# DLAD PART 3 – IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST

- SUBPART 3.1 – SAFEGUARDS

- 3.103-90 Independent pricing.

- 3.104 Procurement integrity.

- 3.104-1 Definitions.
- 3.104-3 (a) (S-90) Statutory and related prohibitions, restrictions, and requirements.
- 3.104-4-90 Statutory and related prohibitions, restrictions, and requirements.
- 3.104-6 Ethics advisory opinions regarding prohibitions on a former official’s acceptance of compensation from a contractor.
- 3.104-7 Violations or possible violations.

- SUBPART 3.2 - CONTRACTOR GRATUITIES TO GOVERNMENT PERSONNEL

- 3.203 Reporting suspected violations of the FAR Gratuities clause.

- SUBPART 3.3 – REPORTS OF SUSPECTED ANTITRUST VIOLATIONS

- 3.301 General.

- SUBPART 3.5 – OTHER IMPROPER BUSINESS PRACTICES

- 3.590 Prohibition against the solicitation of "free issues."

- SUBPART 3.7 – VOIDING AND RESCINDING CONTRACTS

- 3.704 Policy.
- 3.705 Procedures.

- SUBPART 3.8 – LIMITATION ON THE PAYMENT OF FUNDS TO INFLUENCE FEDERAL TRANSACTIONS

- 3.804 Policy.
- 3.806 Processing suspected violations.

PART 3 – IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST

(Revised November 19, 2013, through PROCLTR 2014-34)

TABLE OF CONTENTS

SUBPART 3.1 – SAFEGUARDS

3.103-90 Independent pricing.

3.104 Procurement integrity.

3.104-1-90 Definition.

3.104-3-90 Statutory and related prohibitions, restrictions and requirements.

3.104-4 -90 Disclosure, protection, and marking of contractor bid or proposal information and source selection information.

3.104-5 Disqualification.

3.104-6 Ethics advisory opinions regarding prohibitions on a former official’s acceptance of compensation from a contractor.

3.104-7 Violations or possible violations.

SUBPART 3.2 – CONTRACTOR GRATUITIES TO GOVERNMENT PERSONNEL

3.203 Reporting suspected violations of the FAR Gratuities clause.

SUBPART 3.3 – REPORTS OF SUSPECTED ANTITRUST VIOLATIONS

3.301 General.

SUBPART 3.5 – OTHER IMPROPER BUSINESS PRACTICES

3.590 Prohibition against the solicitation of "free issues."

SUBPART 3.7 – VOIDING AND RESCINDING CONTRACTS

3.704 Policy.

3.705 Procedures.

SUBPART 3.8 – LIMITATION ON THE PAYMENT OF FUNDS TO INFLUENCE FEDERAL TRANSACTIONS

3.804 Policy.

3.806 Processing Suspected Violations.

SUBPART 3.1 – SAFEGUARDS

3.103-90 Independent pricing.

(a) Disclosure of prices during a reverse auction conducted by the Government, in which each offeror consents to public disclosure of its prices, including to other offerors, does not constitute a “disclosure” under FAR 52.203-2(a)(2).

3.104 Procurement integrity.

3.104-1 Definitions.

(a) Designated agency ethics official. The DLA designated agency ethics official is the General Counsel. The chief counsels of each DLA primary level field activity (PLFA) are designated as deputy designated agency ethics officials.

3.104-3 (a) (S-90) Statutory and related prohibitions, restrictions, and requirements.

In accordance with 41 U.S.C. 2107(1), offerors participating in a particular DLA reverse auction and their employees designated to participate in that auction are authorized to receive the prices submitted by all offerors participating in that reverse auction. Commercial reverse auction providers and their employees are authorized to receive the prices submitted by all offerors participating in all DLA reverse auctions conducted by that commercial reverse auction provider.

3.104-4-90 Statutory and related prohibitions, restrictions, and requirements.

(a) In addition to the contracting officer, the Director, DLA Acquisition (J7), Commanders/Directors of DLA contracting offices (see 2.101), Heads of Contracting Activities, and chiefs of the contracting office (see 2.101) have the authority to authorize persons or classes of persons to receive contractor bid or proposal information or source selection information when necessary to the conduct of the procurement. The following persons are authorized access to contractor bid or proposal information or source selection information regarding any DLA procurement (including information in the electronic contract folder):

(1) The contracting officer, the bid opening officer, the procurement agent, the contracting officer's supervisor and contracting office executive, management, policy, contract review, pricing, technical, legal counsel, small business advisory, associated administrative and clerical personnel, Defense Contract Management Agency (DCMA) pricing personnel, preaward survey team members, preaward survey monitor, Defense Contract Audit Agency (DCAA) auditors, and respective engineering support activity personnel.

