Tuesday, August 10, 2010

Gifts from Contractors to Government Employees

Today we present the second of our five part series on potential ethics issues that contractors may face when working with Government employees. It's important to ensure that your interactions with Government employees don't inadvertently trigger ethics problems for them. Today’s issue is gifts.

Ethics rules generally forbid Government employees from accepting gifts from "prohibited sources." If you are working as a contractor employee for a particular agency, you are considered to be a "prohibited source" of gifts to the employees of that agency. Contractors seeking to do business with an agency are also considered "prohibited sources."

There are several exceptions to this general prohibition.

The 20/50 Rule

One exception allows Government employees to accept non-cash gifts from a prohibited source if the gifts from the contractor and its employees have a value of no more than $20 per occasion and no more than a total of $50 per calendar year. A contractor and the contractor employees are considered the same source.

For example, you may buy lunch for a Government employee who works at an agency that does business with your company if the lunch is less than $20. If the lunch is more than $20, the Government employee must pay the full amount, not just the amount over $20.

If you’ve already taken that employee to lunch three times this year, and each lunch was worth $15 (for a total of $45), the employee may not accept any gift from you (or any other employee of the same contractor) worth more than $5.

Government employees may not use any of the gift exceptions to accept gifts from the same (or even different sources) so frequently that a reasonable person would believe they are using their public office for private gain. It is never inappropriate...and frequently might be prudent...for an employee to decline a gift, even if permissible under one of the exemptions.

Personal Relationships

Another exception allows Government employees to accept a gift from a friend (or relative) if it is clear from the circumstances that it was your friendship, and not the employee's official position, that motivated the gift.

In deciding whether the Government employee may accept the gift, relevant factors that are considered include the history of the relationship and whether the gift was actually paid for by you (as opposed to the company that employs you) and whether the nature of the relationship justifies a particular gift.

Sometimes friendships develop between Government employees and contractor employees who work together. Where the friendship developed on the job, a gift rarely is justified. This is especially true if the Government employee is in a position to oversee your work or otherwise participate in decisions affecting the interests of your employer.

Gifts of Travel and Transportation

"Transportation" and "local travel" provided by contractors are considered gifts under the ethics rules. In order to determine whether a gift of travel or transportation may be accepted, an agency must first determine whether the Government employee transportation is duty-related or for the employee's personal benefit.

If the transportation is for the employee's personal benefit (e.g., the cost of a taxi cab to a baseball game), then it is a personal gift covered by the ethics rules. In this case the gift of travel would have to fit under one of the gift exceptions for the employee to accept it.

However, if the transportation is provided in connection with the performance of the employee's official duties, it would not be considered a gift to the individual, but rather a gift provided to the agency. However, not all Government agencies accept gifts, so this might or might not be acceptable. A Government employee should receive approval from the employee's agency before accepting a gift of travel from an agency contractor.

Contractor Parties, Picnics, etc.

While Government employees can't receive gifts from "prohibited sources" such as contractors, the definition of gift excludes "modest" refreshments (such as soft drinks, coffee and doughnuts, as long as they are not part of a meal). However, most holiday parties aren't confined to such items. So, free attendance at a contractor party would be permitted only under an applicable gift exception.

One exception allows attendance where the value of food and entertainment offered is no more than $20. Another exception might allow an employee to attend if the employee's agency authorizes the employee's attendance as being in the agency's interest.

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