Category: Government Contracting

Who Said Government Ethics Wasn’t Funny?

Office of Government Ethics Seal

You might think that the United States Office of Government Ethics would be overly serious and lack a sense of humor.

You would be wrong.

Check out the poem at the end of their Reminder about Holiday Gifts & Fundraising
 (.pdf)

The holiday season – a time for good cheer!
For egg nog, for parties, for friends to be near.
But I must be careful
Lest I accept free
A gift not permitted, no matter how wee.

Part two six three five of the 5 CFR
Explains in detail the relevant bar.
It defines the term gift
To mean all things worth money.
That’s NBA tickets or jars full of honey.

Some gifts may be taken but some are verboten.
The source is the key – it’s the rule that I’m quotin’.
When from me or others
The source seeks some act,
I must find an exception or I could be sacked.

Check out the rest of the poem.

References:

New Mexico Regulates the Use of Placement Agents

Flag_of_New_Mexico

New Mexico, like New York and California is regulating the use of placement agents. The state has adopted the New York Model and banned any future investments with money managers who employ third-party placement agents. They have also instituted enhanced disclosure requirements.

The New Mexico State Investment Council policy will preclude any investments being made with money managers who use outside placement agents to market their fund. This is a complete ban of third-party marketers. Money managers who use internal marketing teams will have to disclose details of their relationships. Fees paid to attorneys, consultants, brokers, administrators and others related to investments will also require disclosure under the new rules.

The policy was enacted at the end of May, 2009. (I just realized that I forgot to write a post about it.)

References:

California Regulates Use of Placement Agents

California

California has followed the lead of New York and started regulating the use of placement agents. California’s law requires placement agents to disclose contributions and gifts made to state and local pension and retirement board members, as well as information about the placement agent’s compensation, the services provided, and any lobbying or regulatory registrations.

The California law is based on disclosure. It does not ban the use of placement agents like New York and as proposed by the SEC

The new California law (Assembly Bill No. 1584) went  into effect on October 11, 2009 when Schwarzenegger signed the bill into law. The law establishes a disclosure-based regime that requires:

  • Potential placement agents, prior to acting to solicit a potential state or local public pension or retirement system investment, must disclose campaign contributions and gifts to public pension board members during the prior 24 months.
  • Placement agents must disclose any subsequent gifts and campaign contributions to pension or retirement board members for as long as they are being paid to solicit investments.
  • Each state and local public pension system must develop and implement policies requiring disclosure of payments to placement agents by external asset managers by June 30, 2010. The new disclosures must include, at a minimum, the following information:
    • the existence of the relationship;
    • a résumé for each officer, partner or principal of the placement agent;
    • a description of compensation paid to the placement agent;
    • a description of services to be performed by the placement agent;
    • a statement of whether the placement agent, or its affiliates, is registered with the SEC, the Financial Industry Regulatory Authority  or other regulatory body; and
    • a statement of whether the placement agent, or its affiliates, is registered as a lobbyist with any state or the federal government.
  • A state or local public pension or retirement system may not enter into an agreement with any asset manager that does not agree in writing to comply with any such policy.
  • Any placement agent or external manager that violates any such policy is barred from soliciting new investments from that state or local retirement system for five years from the time of the violation.

References:

Opportunities Exist to Improve DOD’s Oversight of Contractor Ethics Programs

hotline_poster

The Government Accounting Office released a report on the compliance and ethics programs of 57 government contractors each with yearly contracts over $500 million: Defense Contracting Integrity: Opportunities Exist to Improve DOD’s Oversight of Contractor Ethics Programspdf-icon

The report’s survey was conducted in September 2008, before the new Federal Acquisition Regulations were put in place to require compliance and ethics programs. As of December 2008, the government contractors are required to have a code of business ethics and conduct, an internal control system, and to disclose to the Government certain violations of criminal law, violations of the civil False Claims Act, or significant overpayments. In fiscal year 2008 alone, DOD’s hotline received nearly 14,000 contacts resulting in 2,000 cases referred for investigation.

The Report found two key areas where additional opportunities exist to improve DOD’s oversight. The first is in the area of verifying the existence of contractor ethics programs after contract award as part of contracting officers’ contract administration responsibility. Additional oversight of contractor ethics programs during contract administration could help ensure that contractor ethics programs are in place as intended. The second is in the area of DOD’s hotline program. The new FAR contractor ethics rules have the potential to make the DOD’s hotline program less effective by ultimately reducing contractor exposure to DOD hotline posters and diminishing the means by which fraud is reported under the protection of federal whistleblower laws. Nearly all of the major contractors surveyed in the report had in-house ethics and compliance programs that exempt them from displaying the DOD posters.

The GAO report ended with four recommendations to improve oversight of defense contractors’ ethics programs:

  1. Determine if other guidance is needed to clarify responsibility during contract administration responsibility for verifying the implementation of contractor ethics programs.
  2. Determine the need for displaying the DOD fraud hotline posters.
  3. Determine whether the hotline poster should inform contractor employees of their federal whistleblower protections.
  4. If there is a need for the DOD’s hotline posters, amend DFARS to require display posters regardless of whether contractor has its own posters.

