Supplemental Standards of Ethical Conduct for Employees of the General Services Administration

SUMMARY: The General Services Administration, with the concurrence of

the Office of Government Ethics (OGE), is issuing a regulation for GSA

employees that supplements the Standards of Ethical Conduct for

Employees of the Executive Branch. The supplemental regulation

generally, with certain exceptions, prohibits solicited sales to

subordinates by GSA employees; prohibits the purchase of property sold

by GSA; prohibits the purchase of real estate by certain GSA employees;

prohibits the taking and disposal of Government property; requires

employees to obtain approval before engaging in certain outside

employment; and identifies appropriate officials to whom waste, fraud,

abuse and corruption are to be reported. The General Services

Administration (GSA) is also removing its old standards of conduct

regulations from the Code of Federal Regulations (certain provisions

which have not been superseded are being reissued in an internal GSA

order) and inserting in their place a cross-reference to the new

provisions and to applicable executive branch-wide standards of ethical

conduct, as well as to applicable financial disclosure regulations.

EFFECTIVE DATE: November 1, 1996.

FOR FURTHER INFORMATION CONTACT: Ms. Eugenia D. Ellison or Mr. Dan

Ross, General Services Administration, Office of General Counsel,

Ethics Law Staff, 18th & F Streets, NW., Room 5135, Washington, DC

20405; telephone: (202) 501-0765, FAX: (202) 501-6347.

SUPPLEMENTARY INFORMATION:

I. Background

On August 7, 1992, the Office of Government Ethics (OGE) published

a final rule entitled Standards of Ethical Conduct for Employees of the

Executive Branch (Standards). See 57 FR 35006-35067, as corrected at 57

FR 48557, 57 FR 52583, and 60 FR 51667, with additional grace period

extensions at 59 FR 4779-4780, 60 FR 6390-6391, 60 FR 66857-66858, and

61 FR 40950-40952. The Standards, codified at 5 CFR part 2635 and made

effective February 3, 1993, establish uniform standards of ethical

conduct that are applicable to all executive branch employees.

With the concurrence of OGE, 5 CFR 2635.105 authorizes executive

branch agencies to publish agency-specific regulations supplementing 5

CFR Part 2635 that are necessary to implement their respective ethics

programs. With OGE's concurrence, GSA has determined that the following

supplemental regulations, being codified in new 5 CFR chapter LVII,

consisting of part 6701, are necessary for successful implementation of

GSA's ethics program, in light of GSA's unique programs and operations.

II. Analysis of the New Regulations

Section 6701.101 General

Section 6701.101 of the final rule explains that the regulations

apply to all GSA employees and supplement the executive branch-wide

Standards at 5 CFR part 2635. It also notes that employees are subject

to 5 CFR part 2635 and the executive branch financial disclosure

regulations at 5 CFR part 2634.

Section 6701.102 Prohibition on Solicited Sales to Subordinates

5 CFR part 2635 prohibits an employee from using public office for

private gain, but contains no specific prohibition on sales to

subordinate personnel where the sale price is fair and does not result

in a gift to the superior. Likewise, any item for which fair market

value is paid by the recipient would not be a gift for purposes of the

gifts to superiors provisions in subpart C of the Standards. Under

GSA's old standards of conduct regulation at 41 CFR 105-735.202(d)(6),

which is simultaneously being removed in this rulemaking document, a

prohibition on sales to subordinates was included. Section 6701.102 of

this new supplemental regulation is a restatement with minor

modifications of that prohibition. It has been GSA's experience that

such an additional prohibition is necessary to eliminate coercion,

intimidation, or pressure, or the appearance thereof, that employees

could be subjected to by official superiors in this regard.

Section 6701.102 generally prohibits GSA employees in supervisory

positions from soliciting or making solicited sales to GSA employees

who are under their supervision at any level, regardless of whether the

solicited sale takes place on or off duty. Section 6701.102 extends the

prohibition against commercial solicitation by official superiors that

was in 41 CFR 105-735.202(d)(6) to part-time employees and special

Government employees who have employees under their supervision,

consistent with GSA's determination that hours of work are not a

sufficient basis for distinguishing those supervisors from other

supervisors for the purpose of furthering the interests served by the

prohibition.

