actions" includes modifications to existing contracts when new funds are obligated for additional services or supplies, but does not include change order or other contract modifications resulting from price changes, engineering changes, overruns, repricing actions, or the like. Procurements proposed to be awarded to a sole source of supply are not excluded from the synopsizing requirement. In such cases, appropriate notices substantially as follows shall be submitted for publication:

(1) For unsolicited proposals. "Negotiations will be conducted with (insert name and address of firm) for (insert brief description of supplies or services) on the basis of its unsolicited proposal. This notice is for information only. No RFP is available."

(2) For other sole source procurement. "Negotiations will be conducted with (insert name and address of firm) for (insert brief description of supplies or services). This notice is for information only. No RFP is available."

(b) Where the exemption in § 11.1003-2(a) (4) of this title is proposed to be the basis for not synopsizing the procurement, a statement of the circumstances which justify 15 days or less for receipt of bids or proposals shall be prepared and placed in the contract file. (See also § 2-2.202-1 of this chapter.) § 2-1.1003-4 Synopses of subcontract opportunities.

Section 1-1.1003-4 of this title extends the practice of synopsizing to subcontract opportunities. Except where subcontracting opportunities do not exist or it is not in the Government's interest to do so, the contracting officer shall submit to the Commerce Business Daily for publication the names and addresses of firms:

(a) To whom request for proposals are to be issued in connection with all procurement actions over $500,000. (The list of firms is in addition to the regular synopsis description-see § 11.1003-7(b) (4) and (8) of this title.

(b) That have submitted acceptable technical proposals in the first step of two-step formal advertising.

Subpart 2-1.55-Ethics and
Standards of Conduct

§ 2-1.5500 Scope of subpart.

This subpart describes the main statutes and regulations governing em

(a) Government officials may not favor or provide a competitive advantage to any one firm over others seeking Government business. Nor may the interests of any contractor be placed above those of the Government.

(b) As the procurement program has grown, the Government has given increasing attention to ethics and standards of conduct in procurement. Agency procurement personnel are in a position of great trust and responsibility when they handle public funds. They must be alert to maintain both the high. est public confidence and their own individual integrity, guarding carefully against conflicts between their personal interests and their responsibilities to the Agency.

§ 2-1.5502 Agency regulations governing ethical and other conduct and responsibilities of employees.

§ 2-1.5502-1 Gifts, entertainments, and favors.

(a) Except as provided in § 2-1.5502–2, no employee may solicit or accept, directly or indirectly, any gift, gratuity, favor, entertainment, food, lodging, refreshments, loan, or any other thing of monetary value, from a person or employer of a person who:

(1) Has, or is seeking to obtain, contractual or other business or financial relations with the FAA; or

(2) Conducts operations or activities which are regulated by the FAA; or

(3) Has interests that may be substantially affected by the performance or nonperformance of his official duties.

(b) Each employee shall avoid any action, whether or not specifically prohibited by this subpart, which might result in, or create the appearance of:

(1) Using public office for private gain;

(2) Giving preferential treatment to any person;

(3) Impeding Government efficiency or economy;

(4) Losing complete independence or impartiality;

(5) Making a Government decision outside official channels; or

(6) Affecting adversely the confidence of the public in the integrity of the Government.

(c) No employee may solicit contributions from another employee for a gift to an employee in a superior official position. No employee in a superior offcial position may accept a gift presented as a contribution from employees receiving less salary than himself. No employee may make a donation as a gift to an employee in a superior official position (5 U.S.C. 113).

(d) No employee may accept a gift, present, decoration, or other thing from a foreign government unless authorized by Congress as provided by the Constitution and in 5 U.S.C. 114-115a.

§ 2-1.5502-2 Exceptions.

