Chapter 1: Ethics; Standards of Conduct; and Fraud, Waste, and Abuse

Table of Contents

  1. Key Points
  2. Introduction
  3. Competing Interests
  4. General Principles of Government Service
  5. Conflict of Interest
  6. Gift Prohibition
  7. Treatment of Violations
  8. Combating Trafficking in Persons
  9. Fraud
  10. Waste and Abuse
  11. Interactions with Contractor Employees
  12. Checks and Balances
  13. Ethical Contracting in Contingency Environments
  14. Additional References

Key Points

  • Ethics are vitally important when conducting business on behalf of the U.S. Government, particularly in contingency environments, which often involve high operations tempos and cultural differences.
  • Always remember that your duty is to the government, Department of Defense (DoD), your customer, and the mission.
  • One of your most important duties as a contracting officer is to educate the deployed force that you are the only person authorized to obligate the government.
  • Work with the Office of Special Investigations (OSI), Criminal Investigation Division (CID), or legal counsel to inform the deployed force of the pitfalls of improper actions with contractors, risks of working in a contingency environment, and foreign business practices.
  • Lack of acquisition reviews and pressure to get the mission accomplished at the start of contingency operations can lead to poor ethical decisions.
  • You must strictly avoid any conflict of interest—or even the appearance of a conflict of interest. Immediately report any improper activities to legal counsel.
  • In some countries, “paying it back” to a contingency contracting officer (CCO) is a common practice. Although giving gifts—cash, jewelry, or other expensive items—may be common there, accepting kickbacks is a serious violation that can result in a prison sentence.
  • You may not accept any gift because of your official position, and you may not accept any gift from a contractor, potential contractor, or partnering contractor.
  • Exceptions to the gift prohibition are very limited. You must document unavoidable violations and report them to legal counsel immediately. If you are ever in doubt, contact your legal advisor and notify your chain of command.
  • DoD does not tolerate any form of human trafficking or forced labor by any of its contractors or contractor personnel.
  • Fraud, waste, and abuse are serious matters that carry serious consequences. They hinder mission accomplishment and must be avoided. Maintain your integrity and do what’s right!


Maintaining high ethical standards and procurement integrity is vital for DoD contracting officers, and its importance cannot be overstated. Federal Acquisition Regulation (FAR) 3.101 reminds CCOs and other acquisition support personnel that “government business shall be conducted in a manner above reproach and, except as authorized by statute or regulation, with complete impartiality and with preferential treatment for none.” Meeting this requirement can be challenging in a deployed environment, where varying cultural, political, and economic conditions influence the expectations and business habits of local suppliers. In addition, the increased pressure to meet mission requirements expeditiously in contingency environments can lead to poor ethical decisions. CCOs need to remember that contingencies engender contracting challenges not often seen in normal domestic business operations. Recent operations involved contracting officers, contracting officer’s representatives (CORs), contractors, and others who made unethical decisions that resulted in hefty fines and lengthy prison sentences. As a protector of government interests, you must always remember that your duty is to the government, DoD, and American taxpayer—and, ultimately, to the mission.

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Competing Interests

In some respects, government interests may be directly opposed to those of the contractor. Most suppliers in the contingency environment, particularly in locations where U.S. forces have an established presence, understand the ethical responsibilities and integrity-related restrictions placed on DoD contracting officers. However, this is not always the case. Some contractors want so badly to secure government contracts that they will offer CCOs gifts and kickbacks in an effort to obtain contract awards or preferential treatment. It may be commonplace in the respective host nation to offer these gratuities.

Real-World Example:

A group of contractors bid on a solicitation for services that had a $250,000 independent government estimate (IGE). All offers were well over the IGE, on or around $825,000, and within 10 percent of one another. While competition was adequate, the Air Force Office of Special Investigations and the contracting officer determined that the contractors were colluding, which is prohibited in federal acquisition.

The Bottom Line:

As a CCO, you should always be aware of competing interests at play. Look out for corrupt sources of supply working only to enrich their company through deceptive means. Follow the reporting procedures in FAR 3.303 if you suspect collusion or other antitrust violations.

