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COR Conflict of Interest

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The COR on our DoD contract was working for our company less than six month ago before being hired by the government.  Would that be considered a conflict of interest?

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Does the COR have personal interests in the company that conflict with their official duties or public interest?

Does the official have a position of authority that conflicts with his or her interests in the company? 

Why or how would this person have a conflict of interests between the two organizations in your opinion? 

I had a friend who once worked for a construction company, then went to work for the Government at the Resident Office that administered at least one contract with the company. 

In my last civil service active duty assignment, I witnessed several senior employees of the Army’s Program Office go to work for various contractors on the program and one Colonel in our org who retired, then went to work for Raytheon, who was later prime contractor at two project sites. I was told that he participated in the proposal preparation team for the contracts.  

 

 

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There is no financial conflict of interest.  My thought process is probably off on this.  I am thinking that a government employee cannot accept a position with a company where he was the COR or contracting official.  I guess it doesn't work in reverse where the contractor employee worked for a company where as the COR she is now monitoring the same company she worked for. 

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What does your firm's employment agreeement with its employees say in the area of confidentiality?  

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Thank you.  That is a very interesting point since all employees sign a non-disclosure agreement that continues after employment ends.  We have had several instances where the COR's knowledge of employee's personal information has been brought into question by the COR.  I appreciate your input.

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Interesting.  

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A more on-point question is whether the employee left in good circumstances and whether they might now harbor a grudge or animus against their former employer.

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Possibly, depending on the circumstances.  See 5 CFR § 2635.502(a) which states, in part, 

Quote

Where an employee ... knows that a person with whom he has a covered relationship is or represents a party to such matter, and where the employee determines that the circumstances would cause a reasonable person with knowledge of the relevant facts to question his impartiality in the matter, the employee should not participate in the matter unless he has informed the agency designee of the appearance problem and received authorization from the agency designee in accordance with paragraph (d) of this section.

Paragraph (b) then says

Quote

 

Definitions. For purposes of this section:

(1) An employee has a covered relationship with:

(iv) Any person for whom the employee has, within the last year, served as  officer,  director,  trustee,  general partner, agent, attorney, consultant, contractor or employee

 

So, as an employee within the last year, the COR likely has a covered relationship with the company.  The issue is whether "reasonable person with knowledge of the relevant facts" would question the COR's impartiality, keeping in mind that under the general principles of government ethics, an employee should avoid even the appearance of unethical behavior. 5 CFR § 2635.101(a)(14).

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36 minutes ago, Lionel Hutz said:

See 5 CFR § 2635.502(a) which states, in part,

@Lionel Hutz

You didn't quote the entire passage. You left out the part about financial interest:

Quote

§ 2635.502 Personal and business relationships.

(a)Consideration of appearances by the employee. Where an employee knows that a particular matter involving specific parties is likely to have a direct and predictable effect on the financial interest of a member of his household, or knows that a person with whom he has a covered relationship is or represents a party to such matter, and where the employee determines that the circumstances would cause a reasonable person with knowledge of the relevant facts to question his impartiality in the matter, the employee should not participate in the matter unless he has informed the agency designee of the appearance problem and received authorization from the agency designee in accordance with paragraph (d) of this section.

(1) In considering whether a relationship would cause a reasonable personto question his impartiality, an employee may seek the assistance of hissupervisor, an agency ethics official or the agency designee.

(2) An employee who is concerned that circumstances other than those specifically described in this section would raise a question regarding his impartiality should use the process described in this section to determine whether he should or should not participate in a particular matter.

What you quoted deals in situations in which a financial interest is involved. If there is no financial interest, see paragraph (a)(2).

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I didn’t quote the entire section because I thought it was obvious that a company that has a contract has a financial interest in that contract.  I was trying to draw Lois’s attention to the fact that there is a “covered relationship” due to the prior employment.  If that was misleading, I apologize.

While paragraph (a)(2) addresses situations when there is no financial interest, it is not applicable here because there is a financial interest.

