Working with Government Contractors (TXT)


Working With
Government
Contractors

What You Need to Know as a Federal Employee Who
Works With Government Contractors

U.S. Office of Government Ethics
www.usoge.gov



Working With
Government
Contractors

What You Need to Know as a Federal Employee Who
Works With Government Contractors



Contents

Introduction

Conflicting Financial Interests
Your Spouse’s Employment
Your Off-Duty Employment

Maintaining Impartiality
Covered Relationships
Other Relationships

Gifts

Revolving Door: Looking for Employment Outside
the Federal Government

Reverse Revolving Door: Moving From the Private Sector
to the Government

Conclusion

About OGE


Introduction

In recent years, the Federal workplace has undergone tremendous change as more
work is being contracted out to the private sector. One result has been an
increase in the number of Government contractor employees in the Federal
workplace. This pamphlet provides an overview of the basic rules that executive
branch employees must follow when interacting with contractors and their
personnel. Using scenarios based both on hypotheticals and on actual cases, this
pamphlet will cover some of the most commonly occurring situations. The actual
cases described involved criminal violations and were successfully prosecuted.

This pamphlet does not cover all of the rules that apply to executive branch
employees. If you have a specific issue, have questions, or need additional
help, contact an ethics official at your agency before taking any action. For
information on how to contact your Designated Agency Ethics Official (DAEO),
consult the DAEO list on the Office of Government Ethics website at
http://www.usoge.gov.


1 Conflicting Financial Interests

Your Spouse’s Employment

A Federal criminal statute, 18 U.S.C. § 208, prohibits you from working on a
Government matter that has an effect on your financial interests or on the
financial interests of certain persons, including your spouse or organizations
with whom you have ties. What if your spouse is an employee of a Government
contractor? May you participate in a Government matter involving this
contractor? The answer depends upon the extent of your involvement in the
Government matter and the extent to which your spouse’s financial interest would
be affected by your actions on behalf of the government. Let’s look at some
examples.

Example 1: In her job with the Federal Government, Betty determines the training
needs of agency employees and procures those training services from private
companies. Betty’s husband, John, owns a consulting business that provides
computer training services. Betty awarded some of the agency’s training
agreements to her husband’s company. Did Betty do anything wrong?

Yes, in fact, Betty violated the Federal criminal statute, 18 U.S.C. § 208. As
the owner of the company that received the Government contract, Betty’s husband
had a financial interest in the contract. By awarding the contract to provide
the training to a company owned by her husband, Betty worked on a Government
matter that had an effect on the financial interests of her spouse. This
scenario is based on an actual case, and the Department of Justice successfully
prosecuted Betty.

Example 2: Scott, a Government employee, is the coordinator for the Law
Enforcement Coordinating Committee for a U.S. Attorney’s office. His job
responsibilities include arranging training seminars for local and state law
enforcement.

Scott negotiates with Smith & Jones, LLP, to provide the training seminars for
his U.S. Attorney’s office. Scott’s wife is a general partner in Smith & Jones,
LLP. Over the next two years, Scott recommends, selects, and hires Smith &
Jones, LLP, to conduct periodic seminars that his office sponsors. Did Scott
have a conflict of interest when he selected his wife’s employer to provide the
seminars?

Yes, he did. As part of his official duties, he hired a company in which his
wife was a general partner. As a general partner, Scott’s wife has a financial
interest in the contracts that her company obtains. By awarding a contract to a
company in which his wife is a general partner, Scott participated in a matter
in which his wife had a financial interest and, by doing so, violated a criminal
statute.

Your Off-Duty Employment

Your spouse’s employment with a Government contractor is not the only kind of
financial interest that may be problematic. You are prohibited from working on a
Government matter that has an effect on the financial interests of any
organization in which you serve as an employee, officer, director, trustee, or
general partner. This means that your part-time employment with a Government
contractor can pose problems.

