Training & Resources > Episode Two
Episode Two: Procurement Integrity
Jim, a defense contractor employee, drops in on an old friend from his days as a Naval officer. The friend, Mike, is now a government procurement official. After briefly discussing their families, Jim asks Mike whether he will be going to an industry association conference in San Francisco the following week. When Mike says that he will, Jim invites Mike to accompany him to an evening reception sponsored by his company, a golf outing at Pebble Beach, and a San Francisco Giants game. During the conference, Mike tells Jim that Mike’s wife is being considered for a promotion to her company’s headquarters in Chicago, and asks Jim for help in finding a job in the area. Jim explains that his company cannot hire Mike right now, because Mike is a procurement official, but agrees to discuss it over lunch when they return from the conference. Before the lunch, Jim calls Mike to ask for information about a new sole source procurement awarded by Mike’s office. Mike gets the requested information, quickly calls to give it to Jim, and during the conversation tells Jim that the document from which he’s reading is marked “Source Selection Sensitive.”
The Procurement Integrity Law has been a major compliance concern of government contractors for the last several years. Because this law deals with gifts to government procurement officials, employment discussion with or offers of employment to government procurement officials, and the improper release or exchange of proprietary and source selection information, the law relates in a general way to overall business practices. The episode should be used to discuss appropriate relationships between contractor employees and government procurement officials. More particularly, the discussion should focus on the Procurement Integrity Law restrictions on giving gratuities and discussing opportunities for employment with procurement officials, and theunauthorized receipt of source selection information.
Suggested Discussion Questions
- Is an offer to a procurement official by a competing contractor to attend a reception an offer of something of value? Does it matter if the reception is an open event and anyone at the convention is welcome to attend? What if the procurement official decides to attend, but to eat and drink minimally, or not at all? What if the procurement official offers to pay to attend? What if the procurement official declines or simply doesn’t attend? Since Mike states in the same conversation that he cannot accept any gifts, can Jim assume that Mike will do whatever he needs to comply with the Procurement Integrity Law? Does it matter if the invitation is based on personal friendship?
- Is the offer by Jim for Mike to become part of a golf foursome an offer of something of value? Does this constitute a violation under the Procurement Integrity Law? Is any possible violation negated by Mike’s immediate response that he would have to pay his own green fees and cart? How does the fact that Mike apparently won wagers on the golf match ultimately of sufficient value to pay these costs factor into this? (We do not know if Jim was playing "customer golf’ or his best game.) What if Jim drives the foursome to Pebble Beach? Does Mike have to pay for part of the rental car?
- Is the offer by Jim for Mike to attend a baseball game in a skybox an offer of something of value? Does this constitute a violation under the Procurement Integrity Law? Is any possible violation negated by Mike’s immediate response that he would have to pay for his own ticket? Assume that those who own skyboxes pay a high annual lease amount (perhaps $100,000 a year) and then buy tickets at the regular face value for skyboxes (perhaps $20 a ticket). Does paying the face value of the ticket alone constitute adequate payment for the ticket? What if the ticket were to an event for which tickets were not normally available, such as the World Series?
- Given the limitations in the Procurement Integrity Act on employment discussions, should contractors avoid any discussion with procurement officials related to anything about employment opportunities? Was there anything improper about Jim’s inquiry to Mike of possible candidates for a job with Jim’s company? Was it in any way imprudent? Was there anything improper about Mike’s inquiry to Jim about kinds of opportunities in the private job market for someone with Mike’s background? Was it in any way imprudent?
- Is Jim’s statement that Mike is ineligible to work with his company a technically accurate statement?
- Does Jim’s offer to provide various kinds of assistance to Mike in relocating to Chicago, though not a job with his own company, pose Procurement Integrity Act issues? Does this constitute a prohibited discussion of employment opportunities? Might Jim’s offer to provide extensive assistance to Mike, including one or more favorable references, constitute an offer of something of value? Jim takes the view, incidentally, that he would do the same for any friend, and after all, if he does all this, Mike will no longer be a procurement official and won’t be in a position to help him anyway.
- Was there anything improper about Jim’s request to Mike for information on the rationale for a sole source procurement? Was it imprudent? Should such requests be in writing? Should they be accompanied by one of the disclaimers in the Procurement Integrity Act?
- Does Mike’s discussion at the end of the tape violate the Procurement Integrity Act?
- Is there anything imprudent about the overall way in which Mike and Jim seem to interact with one another? Does extensive socializing between a procurement official and a competing contractor pose a problem even if all interactions comply with the Procurement Integrity Act?
The Procurement Integrity law, 41 U.S.C. § 423, was enacted by section 27 of the Office of Federal Procurement Policy Act, as amended by section 814 of the FY 1990/1991 National Defense Authorization Act. The Act applies, during the conduct of a federal agency procurement, to competing contractors, procurement officials, and anyone with access to proprietary or source
selection information. It prohibits competing contractors from knowingly engaging in the following conduct during the conduct of any Federal agency procurement of property or services:
- Making, directly or indirectly, any offer or promise of future employment or business opportunity to, or engaging in any discussion of future employment or business opportunity with, any procurement official of such agency;
- Offering, giving, or promising to offer or give, directly or indirectly, any money, gratuity, or other thing of value to any procurement official of such agency;
- Soliciting or obtaining, directly or indirectly, from any officer or employee of such agency, prior to the award of a contract any proprietary or source selection information regarding such procurement.
The following definitions are necessary to understand these statutory prohibitions:
“Conduct of a federal agency procurement” means the period beginning on the earliest data upon which an identifiable, specific action is taken for the particular procurement and concluding upon the award or modification of the contract or cancellation of the procurement. Each contract award and each contract modification constitutes a separate procurement action. Modifications are included only when determined by the contracting officer to be outside the scope of the original contract.
“Competing contractor” means any entity legally capable of entering into a contract or subcontract in its own name that is, or is reasonably likely to become, a competitor for or recipient of a contract or subcontract under a federal agency procurement. The terms includes the officers, employee, representatives, agents, and consultants of the competing contractor.
“Procurement official” means a Government employee (or contractor employee acting on behalf of the Government for the procurement) who has participated personally and substantially in any of the following activities for a particular procurement:
- drafting a specification or statement of work
- review or approval of a specification or statement of work
- preparation and development of the purchase request
- preparation and issuance of the solicitation
- evaluation of bids or proposals
- source selection evaluation
- negotiations to establish the price or terms and conditions of the contract or modification
- review and approval of award of the contract or modification
“Gratuity or other thing of value” means any gift, favor, entertainment, or other thing having monetary value, except:
- anything for which market value is paid by the procurement official
- anything which is paid for by the Government or accepted by the Government under specific statutory authority
- plaques or certificates having no intrinsic value any unsolicited item, other than money, having a market value of $10 or less per event or presentation.
Finally, it is worth noting that much of the conduct prohibited by the Act is also prohibited by other statutes and regulations. For example:
- The offer or acceptance of a bribe or gratuity is prohibited by 18 U.S.C. § 201.
- The post-Government employment of certain former Government employees is restricted by 18 U.S.C. § 207.
- The Federal Acquisition Regulation and Trade Secrets Act place restrictions on the release of contractor’s proprietary information and information related to procurements.
- Federal Government employees are prohibited from accepting gratuities (over $25 in value) by the Office of Government Ethics Standards of Ethical Conduct for Employees of the Executive Branch.