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General Principles of Government Service

CCOs have an obligation to the United States Government and its citizens. CCOs must therefore be familiar with the following principles of ethical conduct as established in Executive Order 12731 and as codified in 5 CFR 2635.101.

  • You must place loyalty to the Constitution, the laws, and ethical principles above your private gain.
  • You must not hold financial interests that conflict with your official duties.
  • You must not engage in financial transactions using nonpublic information or permit the release of such information for any improper use.
  • You must not solicit or accept any gift from any person or entity seeking official action from, or doing business with, DoD or its elements.
  • You must put forth honest efforts in the performance of your duties.
  • You must not knowingly make unauthorized commitments or promises that bind the government without authority.
  • You must not use public office for private gain.
  • You must act impartially, not giving preferential treatment to any person or entity.
  • You must protect and conserve government property, using it only for authorized purposes.
  • You must not seek outside employment or engage in outside activities that conflict with official duties.
  • You must disclose fraud, waste, abuse, and corruption to appropriate authorities.
  • You must act in good faith in satisfying the obligations of citizenship, including paying just financial obligations and taxes.
  • You must adhere to all laws that provide equal opportunity for interested parties regardless of race, color, religion, sex, national origin, age, or disability.
  • You must endeavor to avoid any actions that create the appearance of unethical conduct from the perspective of a reasonable person.
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Conflict of Interest

One of the most basic ethical and legal principles is that CCOs may not take official action on a matter that could affect their personal interests, as noted in 18 United States Code (U.S.C.) 208). CCOs must remember that “the general rule is to avoid strictly any conflict of interest or even the appearance of a conflict of interest in government-contractor relationships” (FAR 3.101-1). This rule prohibits an employee from participating personally and substantially in an official capacity in any matter in which that employee—or any person whose interests are imputed (connected) to that employee—has a financial interest if that matter will directly and predictably affect that interest. In other words, the ethics rule requires the following:

  • If you are officially involved in a matter that could affect your own financial interests, or those of someone with whom you are related or associated, you must not act on that matter in your official capacity.
  • If your official involvement creates even the appearance of a conflict of interest to a reasonable person, you should remove yourself from considering that matter—or at a minimum, seek legal advice.
  • Conflicts of interest represent one of the very few areas of the law where you do not have to be guilty to find yourself in trouble—even the appearance of a conflict of interest can create problems, so remember that perception matters.
  • When conflicts of interest arise, the conventional ways of handling them, with advice from an ethics counselor, include (1) disqualification or recusal (stepping aside from decisions that could affect your financial interests); (2) waivers of disqualification (continuing your involvement, but only with full disclosure to, and permission from, agency officials); and (3) divestiture (removing the financial interest that creates the conflict, which often involves selling the financial interest at issue).
  • Annually, CCOs must complete Office of Government Ethics (OGE) Form 450, Confidential Financial Disclosure Report to report their financial interests and other interests outside the government. This helps identify conflicts of interest or potential conflicts. Upon arrival to the deployed location, CCOs should check local policy and procedures to determine whether resubmitting OGE Form 450 is required.
  • CCOs should familiarize themselves with 18 U.S.C. 207, which includes a provision that prevents a government employee from “switching sides” and representing another person or entity before the United States on the same matters on which they worked as a government employee.
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Gift Prohibition

Federal employees are prohibited from soliciting or accepting gifts from a prohibited source or because of the employee’s official position. A gift or gratuity may be anything of monetary value, including things such as discounts, favors, entertainment, hospitality, and loans (5 CFR 2635.203(b) and FAR 3.101-2). A prohibited source can be a company doing business or seeking to do business with the federal government, including contractors, partnering contractors, prospective contractors, employees, agents, and representatives (5 CFR 2635.203(d)). The rules prohibiting the acceptance of gifts have several exceptions as outlined in 5 CFR 2635.204(a). Those most applicable to CCOs are as follows:

  • You may accept gifts from a prohibited source up to a total face value of $50 per calendar year, but any gifts on a single occasion must not exceed $20 in value. (See 5 CFR 2635.204(a) for details and hypothetical scenarios.) Deployed commanders may implement additional restrictions.
  • When in a foreign area, you “may accept food, refreshments, or entertainment in the course of a breakfast, luncheon, dinner, or other meeting or event” if all of the following conditions are met (5 CFR 2635.204(i)(1)-(4)):
    • The market value, converted to U.S. dollars, does not exceed the per diem rate for the foreign area, as specified in the Department of State maximum per diem allowances for foreign areas.
    • Non–U.S. citizens or representatives of foreign governments or other foreign entities participate in the meeting or event.
    • Attendance at the meeting or event is part of the employee’s official duties.
    • The gift of meals, refreshments, or entertainment is from a person other than a foreign government.

