3.703 Authority
Source: FAR 3.703 on acquisition.gov
Federal agencies have the authority and obligation to void or rescind contracts if a contractor or their agent is convicted of, or found to have committed, bribery or related offenses.
Overview
FAR 3.703 outlines the legal authority for federal agencies to void or rescind contracts when there is a final conviction or sufficient evidence of bribery, conflict of interest, or related criminal violations by contractors or their representatives. This authority is derived from Section 1(e) of Public Law 87-849 (18 U.S.C. 218) and 41 U.S.C. 2105(c), and is delegated to agency heads by Executive Order 12448. Agencies are required to consider contract rescission if a contractor or their agent is convicted or found, by a preponderance of the evidence, to have engaged in prohibited conduct under the relevant statutes.
Key Rules
- Presidential and Agency Authority
- The President, or agency heads under delegated authority, can void or rescind contracts if there is a final conviction for bribery, conflict of interest, or similar offenses.
- Mandatory Agency Consideration
- Agencies must consider rescinding contracts if they receive information about violations of 41 U.S.C. 2102, especially if there is a conviction or sufficient evidence of wrongdoing.
Responsibilities
- Contracting Officers: Must report and act upon information regarding contractor violations and initiate rescission procedures as required.
- Contractors: Must avoid engaging in bribery, conflicts of interest, or related offenses; ensure compliance by all representatives.
- Agencies: Must review and consider contract rescission upon receiving credible information or evidence of violations.
Practical Implications
- This section exists to deter and address contractor misconduct, ensuring integrity in federal contracting.
- Contractors face severe consequences, including contract voidance, for violations.
- Agencies must have procedures to investigate and act on credible allegations or convictions, making compliance and internal controls critical for contractors.
(a) Section 1(e) of Public Law 87-849, http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title18-section218&num=0&edition=prelim" target="_blank">18 U.S.C.218 ("the Act"), empowers the President or the heads of executive agencies acting under regulations prescribed by the President, to declare void and rescind contracts and other transactions enumerated in the Act, in relation to which there has been a final conviction for bribery, conflict of interest, or any other violation of Chapter 11 of Title 18 of the United States Code (http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title18-section201&num=0&edition=prelim" target="_blank">18 U.S.C. 201-http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title18-section224&num=0&edition=prelim" target="_blank">224). Executive Order 12448, November 4,1983, delegates the President’s authority under the Act to the heads of the executive agencies and military departments.
(b) http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title41-section2105(c)&num=0&edition=prelim" target="_blank">41 U.S.C. 2105(c) requires a Federal agency, upon receiving information that a contractor or a person has violated http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title41-section2102&num=0&edition=prelim" target="_blank">41 U.S.C. 2102, to consider rescission of a contract with respect to which-
(1) The contractor or someone acting for the contractor has been convicted for an offense punishable under http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title41-section2105(a)&num=0&edition=prelim" target="_blank">41 U.S.C. 2105(a); or
(2) The head of the agency, or designee, has determined, based upon a preponderance of the evidence, that the contractor or someone acting for the contractor has engaged in conduct constituting such an offense.