Avoid Ethics Violations in Government Contracts

A young professional embarking on a career as a contract pricer or agency analyst faces unique responsibilities. In contrast to many private sector roles, these positions are bound by strict regulations that must be meticulously followed. From managing potential financial conflicts of interest to ensuring any indication of fraud during contract execution is reported, adhering to these standards is crucial.

Before delving into the specific guidelines, it’s essential to understand why ethics are foundational to ensuring fairness in contracting.

Why Are Ethics Important in Government Contracting?

Ethics standards ensure that agencies award and administer contracts fairly. Doing so means every viable contractor has an equal chance to win a contract and the government gets the best possible value for its money.

For example, if a contractor gives a government official a gift, that could create a conflict of interest. The official might be more likely to give the contract to that contractor, even if they're not the most qualified bidder for the assignment.

Ethics also help to prevent corruption. If a contractor is willing to bribe a government official, they could be more likely to engage in disingenuous behavior while on the actual job. 

What is the Procurement Integrity Act?

The governing set of guidelines for ethics in contracting today is the Procurement Integrity Act, which specifies the expected attitudes and behavior of all government employees and their contract counterparts. We’ve highlighted examples of Integrity Act violations here:

Stay Away from Financial Conflicts of Interest

On the contractor and agency sides of proposal negotiation, it’s critical to ensure awards aren’t made and administered due to “undo influence.” Even the appearance of impropriety can get a contractor or Contracting Officer (CO) into trouble.

It’s against the law to leverage your work on a government contract for your financial gain or that of your life partner, business partner, kids, or potential future employer.

Some specific examples:

• You work on the agency side, but your life partner works for a contractor that authors a winning proposal for your agency. (Their salary could receive a bump, and that’s considered undue financial gain.)
• You own stock in a contracting company that is under consideration for a contract award by your agency.
• You work for an agency but moonlight for a contracting firm that wins a contract with the same agency.
• You work for an agency yet receive a pension or other compensation from a contracting firm involved in an agency procurement.

Steer Clear of Impartiality or its Appearance

If you’re an agency analyst or CO, you must always appear impartial during a proposal or a direct acquisition. Translation: You can never be accused of favoritism in any dealings.

A few scenarios:

• You’re assigned to work on a government procurement that involves one of the following on the selling end:  a former employer or client, your life partner’s employer or client, your close relatives, or others with whom you’re in business of any kind.
• You become involved in a procurement situation with someone you’re involved with romantically.
• You’re in an agency bid evaluation position, and one of the people submitting is your best friend. 
• When in doubt, delay or stop your work immediately—after informing your boss and a Human Resources (HR) ethics professional.

Just Say ‘No’ to Gifts

In 2024, the US Attorney General indicted a Navy contracting officer and a defense contractor executive for allegedly participating in a bribery scheme that involved over $100 million in government contracts. The indictment alleges that the two conspired to commit fraud by trading expensive gifts—meals, jobs and a sporting event ticket—for help securing contracts. The maximum penalty for this type of crime is 15 years in prison, a $250,000 fine for an individual, or three times the monetary value of the contract, whichever is greater.

This case is just one in a series of ongoing investigations that allege bribery and bid-rigging during federal contracts. As a result, the government looks at gift-giving very closely. To keep your side of the street completely clean, follow these rules:

• What constitutes a gift? Remember that a gift is anything of monetary value you shouldn’t offer or accept during a procurement. Gifts include gratuities, favors, discounts, entertainment, hospitality and loans.
• Gifts from contractors to agency counterparts.  You can’t use your agency position to request or accept valuable gifts from contractors. That said, there are a few things you can receive: light refreshments that don’t include alcohol and that aren’t part of a meal, a small gift worth under $20 at any one time (not to exceed $50 per year from one source), and free attendance at meetings or conferences where you as an agency person are presenting.
• Gifts from agency people to contractors. While government ethics rules do not cover gifts to contractors, you must always come from a position of impartiality. A gift can never even seem to signal proposal favoritism for a given contract.

Take Precautions When Job Hunting While an Agency Employee

It’s not unusual for a government agency employee to consider working for a contractor they’re currently working with on a proposal or negotiation. If you’re in this situation, there are things you can’t do during your government work.

