Government contracting is an inherently competitive enterprise. As a result, contractors often seek to hire former government employees with contract experience. However, the Procurement Integrity Act (PIA) and the U.S. Criminal Code (Criminal Code) restrict the activities of a former government employee when acting on behalf of a new employer. Failure to comply with these laws can result in civil and criminal penalties for employees and employers alike. In this blog, we discuss restrictions these laws impose, who bears the responsibility of compliance, and what government contractors can do to comply with those laws.
The PIA
The PIA seeks to prevent unethical and unfair conduct from influencing the procurement process. To achieve this goal, the PIA imposes restrictions on what employment former government officers and employees may hold after leaving the government.
The PIA prohibits a former agency employee, for one year, from accepting compensation from a contractor if that former agency employee served as:
- the procuring contract officer, the source selection authority, a member of the source selection evaluation board, or the chief of an evaluation team or
- the program manager, the deputy program manager, or an administrative contracting officer, on a contract worth more than $10 Million that was awarded to the hiring contractor.
The PIA’s one-year prohibition also applies to agency employees who personally made a decision to:
- award a contract, subcontract, contract modification, or task or delivery order worth more than $10 Million to the hiring contractor;
- establish overhead or other rates applicable to one or more contracts held by the hiring contractor valued in excess of $10 Million;
- approve one or more contract payments worth more than $10 Million to the hiring contractor; or
- pay or settle a claim in excess of $10 Million with the hiring contractor.
However, the PIA’s one-year prohibition does not apply if the former agency employee is hired by a division or affiliate of the contractor that provides a different product or service than the division or affiliate that was awarded the contract in the above-mentioned procurements.
Additionally, the PIA also prohibits use or disclosure of contractor bid or proposal information prior to the award of a contract. Contractors who employ former government employees should ensure that those former government employees do not use or disclose information gained while in government service relating to a bid or proposal while assisting the contractor.
The Criminal Code
Compared to the PIA, 18 U.S.C. § 207 restricts what employees can do while working for a contractor, not whether the employee can work for any given contractor. Three provisions are especially relevant for federal contractors who wish to hire former agency officials.
First, a former agency employee may not knowingly influence the decision of a government officer or employee in a “particular matter” about which the former agency employee had personal and substantial involvement. Second, for two years after the end of an employee’s employment with an agency, that former employee is prohibited from working with a third party to communicate or appearing before any officer or employee of the U.S. with the intent to influence the decision of that officer or employee in any matter that (1) the U.S. is a party to or has a direct and substantial interest in and (2) was pending under the employee’s “official responsibility” during the last year of the former employee’s government service. Whether a matter was under the former employee’s “official responsibility” hinges on whether the employee had direct administrative or operating authority to approve, deny, or otherwise direct government action, regardless of whether that employee’s decision was final. Finally, senior agency personnel must take a one-year “cooling off” period before communicating with or appearing in any matter before the agency for which that senior employee worked, with the intent to influence an agency decision on behalf of a private party
Because the above prohibitions prohibit only making communications to and appearances before a former agency, 18 U.S.C. § 207 does not prohibit those employees from doing “behind the scenes” work, so long as none of the communications to the relevant agency are attributable to the agency’s former employee.
Unpacking the Rules
Let’s say your company wants to hire Oscar. Oscar is an Officer at an Agency. In the last year of his service, Oscar had supervisory authority over two contracts, A and B. During that year, Oscar engaged in discussions and reviewed bids for contract A and also helped draft a new regulation, Regulation R. Contract B, however, did not come before Oscar until his second-to-last day at the Agency. As a result, Oscar is aware of Contract B’s existence, but he did not play any role in the procurement. After leaving the Agency, Oscar joined your company, and you want to put him to work on Contracts A and B, as well as a regulatory issue your company faces under Regulation R. What kind of work can he do on these?
With respect to Contract A, Oscar is prohibited, for life, from communicating with or appearing before the Agency on Contract A because he participated personally and substantially in the matter, and the matter involved specific parties when he did so. With respect to Contract B, Oscar is prohibited for two years from communicating with or appearing before the Agency, because although that contract was under his official responsibility, he did not participate personally and substantially in the matter. In both scenarios, however, Oscar may do “behind the scenes” work so long as the work appearing before the Agency is not attributable to Oscar.
With respect to the Regulation R issue, Oscar is not prohibited from communicating with or appearing before the Agency, because his drafting of Regulation R did not involve specific parties; he simply drafted the regulation, which has general applicability.
Who Bears Responsibility for Compliance and Best Practices?
Although these statutes impact you as an employer in terms of who you can hire and what work those employees can do, the burden of compliance is primarily on the employee. However, if an employee fails to abide by the PIA and Section 207, that failure may have adverse impacts on you as a contractor, such as loss of a contract award or even, in some scenarios, potential civil and criminal penalties. As a result, it is often a best practice to ask prospective employees leaving government employment to request an ethics opinion from the government entity they are leaving. This ethics opinion will let you know what the employee can and cannot do by outlining potential ethics concerns the employee may face.
Hiring employees from government agencies is an effective way to hire skilled employees who bolster your company’s abilities as a government contractor. When hiring former agency employees, however, contractors must comply with the restrictions imposed by the PIA and the Criminal Code. If you have questions regarding whether you can hire a former agency employee or what kind of work a former agency employee can do, please contact Nichole Atallah, Tim Valley, or another member of PilieroMazza’s Labor and Employment or Government Contracts practice groups. Remember to visit our Government Contract Executive Orders resource center for additional coverage.
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If you’re seeking practical insights to gain a competitive edge by understanding the government’s compliance requirements, tune into PilieroMazza’s podcasts: GovCon Live!, Clocking in with PilieroMazza, and Ex Rel. Radio.