Example : Bill was the chief of Plans, Requirements, and Acquisitions for a
Federal agency. He was in charge of the procurement of data processing equipment
for a regional division of his agency. Bill was also engaged in off-duty
employment. He was a partner in an information technology company, GeoKenn
Technology.

Unfortunately, Bill did not keep his part-time business activities separate from
his Government job. Bill steered several Government contracts to his own
company, GeoKenn Technology. In return, he received cash payments and other
benefits such as the use of GeoKenn Technology’s credit card to purchase
jewelry, vacations, and furniture.

By awarding Government contracts to a company in which he was a partner, Bill
violated 18 U.S.C. § 208. Bill had a financial interest-a partnership
interest-in a private company. By awarding Government contracts to this company,
he participated personally and substantially in a particular matter (a contract)
affecting that financial interest.

Although Bill was a partner in the company, the result would have been the same
if he had been an employee of the company.

This scenario is based on an actual case. The Department of Justice successfully
prosecuted the case.

REMEMBER:

The prohibition against working on a Government matter that would affect your
financial interests also prohibits you from working on a Government matter that
would affect the financial interests of the following persons in your life:

* your spouse;

* your minor child;

* your general partner;

* an organization in which you serve as an employee, officer, director,
trustee, or general partner; and

* a person with whom you are seeking, or have an arrangement for, future
employment.


2 Maintaining Impartiality

Covered Relationships

You probably noted that the list of persons whose financial interests are
imputed to you under the criminal conflict of interest laws is limited. Does
this mean that it is permissible for you to participate on behalf of the
Government in a matter that affects the financial interests of other persons in
your life? Not necessarily. You have to be aware of the appearance of your
actions. You should not work on Government matters in which your impartiality
would be questioned.

Here is how the rule works. You know that a matter at your agency is likely to
have an effect on the financial interest of your household. Or you may know that
a person with whom you have a "covered relation­ship" is involved in a
Government matter, either as a party or a representative of a party to the
matter.

You may determine that, if you participate in the matter, a reasonable person
with knowledge of the relevant facts will question your impartiality. You then
cannot participate in the matter unless you have informed your agency ethics
official of the appearance problem and received authorization from the agency
ethics official to participate.

You have a covered
relationship with:

* a person, other than a prospective employer, with whom you have or seek a
business, contractual, or other financial relationship;

* a person who is a member of your household or who is a relative with whom
you have a close personal relationship;

* a person for whom your spouse, parent, or dependent child is, to your
knowledge, serving or seeking to serve as officer, director, trustee, general
partner, agent, attorney, consultant, contractor, or employee;

* a person for whom you have, within the last year, served as officer,
director, trustee, general partner, agent, attorney, consultant, contractor,
or employee; or

* an organization, other than a political party, in which you are an active
participant.

Let’s look at an example.

Example: Cynthia is an employee of the Department of Health and Human Services.
One of her many duties is to supervise the financial statement audits performed
at the Department’s operating divisions by auditors provided by DK Haven
Corporation under a Government contract. DK Haven is a large corporation with
many different business operations and with multiple divisions. Cynthia has
daily contact with the company’s auditors and is required to provide updates on
their work to the Department’s project officer assigned to the DK Haven
contract.

Cynthia’s husband Michael tells her that he is applying for a job with DK Haven.
The position he is considering is not in the same division of the corporation
that provides the contract auditors to Cynthia’s agency. Are there any
impartiality concerns in this situation?

Yes. Cynthia has a "covered relationship" with any person with whom her spouse
is seeking employment. Under the impartiality rule, Cynthia should recuse
herself from any contract involving DK Haven while her husband is seeking a job
with the company, if either she or an agency ethics official determines that a
reasonable person with knowledge of the circumstances would question Cynthia’s
impartiality. Because DK Haven is a large company with many business activities
and divisions and because Michael is applying for a job that is not in the audit
division of the company, the agency ethics official 6might determine that a
reasonable person would not question Cynthia’s impartiality in performing her
duties with regard to the DK Haven contract. On the other hand, if the ethics
official was concerned that Cynthia’s impartiality would be questioned, he still
could determine that any impartiality concerns are outweighed by the agency’s
need for Cynthia’s services on the matter. In this case she could participate in
the contract pursuant to an authorization issued by the agency ethics official
under the ethics regulations.