These include:

• Working on government assignments that could affect the financial status of your potential future employer. You can’t talk about employment with a contractor during any phase of a proposal process they’re negotiating with you, should they win the contract and become more financially successful. This rule applies if you want to initiate an inquiry about a job or receive an invitation from a contractor to work for them. (You can’t do the former and must reject the latter.)
• Entering into a government matter with a contractor after you’ve accepted employment with them. There's no going back once you’ve decided to transition from government to industry. This means you can’t serve as an agency-side negotiator on a government proposal with that contractor during the interim before you start. Talk to your agency boss if you need to recuse yourself from an ongoing assignment.
• Receiving a request or asking for employment from a current offeror. Under the Procurement Integrity Act, if you’re performing specification, solicitation, evaluation or negotiation on a contractor’s proposal for a contract worth more than $100K, you must report the request to your boss and your agency ethics person. Then, reject the job offer, rescind your request or stop work on your current procurement. 

Work for a Contractor After an Agency Only Under Certain Conditions

If you played specific roles while in a federal procurement position for an agency, several restrictions apply once you leave to join a contractor you worked with that detailed proposals for more than $10M:

• You may be unable to make a salary for up to one year. If you made procurement-related decisions for a contractor while with an agency, you can’t receive compensation for your first year of employment with that contractor. Part of the Procurement Integrity Act, this rule prohibits you from being paid as an employee or consultant of the contractor for 12 months. 
• You’re permanently banned from representing the contractor on the same contract you worked on as a federal employee. Some may construe this as a way to influence the government improperly, and it even applies to such small actions as signing a letter, making a call, attending a meeting and making a presentation. If the contract was under your supervision at the agency and you didn’t directly work on it, you’ll likely be unable to represent the contractor for two years.
  
  Exception: If you take a position with a different division of the contracting firm that creates a product or service dissimilar from the one you purchased as a federal employee, these restrictions don’t apply. 

Don’t Share Pre-Award Proposal or Bid Information on a Contract

Once you begin an industry job search while still an agency employee, you can’t share the source, proposal or contractor information on any bid at the pre-award stage. But, once a contract award takes place, all this information becomes public domain. So it’s safe to share.

Source selection information includes:

• Bid prices
• Proposed costs
• Technical evaluation plans
• Competitive ranges.

Proposal information includes:

• Indirect costs
• Direct labor rates 
• Proprietary manufacturing techniques.

Contractors, Establish a Code of Ethics

Government contractor ethics are just as critical as agency rules in keeping procurements legal, fair and unbiased. So it’s in your best interest as a contractor to establish a Code of Business Ethics and Conduct, socialize it with everyone in your company for input, and then publish the final verbiage on your website and intranet.

If you’re in contention for government contracts worth $5M, such a code has to be in place for your proposal submission and ratification process to continue.

If you receive an award on a contract of more than $5M, you must also provide proof of ethics and compliance training for your employees (certain small businesses are exempt from this requirement; however, it’s always good to supply this training from the launch of your business).

Disclose Suspicions of Fraud Immediately

Afghanistan war fraud. Iran reconstruction fraud. In the early aughts, fraud seemed everywhere in the contracting space. Now, the Federal Acquisition Regulation (FAR) states that contractors and their agency counterparts must disclose credible evidence of law violations and overpayments in connection with the performance of a federal contract award as soon as they detect any suspicious activity. It’s a federal crime not to.

Make no mistake: Contractors have made great strides in self-policing over the past decade. Internal codes of conduct and control systems are, in large part, responsible for the compliance up-level.

Meet Ethics Standards by Using Secure Proposal Software

Another excellent way to maintain ethics standards and ensure compliance of your data and narrative text during the proposal stage is to adopt secure solutions on both the contractor and agency sides of a negotiation, such as those available through Deltek ProPricer.

Contracting firms: These solutions can help you avoid low-balling contract price to win your first contract, as your target agency will expect you to exceed their pricing compliance and performance expectations once you receive an award. In addition, much of this software can help you flag questionable rate and cost adjustments throughout a negotiation. Your final price is your benchmark for all future work, so approach it wisely. 

Agencies: The best software helps all parties who deal with pricing compliance use the same data; it includes an indexing mechanism for all data attributes involved in a federal contract, which is vital for price determination and proposal comparison analysis. In addition, the ability to automate the import of a contractor’s pre-determined data model into your system can save COs much stress and session work.



 
 

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