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Housing Agency Marketplace - Housing Agency Marketplace
 
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HUD Procurement Handbook 7460.8 REV 2
This handbook is originally from the U.S. Department of Housing and Urban Development (HUD)


                                                          Handbook No. 7460.8 REV 2

        CHAPTER 4.  ETHICS IN PUBLIC CONTRACTING

                       

4.1 General

Ethical standards apply not only to PHA employees and Contracting Officers but to 
others with a vested interest in PHA contracts such as members of the Board of 
Commissioners, other officials and agents of the authority, and contractors with 
whom the PHA does business. 

This chapter explains the specific ethical requirements for PHA contracting 24 CFR 
85.36 (b)(3).

4.2 Principles

Members of the Board of Commissioners, PHA employees, and any others serving in an 
official position or acting as an agent of the PHA (hereafter referred to as 
employees, officers, or agents) must discharge their duties impartially to ensure 
fair competitive access to procurement opportunities by responsible contractors. 
Moreover, employees, officers, and agents should conduct themselves in such a manner 
as to foster the public’s confidence in the integrity of the PHA procurement 
organization and process. Any attempt to realize personal gain through PHA employment 
or to serve as an officer or agent of the PHA through actions inconsistent with the 
proper discharge of duties is a breach of public trust. 

4.3 Requirement for a Written Code of Standards (24 CFR 85.36(b)(3))

PHAs must maintain a written code of standards governing the performance of their 
employees engaged in the award and administration of contracts. These standards shall 
be included in the PHA’s procurement policy.

4.4 Conflicts of Interest (24 CFR 85.36(b)(3) and Section 19 of the ACC)
PHAs must observe the following conflict of interest prohibitions.

	A.	No PHA employee, officer, or agent shall participate in the 
		selection, award or administration of a contract supported by 
		Federal funds if a conflict of interest, financial or otherwise, 
		real or apparent, would be involved. Such a conflict would arise 
		when the employee, officer or agent, any member of his or her 
		immediate family; his or her partner; or an organization which 
		employs or is about to employ any of the above, has a financial 
		or other interest in the firm selected for the award. 
        
	B.	In addition to any other applicable conflict of interest 
		requirements, neither the PHA nor any of its contractors or their 
		subcontractors may enter into any contract, subcontract, or 
		arrangement in connection with a project under the ACC in which 
		any of the following classes of people have an interest, direct or 
		indirect, during his or her tenure or for one year thereafter:
		
		1.	Any present or former member or officer of the governing
			body of the PHA, or any member of the officer’s immediate 
			family. There shall be excepted from this prohibition any 
			present or former tenant commissioner who does not serve 
			on the governing body of a resident corporation, and who 
			otherwise does not occupy a policymaking position with 
			the resident corporation, the PHA or a business entity.


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                                                          Handbook No. 7460.8 REV 2
                                                          
		2.	Any employee of the PHA who formulates policy or who 
			influences decisions with respect to the project(s), 
			or any member of the employee’s immediate family, or 
			the employee’s partner.
		
        3.	Any public official, member of the local governing body, 
			or State or local legislator, or any member of such 
			individuals’ immediate family, who exercises functions 
			or responsibilities with respect to the project(s) of 
			the PHA.
			(Note:  For additional important provisions see Section 
			19 of the ACC)
            
            
	C.	No present or former PHA employee, officer, or agent shall 
		engage in selling or attempting to sell supplies, services, 
		or construction to the PHA for one year following the date 
		such employment ceased (see Sections 515 of the old ACC, 
		form HUD-53011, dated 11/69, and Section 19 of the new ACC, 
		form HUD-53012A , dated 7/95). The term “sell” means signing 
		a bid or proposal, negotiating a contract, contacting any 
		PHA employee, officer, or agent for the purpose of obtaining, 
		negotiating, or discussing changes in specifications, price, 
		cost allowances, or other terms of a contract; settling 
		contract disputes; or any other liaison activity with a view 
		toward the ultimate consummation of a sale, although the 
		actual contract is negotiated by another person.
                                                          

4.5 Gratuities, Kickbacks, and Use of Confidential Information
PHA solicitations and contracts above the Federal small purchase threshold shall 
include clauses advising prospective contractors of the prohibitions against 
gratuities and kickbacks (24 CFR 85.36(i)(4)). These rules are designed to 
protect the integrity of the procurement system and to ensure that contracts 
are awarded fairly, based on merit, without improper influence.