The section specifically permits the one-time sale by an official

superior to a subordinate of his own personal property or privately

owned dwelling. It also permits the off duty sales by an employee

during outside employment for a retail establishment or under other

circumstances not involving solicited sales.

Section 6701.103 Prohibited Purchases of Property Sold by GSA

Section 6701.103 supplements the prohibition on the use of public

office for private gain at 5 CFR 2635.702, and the prohibition on the

use of nonpublic information at 5 CFR 2635.703. It prohibits GSA

employees from purchasing for themselves or others any personal or real

property being sold by GSA. An employee may not purchase such property

directly or indirectly. GSA has broad authority to dispose of surplus

Government property through public sales. It is therefore important to

preserve the public's confidence that these powers will not be misused

to

[[Page 56400]]

benefit the private interests of a GSA employee. Prohibiting employees

from engaging in certain purchases that may appear improper is

essential to achieve this objective.

This prohibition is similar to the prohibition in the old GSA

standards of conduct at 41 CFR Sec. 105-735.217, which is

simultaneously being removed in this rulemaking document. However, the

exception in the old rule for items sold by GSA-operated stores is not

being preserved because GSA no longer operates such stores. Also,

unlike the GSA standards of conduct, the prohibition only applies to

the employee, his spouse and minor children, but does not apply to any

other members of the employee's household.

This prohibition is not intended to apply to property under the

control of and sold by an agency other than GSA. The purchase of assets

sold by other agencies would be subject to the regulations of the

agency controlling or disposing of the assets, and not subject to GSA's

regulations.

Section 6701.103(b) excepts from the prohibition in

Sec. 6701.103(a) foreign gifts purchased pursuant to 41 CFR part 101-

49. Further, Sec. 6701.103(c) authorizes the Administrator or his

designee to grant a written waiver of the prohibition in

Sec. 6701.103(a) based upon a determination that the waiver is lawful,

and meets the waiver standard established in that subsection. The

waiver provision is intended, in appropriate cases, to ease the burden

that the supplemental regulation may impose on the private lives of GSA

employees, while ensuring that employees do not engage in action that

may interfere with the objective and impartial performance of their

official duties or raise questions about possible misuse of Government

position. The general prohibition and waiver provisions included in

Sec. 6701.105 would also apply to all GSA employees.

Section 6701.104 Prohibited Purchases of Real Estate by Certain GSA

Employees Involved in the Acquisition or Disposal of Real Estate

Section 6701.104(a) supplements the prohibition on the use of

public office for private gain at 5 CFR 2635.702, and the prohibition

on the use of nonpublic information at 5 CFR 2635.703. Through its

Public Buildings Service, GSA exercises broad authority to acquire and

dispose of real estate for the Government. This section generally

prohibits GSA employees who personally and substantially participate in

or have official responsibility for the acquisition or disposal of real

estate or interests therein from purchasing any real estate or interest

therein. It is similar to the prohibition in the GSA standards of

conduct at 41 CFR

105-735.218, which is simultaneously being removed in this rulemaking

document, dealing with the purchase of real estate. Unlike the GSA

standards of conduct, however, Sec. 6701.104(a) does not apply to all

GSA employees whose official duties are in any way related to the

acquisition or disposal of real estate or interests therein, or to the

maintenance or improvement of real estate. Section 6701.104 limits the

scope of coverage to employees who participate personally and

substantially or have official responsibility over the acquisition or

disposal of real estate or interests therein as part of their official

duties.

The general restriction in Sec. 6701.104(a) prohibits an employee

from purchasing such property directly or indirectly. This provision

ensures that employees do not engage in actions that may interfere with

the objective and impartial execution of their official duties or raise

questions about possible misuse of their official positions. So as not

to interfere unduly with employees' private lives, an exception in

paragraph (b) of this section provides that the prohibition does not

apply to an employee's purchase of a personal residence or other

residential property, such as a vacation home.