(2) The DLA Director, the DLA Vice Director, the Director, Defense Contract Management Agency, the Director, DLA Acquisition (J7); their executive directors; and supporting staff.

(3) The source selection authority, and the source selection evaluation board, technical evaluation panel, and source selection advisory council members and advisors.

(4) Any person or class of persons not listed above who is authorized access to automated systems contract files, contract file information, or procurement information.

3.104-6 Ethics advisory opinions regarding prohibitions on a former official’s acceptance of compensation from a contractor.

(a) Requests for ethics advisory opinions shall be submitted to the General Counsel, or the appropriate deputy designated agency ethics official, as defined in DoD 5500.7-R, Joint Ethics Regulation.

3.104-7 Violations or possible violations.

(a)(1) When the contracting officer concludes there is no impact, with the concurrence of the chief of the contracting office and local counsel, the contracting officer may proceed with award.

(b) Local counsel shall recommend the action to be taken.

(d)(2) If the contracting officer concludes that profit on the contract or modification involved should be recaptured in accordance with the clause at FAR 52.203-10, Price or Fee Adjustment for Illegal or Improper Activity, or that the contract should be voided or rescinded in accordance with FAR 3.104-7(d)(2)(ii) and 3.705, the contracting officer shall prepare a report documenting the facts giving rise to the conclusion that a violation of the Act has occurred. That report shall be prepared in consultation with local counsel and include the contracting officer's recommendation for the action to be taken. When profit recapture is recommended, the contracting officer will recommend an amount to be recaptured. When rescission or voiding of the contract(s) is recommended, the contracting officer will estimate the value of the tangible benefits received and retained under the contract(s) in question. The report shall be forwarded to the General Counsel for action.

(f) Notification shall be submitted through the Director, DLA Acquisition, to the Director, DLA, by letter signed by the Commander or Director of the reporting activity.

SUBPART 3.2 - CONTRACTOR GRATUITIES TO GOVERNMENT PERSONNEL

3.203 Reporting suspected violations of the FAR Gratuities clause.

(a) See DFARS 203.070. Send information related to the suspected violation for initial evaluation and appropriate action to the cognizant chief of the contracting office (CCO). A courtesy copy of the information will also be provided to the local field activity office of counsel.

(1) If the initial evaluation by the CCO supports a finding that action may be taken under the contract’s Gratuities clause, the CCO will refer the matter directly to the cognizant HCA and to local field activity business integrity/fraud counsel with the following information:

(i) The name and address of the contractor, with a statement as to form of organization, including names and addresses of principals.

(ii) Complete contract data, including number, date, estimated day of completion of performance, general description of supplies or services procured, dollar amount, status of performance and payment, urgency of requirements and availability of the supplies or services from other sources.

(iii) A summary of the facts concerning the suspected violation, with names and addresses, dates and references to documentary evidence available.

(iv) The status of any ongoing investigation with the name of the agency conducting the investigation, with an estimated date upon which the report of investigation will be submitted.

(2) The contracting officer will fully cooperate with local field activity business integrity/fraud counsel, and is reminded to carefully preserve documentary evidence and exhibits, since action adverse to a contractor under the Gratuities clause is subject to review by a competent court.

(3) Local field activity business integrity/fraud counsel will identify the appropriate organization responsible for conducting an investigation of the suspected violation and will coordinate with that organization to obtain a copy of a written report outlining the findings of the investigation conducted. A copy of the report will be provided to the cognizant field activity HCA or CCO for contracting offices where the Director DLA Acquisition is the HCA.

(4) The HCA or CCO, as applicable, will coordinate with local business integrity/fraud counsel after receiving the report of investigation from the appropriate organization responsible for conducting an investigation of the suspected violation to determine whether further action is necessary.

(i) If no further action is necessary, the HCA or CCO will issue a written determination stating that no action will be taken against the contractor under the Gratuities clause and the basis for such a determination.

(ii) If further action is necessary, the HCA or CCO will coordinate with local business integrity/fraud counsel to provide the contractor appropriate notice and opportunity for hearing.

(A) If the contractor requests a hearing, the HCA or CCO will schedule and conduct a hearing in coordination with local business integrity/fraud counsel. Information submitted by the contractor during the hearing will be considered in reaching a final decision.

(B) If the contractor elects not to have a hearing but submits information, that information will be considered in reaching a final decision.

(5) After the contractor is given appropriate notice and opportunity for hearing and a hearing has occurred, the contractor did not request a hearing but submitted information, the contractor did not request a hearing, or failed to appear after requesting a hearing and did not submit information, the HCA or CCO, as applicable, will coordinate with local business integrity/fraud counsel to determine whether further action is necessary.

