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Procurement Ethics - PowerPoint Presentation

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Procurement Ethics - PPT Presentation

Presented by Greg Tolbert amp James Gayton Location or Date Agenda Why Are We Here Context The Battle Is Joined A Proposed Analytic Framework Lifecycle Procurement Ethics How Will They Know ID: 619007

procurement ethics rcw amp ethics procurement amp rcw chap public state government contract gov washington actrcw ethical remedies contracts

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Slide1

Procurement Ethics

Presented by Greg Tolbert & James

Gayton

Location or DateSlide2

AgendaWhy Are We Here?Context

The Battle Is Joined

A Proposed Analytic Framework

Lifecycle Procurement EthicsHow Will They KnowTakeaway MessagesAdditional Resources

2

Procurement EthicsSlide3

Before We Get Started

3

Procurement EthicsSlide4

Our GoalsContextIssues & analytic framework

Tools

Procurement Ethics

4Slide5

Procurement Ethics5Slide6

Avoid PowerPoint PoisoningContract Remedies

6Slide7

Contract Remedies7Slide8

Stay AwakeContract Remedies

8Slide9

Remember to preface my personal ethics questions with “Say, I have a friend who …”

Contract Remedies

9Slide10

Stay Out of the HeadlinesProcurement Ethics

10Slide11

Procurement Ethics11Slide12

Procurement Ethics12Slide13

Stay Out of the Unemployment LineProcurement Ethics

13Slide14

Stay out of CourtProcurement Ethics

14Slide15

Contract Remedies

15Slide16

Why Are We Here?Procurement Ethics

16Slide17

Disclaimer

Procurement Ethics

17Slide18

Public Expectation

Procurement Ethics

18Slide19

The TensionProcurement Ethics

19Slide20

ContextThe Development of Government Procurement

20

Procurement EthicsSlide21

England – 1600’sClass systemPolitical power held by wealthy landowners

Government Service is a path to wealth

Procurement Ethics

21Slide22

Colonial America

Procurement Ethics

22Slide23

American Revolution

Procurement Ethics

23Slide24

Procurement Ethics24Slide25

Congressional ReformCentralized Purchasing AuthorityThe Patriot Financier

Procurement Ethics

25Slide26

War of 1812

Procurement Ethics

26Slide27

1850s

Procurement Ethics

27Slide28

Civil War

Procurement Ethics

28Slide29

Procurement Ethics

29Slide30

“For sugar [the government] often got sand; for coffee, rye; for leather, something

no better

than brown paper; for sound

horses and mules, spavined beasts and dying donkeys; and for serviceable muskets and pistols, the experimental failures of sanguine inventors.”

– Harper’s Monthly Magazine (1864)

Procurement Ethics

30Slide31

The Crédit Mobilier Scandal

Procurement Ethics

31

Phony construction company owned by Union Pacific RR stockholders

Hired Credit Mobilier to build the transcontinental railroad

Charged U.S. government twice the actual cost

Bribed Congress to stop investigationSlide32

Procurement Ethics32Slide33

Whiskey Ring Scandal

Procurement Ethics

33Slide34

Teapot DomeBribery scandalU.S. government oil lease

No-bid contracts

Very favorable lease terms

Procurement Ethics

34Slide35

AbscamFBI sting operationTargeted political corruption

7 Members of Congress convicted

Procurement Ethics

35Slide36

Operation Double SteelUndercover FBI operationOffered bribes and kickbacks to government officials involved in purchasing materials and equipment

58 arrests

Procurement Ethics

36Slide37

Military ContractsAir Force Lease of Boeing KC-767 tankersLease more expensive than purchase

Price inflated to favor future employer

Procurement Ethics

37Slide38

Duke Cunningham

Procurement Ethics

38

Member of Congress (CA)

Bribery – accepted $2.4 million

PrisonSlide39

Procurement Ethics

39Slide40

21st Century Contracts Managers

Procurement Ethics

40

Kerry Khan

Program manager

Bribes & kickbacks

Over $30 million

Plead guilty

Bribery

Bid-rigging

Consequences

Prison (19 years)

Restitution ($32.5 million)Slide41

2015

Procurement Ethics

41Slide42

Where are We Today?Public corruption existsCosts taxpayers

Diverts resources

Procurement Ethics

42Slide43

Procurement Ethics43Slide44

Procurement Ethics44Slide45

The Battle is Joined

45

Procurement EthicsSlide46

Selected United States Federal Laws

Procurement Ethics

46Slide47

United StatesConflict of Interests Law,18 U.S.C. §208Bribery

18 U.S.C. §

201

Unauthorized Compensation18 U.S.C. §203Post-Employment Restrictions 18 U.S.C. §207Voiding Transactions

