3.705 Procedures
Source: FAR 3.705 on acquisition.gov
FAR 3.705 establishes a fair, structured process for voiding and rescinding contracts after contractor convictions, ensuring due process and clear agency procedures.
Overview
FAR 3.705 outlines the procedures federal agencies must follow when considering voiding and rescinding contracts due to a contractor’s final conviction for violations of 18 U.S.C. 201-224 (criminal statutes related to bribery, graft, and conflicts of interest). The regulation details the reporting, decision-making, notification, and hearing processes, ensuring contractors are afforded due process while protecting government interests.
Key Rules
- Reporting Requirements
- Any final conviction related to agency contracts must be promptly reported to the agency head or designee, who must also notify the Department of Justice.
- Decision Authority
- The agency head or designee may void and rescind contracts and recover funds or property if a final conviction is established.
- Due Process for Contractors
- Agencies must provide written notice, a 30-day period for contractor response, and an opportunity for a hearing before making a final decision.
- Notice Content
- Notices must specify the contracts, offenses, amounts, property, and benefits involved, and inform the contractor of their rights.
- Final Decision
- The final decision must be in writing, consider tangible benefits retained by the agency, and specify recovery details. These decisions are not subject to standard contract dispute procedures.
Responsibilities
- Contracting Officers: Ensure proper reporting, notification, and adherence to procedural requirements.
- Contractors: Respond to notices, submit information, and request hearings within specified timeframes.
- Agencies: Oversee the process, ensure fairness, and communicate with the Department of Justice.
Practical Implications
This section exists to protect the government from contracts tainted by criminal conduct, while ensuring contractors receive due process. It impacts daily contracting by requiring vigilance in reporting and strict adherence to procedural safeguards. Common pitfalls include failing to provide adequate notice or not following the required process, which can lead to legal challenges.
(a) Reporting. The facts concerning any final conviction for any violation of 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 involving or relating to agency contracts shall be reported promptly to the agency head or designee for that official’s consideration. The agency head or designee shall promptly notify the Civil Division, Department of Justice, that the action is being considered under this subpart.
(b) Decision. Following an assessment of the facts, the agency head or designee may declare void and rescind contracts with respect to which a final conviction has been entered, and recover the amounts expended and the property transferred by the agency under the terms of the contracts involved.
(c) Decision-making process. Agency procedures governing the voiding and rescinding decision-making process shall be as informal as practicable, consistent with the principles of fundamental fairness. As a minimum, however, agencies shall provide the following:
(1) A notice of proposed action to declare void and rescind the contract shall be made in writing and sent by certified mail, return receipt requested.
(2) A thirty calendar day period after receipt of the notice, for the contractor to submit pertinent information before any final decision is made.
(3) Upon request made within the period for submission of pertinent information, an opportunity shall be afforded for a hearing at which witnesses may be presented, and any witness the agency presents may be confronted. However, no inquiry shall be made regarding the validity of a conviction.
(4) If the agency head or designee decides to declare void and rescind the contracts involved, that official shall issue a written decision which-
(i) States that determination;
(ii) Reflects consideration of the fair value of any tangible benefits received and retained by the agency; and
(iii) States the amount due and the property to be returned to the agency.
(d) Notice of proposed action. The notice of proposed action, as a minimum shall-
(1) Advise that consideration is being given to declaring void and rescinding contracts awarded by the agency, and recovering the amounts expended and property transferred therefor, under the provisions of http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title18-section218&num=0&edition=prelim" target="_blank">18 U.S.C. 218;
(2) Specifically identify the contracts affected by the action;
(3) Specifically identify the offense or final conviction on which the action is based;
(4) State the amounts expended and property transferred under each of the contracts involved, and the money and the property demanded to be returned;
(5) Identify any tangible benefits received and retained by the agency under the contract, and the value of those benefits, as calculated by the agency;
(6) Advise that pertinent information may be submitted within 30 calendar days after receipt of the notice, and that, if requested within that time, a hearing shall be held at which witnesses may be presented and any witness the agency presents may be confronted; and
(7) Advise that action shall be taken only after the agency head or designee issues a final written decision on the proposed action.
(e) Final agency decision. The final agency decision shall be based on the information available to the agency head or designee, including any pertinent information submitted or, if a hearing was held, presented at the hearing. If the agency decision declares void and rescinds the contract, the final decision shall specify the amounts due and property to be returned to the agency, and reflect consideration of the fair value of any tangible benefits received and retained by the agency. Notice of the decision shall be sent promptly by certified mail, return receipt requested. Rescission of contracts under the authority of the Act and demand for recovery of the amounts expended and property transferred therefor, is not a claim within the meaning of http://uscode.house.gov/view.xhtml?req=granuleid%3AUSC-prelim-title41-chapter71&saved=%7CZ3JhbnVsZWlkOlVTQy1wcmVsaW0tdGl0bGU0MC1jaGFwdGVyMzctZnJvbnQ%3D%7C%7C%7C0%7Cfalse%7Cprelim&edition=prelim" target="_blank">41 U.S.C. chapter 71, Contract Disputes, or part 33. Therefore, the procedures required by the statute and the FAR for the issuance of a final contracting officer decision are not applicable to final agency decisions under this subpart, and shall not be followed.