52.203-3, Gratuities

[here_2_help]

3 hours ago, ji20874 said:

Fara,

It happens all the time, even in the hallowed halls of Congress.  How many times has Congress passed a bill that says "Notwithstanding any other provision of law. . ." or similar?  This allows them to declare the new law without the tedious chore and argument of modifying all the pre-existing laws that might be stepped on by the new law.

Some other examples in the FAR...

• 52.242-1 Notice of Intent to Disallow Costs - (a) Notwithstanding any other clause of this...
• 52.227-22 Major System-Minimum Rights - Notwithstanding any other provision of this contract, the Government shall have...
• 52.236-11 Use and Possession Prior to Completion - ...notwithstanding the terms of the clause in this contract entitled Permits...
• 52.216-21 Requirements - Notwithstanding anything to the contrary stated in the contract...

The word "notwithstanding" is a very powerful word.  That is the word used in FAR 12.301(d).

Some participants in the acquisition system have been ignoring or resisting this for over twenty years -- hopefully, through exchanges such as this, one at a time, we can help others learn correct principles.

 

Let's talk about The CARES Act:

Quote

SEC. 3610. FEDERAL CONTRACTOR AUTHORITY.

Notwithstanding any other provision of law, and subject to the availability of appropriations, funds made available to an agency by this Act or any other Act may be used by such agency to modify the terms and conditions of a contract, or other agreement, without consideration, to reimburse at the minimum applicable contract billing rates not to exceed an average of 40 hours per week any paid leave, including sick leave, a contractor provides to keep its employees or subcontractors in a ready state, including to protect the life and safety of Government and contractor personnel, but in no event beyond September 30, 2020. Such authority shall apply only to a contractor whose employees or subcontractors cannot perform work on a site that has been approved by the Federal Government, including a federally-owned or leased facility or site, due to facility closures or other restrictions, and who cannot telework because their job duties cannot be performed remotely during the public health emergency declared on January 31, 2020 for COVID–19: Provided, That the maximum reimbursement authorized by this section shall be reduced by the amount of credit a contractor is allowed pursuant to division G of Public Law 116–127 and any applicable credits a contractor is allowed under this Act.

As a contractor concerned about things such as (but not limited to) the Truthful Cost or Pricing Data Act or the Cost Accounting Standards, I really do appreciate those five words.

 

[joel hoffman]

2 hours ago, Vern Edwards said:

18 U.S.C. § 201.

Much better! 

[joel hoffman]

 The life experience of living under an Honor Code with both Honor and Ethics training for four years at the Air Force Academy and continuing in the Air Force for five years,  between 1967-1976, instilled a strong awareness of honor and ethics that has remained important to me since.

I don’t know if anyone here has been  offered a bribe, gratuity or whatever you choose to call it. During my first year with the Army Corps of Engineers in 1980, I was project engineer for quality assurance and contract administration on a small $300,000 construction contract for the infrastructure for Air Force installation of a Solid State Instrument Landing System at Columbus AFB, MS.

The mechanical subcontractor was experiencing some quality control problems on a standby generator and its building. The clearly frustrated foreman asked me what it would take get the work to pass inspection. I quickly answered. “$600,000”. He was shocked and said that’s more than the whole contract!  I said yeah but I’d have to take of my family for the 20 years that we’d both spend in prison for bribery. He laughed and changed the subject...

Actually, I had earlier asked an old time construction management expert what he would do if offered a bribe. He said to cite a ridiculously high amount to shock, diffuse and make the offeror know up front that you can’t be bribed. He guaranteed that it would work. Bingo!

I spent four years in the late 80’s as a USACE contract administrator and negotiator on large construction contracts in Saudi Arabia. All of our contractors were Korean or Middle East firms. Years later, one of my best friends and fellow administrator and I were recollecting our times together in Riyadh. I said that I was surprised that I’ was never approached by any of our contractors, since we had negotiated some really large changes and had handled big claims. He told me that the contractors told him that I was so “squeaky clean” that they knew it would be futile to try. That was pretty gratifying. 😁

Honestly, I was always amazed at how much trust was placed upon USACE ACO’s and contract administrators over my career. 

[C Culham]

1 hour ago, joel hoffman said:

Much better! 

Yes....I spent some time this morning just surfing.   A few things struck me.....

