52.203-8 Cancellation, Rescission, and Recovery of Funds for Illegal or Improper Activity
Source: FAR 52.203-8 on acquisition.gov
Violations of procurement integrity laws can result in contract cancellation, rescission, and recovery of all funds expended, in addition to other penalties.
Overview
FAR 52.203-8 establishes the Government’s authority to cancel solicitations, rescind contracts, and recover funds if a contractor or related party is found to have engaged in illegal or improper activities related to the procurement process, specifically violations of 41 U.S.C. 2102-2104. This clause is intended to deter and address the exchange or misuse of procurement-sensitive information for personal gain or to obtain an unfair competitive advantage. It outlines the consequences for such violations, including contract cancellation or rescission and the recovery of funds expended under the contract, in addition to any legal penalties.
Key Rules
- Cancellation or Rescission Authority
- The Government may cancel a solicitation or rescind a contract if there is evidence of illegal or improper activity involving procurement information.
- Grounds for Action
- Action may be taken if a contractor or their representative is convicted or found, by a preponderance of the evidence, to have violated procurement integrity statutes for personal gain or competitive advantage.
- Recovery of Funds
- If a contract is rescinded, the Government can recover all funds expended under the contract, in addition to any statutory penalties.
- Non-Exclusive Remedies
- The Government’s rights under this clause are in addition to any other legal or contractual remedies.
Responsibilities
- Contracting Officers: Must enforce this clause, investigate allegations, and take appropriate action if violations are found.
- Contractors: Must avoid any illegal or improper conduct related to procurement information and ensure compliance by their representatives.
- Agencies: Must monitor compliance, investigate potential violations, and pursue recovery of funds and other remedies as necessary.
Practical Implications
- This clause exists to protect the integrity of the federal procurement process and deter misconduct.
- Contractors risk severe consequences, including loss of contract and financial penalties, for violations.
- Common pitfalls include improper handling of procurement-sensitive information or failing to monitor the actions of employees and agents.
As prescribed in 3.104-9(a), insert the following clause:
Cancellation, Rescission, and Recovery of Funds for Illegal or Improper Activity (May 2014)
(a) If the Government receives 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-http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title41-section2104&num=0&edition=prelim" target="_blank">2104, Restrictions on Obtaining and Disclosing Certain Information, the Government may-
(1) Cancel the solicitation, if the contract has not yet been awarded or issued; or
(2) Rescind the contract with respect to which-
(i) The Contractor or someone acting for the Contractor has been convicted for an offense where the conduct violates http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title41-section2102&num=0&edition=prelim" target="_blank">41 U.S.C.2102 for the purpose of either-
(A) Exchanging the information covered by such subsections for anything of value; or
(B) Obtaining or giving anyone a competitive advantage in the award of a Federal agency procurement contract; or
(ii) The head of the contracting activity has determined, based upon a preponderance of the evidence, that the Contractor or someone acting for the Contractor has engaged in conduct 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).
(b) If the Government rescinds the contract under paragraph (a) of this clause, the Government is entitled to recover, in addition to any penalty prescribed by law, the amount expended under the contract.
(c) The rights and remedies of the Government specified herein are not exclusive, and are in addition to any other rights and remedies provided by law, regulation, or under this contract.
(End of clause)