Maintaining Public Confidence: Exemplary Standards of Conduct in Federal Procurement

1. Ethics ACQ 370

2. Ethics Philosophy "In order to maintain public confidence in the federal procurement process, government and contractor employees must follow exemplary standards of conduct.” -- John Cibinic and Ralph Nash Administration of Government Contracts

3. Code of Ethics For Government Service

4. Code of Ethics Two Core Concepts • Employees shall not use public office for private gain • Employees shall act impartially and not give preferential treatment to any private organization or individual

5. Code of Ethics • Public service is a public trust, requiring employees to place loyalty to the Constitution, the laws and ethical principles above private gain. • Employees shall not hold financial interests that conflict with the conscientious performance of duty. • Employees shall not engage in financial transactions using nonpublic Government information or allow the improper use of such information to further any private interest. • An employee shall not, except as permitted by subpart B of this part, solicit or accept any gift or other item of monetary value from any person or entity seeking official action from, doing business with, or conducting activities regulated by the employee's agency, or whose interests may be substantially affected by the performance or nonperformance of the employee's duties. • Employees shall put forth honest effort in the performance of their duties. • Employees shall not knowingly make unauthorized commitments or promises of any kind purporting to bind the Government. • Employees shall not use public office for private gain. • Employees shall act impartially and not give preferential treatment to any private organization or individual.

6. Code of Ethics • Employees shall protect and conserve Federal property and shall not use it for other than authorized activities. • Employees shall not engage in outside employment or activities, including seeking or negotiating for employment, that conflict with official Government duties and responsibilities. • Employees shall disclose waste, fraud, abuse, and corruption to appropriate authorities. • Employees shall satisfy in good faith their obligations as citizens, including all just financial obligations, especially those—such as Federal, State, or local taxes—that are imposed by law. • Employees shall adhere to all laws and regulations that provide equal opportunity for all Americans regardless of race, color, religion, sex, national origin, age, or handicap. • Employees shall endeavor to avoid any actions creating the appearance that they are violating the law or the ethical standards set forth in this part. Whether particular circumstances create an appearance that the law or these standards have been violated shall be determined from the perspective of a reasonable person with knowledge of the relevant facts. Standards of Ethical Conduct for Employees of the Executive Branch 5 C.F.R. Part 2635

7. Discussion Jake’s long-time friend and neighbor brought a very expensive gift to his 50th birthday party. She works for a company that is seeking a permit from Jake’s agency. Jake has sought out your advice. As the Ethics Counselor at the Agency, what do you tell Jake?

8. Laws and Regulations Executive branch employees are subject to • Statutes enacted by Congress • Executive orders issued by the President • Ethics regulations issued by the US Office of Government Ethics • Supplemental ethics regulations issued by some agencies for their employees

9. Laws and Regulations Selected Ethics Laws and Regulations • 18 U.S.C. § 201: Bribery of public officials and witnesses • 18 U.S.C. § 203: Compensation to Members of Congress, officers, others in matters affecting the Government • 18 U.S.C. § 205: Activities of officers and employees in claims against and other matters affecting the Government • 18 U.S.C. § 207: Restrictions on former officers, employees, and elected officials of the executive and legislative branches • 18 U.S.C. § 208: Acts affecting a personal financial interest • 18 U.S.C. § 209: Salary of Government officials and employees payable only by United States • 5 U.S.C. app. 4 §§ 101-111: Public financial disclosure requirements • 5 U.S.C. app. 4 §§ 501-505: Outside earned income and activities • 41 USC § 423: Procurement Integrity Act (PIA) • 5 C.F.R., Part 3601: Supplemental Standards of Conduct for Employees of the Department of Defense • 5 CFR 2635 Subpart B: Gifts From Outside Sources • 5 CFR 2635.808: Fundraising Activities • 5 CFR 2635.303: Gifts Between Employees • 5 CFR 2635.401: Conflicting Financial Interests • 5 CFR 2635.501: Impartiality in Performing Official Duties • 5 CFR 2635.601: Seeking Other Employment

10. Laws & Regulations Senate Select Committee on Ethics202-224-2981http://ethics.senate.gov/ethics2.html House Committee on Standards of Official Conduct202-225-7103www.house.gov/ethics Legislative Branch Executive Branch Judicial Branch Office of Government Ethics 202-482-9300 http://www.usoge.gov Judicial Committee on Codes of Conduct Office of the General Counsel Administrative Office of the US Courts 202-502-1100www.uscourts.gov

11. The Joint Ethics Regulation

12. The Joint Ethics Regulation The Joint Ethics Regulation (JER) DOD 5500.7-R • Single source of standards of ethical conduct & ethics guidance for DoD • OSD Office of General Counsel, Standards of Conduct Office • http://www.dod.mil/dodgc/defense_ethics/

