Ethics Corner

August 2005

Contractor-Sponsored Events: Navigating Through the Rules

by Dick Moorhouse and Dave Hickey

The ethics culture in Washington, D.C., during recent decades has become encrusted in a bewildering array of statutes, regulations, guidelines, policies, procedures, assorted memoranda, brochures and bulletins. Federal contractors and their government customers must navigate these ethics rules daily. Contractor-sponsored events that involve federal employees require special planning considerations. Published guidance often relies on broad objective standards of conduct, such as avoiding the “appearance of impropriety” or “apparent conflicts of interest.” Or it simply recites complex regulatory language.

Event sponsorship triggers federal rules that generally bar contractor gifts to Defense Department personnel. Government employees in fact may accept something of value from outside sources if it is not a “gift” or if it falls within the widely attended gathering or event exception (or something similar).

When invoking the widely-attended gathering exemption, the following considerations should be examined: the nature of the event, the role and capacity of the government employees attending the event and the specific, sponsored activities and “takeaways” that comprise the event. Company-sponsored social events commemorating a historic military milestone, for example, differ from seminar speaking invitations to a Defense Department official. Government attendees also should understand the difference between attendance in an official capacity or in a personal status. Finally, a breakdown of all logistical elements is necessary, such as any food, refreshments, entertainment, materials, plaques, travel, lodging and other items of value that will be furnished.

Defense Department employees are permitted to attend events where it is in the interest of the agency or its operations. In approving an event, ethics officials will focus on certain key factors, such as the number of attendees (100 is the benchmark), market value of free attendance, nature and diversity of attendees (all from one contractor or broader community), and whether there is a legitimate government purpose for attending.

For example, many events sponsored by trade associations can be approved under a “community relations” rationale if it does not interfere with government duties or favor one entity over others, and does not support a profit-making function. In many cases, a supervisor must make a written determination permitting attendance. Contractors can and should assist an employee in obtaining approval by providing pertinent information. Ultimately, the government employee bears responsibility for accepting free attendance in consultation with the employee’s ethics office.

Defense Department personnel can properly deliver a speech in an official capacity, but they may not participate in fundraising in an official capacity and should not officially endorse non-federal organizations. Employees also may be barred from making an official speech that affects the financial interests of the sponsoring organization. Defense Department public affairs officers and ethics counselors play key roles in these decisions.

When Defense Department employees attend an event in their personal capacities, it is the responsibility of the individual employee to make the determination in consultation with the employee’s ethics counselor based on standards of conduct and community relations requirements.

Finally, the particular activities that comprise the event must be examined. The gift exception only applies to the fee for the actual event, food, refreshments, entertainment and materials furnished to attendees as part of the event. The exception does not include travel expenses, lodging, entertainment outside the event or meals taken other than in a group setting with all other attendees.

The payment for travel associated with an event or other official activity has special rules. For example, in some cases, the Defense Department may accept an unsolicited offer of travel accommodations for employees as a gift to the agency when the travel involves attendance in an official capacity. As to meals, if a government employee attended a seminar, that employee should not accept free dinners by a contractor if the dinner is not related to the seminar or closed to other interested participants. In other words, if a contractor is sponsoring an event such as a party that is not part of the widely attended gathering, government personnel must decline, since the food, drink, and entertainment is a gift from a prohibited source. In short, even where a widely attended gathering is involved, a gift rule analysis is applied to any other interaction that is not part of the actual event.

Defense Department personnel and contractors often share a common mission and joint events can facilitate the performance of both. Nevertheless, to ensure compliance with the rules, when planning an event, the event should be structured to include a broad and diverse audience and ensure that it promotes Defense Department programs and objectives. Sponsors should make the approval process clear for individual government employees, so that proper approvals can be obtained if necessary. Where questions of propriety are raised in advance, changes to an event should be made where appropriate. Each phase of an event should be planned to ensure that it complies with appropriate rules and necessary approvals are obtained in advance. Working transparently with government ethics officials is the most appropriate course of action.

Richard L. Moorhouse and David T. Hickey are procurement lawyers with the Greenberg Traurig law firm in Tysons Corner, Va. 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.

Back To Top