Individual and Organizational Conflicts of Interest - PowerPoint PPT Presentation

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Individual and Organizational Conflicts of Interest

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  1. Individual and Organizational Conflicts of Interest

  2. Introduction • Concept of Conflict of Interest (COI) • Individual Responsibility Regarding COI • Post-Government Employment • Preventing Potential Organizational Conflicts of Information (OCI)

  3. Conflict of Interest General • A "conflict of interest" is a personal interest or relationship, as defined by law or regulation, that conflicts with the faithful performance of official duty. Source: 18 U.S.C. Sections 201, 203, 205, 208, 209

  4. Individual Conflict of Interest • As Government employee, you may not participate personally and substantially (e.g., make a decision, give advice, make a recommendation) in any government matter that would affect the financial interests of: • You, your spouse, or your minor child, • Your general partner, • An organization in which you are serving as an officer, director, trustee, general partner or employee, or • An organization with which you are negotiating for employment, or have an arrangement for future employment. Source: 18 U.S.C. 208

  5. Individual Conflict of Interest • Federal employees may not work on any government matter (e.g., contract, source selection, or claim) that affects the financial interests of a company, if they (or their spouse or minor child) own stock in the company. • Exception: If value of stock owned by you, your spouse & minor children in all the companies involved in the matter is $15,000 or less. • Example: If Companies A and B are competing for a government contract, you may work on source selection, if you own $6,000 of stock in one and $7,000 of stock in the other. Source: 5 C.F.R. 2640.202

  6. Individual Conflict of Interest • An Executive Branch employee may not work on a government matter involving a contractor that employs his or her spouse if: • Doing so would affect the spouse’s level of compensation or continued employment with the contractor, or • The spouse owns more than $15,000 of the company’s stock, or the spouse has a pension plan that has more than $15,000 of the company’s stock. Source: 5 C.F.R. 2640.103

  7. Post-Government Employment • A government employee may not “seek employment” with a company if he is participating personally & substantially in any “particular matter” that has a direct and predictable effect on the company’s financial interests. • “Particular matter” includes contracts, task or delivery orders, source selections, asset sales, claims against the government, etc. • A government employee begins to “seek employment” when he has a discussion about employment, or submits a résumé. Source: 18 U.S.C. 208, and 5 C.F.R. 2635. 603, 604

  8. Post Government Employment • The lifetime representation ban (18 U.S.C. 207(a)(1)) • The two-year representation ban (18 U.S.C. 207(a)(2)) • The one-year no contact rule (18 U.S.C. 207(c)) • The one-year compensation ban (41 U.S.C. 423(d))

  9. Lifetime Representation Ban • If a Federal employee participates personally & substantially in a contract, he/she may go to work for the contractor, but may never act as contractor’s negotiator or representative before any Federal agency on that contract. [18 U.S.C. 207(a)(1)] • Applies to officers & civilians, but not enlisted • Applies to contracts & other “particular matters” (asset sales, environmental claims, personnel actions) “Lifetime” means lifetime of the contract.

  10. Two-Year Representation Ban • If a Federal employee has a contract under his/her official responsibility during his/her last year in the government, he/she may go to work for the contractor, but may not, for 2 years, act as contractor’s negotiator or representative before any Federal agency on that contract. [18 U.S.C. 207(a)(2)] • Applies to officers & civilians, but not enlisted • Applies to contracts & other “particular matters” (asset sales, environmental claims, personnel actions)

  11. One-Year No Contact Rule • “Senior employees” may not, for one year, communicate with, or appear before, any employee of their former agency, on behalf of a third party, in connection with any matter on which the third party seeks official action by their former agency. • The rule (18 U.S.C. 207(c)) applies to: • General/Flag Officers (O-7 to O-10), • SES employees at Levels 5 and 6, and • SES-equivalent employees (e.g., ST & SL) whose basic rate of pay (excluding locality-based pay) is equal to or greater than the basic pay of SES Level 5.