	A.	Gratuities (24 CFR 85.36(b)(3) and Section 19 of the ACC). PHA 
		officers, current employees, former employees within one year 
		of employment, or agents shall neither solicit, accept, or 
		agree to accept gratuities, favors, or anything of monetary 
		value from contractors, potential contractors, or parties to
		sub-agreements. PHAs may set minimum rules where the financial 
		interest is not substantial or the gift is an unsolicited item
		of nominal intrinsic value. These rules shall be incorporated in 
		the PHA’s Procurement Policy. 

	B.	Kickbacks and Anticompetitive Practices. It is a breach of 
		ethical conduct and prohibited for any payment, gratuity, or 
		offer of employment to be made by, or on behalf of, a contractor 
		or subcontractor under contract to the prime contractor, higher 
		tier subcontractor, or any person associated therewith as an 
		inducement for the award of a subcontractor order. 
        
		The Contracting Officer shall report to the Executive Director, the
		HUD Field Office, and the appropriate State and local officials 
		any suspected anticompetitive practices by contractors. 

	C.	Use of Confidential Information. Disclosure of confidential 
		information to any person not authorized by the Contracting 
		Officer to receive such information shall be a breach of the 
		ethical standards. Confidential information includes but is 
		not necessarily limited to: the contents of a bid (prior to 
		bid opening) or proposal (prior to contract award using 
		competitive proposals), names of individuals or firms that 
		submitted bids (prior to bid opening) or proposals (prior to 
		contract award); PHA-generated information related to a 
		procurement (including PHA cost estimates, contractor 
		selection and evaluation plans, specifications [before 
		solicitation is issued]); and any other information the 
		disclosure of which would have a direct bearing upon the 
		contract award or the competitive process. It is a breach of 
		ethical conduct for any current or former employee, officer, 
		or agent to knowingly use confidential information for actual or 
		anticipated personal gain or for actual or anticipated personal 
		gain of any other person.

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                                                          Handbook No. 7460.8 REV 2

4.6 Prohibition Against Contingent Fees (24 CFR 85.36(c) and (24 CFR 85.36(b)(8))

It is a breach of ethical conduct for a person to be retained to solicit or secure a 
PHA contract upon an agreement or understanding for a commission, percentage, 
brokerage, or contingent fee, except for the retention of bona fide employees or a 
bona fide agency established for the purpose of securing business. This prohibition 
includes the employment of former PHA officials and employees on a contingency basis 
to obtain contracts with the PHA by a business seeking PHA contracts. Many States 
also have specific laws against contingent fees.

4.7 Sanctions (24 CFR 85.36(b)(11) and (12))
The Executive Director and the Board of Commissioners are responsible for establishing 
sanctions for violation of the ethical standards. As stated previously, many States 
have passed laws governing the conduct of officials involved in procurement. All such 
laws shall be enforced by the Executive Director and, in cases where the State or 
local government has no such rules, appropriate sanctions for violation of the 
standards of conduct in this Chapter shall be published and imposed.

Civil and administrative remedies should be established for use whenever employees, 
officials, or agents breach ethical standards. References to State ethics laws, which 
should be consulted by the PHA in developing and administering sanctions for 
misconduct, should be included in the Procurement Policy. In addition, the PHA may 
impose any one or more of the following:

	•	Oral or written warnings or reprimands;

	•	Suspension with or without pay for specified period of time; 

	•	Termination of employment; or

	•	Dismissal from the official or agency position.

The value of anything received by an employee or a non-employee in breach of the 
ethical standards shall be recoverable by the PHA either by confiscating the items 
or by charging the violator for any and all gratuities received. All procedures in 
this Chapter shall be in accordance with due process requirements and existing law. 
In addition, notice and an opportunity for a hearing shall be provided before 
imposing any suspension or termination of employment. Remedies against contractors 
may include suspension and/or debarment, as provided in Chapter 11, Contracts, 
Contract Clauses, and Contract Administration. 

In the case of violations, HUD may exercise any available remedy under the ACC, the 
federal regulation and statutes, and grant agreements including the U.S. Housing Act 
of 1937 as amended, 24 CFR Parts 84 and 85, and sections 17 and 19 of the ACC. 


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                                                          Handbook No. 7460.8 REV 2

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