Section 6701.104(c) authorizes the employee's immediate supervisor

to grant a written waiver of the prohibition in Sec. 6701.104(a), based

upon a determination that the waiver is lawful and meets the waiver

standard established in that subsection. This waiver standard is the

same as that established in Sec. 6701.103(c) for the purchase of

property sold by GSA. The waiver provision is intended, in appropriate

cases, to ease the burden that the supplemental regulation may impose

on the private lives of GSA employees, while ensuring that employees do

not engage in action that may interfere with the objective and

impartial performance of their official duties or raise questions about

possible misuse of their Government positions or nonpublic information.

Section 6701.105 Taking or Disposing of Government Property

Section 6701.105 supplements the prohibitions on misuse of position

in subpart G of the Standards, by specifically adding a prohibition on

the taking or disposing of Government property. It continues the

longstanding prohibition in GSA's regulations at 41 CFR 105-735.206,

which is simultaneously being removed in this rulemaking document, that

Government property can only be disposed of as authorized. Under

Sec. 6701.105, a GSA employee may not, directly or indirectly, take or

dispose of, or allow the taking or disposal of, Government property,

unless authorized to do so. This provision is necessary for inclusion

in GSA's supplemental regulation because of GSA's broad

responsibilities regarding the disposal of surplus Government property,

and is intended to ensure that GSA employees do not misuse information

and resources to which they have access because of their official

responsibilities.

Section 6701.106 Prior Approval for Outside Employment

Under 5 CFR 2635.803 an agency that determines it is necessary or

desirable for the purpose of administering its ethics program may, by

supplemental regulation, require employees to obtain prior written

approval before engaging in outside employment. The GSA standards of

conduct regulation at 41 CFR 105-735.204 (which is now being repealed),

requires prior notification of and administrative concurrence in

proposed outside employment, and is in essence a prior approval

requirement that has remained in effect under the note following 5 CFR

2635.803, as extended at 59 FR 4779-4780, 60 FR 6390-6391, 60 FR 66857-

66858, and 61 FR 40950-40952 (see also appendixes A-C to 5 CFR part

2635). This requirement has been in effect for many years and has

served GSA well in ensuring that its employees avoid violations of the

standards of conduct and conflict of interest statutes.

Therefore, Sec. 6701.106(a) of this final supplemental rule

requires that a GSA employee who wishes to engage in outside employment

with a prohibited source must obtain prior written approval from his or

her immediate supervisor before engaging in such outside employment.

This prior approval requirement applies without regard to whether the

employment is to be undertaken with or without compensation. It does

not apply, however, to special Government employees. Section 6701.106

will help to ensure that the outside employment activities of GSA

employees are not prohibited by statute or Federal regulation,

including the executive branch-wide Standards in 5 CFR part 2635, and

these supplemental regulations.

Section 6701.106(b) sets forth requirements for information to be

provided in the employee's request for prior approval. To ensure that

[[Page 56401]]

Sec. 6701.106 is not itself construed as authority to deny permission

to engage in outside employment, paragraph (c) states that approval

shall be granted unless a determination is made that the outside

employment is expected to involve conduct prohibited by statute or

regulations, including 5 CFR part 2635 and these supplemental

regulations.

At Sec. 6701.106(d)(1), ``employment'' is broadly defined to cover

any form of non-Federal employment or business relationship involving

the provision of personal services, including writing when done under

an arrangement with another person for production or publication of the

written product. It does not, however, include participation in the

activities of nonprofit charitable, religious, professional, social,

fraternal and similar organizations, unless such activities involve the

provision of professional services or advice and are for compensation

other than reimbursement of expenses. Although it is simply a

restatement of the definition at 5 CFR 2635.203(d), paragraph (d)(2) of

Sec. 6701.106 sets forth for ease of reference the definition of

``prohibited source'' that is essential to the determination of when

prior approval is required by Sec. 6701.106.

