Transcript Slide 1
ANNUAL ACQUISITION ETHICS TRAINING
FOR
DESIGNATED DEPARTMENT OF ARMY PERSONNEL
2007
1
DUTY……HONOR…..
GOVERNMENT CONTRACTS
2
Got Ethics Questions?
Contact your ethics
counselor before you act.
CPT Nancy Lewis: (703) 806-4484
[email protected]
3
Why Ethics Rules?
Ensure that we perform our
mission with public interest in
mind.
Uphold public’s confidence in
integrity of Government.
4
Ex-Air Force Official Gets Prison
Time
Boeing Received Special
Treatment in Procurement
By Renae Merle and Jerry Markon
Washington Post Staff Writer
Saturday, October 2,2004; Page A01
5
Dragonlady gets her tail caught in the
revolving door
"The stain of this offense is very severe," said Judge T.S. Ellis of the U.S. District Court in
Alexandria, Virginia, while sentencing Darlene Druyun this morning. Druyun, also known
as the Dragonlady for being a tough negotiator, was the second-most senior Air Force
procurement official and, while overseeing billions of dollars of Air Force contracts, was
involved in discussions with Boeing for a $250,000-a-year job. She was sentenced to
nine months in prison, a $5,000 fine, three years of supervised release and 150 hours of
community service.
Druyun (who referred to herself as the "Godmother of the C-17") pleaded guilty to\
conspiracy to violate federal conflict-of-interest regulations on a technical basis. That is,
she initially admitted only knowingly violating regulations, but not to using her position in
the Pentagon to give Boeing advantages. However, she failed a lie detector test and then
admitted that she "did favor the Boeing Company in certain negotiations as a result of
her employment negotiations and other favors provided by Boeing to the defendant,"
according to the supplemental statement of facts and supplemental plea agreement .
Druyun helped Boeing obtain a grossly-inflated $23 billion deal where the Pentagon
would lease Boeing tankers, rather than buy them (and save up to $5 billion).
Essentially, she was negotiating for Boeing rather than the government at this point.
Assistant U.S. Attorney Robert Wiechering said, "she did this as a parting gift to Boeing
and to ingratiate herself into Boeing."
For more information on the Boeing tanker deal check out our Contractor Bailout
Archives and our new report The Politics of Contracting.
6
Contractor fraud probed on
Kuwait base
U.S. authorities are investigating a web of
more than $10 million in favors, bribes and
kickbacks among Army officers, contractors
and subcontractors at Camp Arifjan, court
and military records show.
By Matt Kelley, USA TODAY
October 14, 2007
7
Camp Arifjan. . . is the center of the Army's financial operation for Iraq. It
has handled more than $4.2 billion in military contracts.
center for corruption investigations.
It's also a
So far, 13 people associated with the Army's contracting operation in
Kuwait have been charged with corruption in federal courts — the
majority of the 20 corruption cases brought to date involving Army
contracts for Iraq. Eight of the 13 have pleaded guilty. Two enlisted
soldiers at Camp Arifjan were court-martialed for taking bribes.
Six companies accused of corruption in Kuwait also have been punished
administratively by Army contracting officials, records show.
The biggest bribery case of the Iraq war
so far involves Army Maj. John Cockerham,
a former contracting officer at Arifjan, who is
accused of taking $9.6 million in bribes from at least
eight companies seeking contracts to provide bottled
water and other supplies.
8
Those linked to Cockerham include some involved in other cases:
Maj. Gloria Davis, a fellow contracting officer at Arifjan who
worked on several contracts with Cockerham. Davis killed herself
in December, a day after admitting to Army investigators that she
took $225,000 in bribes from contractor Lee Dynamics
International, federal court records say. Lee Dynamics also hired
Davis' son, Damien Thomas, the company's lawyer says. The
Army suspended Lee Dynamics from contracting in July.
Diaa Salem, a businessman from Kuwait whom Cockerham
named as a business partner when creating a Texas company in
2004. The Army barred Salem and his firm, Jasmine International
Trading, from getting contracts for a year in 2006 in a separate
case.
In that case, two Army soldiers working at Camp Arifjan's finance
office were court-martialed for taking $7,000 from Salem to
process Jasmine's payments more quickly, according to Army
records released to USA TODAY under the Freedom of
Information Act.
9
Other unassociated cases:
LTC Guiterrez: Assigned to ASG-KU as Director of Logistics.
