In This Chapter

It’s your worst nightmare. You and your proposal team are plugging away, working long and hard to create a winning proposal for a government contract that would be huge for your company. Your own top management has built a strong team with your company as the prime contractor and including a group of subcontractors known to be “in tight” with the customer. The customer loves you and your team, so you’re whistling while you work and are confident this one is just about in the bag. Then listening to the radio on the way into work one morning, you hear that another division of your company, two time zones away from your location, has been charged with massive irregularities in time accounting, meaning your entire company is now threatened with debarment from government contracting.

In other words, through no fault of your own, for something that has (allegedly) happened in another time zone, there’s now a real possibility that your division will suffer by no longer being eligible to get the contract you’re seeking. Your subcontractors will suffer as well through even less fault of their own.

What’s the lesson here? You cannot be successful in government contracting for long unless you know and adhere to the ethical and legal restrictions in this field. Failure to abide by “the rules” can sink your ship quickly and permanently. On the other hand, if you know and obey those rules, you and your company have the opportunity to have successful business relationships with the public sector.

This chapter gives you guidance on how to avoid the described contractor’s nightmare by focusing on common pitfalls and how to stay away from them. We also cover the sources of general guidance, an acquaintance with the Federal Acquisition Regulation (FAR), highlights of case law, a short list of what’s okay and what’s not okay, and end with suggestions on how to be assured you’re in compliance with government rules.

Markets have their own special vocabulary, practices, and conventions, and the government market is no different. If you’re coming from the commercial world (the nongovernment world), you must acquaint yourself with the practices that apply to dealing with governments.

This chapter focuses on the federal government rules and regulations. S&Ls (state and local governments) have corresponding and analogous rules and regulations, but each government has somewhat different rules. If you’re going after S&L work, your best guidance is to rely first on your in-locality partner and the contracts and legal staff of that company for any differences between federal laws and regulations and S&L laws and regulations.

If you’re new to getting government contracts, you may sometimes feel as if you’re a stranger in a strange land. But don’t worry; everyone was new once. Experienced hands come to know what’s permissible and what’s not, and in time you will, too. Until that time comes, consider this book, especially this chapter, as a chance to learn from the mistakes of others and not have to make your own.

These are just a handful of the potential pitfalls that could trip you up, but they are the most common, so if you can avoid these, you’re a big step ahead. It’s impossible to anticipate every potential misstep you could make, but you can get yourself much closer to a smooth road by following trusted sources of guidance on ethical and legal issues in contracting.

Before turning to any official sources, look within yourself and your own sense of good judgment to guide you. You are already equipped to do three things:

Okay, so you want something a little more official than Jiminy Cricket? Maybe some place where people have diplomas on the wall or papers published? I can understand that. So let me suggest the Office of Government Ethics (OGE), established in 1978 by The Ethics in Government Act. Although this office was established as a part of the Office of Personnel Management (OPM), the Office of Government Ethics Reauthorization Act of 1988 made it a separate agency.

The OGE’s charter is to prevent conflicts of interest by government employees and to resolve those conflicts when they do happen. OGE establishes policy and provides guidance about ethics issues. It is unlikely that you, as a government contractor, would have occasion to contact this office. However, it does exist and does help determine what is and is not acceptable practice.

The FAR is the government-wide procurement regulation mandated by Congress and issued by the Department of Defense (DOD), the General Services Administration (GSA), and the National Aeronautics and Space Administration (NASA). All federal agencies are authorized to issue regulations implementing the FAR.

Typically, the FAR clauses are written to describe what is absolutely prohibited or to state what is permitted up to a certain limit. For example, anything given to a government employee for influencing that employee to give something of value in return, such as awarding your company a contract, is strictly prohibited and punishable by fines and imprisonment. Doing other things that are prohibited can result in debarment, which is the act of shutting out (that is, preventing) you and perhaps your company from winning future government contracts.

The relevant clauses in the FAR are in Part 3—Improper Business Practices and Personal Conflicts of Interest. You and your company staff members should review this information. The best way to avoid running afoul of the regulation is to know what the FAR says. The clauses are within Part 52 of the FAR, specifically at 52.203.1 through 52.203.14. Part 3 provides the policy and guidance.

Not only laws and regulations set the limits on ethical behavior. Case law also helps dictate appropriate behavior.

A great deal of case law has been recorded as a result of legal questions about government procurements. Again, you must seek competent, relevant legal advise on how, if at all, the case law applies to your situation. With any luck, you won’t find yourself appearing in any future case law!

Case law has motivated changes in the FAR and other governing regulations. For example, if the outcome of a specific case results in the court deciding that something is not illegal but the government believes it should be illegal, the response is to put into place new regulations or pass new laws to apply to future such acts.

Remember that this chapter emphasizes only the highlights of some of the most common aspects of government regulations for contractors. This list of acceptable and not acceptable actions is a good starting point, covering some common situations you are likely to find yourself in, but don’t forget to read the FAR and confer with legal counsel when you need to know about situations we’ve not covered here.

Several years ago, a Washington Redskins quarterback beat his own head against a concrete block wall after a particularly pivotal play. The player injured his neck and missed several games. When asked, the Redskins coach said he never thought to tell his players not to beat their head against a block wall.

The same holds true with ethical guidelines when dealing with the government in contracting situations. It’s not accurate to say, “If it’s not prohibited, then it’s permissible.” Similarly, it’s not a worthwhile exercise to try to list everything that’s permissible. It’s not wise to conduct relations with your government customer on the basis that you’ve never seen it on a list of prohibited actions.

The best guidance we can give is to proceed with care in any relations you have with your government customer personnel. And here are two examples of reasonable things you can do for and with government employees:

Here’s a short list of sample conduct not permissible by government contractors:

Many companies doing business with the federal government set their own rules and regulations, a code of conduct that details permissible behaviors as well as nonpermissible behaviors. You and your company should have a program in place to ensure compliance with, at minimum, the government’s rules and regulations. Here are four simple suggestions for how to do that:

The Least You Need to Know