Other Relationships

What if your relationship with a contractor employee does not qualify as a
"covered relationship?" Does that mean you do not need to be concerned about the
impartiality rule? Not necessarily. Let’s look at an example of a relationship
that is not a "covered relationship" under the ethics regulations but that is a
relationship that could call your impartiality into question.

Example: David, an agency employee, begins dating Susan, a contractor employee
with whom he works. One of his duties involves reviewing the work of the
contractor, including the work that Susan does. What should David do in this
situation?

A Government employee does not have a "covered relationship" with a person he is
dating or with the employer of a person he is dating. But the impartiality rule
is not limited to "covered relationships." A Government employee must always be
impartial in the performance of his or her duties and must take appropriate
steps to avoid the loss of impartiality in the performance of those official
duties. Because David is dating an employee of the contractor and his Government
job includes evaluating the work of the contractor and its employees, his
impartiality in doing his Government job could be questioned. In this situation,
David would likely determine that the circumstances would cause a reasonable
person with knowledge of the relevant facts to question his impartiality in the
matter. He should not participate in the matter unless he has informed the
agency ethics official of the appearance problem and received authorization from
that official to participate.


3 Gifts

There are numerous rules governing gifts among executive branch employees and
between executive branch employees and nongovernment sources, such as Government
contractors and their employees. This pamphlet will cover only a few of those
rules. You should always consult your agency ethics official for assistance with
questions involving gifts and other ethics issues. Let’s examine a situation
that frequently occurs and look at how the ethics rules might apply.

Example 1: Your boss, Margaret, is retiring after 30 years of Government
service. You and your fellow employees want to present her with a farewell gift.
It is a tradition in your office to buy such gifts for a retiring employee. In
the past, your workplace has been composed solely of Government employees, and
voluntary contributions from employees were collected to purchase such a gift.
But now several employees of a Government contractor, Capital A Corporation, are
working alongside you to complete a project. Jason, a Government employee, has
volunteered to collect donations among the people in the office to purchase the
gift. He makes it clear to everyone that donations are voluntary and no donation
larger than $5 will be accepted from an individual. May Jason ask the contractor
employees for voluntary donations?

No, he may not. The general rule regarding gifts from outside sources is that an
executive branch employee is prohibited from soliciting a gift either directly
or indirectly from a prohibited source or from accepting a gift from a
prohibited source. Government contractors and those companies who seek to do
business with the Government are prohibited sources. In the example, Jason may
not ask the employees of Capital A Corporation for donations because the company
and its employees are prohibited sources.

A gift is anything that has monetary value, such as food, travel,
entertainment, discounts, and loans.

Example 2: May the employees of Capital A Corporation voluntarily contribute to
the group gift that the Government employees are buying?

Again, the answer is no. On a special, infrequent occasion such as a marriage or
a retirement, it is permissible for an employee to solicit voluntary
contributions from other executive branch employees to purchase for a superior a
more expensive gift appropriate to the occasion. It is this exception that
allows Jason to solicit the other Government employees in his office. But this
exception applies only to executive branch employees. There is no similar
exception for contractor employees to contribute, even voluntarily, to the gift
the Government employees are buying. For that reason, the Capital A employees
may not contribute to this gift.


4 Revolving Door: Looking for Employment Outside the Federal Government

Suppose you will soon be completing your Government service, and you are
beginning to search for a new job outside the Federal Government. As you are
searching for that new job, keep in mind that under the conflict of interest
laws and ethics rules you are prohibited from working on a Government matter
that would have an effect on the financial interests of a company with which you
are seeking or negotiating for employment.

