Proposed Changes to Clarify Federal Gift Rules May Muddy Waters on Gift-Giving

Federal contractors of all types are subject to specific rules on gifts
to government officials.  When
considering whether to host a holiday party, give a gift or event
commemorative, or provide a service or intangible to a public official or
employee (the “official”), Federal contractors need to consider the special
ethics rules that apply to the official with whom they interact.

Federal statutes prohibit the offer or acceptance of bribes,
kickbacks and gratuities.  In addition,
Federal ethics rules restrict the giving of gifts, including invitations to
events, to an official because of the official’s position, or because the
contractor has an interest that may be substantially affected by the
performance or non-performance of the official’s public duties.  Under existing gift rules, an official is not
permitted to solicit or accept gifts from outside sources unless an exception
or exclusion applies. 

The Office of Government Ethics (OGE) has proposed changes
to clarify its rules on solicitation and acceptance of gifts that may make
gift-giving more uncertain.
Examples of these changes include the following:

  • Currently,
    the giving of a gift to a public official because of his/her position is
    prohibited unless it falls under an applicable exception or exclusion.  Gifts may cover any “thing of value”, such as
    discounts, loans, food, events, artwork, transportation, in-kind services.  The proposed rules would change the
    definition of “gifts” and applicable exclusions and exemptions.  
  • OGE
    proposes to encourage government officials to consider declining otherwise
    permissible gifts based on a new “flexible non-binding” standard -i.e., if a
    reasonable person would question the official’s integrity if he or she were to
    accept a gift from an outside source such as a federal contractor.  OGE proposes eight potential factors to be
    considered by the official in making the assessment:  (i) market value of the gift, (ii) whether
    the donor may be substantially affected by performance or nonperformance of the
    official’s duties, (iii) whether the official would feel a sense of obligation,
    (iv) whether the gift would create an appearance of preferential treatment, (v)
    for an event gift, whether the government provided persons with views or
    interests that differ from the donor, (vi) whether the event is open to the
    public or news media, (vii) whether the gift would cause a reasonable person to
    question the official’s ability to act impartially, (viii) whether the gift
    would interfere with the official’s conscientious performance of duties.  In applying these factors, OGE would focus
    employees and ethics officials on “whether acceptance of the gift could affect
    the perceived integrity of the employee or the credibility and legitimacy of
    the agency’s programs.” 80 Fed. Reg. 7004.
  • Current
    OGE rules provide that written authorization to accept an invitation to a
    widely attended gathering (WAG) is only required where the individual entity,
    or members of the organization inviting the official, have interests that may
    be substantially affected by the performance or nonperformance of the official.
     The proposed OGE rule would exempt a WAG
    expected to provide an opportunity to exchange ideas and views among invited
    persons, but only if the invited official obtains advance written
    authorization
    .  Depending on the
    circumstances, an event that is not expected to be attended by more than 100
    people may not qualify as a WAG.  

Conclusion:

Gift-giving rules are numerous, complex and changing.  Before offering any “thing of value” to an
official, it’s important to carefully analyze whether the “gift” would fall
under an exception or exclusion to current or proposed Federal gift-giving
restrictions.

Contact us for assistance analyzing your requirements under
these rules and/or seeking formal agency ethics officer approval of applicable
exemptions or exclusions.