Notwithstanding § 2-1.5502-1(a), an employee is permitted to:

(a) Accept a gift, gratuity, favor, entertainment, loan, or other thing of monetary value when the circumstances make it clear that obvious family relationships (such as those between the parents, children, or spouse of the employee and the employee) rather than the business of the persons concerned are the motivating factors;

(b) Accept food or refreshments of nominal value on infrequent occasions in the ordinary course of a luncheon or dinner meeting, or other meeting, or on an inspection tour, when the employee's conduct of official FAA business will be facilitated by that meeting or tour and when no reasonable provision can be made for individual payment by the employee;

(c) Accept an invitation addressed to the FAA when approved by the Administrator of the FAA, for employees to participate in an inaugural flight or other ceremonial event related to the development of civil aeronautics, and accept food, lodging and entertainment incident thereto;

(d) Accept loans from banks or other financial institutions on customary terms to finance proper and usual activities of employees, such as home mortgage loans; or

(e) Accept unsolicited advertising or promotional material such as pens, pencils, note pads, calendars, and other items of nominal instrinsic value.

§ 2-1.5502-3 Outside employment and other activities.

(a) No employee may engage in outside employment or other outside activity that is not compatible with the full and proper discharge of the duties and responsibilities of his official Government employment. Incompatible activities include, but are not limited to

(1) Acceptance of a fee, compensation, gift, payment of expense, or any other thing of monetary value in circumstances in which acceptance may result in, or create the appearance of, conflicts of interest; or

(2) Outside employment which tends to impair his mental or physical capacity to perform his Government duties and responsibilities in an acceptable manner.

(b) No employee may receive any salary or anything of monetary value from a private source as compensation for his services to the Government (18 U.S.C. 209).

(c) Employees are encouraged to engage in teaching, lecturing, and writing that is not prohibited by law, Executive order, or other regulation. However, no employee may, either for or without compensation, engage in teaching, lecturing, or writing that is dependent on information obtained as a result of his Government employment, except when that information has been made available to the general public or will be made available on request, or when the head of the office, service, region, or center concerned, gives written authorization for the use of nonpublic information on the basis that the use is in the public interest.

(d) No employee may engage in teaching, lecturing, or writing on matters within the FAA's mission, or use his official Agency title in connection therewith, without the prior approval of the employee's supervisor.

(e) Unless authorized by an appropriate exemption issued by the Deputy Administrator or a regional or center director, no employee may

(1) Engage in the business of buying and reselling aircraft components, aircraft accessories, or aircraft; or

(2) Engage in a business involving the performance of research, engineering, construction, maintenance, repair, modification, piloting, or other related work with respect to aircraft, aircraft components, airborne electronics equipment or any other material or equipment associated with flight control or aircraft

movements or air-ground communications, or engage in a business carrying on any other phase of commercial aviation.

(f) No employee may be a member of any non-FAA organization, committee, or group whose primary purpose or program is to promote matters within the purview of the FAA's responsibilities, if that membership involves, or may appear to involve, unethical use of the employee's official position or of information or resources to which the employee has access by reason of employment with the FAA. However, employees are not precluded from being members of organizations which have as a primary purpose the enhancement of the professional status of their members, or of any employee organization as defined in Executive Order 10988.

(g) No employee may engage in outside employment under a State or local government, except in accordance with Part 734 of Chapter I of Title 5, Code of Federal Regulations.

(h) This section does not preclude an employee from:

(1) Receipt of bona fide reimbursement, unless prohibited by law, for actual expenses for travel and such other necessary subsistence as is compatible with this subpart for which no Government payment or reimbursement is made. However, an employee may not be reimbursed, and payment may not be made on his behalf, for excessive personal living expenses, gifts, entertainment, or other personal benefits;

(2) Participation in the activities of National or State political parties not prescribed by law; or

(3) Participation in the affairs of or acceptance of an award for a meritorious public contribution or achievement given by a charitable, religious, professional, social, fraternal, nonprofit educational and recreational, public service, or civic organization.

§ 2-1.5502-4 Use of Government prop

erty.

No employee may directly or indirectly, use or allow the use of, Government property of any kind, including property leased to the Government, for other than officially approved activities. Each employee has a positive duty to protect and conserve Government property, including equipment, supplies, and other property entrusted to him.

§ 2-1.5502-5

Misuse of information.

(a) For the purpose of furthering a private interest, no employee may, except as provided in § 2-1.5502-3 (c), directly or indirectly use, or allow the use of, official information obtained through or in connection with his Government employment which has not been made available to the general public.

