Let's say you've developed a working relationship with a federal agency program manager. The agency has purchased your company's products in the past and will likely do so in the future.

You're having lunch with this person -- let's call her Jane -- to discuss agency needs and to go over some ideas on how your company might help meet those needs.

The lunch bill comes. The total is $30, $15 each lunch. You tell Jane you'd like to pick up the tab. Can you without violating the law?

It depends.

FAR 3.101-2 states that, as a rule, no government employee may "solicit or accept, directly or indirectly, any gratuity, gift, favor, entertainment, loan, or anything of monetary value" from anyone who

• has or is seeking to obtain government business with the employee's agency,
• conducts activities that are regulated by the employee's agency, or
• has interests that may be substantially affected by the performance or nonperformance of the employee's official duties.

In this case, you clearly fall within the confines of FAR 3.101-2 because you have business with Jane's agency. But are you in violation?

The first thing to consider is whether the $15 lunch is a "gift" at all. Gifts do not include, among other things: "Modest items of food and refreshments, such as soft drinks, coffee and donuts, offered other than as part of a meal." (Other items outside the definition include greeting cards and items with little intrinsic value which are intended solely for presentation, opportunities and benefits, including favorable rates and commercial discounts, rewards and prizes given to competitors in contests or events, including random drawings. 5 C.F.R. 2635.203)

Since the food in this case was offered to Jane "as part of a meal," it's a gift.

Gifts of $20 or less per occasion are allowed, PROVIDED that the source of gifts do exceed $50 per calendar year. 5 C.F.R. 2635.204(a). Thus, if you or anyone else in your company has picked up lunch or made some other gift in the same calendar year in an amount that is more than $35, then you'll be in violation of the law by picking up the tab this afternoon, because the $15 will exceed the aggregate limit.

So there's an exception to the no-gift rule, but it's fairly strict.

Other exceptions beyond the $50/$20 exception include:

• Gifts based on a personal relationship
• Discounts and similar benefits
• Awards and honorary degrees
• Gifts based on outside business or employment relationships
• Widely attended gatherings and other events
• Social invitations from persons other than prohibited sources ("prohibited sources" include contractors)
• Meals, refreshments and entertainment in foreign areas
• Gifts to the President or Vice President

5 C.F.R. 2635.204

Side note: the states tend to have similar rules. For example, in Washington state, employees are not allowed to accept gifts with an aggregate value in excess of $50 from a single source in a calendar year or a single gift from multiple sources with a value in excess of $50. RCW 42.52.150. Exceptions are similar, including unsolicited advertising or promotional items of nominal value, such as pens and note pads, and unsolicited tokens or awards of appreciation.

Now back to the federal rules:

Beyond what we've already discussed, it's important to keep in mind that contracts exceeding $100,000, that are not for personal services, must include the so-called gratuities clause. FAR 52.203-3. This clause gives the government the contractual right to seek onerous penalties should the contractor offer or give a gratuity with the intent of obtaining favorable treatment under a contract.

Bottom line here: if you're going to pick up Jane's lunch, just make sure you think it through.

More Information

FAR Subpart 3.1 - Safeguards
https://www.acquisition.gov/far/html/Subpart%203_1.html

CFR Title 5--Administrative Personnel
http://www.access.gpo.gov/nara/cfr/waisidx_02/5cfr2635_02.html