1. ARMY STANDARDS OF CONDUCT
Office of the Staff Judge Advocate
415 Custer Avenue
(913) /4926
FAX (913)
Presented By: CPT Chris Jacobs
Good morning
My name is CPT Chris Jacobs
I am the Chief of Administrative and Civil Law at the OSJA. I am also an
Ethics Counselor for this installation.
In the world of ethics, it is much better to ask for permission than to try to seek
forgiveness. If you have any questions, please call me. My number is
The other number listed on this slide is for LTC Well, the DSJA. He is also an
Ethics Counselor.
So that you will have this contact information this slide has been copied to the
back of the ethics training certificate that you will receive at the conclusion of
this briefing. 1

2. Purpose
To provide a better understanding of the ethical principles involved with conflicts of interest, gifts, and working with contractors in order to fulfill the statutory requirement to provide annual ethics training to each person required to file a financial disclosure report. 2

3. References DoD 5500.7-R, Joint Ethics Regulation
Ethics Powerpoint Presentation prepared by Mr. Alfred Novotne, Army Standards of Conduct Office, HQDA
Here are my references.
I would especially like to point out the website I have listed
It is for the Standards of Conduct Office homepage within the DoD General Counsel’s Office website
In addition to numerous ethics training packages that you can download and use for training within your agency, this site also hosts the 2001 Annual Ethics On-line training…which you could have completed in lieu of attending this in-person training. When you go back to your offices, I recommend that you encourage your fellow co-workers that have yet to complete their annual ethics training to try this site, instead of having to go out in the cold and trying to find a parking place near the theater next Wednesday afternoon at 1330, when I will teach this class again. 3

4. Outline Introduction Purpose of Financial Disclosures
Conflicts of Interest
Contractors in the Workplace
Gifts From Contractors
Conflicts of Interest - Contractors
Inside Information
Conclusion
This is the outline I will be following this morning.
I hope this presentation will last approximately 45 minutes, followed by
whatever questions you may have.
Before I going any further, I’d like to ask how many of you are contractors. 4

5. Introduction
The Public expects their government to be fair and impartial.
We cannot have conflicts of interest and still be impartial.
Avoiding conflicts--and improper influence-- is our ethics foundation.
The foundation for ethics in government is remaining fair and impartial.
In order to accomplish this, all government employees must avoid conflicts of interest and improper influence AND must maintain the confidence of certain government information. 5

6. Purpose of Financial Disclosures
The purpose of the OGE 450 and the SF 278 is not to detect criminal behavior
Commanders/Supervisors and employees should use the disclosure process to plan assignments and assign duties so as to avoid conflicts of interest
You have all recently been directed to complete either an OGE Form 450 or the Optional OGE Form 450-A…or at least I hope you have completed it by now…the drop dead deadline is Friday…anyone still need to file?
The reason you had to file a financial disclosure report is so that your supervisor can plan assignments and assign duties to ensure that you do not have a conflict of interest caused by your personal financial holdings and your official duties.
I cannot stress enough that this process is not used to detect criminal behavior. 6

7. Conflicts of Interest (1 of 3)
18 U.S.C The Conflict Statute (Criminal)
May not participate personally and substantially through decision, approval, recommendation, advice, investigation or otherwise--
In a judicial proceeding, application, ruling, determination, contract, claim, controversy, charge or other particular matter--
In which you, your spouse, minor child, partner, organization in which you are an officer or employee, or company with whom you are negotiating for employment-
Has a financial interest.
What exactly is a conflict of interest.
This is the legal definition.
Basically, it means that you cannot be directly involved in some particular matter in which you or someone close to you has a financial interest.
This definition is quite broad. It goes beyond just the typical scenario of a person that is in charge of a contract or procurement and they ultimately choose to purchase something from a company in which they happen to own a lot of stock.
As you can see, it also applies to the case of someone who is negotiating for future employment. If you are negotiating with a certain company for post-government employment, you cannot be involved in any matters affecting that company. 7

