Why is Ethics Important?
The subject of ethics is important because Government employees hold their jobs as a matter of public trust. That trust is fulfilled when employees follow general principles of ethical conduct as well as specific ethical standards.
Also, some Government agencies maintain a policy requiring a contractor code of ethics and business conduct. And, of course, all contractors must avoid improper business practices.
Ready? Let’s begin…
Conflicts of Interest
Government employees are prohibited from having financial conflicts of interest with their official work. Generally, a Government employee may not work on a Government matter that will affect his financial interests, or the financial interests of:
a spouse or minor child
a general partner
an organization he serves as an officer, director, trustee, general partner or employee, and
a person with whom he is seeking or has an arrangement for future employment.
Example: A Government employee owns $50,000 worth of stock in your company. The employee may not work on a procurement matter affecting your company while the employee owns the stock.
Maintaining Impartiality and Integrity
Even when a Government employee doesn’t have a financial interest that can be affected by a contract, situations may sometimes arise that can call his impartiality into question such that he may have to disqualify himself from working on a contract.
If the employee or his agency believes that a reasonable person, with knowledge of the relevant facts, might question the Government employee’s impartiality, the employee must stop working on the matter and seek assistance from an ethics official.
Sometimes a Government employee has a spouse who works for a contractor that does business with that employee’s agency.
In this case, the Government employee may be prohibited from working on an agency contract with the contractor.
Government employees are generally prohibited from representing an outside party to the Government. This means that they may not represent any contractor in dealings with the Government whether or not they’ve been paid by the contractor to make the representation.
Example: A contractor wants to hire a Government employee to represent the company in negotiations with the Government on a new contract. The Government employee may not represent the company back to the Government…even to a different agency from the one where she/he is employed.
Under the ethics rules and laws, a Government employee is not automatically prohibited from working on a Government matter (such as a contract) involving a person with whom he has a personal relationship (e.g., dating, or someone who is a friend or relative).
However, Government employees need to exercise caution and should consider whether a reasonable person, with knowledge of the relevant facts, might question their impartiality.
For example, an employee should not continue working on a Government contract if he were dating one of the contractor’s employees and were in a position to review that person’s work.
Summing it all up…
The bottom line is that Government employees:
May not participate in a Government contract when they have a financial interest in the contractor
Must avoid even an appearance of lack of impartiality
Are prohibited from representing an outside party back to the Government
You’ve now come to the end of the “Conflicts of Interest” section. You may either continue on to the “Gifts” section or click on any of the other sections of this course on the left.
Gifts from Contractors To Government Employees
A common issue is gift-giving between contractor and Government employees.
Ethics rules generally forbid Government employees from accepting gifts from “prohibited sources.” If you are working as a contractor employee for a particular agency, you are considered to be a “prohibited source” of gifts to the employees of that agency. Contractors seeking to do business with an agency are also considered “prohibited sources.”
Exceptions: “The 20/50 Rule”
There are several exceptions to the general prohibition on accepting gifts from agency contractors or their employees.
One common exception allows Government employees to accept non-cash gifts from a prohibited source if the gifts from the contractor and its employees have a value of no more than $20 per occasion and no more than a total of $50 per calendar year. A contractor and the contractor employees are considered the same source.
Example: You want to buy lunch for a Government employee who works at an agency that does business with your company. If the lunch is less than $20, then the employee may accept. If not, the employee must pay the full cost of the meal (NOT just the amount over $20).
Another example: If you’ve already taken that employee to lunch three times this year, and each lunch was worth $15 (for a total of $45), the employee may not accept any gift from you (or any other employee of the same contractor) worth more than $5.
Note: Government employees may not use any of the gift exceptions to accept gifts from the same (or even different sources) so frequently that a reasonable person would believe they are using their public office for private gain. It is never inappropriate…and frequently might be prudent…for an employee to decline a gift, even if permissible under one of the exemptions.
Exception: Personal Relationships
What if you happen to be a personal friend of a Government employee? An exception allows Government employees to accept a gift from a friend (or relative) if it is clear from the circumstances that it was your friendship, and not the employee’s official position, that motivated the gift.
In deciding whether the Government employee may accept the gift, relevant factors that are considered include the history of the relationship and whether the gift was actually paid for by you (as opposed to the company that employs you) and whether the nature of the relationship justifies a particular gift.
Sometimes friendships develop between Government employees and contractor employees who work together. Where the friendship developed on the job, a gift rarely is justified. This is especially true if the Government employee is in a position to oversee your work or otherwise participate in decisions affecting the interests of your employer.
Gifts of Travel and Transportation
“Transportation” and “local travel” provided by contractors are considered gifts under the ethics rules. In order to determine whether a gift of travel or transportation may be accepted, an agency must first determine whether the Government employee transportation is duty-related or for the employee’s personal benefit.
If the transportation is for the employee’s personal benefit (e.g., the cost of a taxi cab to a baseball game), then it is a personal gift covered by the ethics rules. In this case the gift of travel would have to fit under one of the gift exceptions for the employee to accept it.
However, if the transportation is provided in connection with the performance of the employee’s official duties, it would not be considered a gift to the individual, but rather a gift provided to the agency. However, not all Government agencies accept gifts, so this might or might not be acceptable. A Government employee should receive approval from the employee’s agency before accepting a gift of travel from an agency contractor.
Contractor Parties, Picnics, etc.
Suppose a Government employee wants to attend a holiday party sponsored by your company. Is that OK?
The answer is…maybe.
While Government employees can’t receive gifts from “prohibited sources” such as contractors, the definition of gift excludes “modest” refreshments (such as soft drinks, coffee and doughnuts, as long as they are not part of a meal). However, most holiday parties aren’t confined to such items. So, free attendance at a contractor party would be permitted only under an applicable gift exception.
