create access to insider information.

Question 22

FAR PART 3, IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST

FAR Part 3 covers the ethical rules of government contracting, including conflicts of interest.

Are bribes, gifts, or gratuities appropriate in government contracting?

Answer 22

No, absolutely not! Never provide any bribes, gifts, or gratuities to any government employee. Do not even think about it!

Question 23

FAR PART 3, IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST

FAR Part 3 covers the ethical rules of government contracting, including conflicts of interest.

Are federal employees subject to any financial scrutiny?

Answer 23

Yes, federal employees involved in government contracting must disclose (report) their financial and investment information every year.

Question 24

FAR PART 3, IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST

FAR Part 3 covers the ethical rules of government contracting, including conflicts of interest.

Are contractors protected by any of these ethical rules for government contracting?

Answer 24

Yes, contractor bid or proposal information and proprietary information is protected by several laws and regulations, including the Procurement Integrity Act. When your company provides its proprietary pricing information to the government, perhaps as part of a proposal, the government is required to safeguard it.

Question 25

FAR PART 3, IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST

FAR Part 3 covers the ethical rules of government contracting, including conflicts of interest.

What is contractor bid or proposal information?

Answer 25

Contractor bid or proposal information includes cost or pricing data, direct labor rates, indirect labor rates, and proprietary information about your business processes, operations, or techniques. Protect your financial and pricing information!

Question 26

FAR PART 3, IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST

FAR Part 3 covers the ethical rules of government contracting, including conflicts of interest.

Are there prohibitions against government contractors colluding on price?

Answer 26

Yes, colluding with your competitors is a serious, possibly criminal violation. Almost every government contracting competition requires your company to certify that it arrived at its priceindependently (without colluding with any other companies).

Question 27

FAR PART 3, IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST

FAR Part 3 covers the ethical rules of government contracting, including conflicts of interest.

Why is the Procurement Integrity Act important for government contractors?

Answer 27

If your pricing, financial, or other proprietary information were released to your competitors, your company would encounter substantial problems.
Your competitors could undercut your pricing or steal your “secret sauce.” For these reasons, the Procurement Integrity Act restricts the government from releasing your proprietary information. In addition to protecting your proprietary information, the
Procurement Integrity Act also protects government source selection sensitive information.

Question 28

FAR PART 3, IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST

FAR Part 3 covers the ethical rules of government contracting, including conflicts of interest.

What is the difference between proprietary information versus source selection sensitive information?

Answer 28

Ask yourself who cares more about protecting the information. You can easily distinguish between proprietary information versus source selection sensitive information. Both are protected from improper disclosure by the Procurement Integrity Act. However, controlling proprietary information protects your company. Controlling source selection sensitive information protects the government’s selection process.

For example, the names of government source selection decisionmakers and the draft version of a proposal evaluation are both source selection sensitive. The names and draft provide intimate details about the government’s selection process.
In contrast, your company’s pricing and financial details are proprietary information. Spreading this information will hurt your company.

Question 29

FAR PART 3, IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST

FAR Part 3 covers the ethical rules of government contracting, including conflicts of interest.

In government contracting, does my company have a duty to protect proprietary information of my competitors?

Answer 29

Yes, according to the Procurement Integrity Act.
The government must protect your proprietaryinformation. In turn, you must protect proprietary or sensitive information, even if you receive it only by mistake.

Question 30

FAR PART 3, IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST

FAR Part 3 covers the ethical rules of government contracting, including conflicts of interest.

What should I do if I receive my competitor’s proprietary information by mistake?

Answer 30

Do not seek an advantage if you receive your competitor’s proprietary information by mistake.
That decision would be unethical and possibly violate the Procurement Integrity Act. It is not worth the risk. Instead, you must acknowledge the mistake, inform everyone, and try to fix the situation.

Remember that the rules of government contracting differ from the rules of business for other industries.
Other industries may allow you to use information that accidentally “falls into your lap.” This is not the case in government contracting. The Procurement Integrity Act forbids your company from taking advantage of proprietary information from your competitor.

Question 31

FAR PART 3, IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST

FAR Part 3 covers the ethical rules of government contracting, including conflicts of interest.

Should I delete the email, or should I acknowledge the mistake?

Answer 31

You should acknowledge the mistake and inform the government, immediately.

Let’s say the government accidentally emails you the proposal of your competitor. Your competitor’s proposal contains proprietary information, such as individual labor rates, indirect rates, and the total price of your competitor’s offer. This information is extremely valuable for you, but you must resist the temptation to take advantage. The Procurement Integrity Act sets up a strict protocol for your company to follow.

First step: Acknowledge the mistake. Notify both the government contracting officer and your competitor (whose information you mistakenly received). Notify both parties in writing.

Question 32

FAR PART 3, IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST

FAR Part 3 covers the ethical rules of government contracting, including conflicts of interest.

Why is it important to act quickly after my company accidentally receives proprietary information?

Answer 32

The reason you should act quickly is that the longer you wait, the more it seems like your company was trying to take advantage of this mistake. Whatif the government investigates months later? Any gap between when you received the information and when you acknowledged the mistake seems like evidence that your company did something wrong.
Move quickly.