Section 6701.107 Reporting Waste, Fraud, Abuse and Corruption

Section 6701.107 assists employees in adhering to the general

principle of ethical conduct at 5 CFR 2635.101(b)(11), under which an

employee shall disclose waste, fraud, abuse, and corruption to

appropriate authorities. It also identifies GSA's Office of the

Inspector General as an authority to which it would be appropriate for

an employee to disclose waste, fraud, abuse and corruption. This new

provision is similar to the old standards of conduct provision at 41

CFR 105-735.216, which is simultaneously being removed in this

rulemaking document, but no longer specifies the Assistant Inspector

General for Investigations in the Central Office or the appropriate

Special Agent in charge in the regions as the only appropriate

authorities to whom such matters must be reported.

III. Removal of GSA's Old Standards of Conduct Provisions and

Reissuance of Certain Nonsuperseded Provisions in an Internal Order

Because GSA's old standards of conduct have been largely superseded

by the new executive branch financial disclosure regulations at 5 CFR

part 2634 and the new executive branch-wide Standards at 5 CFR part

2635, as supplemented by the regulations contained in GSA's new 5 CFR

part 6701, GSA is simultaneously removing from the CFR its old

standards of conduct, which have been codified at 41 CFR part 105-735,

and is replacing those provisions superseded by 5 CFR parts 2634 and

2635 with a section that provides cross-references to those parts and

to GSA's new supplemental regulations. Moreover, in accordance with 5

CFR 2635.105(c)(3), GSA is reissuing in an internal GSA Order (ADM

7900.9A) those sections of 41 part 105-735 which are not contained in

the Standards or GSA's supplemental regulation, and which GSA has

authority, independent of 5 CFR parts 2634 and 2635, to issue. A copy

of GSA Order ADM 7900.9A will be given to all GSA employees and is

available from GSA's Office of General Counsel.

IV. Matters of Regulatory Procedure

Administrative Procedure Act

Pursuant to 5 U.S.C. 553 (b) and (d), the GSA finds good cause not

to seek public comment on this rule nor to provide for a 30-day delayed

effective date. Such comment and delayed effective date are unnecessary

because the GSA is essentially restating existing regulations in a

different form. Moreover, to complete the transition from GSA's prior

ethics rules to the new Government-wide standards of ethical conduct

regulations, these rulemaking actions should take place as soon as

possible. This final rule will become effective as soon as published in

the Federal Register.

E.O. 12866, Regulatory Planning and Review

GSA has determined this proposal is not subject to the Office of

Management and Budget review under Executive Order 12866.

Regulatory Flexibility Act

GSA has determined under the Regulatory Flexibility Act (5 U.S.C.

601-611) that this rule will not have significant economic impact on a

substantial number of small entities because it affects only GSA

employees. Therefore, a Regulatory Flexibility Statement and Analysis

has not been prepared.

Paperwork Reduction Act

GSA has determined that the Paperwork Reduction Act (44 U.S.C.

chapter 35) does not apply because this regulation does not contain any

information collection requirements that require the approval of the

Office of Management and Budget.

Environmental Impact

The publication of this rule will not have a significant impact

upon the quality of the human environment or the conservation of energy

resources.

List of Subjects

5 CFR Part 6701

Conflict of interests, Ethical standards, Executive branch

standards of ethical conduct, Government employees.

41 CFR Part 105-735

Conflict of interests, Ethical standards, Executive branch

standards of conduct, Government employees.

Dated: October 25, 1996.

Martha N. Johnson,

Chief of Staff, General Services Administration.

Approved: October 28, 1996.

Stephen D. Potts,

Director, Office of Government Ethics.

