Procurement Integrity
INTRODUCTION
The integrity of the procurement and acquisition process is of critical importance to Northrop Grumman. As a business, we expect an even playing field when we bid for contracts and other new business. As a company, we espouse integrity and respect for our customer as baseline values. We expect everyone associated with Northrop Grumman "to act with integrity in all we do" and to be accountable for the highest standards of behavior, including honesty and fairness in all aspects of our work.
PROCUREMENT INTEGRITY
Abuses in the acquisition process in the 1980s led to the passage of the Procurement Integrity Act (41 USC §423). The intent of this law is to protect the federal agency procurement process, specifically, the acquisition of goods or services by using competitive procedures in awarding a contract. The Act applies to procurement competitions for contracts in excess of $100,000 and prohibits:
- Current or former government officials or consultants from improperly influencing the bidding process by disclosing information or providing contacts to a company in an attempt to help it win a bid.
- A company from improperly obtaining contractor bid and proposal information or source selection information, even if the company has no intention of competing in the procurement.
Maintaining the integrity of competitive federal agency procurements is the goal of the Procurement Integrity Act. It is achieved by protecting source selection information and contractor proprietary bid and proposal information. The Act also places restrictions on employment discussions between an official who is personally and substantially participating in a procurement and a contractor who is a bidder or offeror in that procurement.
The Act prohibits a U.S. government employee or consultant from knowingly disclosing source selection information or contractor bid or proposal information before the award of a contract in a competitive federal agency procurement to which the information relates. It also prohibits a contractor, other business entity or individual, other than a U.S. Government employee or consultant, from knowingly attempting to obtain such bid or proposal or source selection information (other than its own information, information in the public domain or information to which it is otherwise legally entitled) before contract award.
Source selection information is information not previously made available to the public that is prepared for use by any agency in evaluating a bid or proposal. Such information includes:
- Bid prices for sealed bids or lists or prices
- Source Selection plans
- Technical evaluation plans
- Technical evaluations of competing proposals
- Competitive range determinations
- Rankings of bids, proposals or competitors
- Cost or price evaluations
- Source Selection Board reports and evaluations
- Source Selection Advisory Board recommendations
- Proposed costs or prices submitted
- Any other information marked as "Source Selection Information"
Contractor bid or proposal information is proprietary information that must be secured to prevent disclosure. It includes certain categories of non-public information submitted to a federal agency in connection with a bid or proposal such as:
- Cost or pricing data
- Indirect costs and direct labor rates
- Information about manufacturing processes, operations and techniques when marked "proprietary" or "source selection information" in accordance with law or regulation
- Information marked as "contractor bid or proposal information"
- Any other material or information related to a specific procurement which a company making a bid deems proprietary.
RESTRICTIONS ON EMPLOYMENT DISCUSSIONS
The Procurement Integrity Act, as well as other federal laws and Northrop Grumman Corporate Procedure H105, place restrictions on employment discussions with current and former federal officials with regard to future non-government employment. The Act prohibits any U.S. government employee who is participating personally and substantially in a federal agency procurement for a contract in excess of $100,000 (a "covered official") from directly or indirectly (through an agent or headhunter) engaging in any contacts with any bidder or offeror in the procurement regarding possible employment unless he or she obtains approval from his or her supervisor, in writing, to be disqualified from that procurement. If the contractor knows the employee is not disqualified but chooses to have the discussions anyway, the contractor is also in violation of the law.
The statute also restricts certain U.S. government employees from accepting compensation in any form from Northrop Grumman as an employee, consultant, or otherwise, and restricts Northrop Grumman from providing compensation to such employee for a period of one year after the employee served in certain procurement-related positions or made certain procurement- related decisions for a federal agency. This compensation ban prohibits compensation by the company element responsible for the contract, but not any other division or affiliate unless it produces the same or similar products or services.
The laws, including this one, governing such discussions are complex and the consequences for violation are severe. Consequently, Northrop Grumman employees should not engage in employment discussions of any kind with any current or former U.S. government employee or military officer without the prior approval of the Human Resources Department. If contacts are made or discussions initiated for this purpose by a covered official, employees should make an immediate referral to the company employment professionals in Human Resources.
If you need additional guidance on such an issue, you can contact Human Resources, the Law Department, your local Business Conduct Officer (BCO), the Sector OpenLine or the Corporate OpenLine.
PENALTIES FOR VIOLATIONS
The company may have to withdraw from the bid process of a particular contract or program. It can also face suspension or debarment. If the contract has already been awarded, the government may void the contract or take other actions against the company.
For violations of the one-year compensation ban, there are also civil fines up to $50,000 for employees and $500,000 for the company plus in either case, twice the value of the compensation received or offered for prohibited conduct. Criminal penalties include up to five years in prison and/or a fine determined by the Federal Sentencing Guidelines. In addition to these penalties, Northrop Grumman employees face company discipline up to and including termination of employment.