13. The Joint Ethics Regulation DoD policy • Employees shall become familiar with – and comply with – all ethics provisions, including the standards set out in E.O. 12674 • DoD employees shall become familiar with the scope of – and authority for – the official activities for which they are responsible • Sound judgment must be exercised • DoD employees must be prepared to account fully for the manner in which that judgment has been exercised -- DoD 5500.7-R (JER), Chapter 1

14. The Joint Ethics Regulation Personal Conflicts of Interest • A personal interest or relationship, as defined by law or regulation, that conflicts with the faithful performance of official duty

15. The Joint Ethics Regulation Personal Conflicts of Interest • Employee may not participate in a matter that would affect the financial interests of • Self, spouse, or minor child • An organization in which he is serving as officer, director, trustee, general partner or employee • An organization with which he is negotiating for employment or has an arrangement for future employment • 18 U.S.C. 208

16. Restrictions on Obtaining and Disclosing Certain Information (Procurement Integrity Act)

17. Restrictions on Obtaining and Disclosing Certain Information(Procurement Integrity) • Bans disclosing or obtaining procurement information • Contractor bid or proposal information • Source selection information • Ban applies to current and former Federal employees and contractor employees • Requires procurement official disclosure of contacts regarding possible employment with contractors • One-year ban for certain personnel accepting employment or compensation from contractor -- 41 U.S.C. 21

18. Restrictions on Obtaining and Disclosing Certain Information(Procurement Integrity) General focus areas: • Contractor bid or proposal information • Cost or pricing data • Indirect costs and direct labor rates • Proprietary information about manufacturing process, operations, or techniques identified as such by any contractor • Information identified by any contractor as "contractor bid or proposal information"

19. Restrictions on Obtaining and Disclosing Certain Information(Procurement Integrity) Source selection focus areas: • Bids or prices submitted by offerors • Source selection plans • Technical evaluation plans • Technical evaluations of proposals • Cost or price evaluations of proposals • Competitive range determinations • Rankings of bids, proposals or competitors • Reports and evaluations of source selection panels, boards or advisory councils • Other information marked as “source selection information”

20. Restrictions on Obtaining and Disclosing Certain Information(Procurement Integrity) Maximum penalty: • Five years in prison • Adverse personnel action (e.g., termination) • Civil penalty for individual: $50,000 for each violation plus 2x amount received or offered • Civil penalty for organization: $500,000 for each violation plus 2x amount received or offered

21. Contractor Code of Business Ethics and Conduct

22. Contractor Code of Business Ethics Government Contractors • Must conduct themselves with the highest degree of integrity and honesty • Should have a written code of business ethics and conduct • Should have an employee business ethics and compliance training program -- FAR 3.1002

23. Contractor Code of Business Ethics FAR Clause 52.203-13 “Contractor Code of Business Ethics and Conduct” • Requires government contractors to: • Exercise due diligence to prevent and detect criminal conduct • Promote an organizational culture that encourages ethics and compliance • Submit mandatory disclosures to the government • Mandates: • Code of business ethics and conduct • Business ethics awareness and compliance program • Internal control system • Subcontractor flowdown

24. Contractor Code of Business Ethics Standards of Conduct • Contractors and personnel must abide by standards of conduct as established by contract, statute, and regulation • Violations could result in contractors being subjected to criminal, civil, administrative, and contractual remedies

25. Organizational Conflict of Interest Three types of OCI • Unequal Access • E.g., contractor has an unfair competitive advantage due to working relationship with the government • Biased ground rules • E.g., contractor involved in writing Statement of Work then seeks to submit a proposal to fulfill that requirement • Impaired objectivity • E.g., support contractor performs duties involving assessing or evaluating itself or a partner company -- FAR Subpart 9.5

26. Organizational Conflict of Interest More likely to occur in contracts involving: • Management support services • Consultant or other professional services • Contractor performance of or assistance in technical evaluations • Systems engineering and technical direction work Mitigation plans must be developed before any contract is awarded • -- Johnson Controls World Services, Inc., • B-286714.2, 2001

27. Conclusion

28. Conclusion • Know your ethics counselor and the Joint Ethics Regulation (JER, DoD 5500.7R) • Contact your supervisor and ethics counselor when questions/concerns arise • Report fraud, waste and abuse to the appropriate investigative agency and/or to the Procurement Fraud Working Group

29. Conclusion • We have laws against murder − murders happens • We have laws against speeding − speeding happens • We have laws against . . . . WHAT IS THE ANSWER?

30. The Answer Living a life that matters doesn’t happen by accident. It’s not a matter of circumstance but of choice. What will matter is every act of integrity, compassion, courage or sacrifice that enriched, empowered or encouraged others to emulate your example. Choose to live a life that matters.

31. Assignment Read the case of “Ms. Friendly” • There will be teams assigned as Ms. Friendly’s defense counsel • There will be teams assigned to bring charges againstMs. Friendly • All teams are required to provide substantive justification for their position to include cases and/or particular reference to the JER • Each side will have a chance to rebut the charges/ positions of the other team • Team members will be randomly selected to present