For clarification purposes, let me explain.

2635.502(a) says that if a government employee has a covered relationship with a party that has a financial interest in a matter, that government employee should not participate in that matter (or get authorization) if circumstances would cause a reasonable person with knowledge of the relevant facts to question his impartiality.

As quoted above, a “covered relationship” includes “Any person for whom the employee has, within the last year, served as officer, director, trustee, general partner, agent, attorney, consultant, contractor or employee…” 5 CFR 2635.502(b)(1)(iv).

In this context, “Person means an individual, corporation and subsidiaries it controls, company, association, firm, partnership, society, joint stock company, or any other organization or institution, including any officer, employee, or agent of such person or entity.”  5 CFR 2635.102(k).

So, in Lois’s scenario, the COR most likely has a covered relationship with his former employer because he worked there less than one year ago.  Because the actions of a COR can have a direct and predictable effect on the financial interests of a contractor, the COR should not be assigned to his former employer’s contract if circumstances would cause a reasonable person with knowledge of the relevant facts to question his impartiality.

We don’t know all the relevant facts.  Perhaps, there are a unique circumstances here that would not cause someone to question the COR’s impartiality.  Or, perhaps the KO sought and received authorization from the agency designee to appoint the COR despite the appearance of impartiality.

In any event, Lois, if you are concerned about that individual being the COR, you have plenty of regulatory support for looking into this matter further and asking the KO if he/she complied with these regulations.

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53 minutes ago, Lionel Hutz said:

In any event, Lois, if you are concerned about that individual being the COR, you have plenty of regulatory support for looking into this matter further and asking the KO if he/she complied with these regulations.

@Lionel Hutz 

What if Lois writes to the CO and receives no response, or the CO says that he or she has "taken care of it," but the COR continues in her duties? Does it prescribe a procedure through which the company can file any kind of official complaint or demand an official investigation? Does 5 CFR grant Lois's company any right to demand that the agency make any kind of official determination?

I also note that 5 CFR § 2635.502(a) says that the employee "should not" participate rather than "shall not." Is that of any legal significance?

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Thank you all so much for your input. I have a much clearer understanding of the regulations after hearing from all of you.

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One final question.  Do any of the rules change if that previous employee is the ACOR rather than the COR?

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My guess is that job title is not important. What is important is the nature and extent of the employee's "participation" in a "particular matter" in which impartiality is required. In short, it's the duties that are important. But that's only a guess.

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3 hours ago, Vern Edwards said:

What if Lois writes to the CO and receives no response, or the CO says that he or she has "taken care of it," but the COR continues in her duties? Does it prescribe a procedure through which the company can file any kind of official complaint or demand an official investigation? Does 5 CFR grant Lois's company any right to demand that the agency make any kind of official determination?

Just a thought that always comes up with regard to ethics and noting that 5 CFR has been used as a reference.   Lois's recourse may be through both the CO as well as the ethics official of the agency involved or maybe even the Office of Government Ethics.  I say this noting the discussion at § 2635.106 Disciplinary and Corrective Action.

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I'm not an expert in administrative law, but here are some thoughts:

  • I don't see anything in 5 CFR that prescribes a process through which a member of the public can demand any action by a government official based on its complaint of a violation of 5 CFR 2635.502. I don't see anything that requires a public official to take any action at the demand of a member of the public. I see no time deadlines for government action.
  • 5 CFR 2635.402 strikes me as pretty loosey goosey. It says "should not participate" not "shall not participate." It appears to leave a lot of room for discretion.
  • I do not know of any standard contract clause that mentions 5 CFR 2635.502. I found no reference to 5 CFR 2635.502 anywhere in the FAR System.
  • I'm not sure that 5 CFR 2635.502 provides a basis for a claim under the Contract Disputes Act, and if it did I'm not sure that a board or the Court of Federal Claims could grant any relief under its CDA authority.

