FAR 3.7—Subpart 3.7

Scope of subpart.

FAR 3.700 defines the scope of Subpart 3.7, which establishes Governmentwide policies and procedures for the discretionary remedy of declaring certain contracts void and rescinding them when serious procurement misconduct has occurred. The section covers two triggering situations: a final conviction for bribery, conflict of interest, or improper disclosure/receipt of contractor bid or proposal information or source selection information in exchange for value or to gain a competitive advantage; and an agency head determination that such information was disclosed or received for value or to gain a competitive advantage. It also makes clear that this subpart is limited to that specific void-and-rescind authority and does not govern other Government remedies, including common law avoidance, rescission, or cancellation. In practice, this means the subpart is a targeted enforcement tool for the most serious integrity violations in Federal procurement, not a general contract-termination or dispute-resolution rule. Contracting officials must therefore distinguish between the special procedures in this subpart and other legal remedies that may be available under statute, regulation, or common law.

Purpose.

FAR 3.701 explains the purpose of Subpart 3.7, which addresses administrative remedies for certain procurement integrity violations. It covers contracts connected to a final conviction for bribery, conflict of interest, or the disclosure or receipt of contractor bid or proposal information or source selection information in exchange for something of value or to gain a competitive advantage, as well as cases where the agency head makes a determination that such information was disclosed or received for that purpose. The section also states that the subpart is intended to deter similar misconduct in future Government contracting. In practice, this means the Government has a formal mechanism to respond to serious procurement integrity breaches without waiting for or relying solely on criminal punishment, and contractors, employees, and other participants in the acquisition process must understand that improper access to or use of protected procurement information can trigger contract-level consequences.

Definition.

FAR 3.702 provides a single, narrow definition used in the FAR’s anti-kickback and related integrity provisions: what counts as a “final conviction.” It explains that a conviction can arise from a verdict or a plea, and it expressly includes a plea of nolo contendere, so long as a sentence has been imposed. The purpose of the definition is to remove ambiguity about when a criminal case has reached the level of finality needed to trigger FAR consequences, such as remedies, reporting, or other actions tied to a conviction. In practice, this matters because contractors, subcontractors, and contracting officials need a clear point at which a criminal disposition is treated as a conviction under the FAR, even if the case was resolved without a traditional guilty plea. The definition is important for compliance, enforcement, and recordkeeping because it determines when the government may rely on the conviction status for contractual or administrative actions.

Authority.

FAR 3.703 explains the legal authority for rescinding or voiding certain federal contracts and related transactions when serious procurement-related misconduct has occurred. It covers two separate but related authorities: first, the authority under Public Law 87-849 and 18 U.S.C. 218, as implemented by Executive Order 12448, allowing the President or agency heads to declare contracts void and rescind them after a final conviction for bribery, conflict of interest, or another violation of 18 U.S.C. chapter 11; and second, the authority under 41 U.S.C. 2105(c) requiring an agency to consider rescission when it receives information that a contractor or person has violated 41 U.S.C. 2102. The section also identifies the two factual triggers for that second authority: a conviction for an offense punishable under 41 U.S.C. 2105(a), or an agency determination by a preponderance of the evidence that the contractor or someone acting for the contractor engaged in such conduct. In practice, this section is about the government’s power to unwind tainted contracts when corruption, conflicts of interest, or similar prohibited conduct undermines the integrity of the procurement. It matters because it can lead to contract termination-like consequences, financial recovery issues, and major reputational and compliance risks for contractors, while requiring agencies to evaluate whether rescission is appropriate once misconduct is known.

Policy.

FAR 3.704 states the government’s policy for responding when a contractor is finally convicted of certain corruption-related offenses tied to federal contracts. It covers three main topics: final convictions for violations of 18 U.S.C. 201–224 involving or relating to agency contracts, the possible use of contract voiding/rescission and recovery of government funds or property, and the relationship between these convictions and suspension/debarment actions under FAR subpart 9.4. It also addresses offenses punishable under 41 U.S.C. 2105, including situations where the agency head or designee determines by a preponderance of the evidence that the contractor or someone acting for the contractor engaged in prohibited conduct. In practice, this section gives agencies a framework for deciding whether to unwind tainted contracts, recover money or property, and pursue responsibility remedies against the contractor. The section is important because it links criminal findings to procurement remedies and protects the integrity of the federal acquisition system.

Procedures.

FAR 3.705 explains the procedure an agency must follow when a contractor has a final conviction for certain bribery, graft, or conflict-of-interest offenses under 18 U.S.C. 201–224 that involve or relate to agency contracts. It covers prompt reporting of the conviction, notification to the Department of Justice Civil Division, the agency head’s authority to declare the affected contracts void and rescind them, and the agency’s ability to recover amounts expended and property transferred under those contracts. The section also lays out the minimum due-process steps for the contractor: written notice by certified mail, a 30-day period to submit information, an opportunity for a hearing if timely requested, and limits on what can be challenged at that hearing. It further requires the final written decision to address the contracts affected, the amounts and property to be returned, and the fair value of any tangible benefits the agency retained. Practically, this section gives agencies a structured but informal process for handling serious criminal misconduct tied to federal contracts, while ensuring contractors receive basic notice and an opportunity to respond before rescission and recovery actions are finalized. It also makes clear that these rescission actions are not Contract Disputes Act claims, so the normal contracting officer final decision procedures in FAR part 33 do not apply.