18 U.S.C. §218 Procurement Ethics

47Slide48

Key State LawsProcurement Ethics

Procurement Ethics

48Slide49

Washington StatutesProcurement ReformRCW chap. 39.26Ethics in Public Service Act

RCW chap. 42.52

Local Government Ethics - Contracts

RCW chap. 42.23Public Records ActRCW chap. 42.56

Procurement Ethics

49Slide50

Procurement ReformRCW Chap. 39.26Regulates procurement of goods & servicesKey provisions

RCW 39.26.020

RCW 39.26.030

RCW 39.26.040Procurement Ethics

50Slide51

RCW 39.26.020Applies toGovernment

Procurement

Employees

ContractorsPotential ContractorsRequires compliance with Ethics in Public Service Act

Procurement Ethics

51Slide52

RCW 39.26.030Exemption from Public Records ActBid submissions & evaluations

Limited time

Goods and services procurements

Supports the goals of:TransparencyEffective

Procurement Ethics

52Slide53

RCW 39.26.040Protection of statutory intent regarding use of volunteersSimilar ethics rulesCompensation for official duties

Outside compensation

Limited application

Agency established group of volunteers to advise managementProcurement Ethics

53Slide54

Ethics In Public Service ActRCW chap. 42.52Applies to state employees and state officersCreates special rules for ‘Section 4’ employees

Key Provisions

RCW 42.52.140 & .150

RCW 42.52.020RCW 42.52.030RCW 42.52.040

RCW 42.52.080RCW

42.52.050

RCW 42.52.110 & .120

Procurement Ethics

54Slide55

RCW 42.52.140 & .150Gift RestrictionsAbsolute prohibition [.140]

No gift of any kind or value if intended to influence state employee

General limitation [.150]

$50 per source/gift per yearList of gifts “presumed not to influence”Section (4) restrictions [.150(4)]Complete list of acceptable giftsUnsolicited

Procurement Ethics

55Slide56

RCW 42.52.020Conflict of InterestFinancial or otherwise

Direct or indirect

Business transactions

Professional activitiesObligations

Procurement Ethics

56Slide57

RCW 42.52.030Financial Interests in TransactionsSpecific conflict of interestCommon method of defrauding government

No financial interest

Direct or indirect

Contract, sale, lease, purchase, or grantBy, through, or under supervisionIn whole or in partNo self-dealingNo participation in official capacityOfficer, agent, employee, member, or beneficial interest

Procurement Ethics

57Slide58

RCW 42.52.040Assisting in transactionsNo help on the sideDirectly or indirectly

Compensation or not

Participation at any time

Under official responsibility within 2 yearsApplies to business in which employee is partner, managing officer, or employeeLimited exceptions

Procurement Ethics

58Slide59

RCW 42.52.080Employment after public service2 years back, 1 year aheadValued above $10,000

Same contract or contracts

Limited 2 year prohibition

No beneficial interest in contract or grantParticipated in authorization or fundingAbsolute prohibition if intended to influenceActual or reasonable beliefCannot assist in transaction in which employee participated

Procurement Ethics

59Slide60

RCW 42.52.050Confidential InformationRestriction on duties both as a state employee and outside employmentNo employment that requires disclosure of confidential information

No use for benefit of you or another

Unless specifically permitted by law or contract

No unauthorized disclosuresNo intentional concealmentProcurement Ethics

60Slide61

RCW 42.52.110 & .120Compensation for duties & outside activitiesGenerally, only pay from stateOfficial duties [.110]

Compensation, gift, reward, or gratuity

Performing, omitting, or deferring

Limited exception for employees of institutions of higher education Outside activities [.120]Start with absolute prohibitionList of conditions and duties that would allow such payAdditional conditions if pay is from a state agency

Procurement Ethics

61Slide62

RCW Chap. 42.23Applies to cities, counties, towns, districts, municipal and quasi-municipal corporations [.020]No beneficial interest [.030]Direct or indirect

By, through, or under supervision

In whole or in part

Includes any paymentsLong list of exceptions“Remote interests” permitted [.040]Must be disclosed to governing bodyGoverning body approves contract

Privilege lost if attempt to influenceProcurement Ethics

62Slide63

RCW Chap. 42.23, cont.Any such contract is void[.050]$500 penalty + any other criminal or civil liability [.050]Grounds for forfeiture of office

Sets a floor local governments can raise [.060]

Other prohibited acts [.070]

Securing special privilegesOutside compensationOutside employment that might require disclosure of confidential informationDisclosure of confidential information

Procurement Ethics

63Slide64

Ethics Violation as CrimeRCW 9.18.130Collusion to prevent competitive billingRCW 9A.56.020

Theft

RCW 9A.60.020

Obtaining signature by deceptionRCW 9A.68.010BriberyRCW 9A.68.020 & .030Requesting or receiving unlawful compensationRCW 9A.68.050Trading in special influence

Procurement Ethics

64Slide65

A Proposed Analytic FrameworkProcurement Ethics

65Slide66

Public vs. Private

Procurement Ethics

66Slide67

Procurement Ethics

67Slide68

Procurement Ethics

68Slide69

Procurement Ethics

69Slide70

Why Do We Care About Procurement Ethics?