"Gratuities Statute" as it seems to be called for DOD dates back to 1962.

In a 1996 Fed Reg notice where the SAT threshold was established for the clause it was stated that.... "FAR Subpart 3.2, Contractor Gratuities to Government Personnel, implements 10 U.S.C. 2207 and applies to all executive agencies except for that portion concerning exemplary damages, which applies only to DOD."

The above seems to support that  10 USC 2207 carries with it the additional  "costly" implication that Vern mentioned.

And this (see below) which to me was odd where it was located but still seems to be in part another "why" as to commercial items solicitation/contracts do not include the Gratuities Clause as a separate term and condition in 52.212-4.   Brought me back to the catch all "q" paragraph of the 52.212-4 clause where contractors are to comply with all laws, etc.   

"3.104-2 General....

  (b) Agency officials are reminded that there are other statutes and regulations that deal with the same or related prohibited conduct, for example-

           (1) The offer or acceptance of a bribe or gratuity is prohibited by 18 U.S.C. 201 and 10 U.S.C. 2207. The acceptance of a gift, under certain circumstances, is prohibited by 5 U.S.C. 7353 and 5 CFR Part 2635;..."

 

Not confused but feeling like the FAR could do a little better job on this subject.

[joel hoffman]

12 hours ago, C Culham said:

Yes....I spent some time this morning just surfing.   A few things struck me.....

"Gratuities Statute" as it seems to be called for DOD dates back to 1962.

In a 1996 Fed Reg notice where the SAT threshold was established for the clause it was stated that.... "FAR Subpart 3.2, Contractor Gratuities to Government Personnel, implements 10 U.S.C. 2207 and applies to all executive agencies except for that portion concerning exemplary damages, which applies only to DOD."

The above seems to support that  10 USC 2207 carries with it the additional  "costly" implication that Vern mentioned.

And this (see below) which to me was odd where it was located but still seems to be in part another "why" as to commercial items solicitation/contracts do not include the Gratuities Clause as a separate term and condition in 52.212-4.   Brought me back to the catch all "q" paragraph of the 52.212-4 clause where contractors are to comply with all laws, etc.   

"3.104-2 General....

  (b) Agency officials are reminded that there are other statutes and regulations that deal with the same or related prohibited conduct, for example-

           (1) The offer or acceptance of a bribe or gratuity is prohibited by 18 U.S.C. 201 and 10 U.S.C. 2207. The acceptance of a gift, under certain circumstances, is prohibited by 5 U.S.C. 7353 and 5 CFR Part 2635;..."

 

Not confused but feeling like the FAR could do a little better job on this subject.

Thanks, Carl. Yes the FAR could be better collated/correlated/cross referenced to provide a better perspective.

Actually, 3.104 deals with procurement integrity, which is more specific than the broader topic of gratuities.

Gratuities could also or alternatively occur before the procurement or after after award.

Ive been involved in all three phases over the years and am aware of instances that have allegedly occurred during each phase. 

Edited February 12, 2021 by joel hoffman
Tried to find appropriate term to provide clearer perspective why clause is needed or not needed. Gratuities are always illegal or otherwise improper.

[Vern Edwards]

@joel hoffman $600,000 would have taken care of your family for 20 years?

[joel hoffman]

26 minutes ago, Vern Edwards said:

26 minutes ago, Vern Edwards said:

@joel hoffman $600,000 would have taken care of your family for 20 years?

That was back when I was making $22,000 as a fresh new GS11 employee.  At any rate, it was twice the amount of the entire prime contract. 

[Vern Edwards]

Yeah, but 20 years?

[Vern Edwards]

Speaking of gratuities, how about Fat Leonard?

[joel hoffman]

1 hour ago, Vern Edwards said:

Speaking of gratuities, how about Fat Leonard?

He may be the king.  He was definitely the King pin of an influence ring!

EDIT: for those wondering who Fat Leonard is...

https://en.m.wikipedia.org/wiki/Fat_Leonard_scandal

[Vern Edwards]

Dude, he was a deputy CNO!

[joel hoffman]

7 minutes ago, Vern Edwards said:

Yeah, but 20 years?

I didn’t live life in the fast lane. The point was really that it was twice the prime contract amount to get his attention. The prison remark was a joke, meant to disarm him and lighten the mood. We both laughed and he changed the subject. I think his initial remark was meant as a test to feel me out.