References:

SIGTARP Quarterly Report

sigtarp

Congress was smart enough to not let loose the billions of TARP funds without some oversight. The Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) was established by Section 121 of the Emergency Economic Stabilization Act as amended by the Special Inspector General for the Troubled Asset Relief Program Act of 2009. Neil Barofsky, the Special Inspector General for SIGTARP sees serious dangers in the operation of the US Treasury’s umbrella bailout plan according to his Quarterly Report to Congress.

SIGTARP set up a SIGTARP Hotline for reporting of concerns, allegations, information, and evidence of violations of criminal and civil laws in connection with TARP. SIGTARP has already received almost 200 tips. Both from the hotline and from other sources, SIGTARP has initiated nearly 20 preliminary and full criminal investigations to date.

Since SIGTARP’s Initial Report in February, SIGTARP’s Audit Division launched a survey of 364 TARP recipients to obtain answers to recurring questions regarding use of TARP funding and actions taken to comply with executive compensation requirements associated with the funding. They had a 100% response rate.

For those of you wondering where all the money has gone and what they are doing with it, this is a great report to browse through.

See:

California’s Pay-to-Play Laws

California requires disclosure of gifts to officials at public agencies. The disclosure is made using Form 801 (.pdf).

This form is for use by all state and local government agencies to disclose payments made to the agency when the payments provide a personal benefit to an official of the agency. Examples may include travel, meals or other benefits. Under certain circumstances, these payments will not result in a gift to the official, but will be considered a gift to the agency. The payments must be used for official agency business and must meet other requirements that are set out in FPPC Regulation 18944.2 (.pdf), which is available on the FPPC website www.fppc.ca.gov. This form must be filed within 30 days of the use of the payment.

California treats the giving of tickets to officials at state and local agencies slightly differently. FPPC Regulation 18944.1 (.pdf) regulates this practice, with disclosure made on Form 802 (.pdf)

There is a whole series form for reporting lobbying activity:

  • Form 601 — Lobbying Firm Registration Statement
  • Form 602 — Lobbying Firm Activity Authorization
  • Form 603 — Lobbyist Employer/Lobbying Coalition Registration Statement
  • Form 604 — Lobbyist Certification Statement
  • Form 605 — Amendment to Registration
  • Form 606 — Notice of Termination
  • Form 607 — Notice of Withdrawal
  • Form 615 — Lobbyist Report
  • Form 625 — Report of Lobbying Firm
  • Form 630 — Payments Made to Lobbying Coalitions
  • Form 635 — Report of Lobbyist Employer/Lobbying Coalition
  • Form 635-C — Payments Received by Lobbying Coalitions
  • Form 640 — Governmental Agencies Reporting
  • Form 645 — Report of $5,000 Filer
  • Form 690 — Amendment to Lobbying Disclosure Report

Fortunately the FPPC put together a Lobbying Disclosure Information Manual (.pdf)

There is an extensive collection of campaign disclosure forms for California.

The key form may be Form 461 — Independent Expenditure Committee and Major Donor Committee Campaign Statement. There is an associated manual: Campaign Disclosure Manual 5 – Information for Major Donor Candidates (.pdf).  Chapter 4 of the Manual (.pdf) details the reporting requirements.

The FPPC Regulations are very long and detailed.

Colorado’s Pay-to-Play Law

The Colorado voters passed Amendment 54 in the November, 2008 elections, which amends the Colorado Consitution to limit campaign contributions: Text of the Proposed Initiative (.pdf) and Text of the Constitutional Amendment (.pdf).

The consitutional amendment carries a presumption of impropriety between contributions to political campaigns and the award of sole source government contracts.

West Virginia’s Pay-to-Play Law

West Virgina addresses pay-to-play abuse by limiting campaign contributions during the negotiation and performance of the contract. West Viginia Code §3-8-12(d) provides:

(d) Except as provided in section eight of this article, no person entering into any contract with the State or its subdivisions, or any department or agency of the State, either for rendition of personal services or furnishing any material, supplies or equipment or selling any land or building to the State, or its subdivisions, or any department or agency of the State, if payment for the performance of the contract or payment for the material, supplies, equipment, land or building is to be made, in whole or in part, from public funds may, during the period of negotiation for or performance under the contract or furnishing of materials, supplies, equipment, land or buildings, directly or indirectly, make any contribution to any political party, committee or candidate for public office or to any person for political purposes or use; nor may any person or firm solicit any contributions for any purpose during any period.

Kentucky’s Pay-to-Play Law

Kentucky places limitation on campaign contributors who get no-bid contracts from the state.  K.R.S. §121.056(2) provides:

No person who has contributed more than the maximum legal contribution established by KRS 121.150 in any one (1) election to a slate of candidates for Governor and Lieutenant Governor that is elected to office or any entity in which such a person has a substantial interest shall have any contract with the Commonwealth of Kentucky during the term of office following the campaign in which the contributions shall be made unless the contract shall be attained by competitive bidding and the person or entity shall have the lowest and best bid.

(a) “Substantial interest” means the person making the contribution owns or controls ten percent (10%) or more of an entity or a member of the person’s immediate family owns or controls ten percent (10%) of the entity or the person and his immediate family together own or control ten percent (10%) or more of the entity.

(b) “Immediate family” means the spouse of the person, the parent of the person or spouse, or the child of the person or spouse.