(b) No employee may make any unauthorized disclosure of official Agency information.

§ 2-1.5502-6 Other standards of ethics and conduct.

Other standards of ethics and conduct applicable to Agency employees are contained in the Agency regulations on employee responsibilities and conduct (14 CFR, Part 199, published on Mar. 29, 1966, in the FEDERAL REGISTER, and transmitted with Order 3750.3).

§ 2-1.5503 law.

§ 2-1.5503-1

Other matters regulated by

Officials not to benefit.

(a) The Officials Not to Benefit clause (see § 1-7.101-19 of this title) is the oldest mandatory contract clause required by statute on this subject (Title 41 U.S.C. 431). It applies to all Government contracts and provides that no member of or delegate to Congress, or any resident commissioner, shall receive any benefit from a contract. This is designed to prevent jobbing (seeking private gain through public service) between legislators and Government procurement personnel.

(b) The clause expressly states that it does not apply to a contract made with a corporation for the corporation's general benefit. This permits the Government to contract with a corporation whose president happens to be a member of Congress.

(c) The statute has both civil and criminal aspects. In case of violation, both parties are subject to fine, and any prohibited agreement between them is void. If procurement personnel encounter a situation covered by the statute, they should notify the contracting officer for further referral of the matter to higher authority.

§ 2-1.5503-2 Covenant against contingent fees.

All Agency contracts contain the Covenant Against Contingent Fees clause (see § 1-1.503 of this title), which is in

tended to prevent the use of purchased influence in obtaining Government contracts. The use of the clause and administration and enforcement of the covenant is discussed in Subparts 1-1.5 of this title and this 2-1.5.

§ 2-1.5503-3 Fees or kickbacks by sub

contractors.

Act

The so-called Anti-Kickback (Title 41 U.S.C. section 51) prohibits subcontractors under all negotiated Government prime contracts from giving anything of value to employees of the primes or of higher-tier subcontractors. Payments from subcontractors to any officer, partner, employee, or agent of the prime contractor or to an intervening subcontractor are covered by the Act. The prohibited payments include direct or indirect payment of a fee, commission, compensation, or gratuity of any kind, as an inducement for (or acknowledgement of) the award of a subcontract. If such payment is shown to have been made, there is a conclusive presumption that it was included in the price of the subcontract. Its cost would thus ultimately be borne by the Government, and the Government can recover it. The Act also imposes criminal penalties on the maker and receiver of the payment. § 2-1.5503-4 Bribery of public officials and witnesses.

Title 18 U.S.C. 201 makes it unlawful to bribe or attempt to bribe a public official. It covers giving, offering, or promising anything of value to an official or his designee with intent to influence an official act. Section 201 similarly prohibits the official from soliciting or accepting a bribe. Maximum penalties are provided. They include a $20,000 fine for certain major offenses, or three times the equivalent of the bribe (which ever is greater), and 15 years' imprsionment. The official is also disqualified from holding Federal office. For lesser offenses, there is a maximum fine of $10,000 and imprisonment for 2 years. § 2-1.5503-5 Compensation to Mem

bers of Congress, officers, and others in matters affecting the Government. Title 18 U.S.C. 203 bars Government officers and agents from directly or indirectly receiving, or agreeing to receive, any payment from nongovernmental sources for services relating to any Government contract, claim, or other matter

in which the United States is interested. The penalty is a maximum fine of $10,000, imprisonment for 2 years, and mandatory disqualification from Federal office. § 2-1.5503-6 Activities of officers and employees in claims against and other matters affecting the Govern

ment.

Title 18 U.S.C. 205 prohibits officers and employees from two activities. They may not act as agents or attorneys for, or aid or assist in the prosecution of, any claim against the United States. Nor may they represent any person as agent or attorney before the Government in any matter of Government interest. The maximum penalty under the section is a fine of $10,000 and imprisonment for 2 years.

§ 2-1.5503-7 Acts affecting a personal financial interest.

