Don’t Gift Wrap an Ethical Problem

by Allan Rubin, Vice President, Marketing

FederalNewsRadio.com article posted today includes a very timely (and clear) reminder of the guidelines for giving gifts to federal employees. Holiday gifts are no exception, and in fact, they represent a dangerous time for what could be well-meaning contractors who don’t pay attention to the rules.

For those who need a brief refresher on what government employees can and cannot accept, the article references this blog post by John P. Mahoney, a partner at Tully Rinckey PLLC. Mahoney states:

“As a general rule of thumb, federal employees should refrain from accepting gifts from people who are considered “prohibited sources” or who want to give them something solely because their official position. A prohibited source, as defined by 5 CFR § 2635.203(d), is someone whose gift could create pose a conflict of interest if accepted, namely anyone who:

  1. wants the employee’s agency to do something;
  2. has an existing or desired business with the employee’s agency;
  3. is regulated by the employee’s agency;
  4. could be impacted by the work the employee conducts; or
  5. is a member of an organization whose members are largely refrained from giving the gift to the employee for the above-stated reasons.

Under 5 CFR § 2635.204(a), federal employees can generally accept unsolicited gifts with a market value of up to $20 per giver, per occasion. However, employees must keep track of how much someone gives them on separate occasions over the year, because the aggregate market value of gift they are permitted to accept cannot exceed $50 annually. Additionally, there are exemptions for gifts between employees who also have family relationship or personal friendship.”

If you’re reading this, there’s a pretty good chance you and/or your company fall under the definition of “prohibited source” as listed above. So, with all Scrooge puns aside, be careful what you give this holiday season. Check out the blog post for more on possible exceptions as well as pitfalls to avoid.

Marketers Should Expect Scrutiny from Ethics Officials

Rita Walston, Director, Marketing Programs

I attended the latest Government Marketing Forum session last week to hear from three experts about “Ethics 2.2: The Changing Rules of Engagement.”  It was an excellent session with Anne Armstrong, president of 1105 Government Information Group, moderating a panel made up of Alice Eldridge, vice president and chief counsel, land & armaments for BAE Systems; Jeffrey Green, senior attorney and deputy ethics official at Department of Defense; and Stephen Ryan, partner at McDermott Will & Emery LLP.  The information the three of them provided was topical and relevant.

It also sent a chill through the room.

“The scrutiny of our community is coming,” we were told.

GSA and VA have become the poster children for inappropriate spending on events and marketing to employees.  As a result, careers were ruined.  Conferences such as AFITC were cancelled, hurting the ledgers of those companies that earn a living supporting such events.  Edicts emerged, such as the recent ban on Army attendance at non-DoD events.

The message from the panel was that there is, unfortunately, a fair amount of ambiguity among the rock-solid rules, but industry is advised to take the extra steps and err on the side of caution to ensure everything we do is above board.  Among the takeaways:

  • Food:
    • $20 or less, period.  While that can be difficult in pricey areas like DC, the rule doesn’t make exceptions for geography.
    • The “honor basket” is not sufficient.  You should prominently post cost and be able to provide a receipt on the spot to anyone paying for their meal.
    • If it needs a fork, don’t serve it.
  • Widely Attended Gathering (WAG) Exception:  the definition of what is or is not a WAG can be rather ambiguous.  Some ethics officers pin it at 25 or more attendees, some say at least 100 people, some look at how many different agencies and titles will be represented.  The panel’s advice is to include wording in your invitation that those interested in attending should check with their ethics officer.
  • Multi-Manufacturer versus Single Manufacturer Events:  Those “single-manufacturer symposia held at a nice place” were described by the panel as “troublesome”—which to me is a loaded word when spoken by a lawyer.
  • It was suggested companies might want to consider having a lawyer present during meetings with government.  This may seem extreme, but it does provide some insurance.

I believe government and industry need to communicate in order to ensure taxpayer dollars are being used to effectively accomplish agency missions.  The current environment is making that more difficult, and that’s where we, as marketers, as expected to get creative.  As we do so, however, we should keep in mind Ryan’s closing comments.

“There are implicit ‘wink-winks’ in this town,” he said, “and there will come a time that those become unwound, and you don’t want to be the poster child for that when it unwinds.”

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