For the reasons set forth in the preamble, the General Services

Administration, with the concurrence of the Office of Government

Ethics, is amending title 5 of the Code of Federal Regulations, and

title 41, chapter 105, of the Code of Federal Regulations, as follows:

TITLE 5--[AMENDED]

1. A new chapter LVII, consisting of part 6701, is added to title 5

of the Code of Federal Regulations to read as follows:

CHAPTER LVII--GENERAL SERVICES ADMINISTRATION

PART 6701--SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR EMPLOYEES

OF THE GENERAL SERVICES ADMINISTRATION

Sec.

6701.101 General.

6701.102 Prohibition on solicited sales to subordinates.

6701.103 Prohibited purchases of property sold by GSA.

6701.104 Prohibited purchases of real estate by certain GSA

employees involved in the acquisition or disposal of real estate.

6701.105 Taking or disposing of Government property.

6701.106 Prior approval for outside employment.

6701.107 Reporting waste, fraud, abuse and corruption.

Authority: 5 U.S.C. 7301; 5 U.S.C. App. (Ethics in Government

Act of 1978); E.O. 12674, 54 FR 15159, 3 CFR, 1989 Comp., p. 215, as

modified by E.O. 12731, 55 FR 42547, 3 CFR, 1990 Comp., p. 306; 5

CFR 2635.105, 2635.702, 2635.703, 2635.802, 2635.803.

[[Page 56402]]

Sec. 6701.101 General.

In accordance with 5 CFR 2635.105, the regulations in this part

apply to employees of the General Services Administration (GSA) and

supplement the Standards of Ethical Conduct for Employees of the

Executive Branch (Standards) contained in 5 CFR part 2635. In addition

to the executive branch-wide Standards in 5 CFR part 2635 and this

part, GSA employees are subject to the executive branch financial

disclosure regulations contained in 5 CFR part 2634.

Sec. 6701.102 Prohibition on solicited sales to subordinates.

A GSA employee shall not engage in solicitation of sales, on or off

duty, to any GSA employee under his supervision, at any level. This

prohibition applies, but is not limited to, solicitation for the sale

of insurance, stock, mutual funds, real estate, computer equipment and

any other commodities, goods or services except:

(a) The one-time sale of the employee's personal property or

privately owned dwelling; or

(b) Sales made in the course of outside employment of GSA employees

in retail stores and under other circumstances not involving

solicitation.

Sec. 6701.103 Prohibited purchases of property sold by GSA.

(a) General prohibition. Except as provided in paragraphs (b) and

(c) of this section, no GSA employee, or spouse or minor child of a GSA

employee, shall purchase, directly or indirectly Government property,

real or personal, being sold by GSA.

(b) Exception. The prohibition in paragraph (a) of this section

does not apply to the purchase of foreign gifts deposited with the

agency pursuant to 5 U.S.C. 7342, that an employee may purchase

pursuant to 41 CFR part 101-49.

(c) Waiver. An employee may make a purchase otherwise prohibited by

paragraph (a) of this section where a written waiver of the prohibition

has been given to the employee by the Administrator of GSA or his

designee. Such a waiver may be granted only upon a determination that

the waiver is not otherwise prohibited by law and that, in the mind of

a reasonable person with knowledge of the particular circumstances, the

purchase of the property will not raise a question as to whether the

employee has used his official position or nonpublic information to

obtain an advantageous purchase or create an appearance of loss of

impartiality in the performance of the employee's duties.

Sec. 6701.104 Prohibited purchases of real estate by certain GSA

employees involved in the acquisition or disposal of real estate.

(a) General prohibition. Except as provided in paragraphs (b) and

(c) of this section, employees who personally and substantially

participate in or have official responsibility for the acquisition or

disposal of real estate or interests therein, shall not directly or

indirectly purchase or participate as an agent or otherwise in the

purchase of any real estate or interest therein.

(b) Exception. The prohibition in paragraph (a) of this section

does not apply to an employee's purchase of real estate for use as his

personal or other residential property, such as a vacation home.

