The Procurement Integrity Act (PIA), FAR 3.104 penalties rules, as implemented by Congress, governs the relationship between government contracting officials and you the contractor. It also governs actions How to Avoid Procurement Integrity Act Penaltiesduring the bidding process.

The key to avoiding violations, civil and criminal penalties under the Act is to make sure that you train your staff correctly. You also want to have proactive policies in place.

Other issues that intertwine with the Act include handling conflicts of interest. Once a criminal investigation starts, you have a 68% chance of criminal sanctions. Understanding seriousness and getting the proper legal counsel is essential.

Avoiding Conflicts of Interest Violations

Procurement Integrity Act penalties intend to restore the public’s trust. As a government contractor, you want to stay away from violations due to the acceptance of employment by former agency officials and violation with employment contracts between agency officials and your company.

For example, if a government official was involved in a procurement over $10 million, he or she cannot accept any form of compensation from you (whether as an employee or consultant)  for one year.

  • If you are a government employee, check with your superiors or even a contracting officer that may be have been involved with a contractor that you now want to work for.
  • Immediately report in writing any behavior to the contracting officer
  • As a government contractor, you must develop internal policies that address the Act and conflicts of interest

FAR Part 3.104-8 — PIA Criminal and Civil Penalties, and Further Administrative Remedies.

Criminal and civil penalties, and administrative remedies, may apply to conduct which violates 41 U.S.C. chapter 21 (see 3.104-3). See 33.102(f) for special rules regarding bid protests. See 3.104-7 for administrative remedies relating to contracts.

(a) An official who knowingly fails to comply with the requirements of 3.104-3 is subject to the penalties and administrative action set forth in 41 U.S.C. 2105.

(b) An offeror who engages in employment discussion with an official subject to the restrictions of 3.104-3, knowing that the official has not complied with 3.104-3(c)(1), is subject to the criminal, civil or administrative penalties set forth in 41 U.S.C. 2105.

(c) An official who refuses to terminate employment discussions (see 3.104-5) may be subject to agency administrative actions under 5 CFR 2635.604(d) if the official’s disqualification from participation in a particular procurement interferes substantially with the individual’s ability to perform assigned duties.

41 USC 2105. Penalties and Administrative Actions

(a) Criminal Penalties.—A person that violates section 2102 of this title to exchange information covered by section 2102 of this title for anything of value or to obtain or give a person a competitive advantage in the award of a Federal agency procurement contract shall be fined under title 18, imprisoned for not more than 5 years, or both.

(b) Civil Penalties.—The Attorney General may bring a civil action in an appropriate district court of the United States against a person that engages in conduct that violates section 2102, 2103, or 2104 of this title. On proof of that conduct by a preponderance of the evidence—

(1) an individual is liable to the Federal Government for a civil penalty of not more than $50,000 for each violation plus twice the amount of compensation that the individual received or offered for the prohibited conduct; and

(2) an organization is liable to the Federal Government for a civil penalty of not more than $500,000 for each violation plus twice the amount of compensation that the organization received or offered for the prohibited conduct.

Protecting Your Company from Procurement Integrity Act Penalties

If you are a federal government contractor, you can protect yourself from inadvertent criminal and civil violations of the procurement integrity Act by doing one of the following:

  • Develop an internal checklist for each proposal that you bid on
  • Train your key personnel that interact frequently with government employees
  • Develop internal policies and procedures that address ethics and behavior of your employees.

Procurement Integrity Act – Bidding Information

The Procurement Integrity Act  involves disclosure or receipt of procurement information  during the procurement process.  You have to be extremely cautious and not put yourself in a situation where you are getting bidding information  from a government official. This can subject you to  severe penalties. You can always tell when a government official tells you “I’m not supposed to say this but…..”  These  are red flags.

FAR Language

A good way to be proactive and to stay clear of any Procurement Integrity Act penalties is to read and understand the statutory language of the FAR. A reading of the FAR 3.104 shows the complexity of the regulations. 

You can see that there is a myriad of restrictions that regulate your behavior as a government contractor. If you are not sure whether you actions comply with the Act, then you should seek legal advice from a procurement integrity act violations lawyer.

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