Redstone -Seminar, Government Employees and Gratuities

As we (Redstone Government Consulting, Inc.) began to plan our September 21, 2017 Redstone Edge, we sought out speakers and potential attendees from government agencies, including those from DCAA (Defense Contract Audit Agency) and DCMA (Defense Contract Management Agency). In both cases, their potential speakers had a list of questions which seemed to be unnecessary, but related to OGE (Office of Government Ethics) regulations and interpretations, to identify and otherwise prohibit anything which might be an illegal (or at least unethical) gratuity. Although we might not be a “government contractor”, for those who are, there is another regulation in play; FAR 52.203-3 prohibits government contractors from offering gratuities to government employees.

Gratuities and Government Speakers: Defined

Noting that we all need to help government executive branch employees in terms of not crossing the line of accepting gratuities, the obvious question is: What exactly constitutes a gratuity? Thanks to OGE, as of January 1, 2017 we now have their identification of impermissible gratuities, which is just about anything and everything, but for some specific exceptions. For the purpose of planning Redstone Edge (a seminar with government presenters), we did our homework and discovered some of the following details regarding exceptions to “gratuities”:

  1. Government attendees and presenters can accept “modest” amounts of refreshments and meals. However, alcohol is not considered a modest refreshment (who knew that alcohol was an immodest refreshment); hence, a government presenter can apparently not partake in alcohol unless it meets another exception. Although we didn’t actually discover those other exceptions, we multi-voted and decided that two exceptions are:
  1. Alcohol consumed (by the presenter) just before their presentation to enhance that presentation; or
  2. Alcohol which is consumed purely for medicinal purposes (not really).
  1. For widely attended events, government attendees and speakers can accept meals if the meals are provided to all attendees or for speakers, provided that the meals are provided to other speakers. In other words, the government employee or speaker cannot receive anything special. That said, for meals which involve a self-serve buffet, the seminar sponsor must observe the government employees and/or speakers to make certain that they do not take more than any other attendee or speaker (okay, we made up the part about observing the government folks).
  2. Private sector employees (or firms/event sponsors) can invite ex-employees who are now employed by the executive branch of the government. However, that invitation should not be due to the ex-employee’s current (government) position. Thus, invitations should clearly state that no one cares about the current position and/or that the person is being invited in spite of their current position. We aren’t sure how to reconcile this with the fact that virtually every government (employee) speaker freely provides their “bio,” clearly identifying their official title and responsibilities. The only logical conclusion…wait, there is no logical conclusion, given that in almost any case, the government speaker is invited in large part because of his/her current title and responsibilities.
  3. The event sponsor can provide unsolicited gifts to the government (employee) speaker, provided that those gifts do not exceed $100 annually (gifts from one source to one government employee). Additionally, the gifts can be informational, but not entertainment. Much to our chagrin, Redstone will not be able to recognize the DCAA and DCMA speakers with a hardbound edition of “The Unparalleled History of the Alabama Crimson Tide Football Program,” or a special DVD of “Sweet Home Alabama”.   We are now actively scouring the shelves at The Dollar Store for alternative gifts for our government speakers.

Although some of this blog has been tongue-in-cheek, the fact is that gratuities can be a land-mine for employees of the executive branch, as well as something to absolutely avoid by government contractors. FAR 52.203-3, Gratuities, prohibits potential and existing government contractors from offering gratuities and there are rather stiff penalties from crossing that line. If a contractor is found to have violated that clause, the contract is subject to termination and the government could pursue penalties equal to 3 to 10 times the amount of the gratuities…along with potential debarment or suspension. The OGE/Government definitions of gratuities may seem to be “in the weeds”, but it is what it is.

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Written by Michael Steen

Michael Steen Mike Steen is a Senior Advisor with Redstone Government Consulting, Inc. and a specialist in complex compliance issues to include major contractor cost accounting & business system regulations, financial compliance, resolution of DCAA audit issues, Cost Accounting Standards application, litigation support, and claims preparation. Prior to joining Redstone Government Consulting, Mike served in a number of capacities with DCAA for over thirty years, and upon his retirement, he was one of the top seven senior executives with DCAA. Mike Served as a Regional Director for two DCAA regions, and during that time was responsible for audits of approximately $25B and 800 employees. In October 2001, he was selected for the Senior Executive Service and in 2006 he received the Presidential Rank Award. During Mike’s tenure with DCAA, he was involved in conducting or managing a variety of compliance audits, to include cost proposals, billing systems, Cost Accounting Standards, claims, defective pricing, and then-evolving programs such as restructuring, financial capability and agreed-upon procedures. He directly supported the government litigation team on significant contract disputes and has prepared and presented various lectures and seminars to DCAA staff and business community leaders. Since joining Redstone Government Consulting in June 2007, Mike has developed and presented training and seminars on Government Contracts Compliance to NCMA, Federal Publications Seminars and various clients. Mike also is a prolific contributor of written articles to government contracting publications, as well as to our own Government Insights Newsletter. Mike also serves as the director of our training service offerings, with responsibilities for preparing and developing course content as well as instructing our seminars to clients and general audiences throughout the U.S. Mike also serves as a faculty instructor for the Federal Publications Seminars organization. Education Mike has a BS Degree in Business Administration from Wichita State University. He is also a graduate of the DCAA Director’s Fellowship Program in Management, and has a Masters Degree in Administration from Central Michigan University. Mr. Steen also completed a number of OPM’s management and executive development courses.

About Redstone GCI

Redstone Government Consultants are a team of the most senior industry veterans and the brightest new talent in the industry. Many have held senior government positions including leadership roles in the DCAA. Our new talents bring significant accounting and software experience along with fresh perspectives, inspiration and energy to our team. Through our leadership and combined experience, we provide a unique perspective, bringing both government and contractor proficiencies to bear and ensuring rock-solid government compliance for our clients.

Topics: Redstone GCI, Compliant Accounting Infrastructure, Cost and Pricing and Budgeting, Small Business Compliance, Contracts Administration, DCAA Audit Support