8. Conflicts of Interest (2 of 3)
5 C.F.R Appearance of Conflict
This rule covers the appearance of impropriety
Would a “reasonable person in possession of the relevant facts” see anything wrong?
Must also look at the financial interests of those with whom you have a “covered relationship”
Non-employment business relationship
Relatives
Organizations in which you were an officer, employee, or consultant during the last year
Organizations in which your relatives are officers
Organizations in which you are active
In at addition to the conflict statute is the “Appearance of Conflict” rule found in the JER.
This rule goes beyond an actual conflict, and prohibits even the appearance of impropriety.
The test is, “Would a reasonable person in possession of all the relevant facts see anything wrong with what you are doing?”
The reasonable person, is your supervisor.
Notice that like the conflict statute, this rule is not just concerned with your personal financial interests, but also with those with whom you have a “covered relationship.”
Some of those are listed here: relatives, organizations in which you were an officer, employee or consultant during the last year, or organizations in which your relatives are officers 8

9. Conflicts of Interest (3 of 3)
Conflicts of Interest MUST be resolved
Disqualification
Divestiture
Waiver
Termination
If a conflict of interest exists, you must do one of these things, in this order.
First, seek to disqualify yourself.
Second, Divest yourself of the financial holdings at the root of the problem or affirmatively end any employment negotiations.
Third, seek a waiver of the conflict of interest from the Standards of Conduct Office.
Finally, termination. 9

10. Contractors in the Workplace Advice on “Best Management Practices” (1 of 2)
Remember: Contractor employees are NOT Federal employees. We must respect the employer-employee relationship between contractors and their employees.
Do not require “out of scope” work, personal services, or “inherently governmental functions.”
Identify contractor employees in meetings, communications, addresses and on ID cards.
Having discussed some of the rules regarding conflicts of interest, I now want to turn to working with contractors.
Listed on this slide and the next are 7 things to keep in mind when dealing with contractors.
Contractor employees are NOT Federal employees. Respect the relationship that the contractor has with its employees.
Be careful not to ask or require contractor employees to do things that are beyond the scope of the contract
Be careful not to require personal services…like picking up your dry cleaning or walking your dog
And be careful not to require activity that is inherently governmental in nature…like preparing your agency’s budget
Identify who is a government employee and who is a contractor 10

11. Contractors in the Workplace Advice on “Best Management Practices” (2 of 2)
Identify and resolve “organizational conflicts of interest.”
Safeguard inside information.
Publish information on gifts and contractor employees.
Resolve appearance issues created by close personal relationships between Federal and contractor employees.
Be wary of Organizational Conflicts of Interest…these arise when a contractor working on an instant contract is provided information that will give them an unfair advantage in competing for the next contract. For example, if the contractor were involved in preparing the statement of work for the next contract, they would have a tremendous advantage.
Protect inside information.
Make sure government employees and contractor employees understand the rules on soliciting and accepting gifts.
Lastly, be careful of the appearance of impropriety problem caused by close personal relationships. 11

12. Misuse of Official Position 5 C.F.R. 2635.702
“An employee shall not use or permit the use of his Government position or title or any authority associated with his public office in a manner that is intended to coerce or induce another person, including a subordinate, to provide any benefit.”
In addition to contract limits, this rule bars assigning “out of scope” tasks to contractor personnel.
Public service is a public trust. Do not misuse your position to get your subordinates to give you things…or to try to get contractor employees to do things that are beyond the scope of their duties. 12

13. GIFTS FROM CONTRACTORS
Is it a “gift”?
Is it a gift from a prohibited source?
Does an exception apply?
Should an exception be used?
Next, I want to discuss some of the rules on Gifts, and how they relate to contractors.
There are two broad categories we will discuss, 1st- Gifts from outside sources
2nd- Gifts from subordinates
Contractors fall into the first category (gifts from outside sources) since contractors are always prohibited sources.
This is the analysis we should use to determine whether or not to accept a gift.
1. Is it a gift?
2. If it is a gift, is it from a prohibited source?
3. If it is a gift from a prohibited source, is there an exception that applies?
4. Finally, even if there is an exception that applies, should I use the exception? 13

14. IS IT A GIFT? 5 C.F.R. 2635.203 What is not a gift?
Application of the “cheap and worthless” rule:
“Items with little intrinsic value intended solely for presentation.”
Plaques, coffee mugs, trophies
Also, coffee and doughnuts
Also included are things like cards
The food items cannot be part of a meal
Be careful of trophies that do have intrinsic value…like the Waterford Crystal vase that has a small engraving attached to it. 14