Offered to disclose procurement –sensitive information to an
employee of a contractor providing logistics support to the Army
in exchange for a cash payment of $3400. LTC Guiterrez
committed suicide subsequent to the preferral of bribery charges
against him.
CW2 Peleti: Charged in federal court with receiving $50,000 in
bribes regarding a food services contract and smuggling $40,000
in cash to the US. Peleti was the Food Services Advisor for Iraq
and Kuwait in 2005.
CW2 Wiesemann: Charged with graft and bribery. He has since
resigned with an Under Other Than Honorable Conditions
discharge as he faces federal prosecution.
LTC Bruce D. Hopfengardner, USAR: In connection with a bribery
and fraud scheme, accused of fraudulently awarding contracts
and authorizing cash payments despite defective or non
performance; also accused of stealing $120,000 in cash from the
Coalition Provisional Authority (CPA) in cooperation with other
co-conspirators; faces wire fraud, wrongful conversion, interstate
transportation of stolen property, conspiracy and money
laundering charges.
10
Other cases:
COL Whiteford:. Once the second most senior person at CPA.
Charged with conspiracy, bribery, wire fraud.
LTC Debra Harrison: Assigned to CPA at one point as the Acting
Comptroller. Charged in federal court with conspiracy, bribery,
wire fraud, interstate transport of stolen property, bulk cash
smuggling, money laundering and falsifying tax report.
LTC Michael Wheeler: Assigned as an advisor for CPA projects for
the reconstruction of Iraq. Charged in federal court with
conspiracy, bribery, wire fraud, interstate transport of stolen
property, bulk cash smuggling.
These three worked in conjunction with LTC Bruce D.
Hopfengardner. Phillip Bloom is a US citizen who received more
than $8.6 million in rigged contracts. The indictment alleges that
Bloom, in return, provided Whiteford, Harrison, Wheeler, Stein,
Hopfengardner and others with over $1 million in cash, SUVs,
sports cars, a motorcycle, jewelry, computers, business class
airline tickets, liquor, promise of future employment with Bloom,
and other items of value.
11
Topics
Gifts
Bribery
Contractor Personal
Organizational Conflict of
Interest
Procurement Integrity Act
Seeking Employment/PostGovernment Service
Employment
12
G
S
I
The servants of the
nation are to render
their services without
any taking of presents . .
The disobedient shall, if
convicted, die without
ceremony.
--Plato
F
T
s
13
The rules on the acceptance of gifts are with
a few exceptions, the same for all
agencies in the Executive Branch.
Everyone in DoD must be aware of the
restrictions in order to avoid inadvertent
mistakes that could ruin a career.
As decision-makers, we all perform official
duties that outsiders may want to unfairly
influence. As public servants, we must not
allow even the appearance of impropriety.
14
Prosecution !
“. . . Michael Dubberly, GM-15 program director
of the Air Vehicle Division for the Naval Air
Systems command, pleaded guilty to accepting
gratuities from Engineering Matrix Services of
Cardiff, N.J. . . . Dubberly was treated to four
expensive dinners from executives of the
company, which he helped award millions of
dollars in Navy contracts. He also requested
that a portion of the company’s profits be
deposited in an offshore mutual fund,
according to the inspector general. Dubberly
faces a maximum sentence of two years in
prison and a $250,000 fine.”
15
Two years in prison and a $250,000 fine in
exchange for four expensive meals?!?!?
If Mr. Dubberly were prosecuted under the
bribery statute (18 USC 201), he could face
penalties of up to 15 years in prison and 3 times
the amount of the bribe. The prosecution
appears to have decided to ask for lesser
penalties in this case.
And don’t forget:
even if the courts don’t prosecute,
the media surely will.
16
Gift Acceptance Analysis
1) Is it
(a) from a prohibited
source, or
(b) offered because of
your official position?
2) Is it defined as a “gift”?
3) Is there an exception?
4) Is there a limitation on using
the exception?