The Anti-Kickback Act of 1986, now codified at 41 U.S.C. Section 87, prohibits actual or attempted kickback payments or offers to provide kickbacks, which include any "money, fee, commission, credit, gift, gratuity, thing of value, or compensation of any kind, that is provided to a prime contractor, prime contractor employee, subcontractor, or subcontractor employee to improperly obtain or reward favorable treatment in connection with a prime contract or a subcontract relating to a prime contract.” Moreover, the U.S.C., Uniform Code of Military Justice (UCMJ), and U.S. Department of Justice all specify, “Any person who knowingly and willfully engages in conduct prohibited [by the Anti-Kickback Act] shall be imprisoned for not more than 10 years or shall be subject to a fine … or both” (41 U.S.C. 87, UCMJ Articles 92 and 134, and U.S. Department of Justice Criminal Resource Manual).

CCOs must never solicit gifts of any type, regardless of their nature or dollar value. They must understand that a bribe occurs when someone “directly or indirectly gives, offers, or promises anything of value to any public official, former public official, or person selected to be a public official, for or because of any official act performed or to be performed by such public official.” Giving or accepting a bribe is a crime punishable by a fine, imprisonment, or both (18 U.S.C. Section 201 and UCMJ Articles 92 and 134).

Reporting of Gifts

If a gratuity is provided to you in any way, you must make every attempt to return it. If a contractor insists on giving a gratuity, you should do one of the following:

  • Attempt to persuade the contractor to take back the gratuity. Explain to the contractor that you cannot accept gratuities as a U.S. procurement official, and note the repercussions you could face for accepting the gratuity.
  • Pay the fair market value of the item.
  • As a last resort, if the contractor appears to be offended, accept the gratuity, contact legal counsel immediately, and take the following actions: (1) once it is accepted, safeguard the gratuity and, if necessary, notify the finance officer to put it in a safe and ask for a receipt; (2) turn the gratuity over to legal counsel; and (3) write a memorandum for the record (MFR) that includes the circumstances and approximate value of the item. In addition, mention in the MFR that legal advice was obtained.
  • If the gratuity is perishable (such as food or flowers), give the gift to a charity or share it within the office.

If ever in doubt about what you should or should not accept, consult your organization’s legal office or ethics advisor and your chain of command.

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Treatment of Violations

CCOs have the option and authority to take action against a contractor for ethics violations. FAR 3.204 grants the CCO the following options:

  • Terminate the contractor’s right to proceed.
  • Initiate debarment or suspension measures (FAR subpart 9.4).
  • Assess exemplary damages, if the contract uses money appropriated to DoD.
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    Combating Trafficking in Persons

Trafficking in persons (TIP) is a worldwide problem posing a transnational threat involving violations of basic human rights. CCOs might encounter situations in which contractors engage in these types of behaviors. TIP is a leading source of profits for organized crime, together with drugs and weapons, generating billions of dollars. TIP affects virtually every country in the world. DoD has a zero tolerance policy toward TIP.

TIP is the use of force, fraud, or coercion to compel a person to provide labor or services or commercial sex. TIP involves exploitation of all types. It can include elements of recruiting, harboring, transportation, providing, or obtaining a person for the purpose of exploitation. The three most common forms of trafficking are labor trafficking, sex trafficking, and child soldiering.

Recent studies show the majority of human trafficking in the world takes the form of forced labor. Also known as involuntary servitude, forced labor may result when unscrupulous employers exploit workers made more vulnerable by high rates of unemployment, poverty, crime, discrimination, corruption, political conflict, or cultural acceptance of the practice.