  12. Employment Contact Reporting Rule If an employee (officer, enlisted or civilian) is… • Participating personally and substantially in a procurement, and • Contacts, or is contacted by, a bidder or offeror regarding possible employment, then the employee must… • Give written report to supervisor & Designated Agency Ethics Official or designee, and • Either (1) reject the possibility of employment, or (2) be disqualified from working on procurement until job discussions end, and there is no arrangement for employment. • Not resume participation until the head of the contracting agency authorizes • Rule applies only to contracts in excess of $100,000. Source: 41 U.S.C. 423(c)

  13. Employment Contact Reporting RulePenalty for Individuals • If an employee fails to comply with employment contact reporting rule, maximum penalty under 41 U.S.C. Section 423(e) is: • Civil penalties, for each violation, of $50,000 plus two times any amount of compensation offered or received by an agency official, and • Adverse personnel action (i.e. termination) • Further, an employee may be criminally prosecuted under 18 U.S.C. Section 208

  14. Employment Contact Reporting RulePenalty for Organizations • If a company (or organization) that is a bidder or offeror in a procurement contacts, or is contacted by, a Government employee who is participating in the procurement, and company engages in employment discussions with employee, and company knows employee has not reported the contact to supervisor and to TMA OGC, maximum penalty is: • Civil penalty, for each violation, of $500,000 plus two times the amount of compensation offered or paid, • Contractual remedies, if contract awarded, • Disqualification of offeror or cancellation of procurement, if contract not awarded, and • Suspension & debarment proceedings Source: 41 U.S.C. 423(e)

  15. One-Year Compensation Ban • People who serve in one of seven positions, or who make one of seven types of decisions, on a contract over $10 million, may not accept compensation from the contractor for one year from date of last service or decision. • One-year ban is on accepting compensation from the contractor as an employee, consultant, officer or director. Source: 41 U.S.C. 423(d)

  16. One-Year Compensation Ban Seven Positions Affected • Procuring Contracting Officer • Source Selection Authority • Member of Source Selection Evaluation Board • Chief of financial or technical evaluation team • Program Manager • Deputy Program Manager • Administrative Contracting Officer

  17. One-Year Compensation Ban Seven Types of Decisions • Decision to award a contract over $10 million • Decision to award a subcontract over $10 million • Decision to award a modification that is over $10 million of a contract or subcontract • Decision to award a task order or delivery order over $10 million • Decision to establish overhead or other rates applicable to a contract or contracts valued over $10 million • Decision to approve issuance of a contract payment or payments over $10 million • Decision to pay or settle a claim over $10 million

  18. One-Year Compensation Ban When the Ban Starts • For PCOs, SSAs, SSEB members, and evaluation team chiefs, ban starts on date of contract award. • Exception: If an individual was serving in the position on the date of contractor selection, but not on the date of contract award, the ban begins to run on date of contractor selection. • For PMs, DPMs & ACOs, ban starts to run on last day of service in the position. • For decision-makers, ban starts on date of decision.

  19. One-Year Compensation Ban • Other divisions. The one-year ban does not apply to accepting compensation from any division or affiliate of the contractor that does not produce the “same or similar products or services” as the entity of the contractor that has the contract that you worked on. • Legal opinion. Individuals can request an opinion on whether the ban applies.

  20. Discussion • Suppose specialist becomes a member of the Source Selection Board • We have offers and are beginning evaluation • One of the offerors contacts specialist with a job opportunity • Specialist immediately notifies supervisor and ethics counselor • Can the supervisor demand that specialist terminate employment discussions?

  21. Organizational and Consultant Conflict of Interest (OCI) FAR Subpart 9.5 “An organizational conflict of interest may result when factors create an actual or potential conflict of interest on an instant contract, or when the nature of the work to be performed on the instant contract creates an actual or potential conflict of interest on a future acquisition. In the latter case, some restrictions on future activities of the contractor may be required.” FAR Subpart 9.504 A Contracting Officer shall identify and then avoid, neutralize or mitigate significant conflicts before contract award.

