FAR 3.704—Policy.
Plain-English Summary
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.
Key Rules
Final conviction triggers review
When there is a final conviction for a violation of 18 U.S.C. 201–224 involving or relating to agency contracts, the agency head or designee must consider the available facts and may, if appropriate, declare the contracts void and rescind them. The agency may also recover amounts expended and property transferred, following the policies and procedures in this subpart.
Voiding is discretionary, not automatic
A final conviction does not automatically require rescission or recovery. The agency must evaluate the facts and decide whether voiding the contract and recovering funds or property is appropriate under the circumstances.
Debarment should be considered
A final conviction under 18 U.S.C. 201–224 related to a contract may show the contractor is not presently responsible. If debarment has not already been initiated or is not already in effect, the agency should consider starting debarment proceedings under FAR subpart 9.4.
41 U.S.C. 2105 offenses get special treatment
If there is a final conviction for an offense punishable under 41 U.S.C. 2105, or if the agency head or designee finds by a preponderance of the evidence that the contractor or someone acting for the contractor engaged in such conduct, the head of the contracting activity must consider additional remedies.
Additional remedies include rescission and recovery
For 41 U.S.C. 2105 matters, the head of the contracting activity must consider declaring contracts void and rescinding them, as appropriate, and recovering amounts expended under the contracts using the procedures in 3.705 and 3.104-7.
Suspension or debarment may be recommended
In 41 U.S.C. 2105 cases, the head of the contracting activity must also consider recommending suspension or debarment proceedings under FAR subpart 9.4, in addition to any other penalty allowed by law or regulation.
Responsibilities
Agency Head or Designee
Review the facts after a final conviction under 18 U.S.C. 201–224 involving or relating to agency contracts, and decide whether voiding, rescission, and recovery are appropriate. For 41 U.S.C. 2105 matters, make the required preponderance-of-the-evidence determination when applicable.
Head of the Contracting Activity
For 41 U.S.C. 2105 offenses, consider declaring contracts void and rescinding them, recovering amounts expended under the contracts through the required procedures, and recommending suspension or debarment proceedings.
Agency
Evaluate whether a final conviction related to a contract warrants debarment action under FAR subpart 9.4, especially if debarment has not already been initiated or is not in effect.
Contracting Officer / Acquisition Officials
Support the agency’s review by identifying affected contracts, preserving the record, coordinating with legal and suspension/debarment officials, and ensuring any rescission or recovery action follows the applicable procedures.
Contractor
Face possible contract voiding, rescission, recovery of funds or property, and suspension or debarment if convicted of covered offenses or found to have engaged in prohibited conduct.
Practical Implications
This section is a remedy-and-responsibility trigger: once a covered conviction occurs, the agency must actively evaluate contract remedies and responsibility actions rather than treating the criminal case as separate from procurement.
Contractors should understand that a criminal conviction tied to procurement can affect both existing contracts and future eligibility to receive awards, especially through debarment or suspension.
Agencies need to coordinate closely with counsel, the contracting activity, and suspension/debarment officials because the section uses different standards and decision-makers for different remedies.
A common pitfall is assuming rescission is mandatory; the rule requires consideration and a fact-based judgment, not automatic cancellation in every case.
Another practical issue is timing: if debarment is already in effect or already initiated, the agency should account for that status rather than duplicating or mishandling the response to the conviction.
Official Regulatory Text
(a) In cases in which there is a final conviction for any violation of 18 U.S.C. 201 - 224 involving or relating to contracts awarded by an agency, the agency head or designee, shall consider the facts available and, if appropriate, may declare void and rescind contracts, and recover the amounts expended and property transferred by the agency in accordance with the policies and procedures of this subpart. (b) Since a final conviction under 18 U.S.C. 201 - 224 relating to a contract also may justify the conclusion that the party involved is not presently responsible, the agency should consider initiating debarment proceedings in accordance with subpart 9.4 , Debarment, Suspension, and Ineligibility, if debarment has not been initiated, or is not in effect at the time the final conviction is entered. (c) If there is a final conviction for an offense punishable under 41 U.S.C. 2105 , or if the head of the agency, or designee, has determined, based upon a preponderance of the evidence, that the contractor or someone acting for the contractor has engaged in conduct constituting such an offense, then the head of the contracting activity shall consider, in addition to any other penalty prescribed by law or regulation- (1) Declaring void and rescinding contracts, as appropriate, and recovering the amounts expended under the contracts by using the procedures at 3.705 (see 3.104-7 ); and (2) Recommending the initiation of suspension or debarment proceedings in accordance with subpart 9.4 .