Page 1 of 2
Whether it's understanding established conduct with government employees, hiring former federal employees or ensuring that your own organization meets federal employment standards, a misstep here can be expensive, and can cost you a contract or seriously damage your reputation.
Over the next several columns, we'll look at personnel and related hurdles a company has to clear in the process of running a business that sells to the government. Let's look first at the notion of gifts and gratuities to current federal employees.
It's a criminal offense to give or offer anything of value to public officials in connection with their official capacity. That includes direct exchanges or indirect exchanges via a spouse or other connected persons. There is a fine difference between a bribe and a gratuity. When there's an up-front quid pro quo between the giver and the public official, the exchange is considered a bribe. A gratuity is an exchange made to thank a public official for an act. It's still illegal because the giver nonetheless is rewarding a public official for an official act.
It is possible to offer a civil servant a small token or a meal without it being construed as a bribe or gratuity, provided you're very careful.
The government's ethics regulations define prohibited sources of consideration as people that (1) seek official action from a federal agency; (2) do business or seek to do business with an agency; (3) conduct activities regulated by an agency; (4) have interests that may be substantially affected by performance or nonperformance of the employee's official duties; or (5) are an organization, a majority of whose members are prohibited sources.
A civil servant can accept a gift from a prohibited source without violating the gratuity statute under a basic rule known as the $20/$50 exception or de minimis exception. Civil servants may accept unsolicited gifts, but not cash, worth up to $20 at any one occasion, provided that they don't accept more than $50 worth of gifts during a calendar year from any one source. A company counts as one source.
"Modest refreshments" offered independently by a prohibited source don't count toward the $20 or $50 limit. Items with almost no intrinsic value, such as a cheap plaque or a certificate, also do not count toward the limit.
The moment the appearance of a quid pro quo enters under any circumstance, however, the $20/$50 exception is off. All bribes, even cheap ones, are illegal.
The rules about accepting gifts place the burden mainly on feds to refuse. But a company caught systematically handing out too many gifts, even if the gifts aren't illegal, could draw attention from debarment officials.