(i) If no further action is necessary, the HCA or CCO will issue a written determination stating that no action will be taken against the contractor under the Gratuities clause and the basis for such a determination.

(ii) If further action is necessary, the HCA or CCO will coordinate with local business integrity/fraud counsel and draft a written determination and findings outlining the basis for the determination and the amount of exemplary damages, in accordance with the requirements of FAR 52.203-3(c)(2).

(6) In determining the appropriate action that should be taken, the HCA or CCO, as applicablewill:

(i) Provide a draft copy of the written determination with supporting documentation along with a report summarizing the hearing offered to the contractor and any information provided by the contractor, to the Director, DLA Acquisition (J7) for headquarters review and comment by J7 divisions, and DG.

(7) The determinations required by FAR 52.203-2(a) and FAR 52.203-3(c)(2) will be made by the cognizant HCA.

(8) HCAs approve and sign the determination for their contracting activity. CCOs for contracting offices for which the Director, DLA Acquisition is the HCA, will forward draft determinations with supporting documentation, including the DLA IG Report and the CCO’s recommendation, to the Director, DLA Acquisition , who is the approval authority for those contracting offices.

SUBPART 3.3 – REPORTS OF SUSPECTED ANTITRUST VIOLATIONS

3.301 General.

(b) Whenever the contracting officer finds evidence of suspected antitrust violations, he/she shall forward to local counsel, a report of information available to establish possible violation of the antitrust laws.

(b)(S-90) Exchange of information regarding questionable contractor business practices. Information revealed by postaward reviews, audits, or similar sources on price overcharges and other questionable business practices may be of concern to other DoD activities that conduct business with the firm involved. Sound business practices dictate that this information be made available to DoD activities upon request. Also, such information, including the name and address of the firm involved, a brief description of the questionable business practice, and the manner in which it was revealed, shall be forwarded in writing to the chief of the contracting office and cognizant DCMA.

SUBPART 3.5 – OTHER IMPROPER BUSINESS PRACTICES

3.590 Prohibition against the solicitation of "free issues."

(a) The solicitation of supplies or services from individuals or firms at no cost (known as "free issues") may lead to a perception on the part of these individuals or firms that either there is a benefit to accrue to them in the future if they satisfy the request at no cost, or that they are under an obligation to satisfy the request at no cost as a condition of receiving future Government business. These perceptions must be avoided. The solicitation of supplies or services from individuals or firms at no cost is therefore prohibited.

(b) However, when an individual or a firm voluntarily offers to provide supplies or services at no cost, under certain circumstances the Government may accept such offers without compensating the supplier therefore. Consult with servicing Counsel for guidance with regard to when this may be done. In no case will gratuitous items or services be accepted without the concurrence of Counsel.

SUBPART 3.7 – VOIDING AND RESCINDING CONTRACTS

3.704 Policy.

(a) For purposes of this subpart, the Head of the agency designee is the Special Assistant for Contracting Integrity (SACI), General Counsel.

3.705 Procedures.

(a) Reporting. The facts concerning a final conviction for any violation of 18 U.S.C. 201-224 shall be reported by the contracting officer to the Associate General Counsel for Business Integrity within 20 days after the contracting officer learns of the final conviction. The report shall be signed by the contracting officer and submitted through local Counsel. The report shall:

(1) Identify and include a copy of the contracts(s) involved;

(2) Include a copy of the judgment order evidencing or confirming a final conviction as defined in FAR 3.702;

(3) List in detail the tangible benefits received and retained by the reporting activity in connection with the performance of the contract(s) which relate to the final conviction;

(4) Provide the contracting officer's estimate of the fair value of benefits received and retained and include an explanation of how that estimate was calculated;

(5) Include a recommendation concerning the amount to be recovered and the property to be returned as a result of action under this subpart; and

(6) Indicate whether a report recommending debarment of the parties involved has been forwarded to General Counsel. After review, the Associate General Counsel for Business Integrity will refer the contracting officer's report to the SACI for action. The SACI shall promptly notify the Civil Division of the Department of Justice when action is contemplated under Subpart 3.7 of the FAR.

SUBPART 3.8 – LIMITATION ON THE PAYMENT OF FUNDS TO INFLUENCE FEDERAL TRANSACTIONS

3.804 Policy.

(b) Reporting. Upon receipt of contractor disclosures, forward copies of the OMB Standard Form LLL, Disclosure of Lobbying Activities, to DLA Acquisition J71.

3.806 Processing suspected violations.

Suspected violations of the requirements of the act shall be referred to the local office of counsel.