15. IS IT A GIFT FROM A PROHIBITED SOURCE?
Yes, if given by someone who seeks to do business with DoD
5 C.F.R (d)
Or, if given because of the recipient’s official position
5 C.F.R (e)
Contractor employees should
always be treated as
“Prohibited Sources”
This is how to determine if the gift is from a prohibited source.
Is it given by someone who does or seeks to do business with DoD?
Is it given to you because of your official position?
Remember, contractor employees should be treated as prohibited sources because they seek to do business with DoD. 15

16. DOES AN EXCEPTION APPLY?
$20 or less (& not to exceed $50 per year)
Gifts to a large group (not based on rank)
Bona Fide Award Programs
Widely attended gathering
(consult Info Paper for details on this exception)
Outside personal or business relationships
Personal gifts can be accepted only if the relationship is
independent of the Federal workplace.
These are some of the most common exceptions.
20/50
Gifts to a large group. Discounted loans for all government employees.
Genuine awards
Widely Attended Gathering: When attendance at the event is in the agency’s interest because it will further agency programs and operations AND the event is attended by a large number of persons with a diversity of views or interests.
Outside personal or business relationships. I could accept a birthday present from my brother even if he were employed by a prohibited source.
The personal relationship must be independent of the Federal workplace. 16

17. SHOULD AN EXCEPTION BE USED? 5 C.F.R. 2635.202(c)
NO, if the gift undermines Government integrity:
If it is bribery or creates the appearance of a bribe
If gifts are given too frequently
NO, if it undermines the integrity procurement activities
Even if an exception applies, it should not be used if it undermines government integrity
or if it undermines procurement integrity
for example, the 20/50 exception shouldn’t be used if the frequency of the gifts creates the appearance of impropriety 17

18. IMPROPER GIFTS WHAT TO DO?
Eat It!
Food may be shared in the office
Return It!
Pay for It!
Give It to Uncle! (the Army)
Uncle Sam is there for you and will
relieve you of your unwanted burdens
Practice Tip: Your office should publish information on contractor gifts and solicitation
If you elect to pay for it, you must the fair market value
If you are trying to use the 20/50 rule, you cannot simply pay $5 for a $25 gift…you must pay the full $25 18

19. CONTRACTOR GIFTS
About to retire, COL Hardcharger, project manager for the support contract, invites his employees to dinner at his house and includes Mark, a contractor employee, who brings a $22 bottle of wine.
Mark invites COL Hardcharger and his wife for drinks & dinner at his favorite restaurant.
COL Hardcharger’s executive officer
solicits from everyone for his retirement gift (a $250 briefcase). Mark contributes $25.
May COL Hardcharger accept Mark’s gifts?
Here are some hypothetical scenarios involving gifts from contractor employees.
Because they may be hard to see, I’ll read them. 19

20. CONTRACTOR GIFTS
COL Hardcharger may not accept the wine; the value exceeds $20 and no other exception applies.
COL Hardcharger may not accept the invitation from Mark for dinner at his favorite restaurant.
The executive officer may not solicit, nor accept, gifts or contributions to gifts from outside sources, such as contractor employees. No
No. You may never SOLICIT gifts from outside sources. All of the exceptions deal with acceptance of gifts…they do not allow for soliciting gifts. 20

21. Gifts From Subordinates (1 of 6)
Generally, subordinates may not give superiors gifts, but there are exceptions
This is the general Rule…No gifts. 21

22. Gifts From Subordinates (2 of 6)
Occasional basis (e.g., holidays, birthdays)
Valued at $10 or less (no cash)
Shared refreshments in office
Personal hospitality at residence 22

23. Gifts From Subordinates (3 of 6)
Examples of occasional gifts
$8 bag of candy after vacation
$9 poinsettia plant at holiday
dinner for supervisor in home
$15 bottle of wine at dinner in home 23

24. Gifts From Subordinates (4 of 6)
Special Infrequent Occasions
Occasions of personal significance, or
When supervisor-subordinate relationship ends
Gift “appropriate to the occasion” 24

25. Gifts From Subordinates (5 of 6)
Examples of gifts for special infrequent occasions
$30 floral arrangement after supervisor’s surgery
$70 place setting at commander’s wedding
$19 book at retirement 25

26. Gifts From Subordinates (6 of 6)
Limitations on gifts for special infrequent occasions
Generally, a $300 limit per “donating group”
$10 limit on solicitation ( not on giving)
Must be voluntary (suggest organizer be junior and do not keep lists) 26

