Impartiality Impairments

The standards of ethical conduct for Government employees require that employees take appropriate steps to avoid an appearance of loss of impartiality in the performance of his or her official duties. To do this, the standards require that an employee should not participate in a particular matter involving specific parties with whom they had a covered relationship without prior authorization from the agency designee. Two things in this prohibition require definitions; 'particular matter' and 'covered relationship'.

A 'particular matter' includes, among other things, a contract in which the United States is a party or has a direct and substantial interest. A 'covered relationship' would include a former employer with whom the employee worked for within the last twelve months.

Typically, when we read about violations of ethical standards, it involves a former Government employee who left and went to work for company with Government contracts where that employee had substantial involvement over the negotiation, award, and administration. But it could apply the other way as well - where a contractor employee goes to work for the Government. A recent audit report by the GSA (General Services Administration) Office of Inspector General (OIG) illustrates the later point. The OIG found that GSA and one of its employees violated these standards of ethical conduct.

Northern Management Services has an O&M (Operations and Maintenance) contract with GSA to maintain three Federal buildings in the Ft. Worth, TX area. A project manager for Northern who assisted in preparing cost proposals for the company, left and went to work for GSA, whereupon he participated in negotiating costs for task orders for projects which he had prepared the cost estimates.

The OIG found that this employee had an "impartiality impairment" and that neither he nor GSA took necessary steps to avoid an appearance of loss of impartiality in the performance of his official duties. The OIG ordered GSA to take immediate steps to address the impartiality impairment which presumably (though not stated) would require someone to take a second look at the negotiation process to ensure that the Government's interests were protected.

What Does "Tangible Personal Benefit" Mean

The new Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR 200) became effective last December. It applies to Federal agencies, non-Federal entities (states, local governments, Indian tribes, institutions of higher education , and nonprofit organizations) that receive Federal awards as a recipient or sub recipient, and their auditors. It more or less replaces a host of OMB Circulars including A-21, A-87, A-110, A-122, A-89, A-102 and A-133 and that's why these new requirements are commonly referred to as the "Super Circular".

One of the requirements of the Super Circular is to ensure that non-Federal entities have effective internal controls over conflicts of interest. In implementing such practices, some such entities have been beguiled by the term "tangible personal benefit". It appears in the section on Procurement Standards (2 CFR 200.318(c)(1)) as follows:

The non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. No employee, officer, or agent may participate in the selection, award, or administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest. Such a conflict of interest would arise when the employee, officer, or agent, any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from a firm considered for a contract. The officers, employees, and agents of the non-Federal entity may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. However, non-Federal entities may set standards for situations in which the financial interest is not substantial or the giftis an unsolicited item of nominal value. The standards of conduct must provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents of the non-Federal entity.

The Department of Education, in its implementation of the Super Circular is the first to provide a definition of "tangible personal benefit".

The phrase "tangible personal benefit" is new language added to the general conflict of interest section of the general procurement standards that existed previously under ... OMB Circular A-102. The language was expanded from just "financial or other interest in" to also include "or a tangible personal benefit from" a firm considered for a contract from the grantee. This new language stresses the importance of ensuring that employees who select, award, and administer contracts supported by a Federal award are free from any real or apparent conflict of interest, including financial interests and other non-financial benefits that result in a personal benefit that result in a personal benefit for the employee (such as improved employment opportunities, business referrals, political influence, etc.). (Source)

 Contractors might consider adding this language to their own employee standards of conduct and internal control procedures.