Question 33

FAR PART 3, IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST

FAR Part 3 covers the ethical rules of government contracting, including conflicts of interest.

How should my company document the mistake and steps to correct it?

Answer 33

Second step: Write and sign a memorandum for record that explains how your company corrected the error. Be transparent. Name those people who have seen the documents. Explain how your company deleted or shredded all copies of the document.

Include your information technology specialist to
describe how the documents were deleted altogether from your network or server. Your company’s leadership should sign this memo and provide a copy to the government.

Question 34

FAR PART 3, IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST

FAR Part 3 covers the ethical rules of government contracting, including conflicts of interest.

What two government officials should my company notify?

Answer 34

Coordinate and cooperate completely with both the contracting officer and the agency ethics official, who is likely to be an attorney in the legal office. Request in writing to be connected to the agency ethics official so you can make sure that you follow all required procedures.

Question 35

FAR PART 24, PROTECTION OF PRIVACY AND FREEDOM OF INFORMATION

FAR Part 24 provides details about Freedom of Information Act (FOIA) requests.

What is the Freedom of Information Act?

Answer 35

The Freedom of Information Act or FOIA is a law passed by Congress in the aftermath of the Watergate scandal in the time of President Richard Nixon. Among other things, FOIA requires the federal government to disclose certain documents or general information if the public requests it formally.

All kinds of interesting revelations about the federal government have sprung forth from American citizens exercising their rights under FOIA. American citizens write to federal agencies, requesting certain documents or information, justifying their request using FOIA, and federal agencies deliver dutifully.
There have been FOIA requests on unidentified flying objects (UFO), plane crashes, interrogation techniques, and many other provocative topics.

Question 36

FAR PART 24, PROTECTION OF PRIVACY AND FREEDOM OF INFORMATION

FAR Part 24 provides details about Freedom of Information Act (FOIA) requests

How are FOIA requests relevant to government contractors?

Answer 36

You can use FOIA requests to gather business intelligence on your clients and competitors. If there is no easier way to obtain information about your competitors, FOIA can force the government to divulge information about the current or prior contractor as well as the federal contract itself, within certain limitations.

Question 37

FAR PART 31, CONTRACT COST PRINCIPLES AND PROCEDURES

FAR Part 31 provides a long list of allowable and unallowable costs.

What is a cost-reimbursement contract?

Answer 37

Read more about cost-reimbursement contracts in
FAR Part 16, Types of Contracts.

Question 38

FAR PART 31, CONTRACT COST PRINCIPLES AND PROCEDURES

FAR Part 31 provides a long list of allowable and unallowable costs.

What are the three considerations for determining whether a cost can be reimbursed?

Answer 38

To determine if a cost is reimbursable (under a cost-reimbursement contract), you need to evaluate three factors: allowability, allocability, and reasonableness.
Ask these three questions: Is this cost allowable? Is this cost properly allocated (to the contract)? Is this cost reasonable?

Question 39

FAR PART 31, CONTRACT COST PRINCIPLES AND PROCEDURES

FAR Part 31 provides a long list of allowable and unallowable costs.

What is an allowable cost?

Answer 39

Allowability refers to whether that specific cost is explicitly allowed in your contract or in FAR Part 31.
You can find a long list of allowable and unallowable costs in FAR Part 31. For example, entertainment costs like season tickets for the regional sports team are unallowable. For another example, the cost of holding shareholders’ meetings is allowable.

Question 40

FAR PART 31, CONTRACT COST PRINCIPLES AND PROCEDURES

FAR Part 31 provides a long list of allowable and unallowable costs.

What if my contract language states a certain cost is unallowable, but that same cost is allowed by FAR
Part 31?

Answer 40

In the case of a contradiction between your contract’s allowable costs and the rules in FAR Part 31, follow your contract, not FAR Part 31. Sometimes contracting officers will limit or prohibit the allowability of certain costs, even though these same costs are allowable under FAR Part 31. For example, let’s say FAR Part 31 allows precontract costs, but your contract specifically excludes precontract costs.
In this example, follow your contract.

Question 41

FAR PART 31, CONTRACT COST PRINCIPLES AND PROCEDURES

FAR Part 31 provides a long list of allowable and unallowable costs.

What is an allocable cost?

Answer 41

Allocable means you can tie the costs or a portion of the costs to the particular contract you are charging the costs against. The cost might be 100% allocable to a single contract— a direct cost. Alternatively, the cost might be spread across several contracts-in other words, an indirect cost.

The good news is the government will reimburse you for both direct and indirect costs. If the cost is indirect (spread across several contracts), you must make sure you attribute (“allocate”) an accurate fraction of the cost to the contract you’re charging against.

Question 42

FAR PART 31, CONTRACT COST PRINCIPLES AND PROCEDURES

FAR Part 31 provides a long list of allowable and unallowable costs.

What is a reasonable cost?

Answer 42

Determining whether a cost is reasonable is a check
mostly used against ridiculous prices or unnecessary expenses. Determining reasonableness is rather subjective, of course.

Question 43

FAR PART 31, CONTRACT COST PRINCIPLES AND PROCEDURES

FAR Part 31 provides a long list of allowable and unallowable costs.

Who determines whether a cost is reasonable?

Answer 43

The contracting officer decides whether a cost is reasonable or not.