(c) Waiver. An employee may make a purchase otherwise prohibited by

this section where a written waiver of the prohibition has been given

to the employee by the employee's immediate supervisor, with the advice

of a Deputy Standards of Conduct Counsellor or the Designated Agency

Ethics Official. Such a waiver may be granted only if a determination

is made that the waiver is not otherwise prohibited by law or

regulation, and that in the mind of a reasonable person with knowledge

of the particular circumstances, the purchase of such real estate or

interest therein will not raise a question as to whether the employee

will use his official position or nonpublic information to obtain an

advantageous purchase or create an appearance of loss of impartiality

in the performance of the employee's duties.

Sec. 6701.105 Taking or disposing of Government property.

An employee shall not, directly or indirectly, take or dispose of,

or allow the taking or disposal of, Government property, unless

authorized to do so. For purposes of this section, property remains

Government property until disposed of in accordance with applicable

rules and regulations.

Sec. 6701.106 Prior approval for outside employment.

(a) Approval requirement. A GSA employee, other than a special

Government employee, shall obtain written approval from his immediate

supervisor prior to engaging in outside employment with a prohibited

source, with or without compensation.

(b) Form of request for approval. A request for approval of outside

employment shall include, at a minimum, the following:

(1) The employee's name, location and occupational title;

(2) A brief description of the employee's official duties;

(3) The nature of the outside employment, including a full

description of the specific duties or services to be performed;

(4) The name and address of the prospective outside employer for

which work will be done; and

(5) A statement that the employee currently has no official duties

involving a matter that affects the outside employer and will

disqualify himself from future participation in matters that could

directly affect the outside employer.

(c) Standard for approval. Approval shall be granted unless a

determination is made that the outside employment is expected to

involve conduct prohibited by statute or regulation, including 5 CFR

part 2635 and this part.

(d) Definitions. For purposes of this section:

(1) Employment means any form of non-Federal employment or business

relationship involving the provision of personal services by the

employee. It includes but is not limited to personal services as an

officer, director, employee, agent, attorney, consultant, contractor,

general partner, trustee, teacher, or speaker. It includes writing done

under an arrangement with another person for production or publication

of the written product. It does not, however, include participation in

the activities of a nonprofit charitable, religious, professional,

social, fraternal, educational, recreational, public service, or civic

organization, unless the participation involves the provision of

professional services or advice for compensation other than

reimbursement for actual expenses.

(2) Prohibited source has the meaning in 5 CFR 2635.203(d), and

includes any person who:

(i) Is seeking official action by GSA;

(ii) Does business or seeks to do business with GSA;

(iii) Conducts activities regulated by GSA;

(iv) Has interests that may be substantially affected by

performance or nonperformance of the employee's official duties; or

(v) Is an organization a majority of whose members are described in

paragraphs (d)(2)(i) through (iv) of this section.

Note to Sec. 6701.106: An employee may obtain advice from an

agency ethics official as to whether a potential employer is a

prohibited source.

[[Page 56403]]

Sec. 6701.107 Reporting waste, fraud, abuse and corruption.

GSA employees shall disclose immediately any waste, fraud, abuse,

and corruption to appropriate authorities, such as the Office of

Inspector General.

TITLE 41--[AMENDED]

CHAPTER 105--GENERAL SERVICES ADMINISTRATION

2. Part 105-735 of 41 CFR chapter 105 is revised to read as

follows:

PART 105-735--STANDARDS OF CONDUCT

Sec. 105-735.1 Cross-references to employee ethical conduct standards,

financial disclosure regulations, and other regulations.

Employees of the General Services Administration are subject to the

executive branch-wide standards of ethical conduct at 5 CFR part 2635,

GSA's regulations at 5 CFR part 6701 which supplement the executive

branch-wide standards, the regulations on employee responsibilities and

conduct at 5 CFR part 735, and the executive branch financial

disclosure regulations contained in 5 CFR part 2634, and GSA Order ADM

7900.9A, which can be obtained from the GSA Office of General Counsel.

Authority: 5 U.S.C. 7301.

[FR Doc. 96-27967 Filed 10-31-96; 8:45 am]

BILLING CODE 6820-34-P