70

Procurement EthicsSlide71

How to Think About Procurement EthicsDon’t think about “ethics”“Ethics” is NOT “Morals”List of rules governing conduct

Not about being “right” or “wrong”

Think about compliance

Behave in accordance with rulesNo appearance

of improprietyNot restricted to actions during work

71

Procurement EthicsSlide72

Potential Ethical Issues

Procurement Ethics

72Slide73

Potential Ethical Issues, cont.

Procurement Ethics

73Slide74

Less Obvious Ethical Issues

Procurement Ethics

74Slide75

Less Obvious Ethical Issues, cont.

Procurement Ethics

75Slide76

First Draft

76

Procurement EthicsSlide77

Analytic Framework for Procurement Ethics

77

Procurement EthicsSlide78

Lifecycle Procurement EthicsProcurement Ethics

78Slide79

Procurement Stages

Procurement Ethics

79Slide80

Planning

Procurement Ethics

80Slide81

Solicitation

Procurement Ethics

81Slide82

Evaluation & Award

Procurement Ethics

82Slide83

Protest

Procurement Ethics

83Slide84

Contract Management

Procurement Ethics

84Slide85

How Will They Know?Procurement Ethics

85Slide86

It’s the Company You Keep

Procurement Ethics

86Slide87

Criminals are Not Trustworthy

Procurement Ethics

87Slide88

Warning Signs

Procurement Ethics

88Slide89

Warning Signs, cont.

Procurement Ethics

89Slide90

It’s How You Act

Procurement Ethics

90Slide91

Sources of InformationCo-workersDisgruntled spouses (or former spouses)Disappointed mistressesWhistleblowers

Competitors

Internal Audit

SAO AuditsWiretapsArrested co-conspirators91

Procurement EthicsSlide92

There’s An App for ThatMove towardIncreased transparencyGreater accountability

Cost effective government

Procurement Ethics

92Slide93

Takeaway Messages

93

Procurement EthicsSlide94

“An awful lot of corruption comes from government contracts. You can’t have no-bid contracts. You have to have transparent contracting procedures.”-

Melanie Sloan

Former federal prosecutor

Citizens for Responsibility & EthicsProcurement Ethics

94Slide95

Think AboutHistory is informativeLifecycle procurement ethics

Be alert for red flags

Procurement Ethics

95Slide96

Plan AheadEthics policyEthics training

Ethics advisor

Checks & balances

Audits

Procurement Ethics

96Slide97

Remember …

“If you can’t be a good example, then you’ll just have to be a horrible warning.”

Catherine Aird,

His Burial Too

97Slide98

Additional Resources

98

Procurement EthicsSlide99

Selected WebsitesWashington Executive Ethics Boardwww.ethics.wa.gov

Washington Department of Enterprise Services

www.des.wa.gov

NIGPwww.nigp.org NASPO

www.naspo.org NAEPwww.naepnet.org

MRSC

www.mrsc.org

99

Procurement EthicsSlide100

State StatutesRCW chap. 42.52, Ethics In Public Service ActRCW chap. 39.26, Procurement of Goods & Services

RCW chap. 42.23,

Code of Ethics for Municipal Officers – Contract Interests

RCW chap. 42.30, Open Public Meetings ActRCW chap. 42.56, Public Records ActRCW titles 9 & 9A, Crimes and Punishments & Criminal Code

100

Procurement EthicsSlide101

Procurement Ethics TrainingDES, Washington State Purchasing & Procurement Ethicshttp://des.wa.gov/about/pi/ProcurementReform/Pages/PRTraining.aspx

EEB, Training

http://www.ethics.wa.gov/TRAINING/Training.htm Procurement Ethics

101Slide102

OtherU.S. Department of Defense, Office of General Counsel, Standards of Conduct Office, Encyclopedia of Ethical Failure (October 2014)

http://www.dod.mil/dodgc/defense_ethics/

U.S. Office of Government Ethicshttp://www.oge.gov/home.aspx

Procurement Ethics

102Slide103

Transparent GovernmentAmerican Transparency – Open the Books Projectwww.openthebooks.com

Washington State Open Checkbook

www.fiscal.wa.gov/checkbook

Procurement Ethics

103Slide104

OtherJohn Mikesell & Cheol Liu, The Impact of Public Officials’ Corruption on the Size and Allocation of U.S. State Spending (2014)

Caitlin Ginley,

Grading the Nation: How Accountable Is Your State?

Center for Public Integrity, State Integrity 2012Procurement Ethics

104Slide105

Thank You

105

Procurement EthicsSlide106