This analysis covers FAR Part 3, which establishes the ethical framework for the relationship between the Federal Government and private contractors. It is designed to ensure that public funds are spent with complete impartiality and to maintain public trust in the procurement process.
Overview
FAR Part 3 prescribes policies and procedures intended to eliminate improper business practices, such as bribery, kickbacks, and collusion, while managing personal conflicts of interest. It implements major statutory requirements, including the Procurement Integrity Act and the Anti-Kickback Act, to ensure that government business is conducted in a manner that is "above reproach."
Key Rules
- Standards of Conduct: Government personnel are strictly prohibited from soliciting or accepting gratuities, gifts, or favors from anyone seeking government business. The "appearance of a conflict" is treated as seriously as an actual conflict.
- Procurement Integrity (The $10M Rule): Current and former officials are prohibited from disclosing or obtaining "contractor bid or proposal information" or "source selection information." Former officials who served in key roles on contracts exceeding $10 million are barred from accepting compensation from that contractor for one year.
- Independent Pricing: Offerors must certify that their prices were reached independently without consultation or communication with competitors (collusion/price-fixing).
- Covenant Against Contingent Fees: Contractors are prohibited from paying "contingency fees" (bonuses for securing a contract) to anyone except bona fide employees or agencies.
- Anti-Kickback Protections: The law prohibits any person from providing, attempting to provide, or soliciting kickbacks in exchange for favorable treatment under a prime contract or subcontract.
- Whistleblower Protections: Contractors and subcontractors are prohibited from discharging, demoting, or discriminating against employees who report "credible evidence" of waste, fraud, or abuse.
- Mandatory Disclosure: Contractors must have a written code of business ethics and are required to timely disclose to the Agency Office of the Inspector General (OIG) whenever they have credible evidence of a violation of Federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations.
Responsibilities
- Contracting Officers (COs):
- Must report suspected antitrust violations or collusive bidding to the Attorney General.
- Responsible for evaluating "Certificates of Independent Price Determination."
- Must verify that former government employees are not in violation of post-employment restrictions before contract award.
- Must include mandatory ethics and whistleblower clauses in solicitations and contracts.
- Government Officials (Program Managers/Source Selection Members):
- Must protect sensitive source selection information from unauthorized disclosure.
- Must "disqualify" themselves and report in writing any contact with an offeror regarding potential non-Federal employment.
- Contractors:
- Must maintain a Code of Business Ethics and Conduct (required for contracts over $6 million and performance periods of 120+ days).
- Must display "Whistleblower Protection" posters and ensure employees know their rights.
- Must conduct internal audits and report wrongdoing to the government (Self-Disclosure).
- Agency Ethics Officials:
- Provide advisory opinions to former officials regarding post-employment restrictions.
Practical Implications
- The "Revolving Door" Control: In real-world scenarios, a high-ranking military officer or Program Manager cannot retire on a Friday and begin working for a major defense contractor on Monday if they had a "personal and substantial" role in a $10M+ contract for that same contractor. Violations can lead to the contract being voided or rescinded.
- Collusion Detection: If two contractors submit bids with identical typographical errors or suspiciously similar pricing structures, the Contracting Officer is legally mandated to halt the procurement and report the matter to the Department of Justice (DOJ).
- The Gratuities Clause: A simple lunch paid for by a contractor for a government technical lead can trigger a "Gratuities" violation investigation, potentially leading to debarment of the contractor and disciplinary action for the employee.
- Subcontractor Oversight: Prime contractors are legally responsible for ensuring their subcontractors do not engage in kickbacks. This requires robust "Flow-down" clauses in every subcontracting agreement to ensure compliance throughout the entire supply chain.