February 1998

Gift and Gratuity Rules for Government Contractors

Arnold & Porter Article
Restrictions on Government Contractors
Criminal violation to provide any "thing of value" to a public official
With the intent to influence any official act; or
For, or because of, any official act. 18 U.S.C. § 201
Contractor may not
Offer or give a gratuity to an officer, official, or employee of the Government.
If the contractor intended by the gratuity to obtain a contract or favorable treatment under a contract. FAR 52.203-3.
Penalties include termination of contract for default, exemplary damages of three to ten times the costs the contractor incurred in giving the gratuity, and other remedies allowed by law. Id.
Restrictions on Government Employees
General prohibition on gifts, gratuities, entertainment, loans, or anything of value from anyone
Who has business or is seeking business from the employee's agency, or
Who conducts activities that are regulated by the employee's agency, or
Who has interests that may be "substantially affected" by the performance of the employee's duties. FAR 3.101-2.
Exceptions Include:
De Minimus Exception ($50/20)
Based on Personal/Familial Relationship
Widely Attended Gatherings
Modest items of food or drink other than as part of a meal (coffee, donuts, etc.)
Restrictions Related to Non-Federal Employment
Agency official "personally and substantially" involved in a procurement who is contacted by contractor regarding possible non-Federal employment must
Promptly report the contact in writing; and
Reject the possible non-Federal employment; or
Disqualify him/herself from further involvement in the procurement. FAR 3.104-4(c).
Former Government official may not accept compensation from a contractor for one year if the official
Served in identified positions (e.g., contracting officer, source selection authority, source selection board member, program manager), or
Made contract decisions (e.g., issued contract modifications, set overhead rates, settled claims) regarding a contracts or claim of more than $10 million. FAR 3.104-4(d).
These restrictions - imposed by the Procurement Integrity Act and its implementing regulations - are in addition to any Ethics in Government Act Restrictions.
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