17
General Gift Rule
An employee shall not
solicit or accept any
gift or other item of
monetary value
1. From a prohibited
source; or
2. Given because of the
employee’s official
position
18
Prohibited Sources
Any person
1) seeking official action from, doing
business with, or conducting activities
regulated by, the individual’s
employing agency; or
D
E
F
I
N
I
T
I
O
N
2) whose interests may be substantially
affected by the performance or
nonperformance of the individual’s
official duties
19
Not “Gifts”
Modest items of food and refreshment
Greeting cards and items with little intrinsic
value, such as plaques, certificates, and trophies
Loans from financial institutions
Opportunities and benefits available to
the public or a class of employees
Rewards and prizes to competitors
Pensions and other benefits from a former employer
Anything paid for by the Government or
by the employee
Gifts accepted under specific statute
20
Gift Exceptions
Exceptions
to the gift
acceptance
prohibition
21
Gift Exceptions
Gifts of up to $20, up
to $50 per year from
the same source
Discounts and similar
benefits
22
You may accept gifts (other than cash or investment
interests) up to $20 per occasion, if the aggregate
market value received from one source under this
exception does not exceed $50 in a year.
You may accept reduced membership or other fees
offered to all Government employees or all military
personnel by professional organizations if the only
restriction on membership is professional qualifications.
You may accept opportunities, benefits, favorable rates,
and commercial discounts offered
(1) to a group in which membership is unrelated to
Government employment (e.g., The Association of
Retired Persons)
(2) to members of an organization in which membership
is related to Government employment if the same is
broadly available to large segments of the public
through organizations of similar size, (e.g., The Senior
Executive Service Association) or
(3) by an entity that is not a prohibited source
23
Gift Exceptions, cont.
Gifts based on
personal
relationships
Gifts based on
outside employment
Awards and honorary
degrees
24
Gift Exceptions, cont.
Mr. and Mrs. Invitee
Defense Pentagon
Washington, D.C.
Social invitations
from other than
prohibited sources
Speaking
engagements and
widely attended
gatherings
25
Gift Hypothetical
You are a quality assurance officer for the X-Files
Project. UFO Corp. is the contractor. You attend a
week of related meetings.
On Monday, the VP for at UFO Corp. takes you to lunch
and insists on paying the $18 for your meal
On Tuesday, the CEO of UFO Corp. invites you to join
him for dinner for which you never see a bill.
On Wednesday, you run into an old college chum and
have drinks in the hotel lounge, where you discover
your friend is now the Director of Marketing for UFO
Corp. He charges the tab to his own room before
you can get out your wallet. You leave the tip.
On Thursday, you sit down for a quiet breakfast alone
when a UFO Corp. project officer sits down with you.
You ask the waiter for separate checks, but the UFO
employee insists on covering the entire amount
through his corporate expense account.
26
Are you in trouble?
Analysis:
1) Is it from a prohibited source? YES, YES, YES, and YES
2) Is it defined as a “gift”? YES
3) Is there an exception? YES and NO.
The first meal probably qualifies for the $20 exception.
The second meal probably does not, unless you only had a
Caesars salad for dinner. You would need to send a check to
UFO Corp. to cover the cost of your dinner if it was over
$20.
The drinks in the lounge would have put you over the $50
limit from the same source, since your chum works for UFO
Corp. Gifts from different representatives of the same
company are deemed to be from the company. BUT, you
might accept the gift of the drinks under another exception:
gifts based on a personal relationship.
The breakfast with the project officer clearly would put you
over the limit of $50 from the same source in a year unless
you reimbursed the company for your dinner with the UFO
executive AND you were able to accept the drinks under the
27
personal relationship exception.
Bribery
Accepting a gift, even if nominal in
value, in return for being influenced in
the performance of an official act is a
bribe.
18 USC Section 201
28
Contractors in Government
Workplace!
29
Changing Workplace
Contractors Support DoD
Mission- No longer considered
“outsiders” with whom we deal
with at arms length!!
Contractors are Perceived as
“Partners”
Unchanging Laws
Fundamental Differences
Legal and Ethical Limitations
30
Oath of Office
Officers and Army Civilians
“I do solemnly swear/affirm that I will
support and defend the Constitution of the
United States against all enemies, foreign
and domestic; that I will bear true
allegiance to the same; that I take this
obligation freely, without any mental
reservation or purpose of evasion; and
that I will well and faithfully discharge the
duties of the office upon which I am about
to enter. So help me God.”
31
The Contractor’s Oath
BOTTOM LINE
32
Goals
Re-establish the Lines
Recognize when contractors and
Federal employees must be
distinguished
33
ALLOWING “TIME
OFF”
34
ALLOWING “TIME OFF”
Remember:
• Federal Personnel System rules/regulations are
inapplicable to contractor personnel
• Contractor personnel time is “billed” to the
government
Exercise caution:
• Organization Day
• Holiday Party
• Off-Site Conference
• Training
Coordinate with contracting officer
Ensure that contractor personnel are informed
35
YOU MAKE THE CALL!
