‘Tis Once Again the Season To Be Jolly, but Wise
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By Joe Reeder and David T. Hickey
It is that time of year again when experts and pundits issue their
annual holiday advice on assorted topics from toy purchases, to
stress management tips, how to deal with visiting family and see
those New Year’s resolutions through.
It also a time when the Defense Department’s Standards of
Conduct Office, agency ethics officials and corporate ethics officers
issue guidance and emphasize the rules governing partying and gift
giving between contractors and their government customers. This
guidance, as well as individual company ethics policies and programs,
should be considered by government and contractor employees alike
before celebrating the holiday season.
As invitations to receptions, office parties and holiday events
begin to arrive, consider that the federal gift rule—the $20/$50
rule, the de minimis value exception, the bona fide personal relationship
exception and the widely-attended gathering exception—should
cover most circumstances.
All contractor and federal employees should receive training on
the gift rule, which bars gifts to government employees from outside
sources, particularly from sources doing business with an agency
or gifts given because of an individual’s position. The de
minimis value exception to the gift rule allows the giving and receipt
of items of little or no intrinsic value. In addition, the rule
permits acceptance of gifts worth $20 or less, so long as the government
employee has not accepted gifts from the contractor that exceed
$50 in value for the year.
The bona fide personal relationship exception allows gifts from
an otherwise prohibited source if a true personal/familial relationship
exists, as long as the individual giver on whom the relationship
is based (and not his/her company) pays for the gift. Typically,
this exception only applies to long-standing, pre-existing personal
friendships or family relationships.
The widely attended gathering exception requires approval by a
government employee’s supervisor and typically a determination
by an appropriate ethics official that attendance is in the agency’s
interest. The gathering must involve a large number of persons (the
benchmark is 100) representing a diversity of views. Government
employees may attend a contractor’s holiday party, open house,
or reception as long as the widely attended gathering rule in particular
applies. As usual, advance supervisor and a written agency “best
interests” determination are best practices that should be
followed scrupulously, especially when there is any doubt about
the propriety of attending one of these holiday functions.
In summary, government employee attendance at contractor-sponsored
celebrations open to the public, all government employees, is generally
acceptable. But wisdom and good sense, rather than the spirit of
the season, should be the ethical compass.
Government personnel often sponsor office events during non-duty
hours, such as an after-work party. Contractor employees may participate
in these festivities and voluntarily contribute a fair share towards
items such as refreshments. Where the party occurs during duty hours,
reimbursement issues regarding labor costs or charging under individual
contracts are implicated, because the government will not reimburse
contractors for morale and welfare expenses. Contracting officers
and contractor supervisors should be consulted to clarify employee
time issues under the terms of each contract and the policies of
the contractor.
When government and contractor employees invite each other to private
parties, typically in a private home, the gift rules still apply.
At the government employee’s house, a gift of food and refreshments
to a contractor employee does not violate the rules. However, any
gift that the contractor brings to the government employee host
must not exceed $20, and any food the contractor brings to the party
exceeding the $20 threshold must be shared among all attendees.
The average cost per attendee for that food should not exceed $20
even though certain government guidance does permit gifts of immediately
edible food with a value in excess of $20 per guest to be shared
among attendees without regard to the $20 threshold.
If the contractor employee is sponsoring the party, normally government
personnel should be cautious about accepting the invitation since
the food, drink and any entertainment provided are all gifts from
a prohibited source. One exception to the gift rule must apply—such
as the widely attended gathering, bona fide personal relationship
or $20/$50 exception.
Actual gift exchanges between contractor and government employees
will typically raise more eyebrows than eating and drinking at a
holiday party. The gift rules apply year-round. The exceptions to
the general rule apply and include gifts not exceeding $20 per gift/$50
per year from each contractor. Gifts based upon bona fide personal
friendships that are paid by the contractor employee (not the contractor)
are also permitted. If solicited by a government employee for a
contribution to a gift, contractor employees should decline since
they are considered a prohibited source under the rules. Finally,
there is no monetary limit to random, mutual exchanges of gifts,
such as a “Secret Santa” exchange, although self-imposed
restrictions, such as the $20 limitation, are most wise in these
circumstances.
The holiday season should be an appropriate time for contractors
and their government customers to celebrate, express mutual thanks
and to build stronger relationships. In doing so, however, awareness
of the rules governing those celebrations and the appropriate, legal
ways to say thanks are required.
Joe Reeder and David Hickey are attorneys with the Greenberg Traurig
law firm. The opinions expressed here are solely those of the authors
and are not intended to provide legal advice or represent the view
of NDIA or the NDIA Ethics Committee.