  22. OCI Evaluation Principles • The two underlying principles are -- • (a) Preventing the existence of conflicting roles that might bias a contractor's judgment; and • (b) Preventing unfair competitive advantage, which may exist where a contractor competing for award of any federal contract possesses -- • (1) Proprietary information that was obtained from a Government official without proper authorization; or • (2) Source selection information that is relevant to the contract but is not available to all competitors, and such information would assist that contractor in obtaining the contract. Source: FAR Subpart 9.505

  23. TMA OCI Categories • TRICARE Management Activity (TMA) has categorized all its non-purchased care requirements into three broad categories for purposes of identifying, avoiding or mitigating against OCIs in accordance with FAR Subpart 9.5. These categories are defined as follows: • Category 1: TMA Internal Support: Services which, by their very nature, give the Contractor access to extensive data about the contracts of all other TMA contractors. • Category 2: Program Management Support: Services which assist TMA in planning and managing its activities and programs. These include, for example: requirements analysis, acquisition support, budget planning and management, business process reengineering, program planning and execution support, and independent technical management support. • Category 3: Product Support. Services or end items required to meet the mission requirements of TMA’s non-purchased care activities and programs. These include, for example: concept exploration and development, system design, system development and integration, COTS Procurement and integration, internal development testing, deployment, installation, operations, and maintenance. Source: TMA OCI Clause

  24. TMA OCI Categories (continued) • OCI categorization applies to all TMA non-purchased care requirements and acquisitions, regardless of: • The cognizant contracting activity (USAMRAA, ITEC4, etc.), or • The type of contracting vehicle used (FSS order, Fair Opportunity competitive order under Multiple Award IDIQ Contracts, competitively-negotiated awards etc.) Source: TMA OCI Clause

  25. TMA OCI Rules – Award Eligibility • A contractor that has never provided support to TMA in any of the OCI categories is eligible for award in any category. • A contractor that provides or has provided support to TMA in only one OCI category of work and has never supported TMA in any other category (I.e., a single-category contractor) is eligible for award for any future requirement in that single category. Source: TMA OCI Clause

  26. TMA OCI Rules – Award Eligibility • A single-category contractor wishing to submit an offer in a different category, or any contractor which now provides or previously has provided support in more than one category, must include the following as part of its offer: • A comparative analysis of the potential new work against all current and previous work performed in support of TMA in any category other than that of the new work being bid. • Must include a statement whether the contractor believes that its performance of the proposed new work would create a real or apparent OCI. • If the contractor believes that no real or perceived OCI will result from an award of the proposed work, no additional action by the contractor is required. • If the contractor believes that a real or apparent OCI may exist as a result of an award, the contractor shall also submit an OCI Avoidance or Mitigation Plan with its proposal. Source: TMA OCI Clause

  27. OCI Award Eligibility Determination • The Contracting Officer will review the comparative analysis and, if provided, the Avoidance or Mitigation Plan, to determine whether award to that offeror would be consistent with FAR requirements. • If it is unilaterally determined by the Contracting Officer that no OCI would arise or that the OCI Avoidance or Mitigation Plan adequately protects the interests of the government in the event of award to that offeror, the offeror will be determined, for purposes of this clause, to be eligible for award. • The Contracting Officer may properly decide that in the best interest of the Government, the proposed mitigation plan is not adequate and determine the contractor is ineligible for award. This will save the contractor from further expense and effort to receive the award. Source: TMA OCI Clause

  28. Summary Avoid Individual Conflicts of Interest • Government employees may not make a decision, give advice, or make a recommendation in any government matter that would affect their own financial interests. Report Organizational Conflicts of Interest • The existence of conflicting roles that might bias a contractor's judgment or give them an unfair competitive advantage