TIP has specific implications for CCOs. FAR subpart 22.17, Defense Federal Acquisition Regulation Supplement (DFARS) subpart 222.17, and DFARS Procedures, Guidance, and Information (PGI) 222.17 provide policy and guidance that apply to all contracts. If faced with a situation involving human trafficking, you should immediately inform the relevant chain of command and legal counsel. You should take immediate action to impose suitable remedies, including contract termination, on contractors that support or promote trafficking or that fail to monitor the conduct of their employees and subcontractors with regard to TIP.

The contractor is responsible for knowing its employees’ activities and for complying with U.S. policy on combating trafficking in persons (CTIP). FAR 52.222-50, “Combating Trafficking in Persons,” is a required provision in all solicitations and contracts. Also, pursuant to DFARS PGI 222.1703, quality assurance surveillance plans (QASPs) should describe how the COR will monitor the contractor’s performance regarding TIP such that noncompliance with FAR 52.222-50 is brought to the immediate attention of the contracting officer. Violations can be reported on the DoD Hotline: or 800-424-9098. Additional resources are available at the DoD CTIP Program Office.

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Fraud is the misrepresentation of a material fact with the intent to deceive. Fraud can be a single act or a combination of circumstances, can be the suppression of truth or the suggestion of what is false, or can occur by direct falsehood or through innuendo, speech, silence, word of mouth, or look or gesture.

Fraud includes the following:

  • Deliberate omission of material facts
  • False or misleading representations.

Fraud is a criminal offense. CCOs, contractors, and others have faced prison sentences, fines, restitution, and criminal and civil settlement agreements due to fraudulent actions supporting contingency contracting operations. CCOs must never succumb to fraud and are responsible for identifying and preventing it.

Identification of Fraud Indicators (1)

Contracting officers play a vital role in the identification, prevention, and reporting of fraud. As noted, CCOs have an obligation to report any suspected violation or wrongdoing. They should train CORs, quality assurance evaluators (QAEs), field ordering officers, and governmentwide commercial purchase card holders on basic fraud awareness, identification, prevention, and reporting during their initial and refresher training classes. Training representatives on the frontlines enhances the government’s ability to detect and prevent fraud.

Common Fraud Offenses

Common fraud offenses include the following:

  • Bribery, kickbacks, and gratuities
  • Making or use of a false statement
  • Falsifying a document or creating a false document
  • Making or presenting a false claim
  • Companies conducting business under several names
  • Collusive bidding (bid rigging)
  • Conflicts of interest
  • Conspiracy to defraud
  • Disclosure of proprietary data or source-selection-sensitive information
  • Insufficient delivery of contracted items
  • Intentional failure to meet specifications (for example, contractor use of one coat of paint instead of two, watered loads of concrete, inferior memory chips in computers, or inferior automobile replacement parts). Recognizing that not all failures to meet contract specifications constitute crimes, a CCO should seek legal counsel on any suspected contract fraud.
Common Fraud Schemes

Common fraud schemes include the following:

  • Rigged specifications, such as when the requesting organization tailors specifications to meet the qualifications of one company, supplier, or product
  • Unvarying patterns in small purchases, such as when a buyer (1) awards contracts to favored vendors without soliciting competitive offers from additional firms or (2) enters fictitious competitive quotations and consistently awards to a favored vendor at inflated prices
  • Splitting of large requirements, such as when contracting or requiring activity personnel divide requirements into small purchase orders to avoid the scrutiny required for contracts with a larger dollar value
  • Duplicate payment, such as when a vendor submits the original voucher for payment while the purchaser, acting alone or in collusion with the vendor, collects for the same item from the cash fund
  • Overstatement of shipment weights, such as when carriers defraud the government by artificially inflating the weight of a shipment by using methods such as (1) fuel bumping, or getting the tare weight with less than a full tank of gas, but the gross weight with a full tank; (2) double billing on small shipments (500 to 3,000 pounds), or getting two tare-weight tickets for the truck, picking up the two small shipments, getting two gross-weight tickets for the combined weight of both shipments, and then submitting both tickets for payment; and (3) false weights, either paying the weight master to provide a false weight ticket or maintaining a supply of blank tickets (usually with a handwritten rather than printed weight) or a stock of false weight tickets
  • Counterfeit parts rather than genuine parts (a wide variety of counterfeit parts have been known to infiltrate the DoD supply chain, from tools to electronics)
  • Emotional bribery, such as when a CCO and a vendor representative become friends and the vendor uses this friendship to unduly influence the CCO.