I remembered the tactic that my sage buddy taught me - it’s a spur of the moment reaction. One doesn’t sit down and calculate pay and job growth before responding to a possible bribe. 

Edited February 12, 2021 by joel hoffman

[Vern Edwards]

Next time, show some imagination!

(Quite a pair, laughing at the idea of prison.)

[joel hoffman]

That was a relatively easy situation. It was a hell of a lot more serious when someone I worked with and thought I knew  tried to recruit me for the Mafia, 46 years ago when I was an young Air Force officer. Totally unexpected and terrifying experience...can’t go into detail.

 

[Vern Edwards]

You might have been in a Scorsese movie! With DeNiro and Pesci!

[joel hoffman]

I’m a guy that wouldn’t let my contractor friend on my first AF construction project 50 years ago buy me a 10 cent cup of coffee at the BX cafe.  We started taking daily coffee breaks to discuss the job.  He would teach me all about concrete and asphalt paving - I made him first agree that we would trade off days paying for coffee (free refills - shows how much coffee cost back then) because I was afraid that it would be improper, based upon my Academy training. Of course, you can probably remember how much Air Force lower ranked personnel made back then. At least enlisted personnel could go to the Dining hall and drink free coffee. 😁

[Retreadfed]

On 2/11/2021 at 9:06 AM, C Culham said:

In truth anyone  could offer gratuities all it wants to government employees, isn't it the government employee that violates ethics rules if they accept the gratuity.

I'm not sure what ethics rules you are referring to, but if you are talking about the Government-wide Ethics Regulation put out by the Office of Government Ethics or the DoD Joint Ethics Regulation, those regulations apply to government officers and employees.  For purposes of this discussion see 5 CFR 2635.205.  However, there are criminal statutes and contract clauses such as FAR 52.203-3 that apply to contractors.  The criminal statutes also apply to government officers and employees.

[C Culham]

4 hours ago, Retreadfed said:

I'm not sure what ethics rules you are referring to, but if you are talking about the Government-wide Ethics Regulation put out by the Office of Government Ethics or the DoD Joint Ethics Regulation, those regulations apply to government officers and employees.  For purposes of this discussion see 5 CFR 2635.205.  However, there are criminal statutes and contract clauses such as FAR 52.203-3 that apply to contractors.  The criminal statutes also apply to government officers and employees.

Yes probably a hastily prepared statement.   I agree especially with regard to the 18 USC stuff.   Not trying to wiggle out but my view would be the hearsay of somebody said a contractor offered them a bundle to do such and such would still require details being added to make it qualify for the 18 USC penalties.   But again the clarification is acknowledged and appreciated.  Thanks

[Fara Fasat]

The dust has settled now, and I have completed my review of the applicability of clauses to CI contracts (larger project, not relevant here), so  have a couple observations:

1. I missed the 'notwithstanding' in 12.301. I knew it from way back, but got too wrapped up in the 'all contracts' language. My fault.

2. There can be some honest debates over whether some clauses should or should not apply to CI contracts, as evidenced by the discussion over the gratuities clause. For example, the "Brand Name or Equal" clause, 52.211-6, is not listed in 12.301 and therefore not required in CI solicitations or contracts. And yet commercial items are more likely to be identified by a brand name than a non-commercial item, so why not? Maybe there's a good reason for this clause, but there are a whole lot more that make you wonder why they wouldn't be required.

3. The 'notwithstanding' rule was presented earlier in this discussion as so all-encompassing and so easy to understand and apply, that any question deserved to be in the beginner's forum. Yet as with most things in the FAR, it's not so simple. There are some clauses that are nowhere to be found in Part 12 or 52.212-5, yet definitely belong in CI contracts. 

For example, 52.216-31, "Time-And-Materials/Labor-Hour Proposal Requirements -- Commercial Item Acquisition", is nowhere in Part 12 or 52.212-5. By 12.301(d), we should exclude it, yet the only reason for its existence is a CI contract. Its prescription is at 16.601(f)(3). The FAR matrix doesn't list it in the CI column, although the DAU matrix caught it. There are a couple others like this. The point is, there are some holes in 'notwithstanding,' and it's not easy to find them.