The holiday weekend is fast approaching
and the officer-in-charge of the
organization invokes the “59-minute
rule” for all members of the office –
including the contract support team who
work with the Soldiers and government
employees.
Is it permissible to allow the contractor
personnel to leave 59-minutes before
their scheduled departure time?
36
ANSWER
Decisions concerning “time off” are to be
made by the contractor NOT the
government
Contractor personnel are paid pursuant to
the terms of the contract with the Army –
not according to federal personnel system
rules/regulations
• The contractor employee has no authority to
modify the terms of the contract
• Only certain government personnel have the
authority to modify the terms of the contract
37
Misuse of Contractor
Personnel
38
Misuse of Contractor Personnel
Prohibited from directing
contractor personnel to:
Perform any tasks other than
those in the contract.
39
Sharing a Taxi
A DoD employee and a contractor
employee are on official travel and
would like to split the cost of a taxi
ride to the airport. This is permissible.
True/False??
40
TRUE
Sharing the cost of the taxi ride with
the contractor is permissible because
each traveler would pay his or her
pro-rata share to the neutral
provider of the transportation.
The DoD employee should, however,
consider whether sharing the taxi
might constitute an appearance of a
conflict of interest.
41
You Make the Call
A contractor employee offers to
drive an Army employee to lunch
at a restaurant ten miles off-post
in his personal vehicle.
May the employee accept the ride?
42
Answer
The Army employee may accept the ride if it
fits within one of the exceptions to the gift
rule.
Caution: There may be an appearance
problem that requires discussion with an
ethics counselor if, for example, this
arrangement occurs frequently or the
Army employee is making official decisions
affecting the contractor.
43
Organizational Conflicts
of Interest
44
What is an Organizational Conflict
of Interest (OCI)?
An "organizational conflict of interest"
exists when a contractor is or may be
unable or unwilling to provide the
government with impartial or objective
assistance or advice.
Creates an actual or potential conflict of
interest on a current contract or a
potential future procurement.
45
The two underlying principles are –
1) Preventing the existence of
conflicting roles that might
bias a contractor’s judgment
AND
2) Preventing unfair
competitive advantage
46
How Does OCI Arise?
Biased ground rules cases . . .
government contractor has opportunity to
skew a competition in its favor
Unequal access to information . . .
access to non public information that
would give it an unfair competitive
advantage
Impaired objectivity . . . government
contractor would be in a position to
evaluate itself or a related entity
47
Areas
Providing systems engineering and
technical direction
Preparing specification of work statements
Access to proprietary information
Solicitation provisions, waivers and
mitigation plans
48
Providing Evaluation Services
A contractor cannot evaluate its own
offers for products or services, or those of
its competitors, without proper safeguards
to ensure objectivity to protect the
Government’s interests.
49
Procurement Integrity
Act
50
Resources
41 USC 423 - the current version of
the Procurement Integrity Act went
into effect on 1 Jan 97
Implemented by FAR 3.104, DFAR
Part 203, and AFAR Part 5102
51
Bans
Disclosing contractor bid or proposal or
source selection information (for
competitive procurements)
Obtaining contractor bid or proposal or
source selection information (for
competitive procurements)
Accepting compensation from certain
contractors after leaving Federal
employment
Discussing non-Federal employment with
certain bidders or offerors
52
To Whom Does Disclosure Ban
Apply?
The disclosure ban applies to:
Current Federal employees and military
personnel
Former Federal employees and military
personnel
Individuals (such as contractor employees)
who are currently advising the government
regarding the procurement
Individuals (such as contractor employees)
who have advised the government regarding
the procurement but are no longer doing so
53
What Are Not Violations of the
Disclosure Ban?
Information already disclosed publicly or
made available to public
Information disclosed by contractors.
They are not prohibited from disclosing
their own bid or proposal information.
Source Selection Info disclosed, pursuant
to a proper request, to Congress, the
Comptroller General, or the inspector
general (provided the SSI or CBPI is
highlighted and notice given that
disclosure is restricted by PIA.)
54
Penalties for Disclosing or Obtaining
SSI or Contractor Bid or Proposal info
+
And………..
55
56
Administrative Actions
Cancellation of the procurement.
Disqualification of an offeror.