Real-World Example:

A DoD contracting officer was sentenced to 60 months in prison for accepting money and items of value in return for being influenced in the award of DoD contracts. He also had to serve 3 years of supervised release following the prison term and pay a $15,000 fine. In addition, he was ordered to forfeit Rolex watches, real estate, and other property purchased with the proceeds of the bribery scheme. He was deployed overseas in Afghanistan, Iraq, and Kuwait as a procuring contracting officer in 2004–07. His duties included reviewing bids submitted by contractors for Army contracts, recommending the award of Army contracts to specific contractors, and ultimately awarding those contracts. The contracting officer admitted that while deployed, he accepted illicit and secret bribe payments from foreign companies seeking to secure DoD contracts(2).

The Bottom Line:

CCOs should become familiar with the fraud indicators described in this handbook and identify areas around them that may be susceptible to public corruption. Be observant, make ethical choices, and maintain procurement integrity at all times. Federal investigators are ever-present in contingency environments. Work with local investigators to help mitigate fraud, waste, and abuse in the area of operations. Contact them about unethical behavior. A good practice is to invite federal investigators to provide fraud briefings to the respective contracting and acquisition support units.

Situations That Enable Fraud

Acts of fraud are enabled by many situations, such as the following:

  • Failure to properly monitor contract performance
  • Lack of acquisition checks and balances, such as personnel who control both the ordering and receiving functions and can arrange for diversion of supplies or services for their own benefit
  • Poorly defined specifications
  • Poor physical security
  • Receipt of items that cannot be traced to a valid requisition and thus could have been ordered for personal use or resale, with the resulting paperwork destroyed.
Common Fraud Indicators

Common indicators of fraud include the following:

  • Frequent complaints by users of supplies or services
  • Government estimates and contract award prices that are consistently very close
  • Contractor complaints of late payment by the agency
  • An abnormal increase in consumption of fuel or supply items
  • Failure to deobligate cancelled purchase orders
  • An excessive number of photocopies of invoices in file, such as (1) approved invoices altered with correction fluid (which might indicate the invoice had been copied and the original destroyed in an attempt to manipulate the audit trail or commit fraud via the alteration), which require follow-up to secure external and internal copies for comparison; or (2) duplicate copies of supplier invoices, which could indicate the possibility of multiple payments of the same invoice and possibly diverted checks
  • The sale or transfer of assets for apparently less than adequate consideration, which might indicate a sham transaction not based in economic reality that should be questioned (because businesses exist to make a profit).

Lead investigators and contacts for reporting fraud include the Air Force Office of Special Investigations (AFOSI), Naval Criminal Investigation Service (NCIS), U.S. Army Criminal Investigation Command (CID), Major Procurement Fraud Unit (MPFU), Defense Contract Audit Agency (DCAA), Defense Contract Management Agency (DCMA), Defense Criminal Investigative Service (DCIS), and U.S. Army Audit Agency (USAAA). You can contact these agencies at the following:

CCOs must work closely with these investigative agencies to mitigate fraud, waste, and abuse. CCOs should ensure processes are in place for reporting concerns about unusual or inappropriate business actions. Back to Top

Waste and Abuse

CCOs have the responsibility to identify, and ultimately avoid, waste and abuse of resources and taxpayer dollars when conducting business on behalf of the U.S. Government. In 2011, a Commission on Wartime Contracting (COWC) report to Congress defined waste as follows:
  • “Requirements that were excessive when established and/or not adjusted in a timely fashion;
  • Poor performance by contractors that required costly rework;
  • Ill-conceived projects that did not fit the cultural, political, and economic mores of the society they were meant to serve;
  • Security and other costs that were not anticipated due to lack of proper planning;
  • Questionable and unsupported payments to contractors that take years to reconcile; ineffective government oversight; and
  • Losses through lack of competition.”(3)

According to the COWC, $31 to $60 billion in taxpayer dollars has been lost due to contract waste and fraud in the recent contingency operations in Iraq and Afghanistan. Although the report focused on these nations, waste and abuse can happen in any environment, especially contingency environments. Waste and abuse can be subjective and often more difficult to define than contract fraud, but CCOs should make every effort to assist in the prevention of, and ultimately the avoidance of, waste and abuse of federal funds and resources.