In short, there is a loose regulation and no clear process through which a contractor can demand action by the CO or anybody else. A contractor could certainly raise an issue, but it's not clear to me that it could pursue any course of enforcement action.

An expert in administrative law, and Lionel Hutz may be one, might be able to shed some light.

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In regard to Vern's last post, 5 CFR 2625.106(c) might be of interest.  It says:

A violation of this part or of supplemental agency regulations, as such, does not create any right or benefit, substantive or procedural, enforceable at law by any person against the United States, its agencies, its officers or employees, or any other person. Thus, for example, an individual who alleges that an employee has failed to adhere to laws and regulations that provide equal opportunity regardless of race, color, religion, sex, national origin, age, or handicap is required to follow applicable statutory and regulatory procedures, including those of the Equal Employment Opportunity Commission.

 

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By my read there are two aspects to a matter of conflict of interest.  One is prevention.   The other is enforcement action (lack of a better term on my part).  

Prevention and as such raising the matter to the right person on the government side would help determine any appropriate preventative action.  Who is that person?   The CO and the ethics official either through the CO or separately.  

Enforcement when a conflict is alleged to have actually occurred?   Possibilities include CO, Agency Head or designee for disciplinary actions, GAO, courts, EEOC, DOJ, and IG. 

I read the OP's question as enlisting help on the prevention aspect.   When it gets to an alleged violation seeking advice from an expert in contract and administrative law is the best route.   Such expert advice would be valuable in prevention efforts too but as noted prevention efforts lack a procedure to demand a specific action.

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Retreadfed identified the applicable portion of the regulation.  The Standards of Ethical Conduct impose duties and requirements on federal employees that are enforceable by the government, not by the public.

However, if a company has a separate and independent contractual cause of action, then a COR’s violation of ethics regulations could strengthen a claim/appeal.  For example, if a contractor alleges the CO’s and COR’s treatment of the contractor was unreasonable, increased the cost of performance, and violated the contract’s implied duty of good faith and fair dealing, then the COR’s violation of the ethics regulations lends weight to the contractor’s argument.  It doesn’t prove anything, but in my opinion, a court or board of contract appeals will be less deferential and more skeptical of the actions and explanations of a COR who has a “covered relationship” with the contractor and was appointed in violation of ethics regulations.

Even if there is not a claim or appeal in play, a contractor can still seek redress, it just depends on how much of a nuisance she wants to make herself over this issue.  In my experience, the key to getting results is to increase the “pain” level until ignoring the issue is more burdensome than dealing with it.

So, start by notifying the contracting officer.  Maybe she/he was not aware of the prohibition and it can be solved at that level.  If you get ignored, go to the Chief of the Contracting Office.  Then, the Chief Counsel, Agency Ethics Official, and Agency Inspector General’s Office.  If no one in the Agency will address the situation, contact your Senators and Congressman.  It’s amazing how quickly an issue will get addressed when a Congressional response must be provided.  At each step of the way, articulate the harm being caused to your company by this apparent violation of ethical regulations.

This course of action is provided with the following practical considerations: 

1) Make sure the issue is worth it.  If you go to your Congressman or the IG with every contract issue you have, your complaints will start to lose their effectiveness.  Become a “frequent filer” of complaints and people will start thinking the problem is with you and not the Agency.

2) Is the COR actually doing something to negatively affect your company?  If this is just an issue that you think doesn’t look right, but the COR is not actually doing anything problematic, it may not be worth becoming a nuisance and jeopardizing your relationship with other agency personnel.

3) In less than a year, the COR will no longer be in a “covered relationship” with the company and will be permitted to be the COR again.  Will getting the COR “kicked off” this contract for 6 months make working with him more difficult in the future?

4) Finally, as Vern points out, the regulation says “should” not “shall,” and the “agency designee” can authorize someone to work on a matter regardless of any real or perceived impartiality.  In the end, while you may be able to force an answer out of an agency, it won’t necessarily be the one you want.

 

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