Suspension or debarment of the
contractor.
Initiation of an adverse personnel
action.
Any other action in the best interest
of the Government.
57
Seeking Employment
58
Applicable
Procurement Integrity Act
18 U.S.C. Section 208
Joint Ethics Regulation
Standards of Ethical Conduct for
Executive Branch Employees
59
“Seeking Employment”
5 C.F.R.2635.603(b)
You are “seeking employment” when
you:
• engage in negotiations
• make unsolicited employment contact
includes sending resume (up to 2
months)
• respond to unsolicited proposal (except
unconditional rejection)
60
Disqualification
To avoid violation:
• Take no action
• Written notice to
supervisor (JER 2-204)
• Supervisor response:
Written
Recusal
Copy to Ethics Counselor &
subordinates
61
Post-Government
Employment Restrictions
62
Post-Government Employment
Restrictions
Representational Restrictions
18 U.S.C. § 207
Prohibits representing another before
U.S. Government with intent to
influence
• Lifetime ban
• 2-year ban
• 1-year cooling-off period for senior
employees
• 1-year ban on senior employees
representing foreign entities
63
Government Purchase Cards
SCENARIO: No one in your office enjoys
drinking from the office water fountain.
The water is often warm and sometimes
has a weird metallic taste to it. One day
Director H2O orders you (after taking a
large gulp of warm, metallically water
from the fountain) to buy a couple cases
of bottled water with your GPC for the
office.
QUESTION: May you buy bottled water?
64
Answer
Bottled water generally does not materially
contribute to an agency’s mission
accomplishment and is generally a personal
expense.
GAO- Sanctioned Exception Where Water is
Unpotable: Agencies may use appropriated
funds to buy bottled water where a building’s
water supply is unwholesome or unpotable.
65
Contractors
SCENARIO: You are the
administrative staff supervisor
for an organization. The
receptionist for your
organization is a contractor
employee. He has worked in
support of the organization for
2 years and has done a terrific
job. He has decided to pursue
a college education and has
asked you for a letter of
recommendation discussing his QUESTION: May you
job performance & work ethic. write the letter of
He intends to include the letter recommendation?
of recommendation with his
college application.
66
Answer
Impermissible to give preferential treatment to any
non-federal entity. Would need to do the same for
all other contractor employees
The terms of the contract control contract provides
for the proper method to provide information
on performance awards.
Discuss with contracting officer.
67
CONTRATORS
Scenario: Commander Lewis gave out
coins to contract employees during an office
award day?
Did Commander Lewis do anything wrong?
68
ANSWER
Coins purchased with appropriated
funds shall not be presented to
contractor personnel.”
DA Memo 600-70, para. 5d(2)
Coins purchased with personal funds are okay!
69
Government Resources
SCENARIO: While you
are driving home from
work your tire blows out.
A gas station a block
away replaces the tire
right away. You are so
thrilled that the problem
is solved so easily that
you inadvertently use
your Government travel
card to pay. Later, when
you get the bill for the
card you immediately
pay in full.
•QUESTION: Is
there a problem
here?
70
Correct Answer
Misuse of Government
travel cards and purchase
cards has received
considerable congressional
and media scrutiny in recent
years.
Even when employees
have paid off their
charges, agencies have
taken administrative or
disciplinary action.
More misuse:
•Cash advances
•Vehicle lease agreements
•Motor vehicle repair
•Long term lease of land or
building
•Nordstrom, Macys, Neiman
Marcus
71
Post-Government Service
Employment Restrictions
SCENARIO: Found You!, Inc., is the
contractor for the ABC program. You
interact with the ABC division of Found
You! on technical matters and evaluate
their product. Right before a meeting to
discuss a product, a ABC employee
unexpectedly mentions that Found You! is
looking for a manager in a new division,
DEF, completely separate from ABC. You
tell him you’re going to talk to your ethics
counselor ASAP and then get back to him
with your decision. You then proceed with
the meeting.
QUESTION: Did you do the right thing?72
Answer
Once you have engaged in a conversation such as just
described, you are considered to be seeking
employment with the company.
73
Duty. Honor. Government
Contracts.
Who you gonna call?
LTC Denise Council-Ross: 703-681-3334;
[email protected]
Duane Zezula: 703-681-5408; [email protected]
COL Scott Lind: 703-681-9158; [email protected]
74
Conclusion
Duty. Honor. Government Contracts.
Any questions??
75