Common practices that result in waste and abuse include the following:
  • Duplicative efforts to satisfy the same objective (in other words, contracting for something without proper planning to make sure a contract is not already in place for similar work)
  • Lack of interagency coordination in the pre-award stage to determine whether external agencies have contracts in place that could be leveraged
  • CORs not trained adequately for the contingency environment
  • Unsustainable projects or programs
  • Poor contract oversight and surveillance
  • Lack of financial and requirements review boards.
Deployed commanders, CCOs, and acquisition support personnel should take every possible step to ensure waste and abuse are prevented in contingency environments. Waste and abuse, like fraud, undercut mission performance.

The following are some ways CCOs, deployed commanders, and acquisition support personnel can minimize waste and abuse:
  • Establish joint requirements review boards (JRRBs) and other acquisition planning and oversight processes.
  • Designate and assign properly trained CORs. Contracting officers should provide CCO-led training to clearly relay COR responsibilities(4).
  • Utilize competitive procedures to the maximum extent practicable.
  • Make use of other methods of obtaining supplies and services outside the contingency contracting process where practicable, such as host nation support or in-house U.S. Government personnel.
  • Establish interagency coordination procedures to avoid duplicative requirements.
  • Ensure contract oversight is accomplished and projects are sustainable post-contract.
  • Follow local vendor-vetting procedures to ensure responsible contractors receive contracts.

Real-World Example:

In 2009, a DoD Inspector General report revealed that a contracting officer approved invoices for underutilized contractor personnel responsible for tactical-vehicle field maintenance at a joint base in Iraq. From September 2008 through August 2009, the actual utilization rate was only 10 to 15 percent of the requirement. The contractor alerted only low-level government officials that the actual labor utilization was far below that of the contractor personnel being paid. The government did not act on this information, and the COWC estimated that for a particular category of labor services, almost $400 million paid to the contractor was wasted through underutilization(5).

The Bottom Line:

You, as a CCO, can make a difference in the prevention of waste. Act on fraud, waste, and abuse information expeditiously and elevate any concerns and findings up your chain of command. Also, ensure all contractors know who the CCO is for their contracts, so they can notify that individual (rather than low-level government officials) of any issues.

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Interactions with Contractor Employees

A personal services contract is characterized by the employer-employee relationship it creates between the government and contractor personnel. The government is normally required to obtain its employees by direct hire under competitive appointment or other procedures required by U.S. civil service laws. Obtaining personal services by contract (rather than by direct hire) circumvents those laws unless Congress has specifically authorized acquisition of such services by contract.

CCOs or CORs who interact daily with contractor employees must keep in mind that they are not government employees. The terms and conditions of the contract define the obligations of each party and the contractor’s performance requirements. Understand that federal and DoD standards of conduct do not apply to contractor employees, so CCOs must not do the following:
  • Interfere in contractor-employee relations
  • Allow work outside the scope of the performance work statement
  • Permit work before the obligation of funding
  • Establish specific hours of duty and grant or deny leave requests.
In addition, CCOs may not mandate any contractor personnel actions without specific contractual authority to do so, including the following:
  • Telling contractors whom to hire or promote
  • Reassigning contractor employees
  • Disciplining contractor employees.
However, DFARS 237.104 (referencing 10 U.S.C. 129b) provides limited authority to acquire the personal services of expert consultants if the following conditions are met and documented in a determination and finding document:
  • The duties are of a temporary or intermittent nature.
  • Acquisition of the services is advantageous to the national defense.
  • DoD personnel with necessary skills are not available.
  • Excepted appointment cannot be obtained.
  • A nonpersonal services contract is not practicable.
  • Statutory authority, 5 U.S.C. 3109, and other legislation apply.
  • Any other determination required by statute has been made.

