Overview
FAR 3.705 outlines the administrative procedures and due process requirements an agency must follow to void or rescind contracts following a final conviction for bribery, graft, or conflicts of interest. It establishes a framework for the government to recover payments and property while providing the contractor a formal opportunity to respond to the proposed action.
Key Rules
- Mandatory Notification: Convictions for violations of 18 U.S.C. 201-224 must be reported to the agency head, who must then notify the Civil Division of the Department of Justice.
- Due Process Rights: Agencies must provide contractors with a written notice of proposed action via certified mail, allowing 30 calendar days for the contractor to submit pertinent information or request a hearing.
- Hearing Limitations: If a hearing is requested, the contractor may present and confront witnesses; however, the hearing cannot be used to challenge the validity of the underlying criminal conviction.
- Fair Value Consideration: Any final decision to rescind a contract must reflect the "fair value" of tangible benefits the agency received and retained, which is subtracted from the total amount the government seeks to recover.
- Exclusion from CDA: Actions taken under this section are specifically excluded from the Contract Disputes Act (41 U.S.C. chapter 71). Consequently, the standard Contracting Officer (CO) final decision procedures and FAR Part 33 do not apply.
Practical Implications
- Bypassing Standard Appeals: Because these actions are not considered "claims" under the Contract Disputes Act, contractors cannot utilize the standard Board of Contract Appeals process, making the agency head's written decision the definitive administrative conclusion.
- High Financial Stakes: The government’s ability to "claw back" expended funds and property can result in significant financial loss for a contractor, mitigated only by the agency’s assessment of the "fair value" of work already performed and accepted.