27. IMPROPER APPEARANCES 5 C.F.R. 2635.502
What would a “reasonable person in
possession of the relevant facts” think?
This covers any appearance of impropriety and includes the interests of anyone with whom you have a
“covered relationship.”
“I must say, this
looks really bad!”
9/22/2018 27

28. KEY CONCEPT “Reasonable person in possession of the relevant facts”
Impartiality is judged on all relevant facts. This is not a “Washington Post” test.
The “reasonable person” is your supervisor. It is he or she
who weighs the facts.
9/22/2018 28

29. THE DATING GAME LTC Gigabyte is the new DOIM.
He is dating Jane Data, the contractor employee responsible for DOIM support.
Must LTC Gigabyte stop dating Jane Data? 29

30. THE DATING GAME
No, but…
LTC Gigabyte should not participate in any contract issues, including the follow-on contract.
LTC Gigabyte should not rate or evaluate the work done by Jane’s company.
LTC Gigabyte should issue a written notice of disqualification.
Commander might want to select someone else as DOIM. 30

31. CONFLICTS OF INTEREST
Federal employees are barred from participating in official actions that affect their outside interests.
But contractor employees are not subject to this statute!
However, contractors are subject to organizational conflict limits (FAR 9.5).
Practice Tip: Do you need conflict of interest
restrictions in your contract requirements?
9/22/2018 31

32. THE PHANTOM BRIEFER Has Mr. Ican violated any laws?
A support contractor, Mr. Ican, is tasked to brief the CG on a plan to increase a subordinate command’s mission (which will also increase the support contract).
Mr. Ican conducts the briefing but does not identify himself as a contractor employee.
The briefing convinces the CG to double the size of the mission.
Has Mr. Ican
violated any laws? 32

33. THE PHANTOM BRIEFER Mr. Ican did not violate any laws, BUT...
Mr. Ican should have been introduced as a contractor employee to all attendees at the outset of the briefing.
Mr. Ican may not prepare or
brief the acquisition strategy
for the procurement since
such activity will result in
an unfair competitive
advantage under the FAR. 33

34. Often mysterious—it is information that is:
Inside Information
Often mysterious—it is information that is:
Not available to the general public
Exempt under FOIA or protected by the
Privacy Act
Trade Secrets or data to which we
purchased limited rights (TDPs)
Procurement Sensitive
Classified
Information that would
damage U.S. interests

35. Did Mr. Lips violate any laws?
THE LEAK
Mr. Lips, a contractor employee, not involved in a source selection process, overheard a conversation between two Source Selection Evaluation Board members.
He heard that INSIDER won a contract that will be announced at noon tomorrow.
He called his broker and purchased shares of INSIDER stock at $10 per share.
After the award is announced, INSIDER’s stock jumps to $20 per share giving this shrewd investor a tidy profit.
Did Mr. Lips violate any laws? 35

36. THE LEAK
Abuse of inside information is prohibited by the Joint Ethics Regulation, securities laws & other criminal statutes.
Government employees may not give support contractors access to proprietary information unless the proprietary owner consents.
The contractor and its employees should sign nondisclosure agreements.
Ensure that Government employees know who the contractor employees are (such as distinctive badges and specific identification in addresses).
Did Mr. Lips violate any laws? Probably.
The Procurement Integrity Statute specifically prohibits obtaining procurement information. 36

37. ORGANIZATION DAY
It is time for the Employee Annual Picnic.
The project officer recommends that the CG invite all contractor employees to the picnic. After all, they are part of the team and should participate and enjoy the day off with their co-workers.
Should the CG invite contractor
employees to participate in the
picnic and organization day? 37

38. ORGANIZATION DAY
In order to avoid putting pressure on the contractor, the CG should not officially encourage their attendance.
Although not officially invited, contractor employees may attend the picnic, but:
The contractor decides whether they get time off and how;
We will not pay the contractor for time spent at the picnic;
We may not solicit contractor employees when fundraising;
We may not subsidize contractor employees. 38

39. CONCLUSION
Yes, contractor employees can and should be part of the “team.”
Yes, contractor employees can and should be our friends and peers.
But, we must respect their limitations.
And, we should ensure that everyone in the office understands those limitations.
WHAT ARE YOUR QUESTIONS??? 39