The Federal Government Has Increased Oversight and is Cracking Down on Federal Procurement Integrity Act violations under FAR 3.104. In Addition to Criminal Defense Law You Should Also Understand the Procurement Process – The End Result Depends on It. 

Procurement Integrity Act Violations FAR Part 3.104

The Procurement Integrity Act prohibits and makes it clear that the release of source selection in government contracting and contractor bid or proposal information is strictly prohibited.  The statute also provides that former federal government employees who served in certain positions on a procurement action or contract in excess of $10 million are also prohibited for one year from receiving compensation as an employee or consultant from that procurement contractor. Problems frequently arise and it is important to seek legal representation immediately from a defense attorney that understands the relevant laws. May 2016- Former Marine Corps Contracting Officer Sentenced To 37 Months For Conspiracy.

Getting charged with obtaining procurement information, and allegations of receiving personal profits can lead to harsh penalties under the PIA and FAR 3.104. Many criminal cases involve government contracting officers that evaluate bid proposals from potential suppliers and award government contracts that were the most appropriate and advantageous for the needs of the government.

Federal government contractors involved in procurement integrity violation cases should make sure that they have criminal defense lawyers that really understand federal government contract law. Without this experience, not only does the government have an advantage in a criminal case, but the defendant’s criminal defense can be in serious jeopardy. When companies understand the various nuances of a criminal trial that involves any type of Procurement Integrity Act Violations, False Claims, etc. they can make better decisions.

When an awardee has to defend a bid protest under these circumstances, information gathered could also lead to more serious penalties such as debarment or suspension, and ultimately a government investigation. How companies proceed under these circumstances is very important. The facts of each case are important and highly relevant to the outcome. Whether there is preferential treatment to one contractor over another by the government is also a major concern.

Congress amended the Federal Procurement Integrity Act(PIA) and its violations to focus on the regulation of relationships between government employees that are involved in the procurement process and contractors bidding on federal government contracts.

48 CFR 303.104-7 and FAR Violations or possible violations of the Federal Procurement Integrity Act.

What must the agency do when put on notice?

(a) (1) The contracting officer shall submit to the head of the contracting activity (HCA) for review and concurrence the determination (along with supporting documentation) that a reported violation or possible violation of the statutory prohibitions has no impact on the pending award or selection of a contractor for award.

(2) The contracting officer shall refer the determination that a reported violation or possible violation of the statutory prohibitions has an impact on the pending award or selection of a contractor, along with all related information available, to the HCA. The HCA shall –

(i) Refer the matter immediately to the Associate Deputy Assistant Secretary – Acquisition (ADAS-A) for review, who may consult with the appropriate legal office representative and the Office of Inspector General (OIG) as appropriate; and

(ii) Determine the necessary action in accordance with FAR  part 3.104-7(c) and (d). The HCA shall obtain the approval or concurrence of the ADAS-A before proceeding with an action.

(b) The HCA (non-delegable) shall act with respect to actions taken under the Federal Acquisition Regulation (FAR) clause at 52.203-10, Price or Fee Adjustment for Illegal or Improper Authority.

Purpose of 41 USC 423 and FAR 3.104

Under 41 USC 423, the Procurement Integrity Act puts certain restrictions on and invokes penalties for, the conduct of government procurement officials and contractors during the procurement process. The primary problem that Congress sought to correct was to avoid the appearance of impropriety in federal procurement policy and to avoid favors in exchange bidding information.

During the procurement planning stages, companies must be extremely careful how they interact with government officials.  The focus of the Procurement Integrity Act is not just intended for communication with contracting officials. It also addresses using inside information about an upcoming project from the end user, that participates in the various aspects of the procurement.

  • Incumbent contractors should be extra careful not to seek internal information that would give them an edge.
  • Under the PIA statute, FAR 3.104, 5 CFR 2641 and agency regulations, there can simply be no conflicts of interest or improper disclosure or receipt of procurement information.
  • If you are contemplating filing a bid protest alleging violations of the PIA, you must first ensure that you have reported the matter to the contracting agency with 14 days of becoming aware of the possible violation.

The PIA statute also allows the contracting agency an opportunity to promptly investigate the allegations and to take the appropriate remedial action. See 41 USC 423 (e)(3); Honeywell Tech. Solutions, Inc., B-400771, B-400771.2, Jan. 27, 2009, 2009 CPD para. 49 at 9.

Procurement Integrity Act Violations and Penalties 

PIA violations penalize former federal procurement office and policy officials from knowingly disclosing or contractors from knowingly obtaining “contractor bid or proposal information or source selection information before the award of a federal agency procurement contract to which the information relates.

Individuals or contractors that violate the personal conflict of interest sections of FAR 3 are subject to tough administrative and civil penalties.

For example, administrative penalties for such violations include: giving up all profits under the contract; termination for default; suspension and debarment or any other appropriate penalty. See also 41 USC 423(h) and FAR Part 3.104 and 5 USC 2641.

  • Criminal penalties for PIA violations for proposal information conduct can cost you imprisonment of up to five years, fines, or both.
  • Civil penalties. Companies can also be subject to civil penalties of $50,000 for individuals or $500,000 for business entities.
  • The federal government can also cancel the procurement, rescind the contract, or even start suspension and debarment actions against you.

Questions and Answers

  1. What should you do if you are made aware of bidding information that you otherwise would not be entitled to receive?
    • You should immediately notify the procurement contracting officer or respective federal agency.
  2. What must you do before filing a bid protest alleging Procurement Integrity Act Violations?
    •  Bid protest procedures and agency regulations require that you must have notified the agency 14 days prior.

For immediate help with procurement integrity consulting services, or if you are involved in a government investigation for PIA violations under FAR 3.104 or a federal criminal case, call 1-866-601-5518 and speak to a Procurement Integrity Act defense lawyer.

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