One exception allows attendance where the value of food and entertainment offered is no more than $20. Another exception might allow an employee to attend if the employee’s agency authorizes the employee’s attendance as being in the agency’s interest.
Note: Your employer may have rules of ethics or business practices that cover these areas.
Summing it all up…
The bottom line is that Government employees may not accept (with exceptions) gifts (including travel) from “prohibited sources.”
You and your employer would be considered a prohibited source under the laws and regulations covering gifts to Government employees if you are a contractor that is either doing business with (or seeking to do business with) the Government.
You’ve now come to the end of the “Gifts” section. You may either continue on to “The Revolving Door” section or click on any of the other sections of this course on the left.
The Revolving Door
Sometimes Government employees leave Government service and go to work for contractors. It’s also true that employees working for contractors sometimes enter Government service. As a result, there are a number of ethics issues that arise from these changes in employers. This is sometimes called the “revolving door.”
Not surprisingly, there are laws and regulations that cover these situations. There are several laws and regulations that govern what a Government employee must do while seeking or negotiating future employment with a contractor, as well as governing what a former Government employee may do once the employee goes to work for a contractor.
There are also laws and regulations that may limit what you may work on if you accept employment with the Government.
Let’s examine a few of these areas…
Seeking/Negotiating Employment With Contractors
Generally, Government employees may not work on Government matters affecting contractors with which they are seeking employment. Seeking employment includes (but is not limited to) unsolicited contacts about possible employment, such as sending a resume to a firm or contractor.
Government employees may not work on Government matters affecting the financial interests of a contractor if they make any response other than rejection to a contractor’s unsolicited overture about possible employment.
Example: A Government employee who just interviewed with your company for a job may not work on any procurement matter concerning your company.
The Procurement Integrity Act
The Procurement Integrity Act imposes requirements on Government employees who participate in a procurement above a certain threshold.
Government employees who participate in such a procurement must report to their supervisor and their agency’s ethics officials if they contact, or are contacted by, a bidder or offeror regarding possible employment.
A Government employee must also either reject the possibility of employment or not participate in the procurement until the employee’s agency has authorized the employee to resume participating.
Moonlighting for Contractors
Sometimes Government employees consider “moonlighting” by working for a contractor after-hours. Ethics regulations prohibit Government employees from holding outside employment that conflicts with their official duties. Government employees also may not hold outside employment that creates the appearance of using public office for private gain.
Example: A Government employee wants to get a part-time job with a contractor that does business with her agency. Her official duties involve work this contractor. This would be considered a conflict with her official duties.
Additionally, some agencies have specific rules requiring prior approval for outside employment, as well as restricting the types of outside employment that their employees may hold.
After Government Employees Leave
There are certain restrictions that apply to Government employees after they leave Government service.
Here are three of them:
Lifetime ban on representing any other person before the Government on the same Government matter, such as a contract, on which they worked for the Government. This means the former employee may not sign a letter, attend a meeting, make a presentation, make a telephone call or make any other communication or appearance before the Government in connection with the same matter on which the employee worked.
Two-year ban on representing another person before the Government on the same contract (or other Government matter) that was pending under the employee’s official responsibility during the last year of the employee’s Government service.
One-Year “cooling-off” period for any matter involving the employee’s former agency. This provision applies only to “senior” employees whose basic pay is above a certain level.
If a former Government employee goes to work for a contractor and works “behind the scenes” on the same contract he worked on as a Government employee, he will not violate the criminal and post-employment provisions just described. But, former employees need to be careful! The post-employment rules apply even if the contract specifically requires contractor personnel to communicate with the Government.
Although certain non-controversial routine or administrative communications are not prohibited, many communications that a former employee might make while performing the contract may involve the intent to influence the Government, because the contractor and the Government have potentially differing views or interests on the matter being discussed.
But, we’re not done yet. There are additional restrictions posed by the Procurement Integrity Act…which we’ll now examine again.
Procurement Integrity Act (Again)
The Procurement Integrity Act contains restrictions on the post-employment activities of certain Government employees.
If a former Government employee has served in certain contracting roles, or performed specific contracting functions, on certain matters over $10,000,000 involving a particular contractor, then the former employee is generally prohibited, for one year, from receiving compensation from the contractor for service as an employee, officer, director, or consultant. That means that if these criteria are met, a former employee may not even work “behind-the-scenes” for compensation.
This prohibition does not prevent a Government employee from going to work for a division or affiliate of the contractor that does not produce the same or similar products or services as the division or affiliate of the contractor responsible for the contract in which the employee was involved.
Joining the Government
Ethics questions also can arise if you ever enter Government service after working in the private sector.
For example, you may have continuing financial interests in your former employer which might pose a conflict of interest. These interests could include stock, stock options, pensions, deferred compensation arrangements, or other miscellaneous benefits. These conflicts may be resolved by divestiture, recusal or other measures.
You may not work, for one year after leaving a former employer, on any contract or other Government matter in which your former employer is a party (or represents a party), if either you or an agency ethics official determines that a reasonable person would question your impartiality.
Summing it all up…
The bottom line is that there are a number of issues that arise when a Government employee takes a position with the private sector or when a contractor becomes a Government employee:
Government employees face certain restrictions when they are seeking/negotiating for private sector employment
Government employees also face certain restrictions on private sector employment when they leave Government service.
Former contractors may face restrictions on the work they may perform when they join the Government
You’ve now come to the end of “The Revolving Door” section. You may either continue on to the “Where to Get Help” section or click on any of the other sections of this course on the left.