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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.
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