Take Heed of Post-Employment Restrictions

The new Defense Acquisition Regulation System clause (252.203-7005) requires offerors on Defense Department contracts to represent that all covered ex-department officials expected to work on any resulting contract are in compliance with all post-employment restrictions.

This representation must be made at the time of submittal, including commercial-item procurements. The rule also makes clear that the representation must also be made when an offer is submitted in response to a solicitation for task and delivery orders.

Covered “officials” include anyone who left Defense Department service post-Jan. 28, 2008, and either participated “personally and substantially” in an acquisition with a value above $10 million or served as “program manager, deputy program manager, procuring contracting officer, administrative contracting officer, source selection authority, member of the source selection evaluation board, or chief of a financial or technical evaluation team for a contract in an amount in excess of $10 million.”

This rule does not require the creation of a new compliance system, but does require defense contractors to be vigilant when hiring former officials. Contractors commonly require potential new hires who were government officials to obtain an advisory letter from an agency ethics official on any private employment limitations. Indeed, DFARS 252.203-7000 prohibits a contractor from knowingly providing compensation to covered defense officials within two years after they leave service without first determining whether those officials have sought an advisory letter from an appropriate ethics official.

In addition to ensuring that former government employees obtain advisory opinions, many contractors, including members of the National Defense Industrial Association, identify the hiring of former government employees as an area of risk in their codes of conduct or compliance programs. To mitigate these risks, many contractors require new employees to complete questionnaires and certifications to screen employees and their compliance with any applicable post-employment restrictions. Contractors also train their employees on the prohibitions and limitations on engaging in discussions with government employees on future employment.

The new rule requires an affirmative representation as to compliance with myriad post-employment laws and regulations, so contractors must redouble compliance efforts. The Defense Department rejected a suggestion in a Government Accountability Office report on compliance that it require the representation to cover the entire contract performance period, so the representation covers the date the offer is submitted and not a representation of ongoing compliance. However, the burden remains on contractors to know what ex-officials worked on at the department, and to police their post-employment work.

The representation, “to the best of the offeror’s knowledge and belief,” covers post-employment restrictions in 18 U.S.C. 207 (barring one from representing a contractor to a former employing agency on “particular matters”); 41 U.S.C. 2104 (barring government acquisition officials from accepting compensation from a defense contractor, for a year, if the official performed certain duties at the department involving that contractor on contracts of over $10 million); 5 C.F.R. parts 2637 and 2641 (containing regulations implementing procurement integrity and conflict of interest laws) and Federal Acquisition Regulation 3.104.2 (implementing the procurement integrity law).

Violations of these laws and regulations can result in criminal liability, disqualification from competitions, suspension and debarment. False representations of compliance with post-employment restrictions may also create liability for contractors under the civil False Claims Act. Under the Federal Acquisition Regulation, contractors are required to disclose credible evidence of violations of 18 U.S.C. 207 and the civil False Claims Act, and a failure of a contractor to disclose credible evidence of such violations is a separate ground for suspension and debarment.

Even where contractors obtain the necessary advisory letter from an appropriate ethics official, contractors hiring former defense officials may still be subject to allegations of having an “unfair competitive advantage.”

GAO has concluded that a contractor may gain an unfair competitive advantage through hiring a former government official, which could result in an offeror being disqualified from a competition based on the appearance of impropriety created by this situation, even if no actual impropriety can be shown, so long as the determination of an unfair competitive advantage is based on facts and not mere innuendo or suspicion. In one case, the GAO concluded that a government official’s work in preparing a proposal created an appearance of impropriety based on an unfair competitive advantage because of the former government employee’s access to non-public proprietary and source selection sensitive information and where the contracting officer never considered the matter.

Bottom line: while this new rule does not substantively add to a contractor’s existing obligation to comply with the post-employment restrictions, making an affirmative representation on an ongoing basis requires that all contractors make sure that both their hiring and their HR practices are always aligned with existing post-employment restrictions.

Jacob B. Pankowski is a shareholder (pankowskij@gtlaw.com) at Greenberg Traurig LLP.
The views expressed are solely those of the author.

Topics: Defense Contracting, Defense Contracting