Example 1: As an active duty officer with the Coast Guard, Captain Charles works
extensively on a new aircraft navigation system for Coast Guard aircraft. The
Coast Guard contracted with a private consulting company, Company X, to oversee
a project to integrate the new technology with the GPS systems in the aircraft.
Captain Charles drafted a statement of work related to the project. After
drafting the statement of work, Captain Charles provides technical support for
the project on behalf of the Coast Guard. Company X contacts Captain Charles
concerning possible employment in the division that is overseeing this project.
May Captain Charles continue to work on the project for the Coast Guard if he
informs the company that he is interested in the employment offer?

No, he may not. If he intends to continue to work on the project for the Coast
Guard, he must reject the job offer from Company X. If he does not reject the
job offer and he continues to work on the project, he will be in violation of a
criminal statute, 18 U.S.C. § 208.

Example 2: An employee of the Department of Veterans Affairs is participating in
the audit of a contract for laboratory support services. He will soon be
retiring from the VA and is looking for a new job in the private sector. He is
interested in working for a lab that is a subcontractor under the VA contract he
is auditing. May he send his resume to this lab?

Not until he takes certain steps under the ethics rules. Before sending his
resume to the lab, the employee should disqualify himself from participation in
the audit. Because he cannot withdraw from participation in the contract audit
without the approval of his supervisor, he should disclose his intentions to his
supervisor in order that appropriate adjustments in the work assignments can be
made.

Appropriate oral or written notice of an employee’s disqualification may be
made to co-workers by the employee or the supervisor to ensure that the
employee is not involved in a matter from which he is disqualified.


5 Reverse Revolving Door: Moving From the Private Sector to the Government

The conflict of interest laws apply not only to employees leaving the Government
but also to individuals moving from the private sector to the Federal
Government. Depending upon your duties in your new Government position, you may
be required to divest stock in a company that has contracts with your agency.
Other financial conflicts may arise from your ties to your former employer, such
as pension plans and stock options.

Example 1: Two months ago, Kate left her job at a brokerage house and began
working for the Securities and Exchange Commission. In her new job with the
Government, she has been assigned to an investigation of insider trading by her
former employer. She believes that there is a potential appearance problem if
she participates in the investigation. She informs the agency ethics official
of the issue and requests a determination about whether there is an appearance
problem if she participates in the investigation. What decision should the agency
ethics official make?

Because Kate left her position at the brokerage house within the last year, she
has a "covered relationship" with that former employer, and the agency ethics
official may determine that her impartiality will likely be questioned. Given
the sensitivity of the investigation, the agency ethics official may be unable
to conclude that the Government’s interest in Kate’s participation in the
investigation outweighs the concern that a reasonable person may question the
integrity of the investigation, even though Kate has severed all financial ties
with the company. As a result, the agency ethics official may determine that her
participation cannot be authorized, and she will be disqualified from working on
the matter.

Example 2: Sam, who left his job with M Corporation two years ago, is now an
undersecretary with the Department of Defense. Sam has a 401(k) plan that is
invested in M Corporation stock. M Corporation has numerous contracts with the
Department of Defense, and matters involving some of these contracts may come
before Sam in his job as an undersecretary. May Sam participate in matters involving
the contracts of his former employer?

No, he may not. If Sam has a 401(k) retirement account which is
invested in M Corporation stock, he cannot participate in any matter involving
the contracts of his former employer because he has a financial interest in M
Corporation through his ownership of M Corporation stock.


Conclusion

We hope this brochure has helped you identify some of the ethics issues that
can come up when you are working with Government contractors. For more
information on these issues, contact your agency ethics official.


About OGE

The Office of Government Ethics (OGE) is the agency that exercises leadership
in the executive branch to prevent conflicts of interest on the part of
Government employees and to resolve those conflicts of interest that do occur.
In partnership with executive branch agencies and departments, OGE fosters high
ethical standards for employees and strengthens the public’s confidence that the
Government’s business is conducted with impartiality and integrity.


Office of Government Ethics
http://www.usoge.gov
November 2007