(a) Title 18 U.S.C. 208 prohibits a Government employee in the executive branch from acting on behalf of the Government in any matter involving an organization in which he has a financial interest. He is also disqualified if (to his knowledge) his spouse, minor child, or partner has a financial interest in such an organization. The section further bars the employee from acting for the Government if he is an officer, director, partner, or employee of an organization that has a financial interest in a transaction with the Government. The employee is even barred from such transactions if he is negotiating for or has an arrangement concerning prospective employment with that organization. The maximum penalty under section 208 is $10,000 and imprisonment for 2 years.

(b) The section also defines the type of participation by the employee that is prohibited. He may not participate personally and substantially in the matter, whether by decision, approval, disapproval, giving advice or recommendation, investigation, or otherwise. In two situations, however, the section permits the employee to act for the Government even if he does have some financial interest. First, he may act if he makes full advance disclosure to the Government of that interest and of the matter in issue. In this case, he must receive a written decision, in advance, that his financial interest is not so substantial as to affect the integrity of his services. Second, he may act if the Agency has

exempted the financial interest from the requirements of the statute, by regulation published in the FEDERAL REGISTER. This may be done when the interest is too slight to affect the integrity of his services.

§ 2-1.5503-8 Voiding transactions in violation of law.

In addition to other remedies provided by law, Title 18 U.S.C. section 218 permits the head of a department or agency, pursuant to regulations, to rescind any transaction (such as a procurement contract) in which there has been a final conviction for violation of sections 201 through 209.

§ 2-1.5504 Violations.

Actual and alleged violations of the regulations, investigations conducted, and the final disposition of each case will be promptly reported to the appropriate Compliance and Security office. Subpart 2-1.56-Value Engineering § 2-1.5601 Policy.

(a) General. Value engineering is concerned with elimination or modification of elements contributing to the cost of an item but is not necessary to required performance, quality, maintainability, reliability, standardization, or interchangeability. Value engineering usually involves an organized effort directed at analyzing the function of an item with the purpose of achieving the required function at the lowest overall cost. As used in this subpart "value engineering” means a cost reduction effort not required by any other provision of the contract. It is the policy of the Agency to incorporate provisions which encourage or require value engineering in all contracts of sufficient size and duration to offer reasonable likelihood for cost reduction. Normally, however, this likelihood will not be present in contracts for architect-engineering, research, or exploratory development. This subpart deals with value engineering incentives which provide for the contractor to share in cost reductions that ensue from change proposals he submits.

(b) Processing value engineering change proposals. In order to realize the cost reduction potential of value engineering, it is imperative that value engineering change proposals be processed as expeditiously as possible.

§ 2-1.5602 Value engineering incentives.

§ 2-1.5602-1 Description.

Many types of contracts, when properly used, provide the contractor with an incentive to control and reduce costs while performing in accordance with specification and other contract requirements. However, the practice of reducing the contract price (or fee, in the case of cost reimbursement type contract) under the "Changes" clause tends to discourage contractors from submitting cost reduction proposals requiring a change to the specifications or other contract requirements even though such proposals could be beneficial to the Government. Therefore, the objective of a value engineering incentive provision is to encourage the contractor to develop and submit to the Government cost reduction proposals which involve changes in the contract specifications, purchase description or statement of work. Such changes may include the elimination or modification of any requirements found to be in excess of actual needs regarding for example, design components, materials, material processes, tolerances, packaging requirements, or testing procedures and requirements. If the Government accepts a cost reduction proposal through issuance of a change order, the value engineering incentive provision provides for the Government and the contractor to share the resulting cost reduction in the proportion stipulated in the value engineering incentive provision.

§ 2-1.5602-2 Application.

(a) Except as limited by § 2-1.5602-3, a value engineering incentive provision shall be included in all advertised and negotiated procurements as required by and in accordance with the guidelines in Order IM-4435.2, unless it is determined that the value engineering offers no potential for cost reduction, as for example, where a particular contract or class of contracts is of insufficient duration to allow value engineering proposals to be processed, or where the item or class of items being procured is a commercial product whose design and cost are controlled by the commercial market.

(b) The contract clause providing for value engineering incentive is set forth in § 2-7.150-21 of this chapter.

(c) The precise extent to which the contractor should share in cost reduc