Allen: New rules of contract ethics (full version)

Promoting your ethical behavior may actually help your firm win government business

Companies selling to the government and the government employees with whom they do business have long been bound by a host of ethical rules designed to ensure fair, transparent government acquisition. Until the past two years, however, these rules were known primarily only to people inside the procurement community. Although largely followed, they were notably ignored in a few high-profile cases. It is those notable exceptions that have brought increased scrutiny to the realm of procurement ethics. Now, it seems, no one can be ethical enough.

In today’s market, contractors and customers feel someone is looking over their shoulder. Even routine decisions are being second-guessed. Not surprisingly, this trend is starting to have an impact on the business of government. Contract professionals are demanding more information from contractors to make it clear that contracting decisions are based on objective criteria. In fact, some professionals will not make a decision until the proposal is reviewed by a group of contracting officers.

Established ethical policies do exist. With some limited exceptions, companies in business with an agency may not provide anything of value to any person involved in the acquisition process. This includes meals, sports tickets, gifts, forbearances and other items that might have the potential to sway the judgment of a government decision-maker.

The official rules of the Senate and the House say that lawmakers and staff members may accept gifts — other than cash or a cash equivalent — that they “reasonably and in good faith believe” to have a value of less than $50 and a cumulative value from one source of less than $100 in a calendar year. A gift worth less than $10 does not count toward the annual limit.

Many individual offices, however, have initiated stricter polices that prohibit the receipt of gifts of any value from an outside source having business before Congress or a federal agency. Some offices are going to extraordinary lengths to avoid even the appearance of unethical behavior. As a result, it may be easier to obtain Redskins tickets this fall than it has been in years.

It is vital that contractors know the policies of the offices and agencies they regularly do business with and develop their own systems to ensure they don’t inadvertently exceed gift ceilings.

Offering to pay for an $18 business lunch, although permissible in many cases, may actually bring a chill to a relationship if your guest’s agency has instituted a strict ban or if you’ve already bought the official several lunches. The last thing any contractor wants to do is lose a business opportunity by making a customer uncomfortable.

It’s not only gifts that can get a contractor or government official in trouble. Information shared with one company that is not shared with all after a request for proposals has been issued is a no-no. Employment discussions with officials at an agency with which your firm has business can land a company and the government employee in big trouble. Conflicts of interest can also take you where you do not want to go, proving that there is such a thing as bad business.

Think about it. Do you truly want to hire any government official that did not recuse him or herself from a procurement after employment discussions had been initiated? Similarly, if a contracting officer asked to be treated to lunch at The Palm, complete with a bottle of Opus One, I'd have to wonder if it were a trap to get my firm in trouble.

The same is true for contractors. If you offer inappropriate gifts, you can be fined, go to jail and cost your firm new government business. Is it worth the risk to yourself and your company? All companies doing business with the government should have clear ethics policies — in writing. The company should offer consistent training to employees and ensure that they follow the policies. I know of a company that has two “stand down” days each year to give such training to all its employees.

Promoting your ethical behavior may actually help your firm win business. Government agencies are increasingly looking for companies they can trust; having a visible ethics program is a big part of this equation.

Want more information? Hey, I’m available for lunch. And I love Opus One.

Allen is executive vice president of the Coalition for Government Procurement.

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