Violations of ethics rules may lead to a bid protest or undermine the public’s confidence in the Government. Congress passed the Procurement Integrity Act (PIA), passed in 1988 to help alleviate this problem. It prohibits the release of source selection and contractor bid or proposal information. It created rules to eliminate conflicts of interest, gifts from contractors, improper disclosure of information that could affect a contract bid or award process, and it places restrictions on government employees seeking employment in the private sector.
The Act requires a contracting officer who obtains information of a violation or possible violation to determine if it has any impact on the pending award or selection of contractor. If it is determined there is no impact on the procurement, the officer is required to forward the information and supporting documentation to “an individual designated in accordance with agency procedures.”
Below, you will find further information on ethics violations in government contracting: the Act, consequences for violations, its protest, and responsibilities of government agencies to abide by ethical rules.
Procurement Integrity Act (PIA)
PIA contains the following provisions:
1. Prohibits disclosing procurement information.
2. Prohibits obtaining procurement information.
3. Creates a reporting requirement for agency official contacted by offeror concerning possible non-federal employment
4. Prohibits former official’s acceptance of compensation from contractor.
A PIA violation is grounded in improper or unlawful conduct. Knowledge a contractor may have is not enough to support a PIA violation. It requires an affirmative act by the offeror to obtain source selection information. Improper or unlawful conduct is necessary.
Consequences of Violations
Violators of PIA may face penalties described below:
- Criminal Penalties: Persons can be fined, imprisoned for not more than 5 years, or both
- Civil Penalties: An individual may be fined not more than $50,000 for each violation plus twice the amount of compensation the individual received or offered, and $500,000 for an organization.
- Administrative: Cancels agency procurement; rescinds a contract and recovering amount expended; initiates suspension or debarment proceeding; initiates an adverse personnel action.
When an agency becomes informed of an alleged PIA violation, the contracting officer is required to determine if the reported violation has any impact on the pending award or selection of the contractor. If the officer determines a possible violation may have had an impact, the Head of the Contracting Activity must then take appropriate action. If the officer concludes a violation did not occur, or that a violation would not have an impact on a pending award, the documentation and findings are delivered to an agency official who determines the outcome of the procurement.
A protester of a potential PIA violation must allege the agency failed to resolve the violation in a reasonable matter. This may be due to the agency’s failure to recognize it was a violation, or the agency took corrective action that was not reasonably adequate. Agencies are not always required to act. If a PIA violation occurs, but an agency determines there was no adverse effect on a procurement, it is not required to take any particular action. The Government Accountability Office (GAO) reviews the agency’s decisions to ensure they are properly documented and reasonable.
When a PIA violation is used as a basis of a protest, the protester must notify the agency of the suspected violation within 14 days of when it was known or should have been known. Once it has been reported, the agency investigates and determines the course of action. The violation can be protested once the investigation is complete. After the investigation, the interested party has ten days to file a bid protest.
Organizational Conflict of Interest (OCI)
Agencies are required to consider actual or potential OCI’s as early as possible in the acquisition process. As grounds for protest to the GAO, OCI’s are raised after an allegedly conflicted firm is selected for an award. Protesters who challenge their exclusion of an award because of OCI fall under the 10-day timeliness rule.
Turner Const. Co. v. United States, 94 Fed. Cl. 561 (2010), aff'd, 645 F.3d 1377 (Fed. Cir. 2011) demonstrates an OCI requires “hard facts” that exposes a potential existence of a conflict. These facts need not show an actual conflict or negative impact from a conflict. Inference or suspicion of a potential conflict is not enough. According to the GAO, once hard facts establish an actual or potential OCI exists, harm from conflict is presumed to occur.
PIA V OCI
(Hard Facts Standard for OCIs)
Allegations of a PIA violation is of greater severity than OCI. In an OCI, a government contractor may be accused of having access to or knowledge that gives it competitive advantage on a new procurement. A PIA violation requires the contractor to have knowingly obtained information the agency intended to use in evaluating proposals on a new procurement.
Whitcomb, Selinsky, PC lawyers are very experienced and knowledgable in government contract law. If you believe an agency is guilty of an ethics violation, contact us so we can help. Call us at (866) 476-4558 or book a free assessment below.