Conflicts of Interest Ethics Improper Business Practices National

Conflicts of Interest, Ethics, Improper Business Practices National Oceanic and Atmospheric Administration Acquisition and Grants Office Oversight and Compliance Branch

Agenda Conflicts of Interest (FAR Subpart 9. 5) -- • • Unequal Access to Information • Biased Ground Rules • Impaired Objectivity • Personal Conflict of Interest • Ethics • Forms of Improper Business Practices (FAR Part 3) 2

Conflicts of Interest • Unequal Access to Information- • A firm has access to nonpublic information as part of its performance of a government contract. • And that information may provide the firm a competitive advantage in a later competition for a government contract. FAR 9. 505 -4 • In these unequal access to information cases, the concern is limited to the risk of the firm gaining a competitive advantage; there is no issue of bias. 3

Conflicts of Interest • Biased Ground Rules - • • In these biased ground rules cases, the primary concern is that the firm could skew the competition, whether intentionally or not, in favor of itself. FAR 9. 505 -1, 9. 505 -2 • 4 A firm, as part of its performance of a government contract, has in some sense set the ground rules for another government contract by, for example, writing the statement of work or the specifications. These situations may also involve a concern that the firm, by virtue of its special knowledge of the agency's future requirements, would have an unfair advantage in the competition for those requirements.

Conflicts of Interest Impaired Objectivity – • • A firm's work under one government contract could entail its evaluating itself, either through an assessment of performance under another contract or through an evaluation of proposals. FAR 9. 505 -3. • In these impaired objectivity cases, the concern is that the firm's ability to render impartial advice to the government could appear to be undermined by its relationship with the entity whose work product is being evaluated. 5

Conflicts of Interest These three conflicts cannot be mitigated. • • Biased Ground Rules • 6 Unequal Access to Information Impaired Objectivity

Conflicts of Interest “Personal conflict of interest”— a situation in which a covered employee has a financial interest, personal activity, or relationship that could impair the employee’s ability to act impartially and in the best interest of the Government. 7

Ethics "Men acquire a particular quality by constantly acting in a particular way. " — Aristotle Therefore we must strive to do the right things in the right way to maintain the public trust. 8

Ethics Examples of Unethical Behavior by Public Servants – • “GSA officials in Western states went on taxpayer-financed junkets to Hawaii, South Pacific islands, California's Napa Valley and Palm Springs; stayed in resort hotel suites, and threw lavish parties. ” • Details emerge “how four Western regions partied at their Las Vegas conference in 2010, which featured a clown, a mind-reader, a teambuilding exercise to build bicycles and a rap video making fun of the spending. ” • “Reports of wrongdoing and messages on his hotline have triggered new investigations beyond an $823, 000 Las Vegas conference and junkets to resorts. ” 9

Ethics Darleen Druyun “with considerable assistance from senior Air Force procurement official Darleen Druyun and others…on a lease that would have cost taxpayers about $6 billion more than buying them would have. ” • John L. Cockerham “John L. Cockerham, 43, a major in the U. S. Army, was sentenced to 17 ½ years in prison and ordered to pay $9. 6 million in restitution. ” • Eddie Pressley “Eddie Pressley was sentenced Thursday to 12 years in prison and ordered to forfeit $21 million, as well as real estate and several vehicles. ” • 10

Improper Business Practices • Gratuities – • • • 11 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 – has or is seeking to obtain Government business with the employee’s agency, or conducts activities that are regulated by the employee’s agency, or has interests that may be substantially affected by the performance or nonperformance of the employee’s official duties. An exception may be authorized by the Agency.

Improper Business Practices • Procurement Integrity - • Statutory Prohibitions and Restrictions • Disclosing procurement information • Obtaining procurement information • Non-Federal employment (contacted for) • Acceptance of compensation (former Official) • Disclosure and Protection of Proprietary and Source Selection Information • Penalties 12

Improper Business Practices • Acceptance of compensation (former Official) - • 13 May not accept compensation from a contractor that has been awarded a competitive or sole source contract within a period of 1 year after such former official— i. Served at the award of a contract to that contractor, 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 of a contract in excess of $10, 000; or ii. served as the program manager, deputy program manager, or administrative contracting officer for a contract in excess of $10, 000.

Improper Business Practices • Acceptance of compensation (former Official) – 1) (iii) Personally made for the Federal agency a decision to— (A) Award a contract, subcontract, modification of a contract or subcontract, or a task order or delivery order in excess of $10, 000 to that contractor; (B) Establish overhead or other rates applicable to a contract or contracts for that contractor that are valued in excess of $10, 000; (C) Approve issuance of a contract payment or payments in excess of $10, 000 to that contractor; or (D) Pay or settle a claim in excess of $10, 000 with that contractor. 14

Improper Business Practices Antitrust Violations - • 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 - • Collusive bidding • Follow-the-leader pricing • Rotated low bids • Collusive price estimating systems • Sharing of the business 15

Improper Business Practices • Contingent Fees -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. • • Buying-In - • • submitting an offer below anticipated costs expecting to increase the contract amount after award; or recover losses on the buy-in contract. Kickbacks - • means receiving anything of value indirectly or directly for the purpose of obtaining or rewarding favorable treatment in connection with a prime or subcontract. 16

Improper Business Practices • A contracting officer shall not knowingly award a contract to a Government employee or to a business concern or other organization owned or substantially owned or controlled by one or more Government employees. • This policy is intended to avoid any conflict of interest that might arise between the employees’ interests and their Government duties, and to avoid the appearance of favoritism or preferential treatment by the Government toward its employees. 17

Improper Business Practices • Payment clauses at FAR 52. 212 -4(i)(5), 52. 232 -25(d), 52. 232 -26(c), and 52. 23227(l) require that, if the contractor becomes aware that the Government has overpaid on a contract financing or invoice payment, the contractor shall remit the overpayment amount to the Government. A contractor may be suspended and/or debarred for knowing failure by a principal to timely disclose credible evidence of a significant overpayment, other than overpayments resulting from contract financing payments as defined in 32. 001 (see FAR 9. 406 -2(b)(1)(vi) and 9. 4072(a)(8)). • If the contracting officer is notified of possible contractor violation of Federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations found in Title 18 U. S. C. ; or a violation of the civil False Claims Act, the contracting officer shall— (1) Coordinate the matter with the agency Office of the Inspector General; or (2) Take action in accordance with agency procedures. 18

Questions? ? 19