Professional friendships between government and contractor employees are not prohibited; however, you must act impartially and show no favoritism or preferential treatment. Although professional and personal friendships are not prohibited, they may result in the appearance of a conflict of interest. Government employees cannot personally make recommendations or provide references for contractors except when furnishing past performance information to other agencies.

Chapter 6 addresses other ethical considerations relevant to contract administration.


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Checks and Balances

The CCO needs a system to ensure checks and balances are part of the daily routine to fulfill obligations and prevent opportunities for fraudulent activity. As part of the checks and balances, CCOs should not perform the following duties unless no other option is available:
  • Order and receipt of goods. It is common practice for the person who orders goods to also receive the goods. This is not the ideal scenario, but it is common in deployed locations. You should take steps to ensure that documentation (including customer signatures and contact information) is obtained once you turn over possession of received goods, and you should immediately add this documentation to the contract file.
  • Paying agent duties. DoD Financial Management Regulation (FMR) Volume 5, Chapter 33, restricts paying agents from acting as purchasing officers, in an effort to minimize conflicts of interest or the perception of conflicts of interest.
  • QAE and COR oversight. The CCO oversees many QAE and COR actions. A reporting system is needed to ensure fair and proper evaluation and that the contract representative provides direction.

Many other checks and balances could be discussed, but the preceding examples illustrate common-sense scenarios. You have an obligation to protect the taxpayer, the warfighter, and yourself. You protect the taxpayer by using sound judgment when spending taxpayer dollars. You protect the warfighter by providing goods and services to help meet mission needs. You protect yourself by acting ethically and preserving the documentation necessary to back up your sound judgment and acquisitions. Back to Top

Ethical Contracting in Contingency Environments

The CCO has the responsibility to determine that only responsible contractors are doing business with the DoD. It is of the utmost importance to ensure vendor vetting procedures are established at the deployed location to prevent contracting with the enemy and the improper use of federal funds. The chapters to follow discuss vendor vetting and contract oversight in more detail.

Real-World Example:

The International Security Assistance Force commander’s counterinsurgency contracting guidance (September 2010) and similar contracting guidance issued by the Department of State and the U.S. Agency for International Development (November 2010) confirmed the importance of contracting to the U.S. mission in Afghanistan. In particular, the guidance emphasizes the importance of contracting with Afghan contractors and purchasing Afghan goods—a policy collectively known as Afghan First—as a key element of the U.S. counterinsurgency strategy. However, in light of cases like that involving the host nation trucking contract, in which funds paid by contractors for the safe passage of U.S. military goods are widely believed to have been funneled to insurgents, the U.S. Government has launched a variety of efforts to prevent contracting abuse and decrease the likelihood of funds being diverted to terrorist or insurgent groups(6).

The Bottom Line:

Contracting officers should establish vendor-vetting procedures and be diligent in overseeing contracts and documenting contractor performance, both of which are critical in preventing abuse of federal funds and in ensuring funding does not reach the enemy. Contracting with the enemy is forbidden. It is your job as a CCO to ensure taxpayer dollars are protected and legally expended.

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Additional References

The following references were not mentioned in this chapter but offer additional information related to ethics; standards of conduct; and fraud, waste, and abuse: Back to Top


1. Sources: Fraud Integrated Process Team and “DoD Fraud, Waste, and Abuse Hotline” trifold brochure.

2. Federal Bureau of Investigation, “Army Contracting Officer Sentenced to 60 Months in Prison for Bribery,” January 19, 2001.

3. COWC, “How did the Commission derive its $31 billion to $60 billion estimate of waste?” Information Sheet, September 2011.

4. CCOs should also direct CORs to the Defense Contingency COR Handbook.

5. CWOC, Transforming Wartime Contracting: Controlling costs, reducing risks, Final Report to Congress, August 2011.

6. Special Inspector General for Afghanistan Reconstruction, Contracting with the Enemy: DoD Has Limited Assurance that Contractors with Links to Enemy Groups Are Identified and their Contracts Terminated, Audit 13-6, April 2013.

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