3.703
Authority
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.