[Federal Register Volume 61, Number 213 (Friday, November 1, 1996)]
[Rules and Regulations]
[Pages 56399-56403]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-27967]



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 Rules and Regulations
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  Federal Register / Vol. 61, No. 213 / Friday, November 1, 1996 / 
Rules and Regulations  

[[Page 56399]]



GENERAL SERVICES ADMINISTRATION

5 CFR Chapter LVII

41 CFR Part 105-735

RIN 3209-AA15


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

AGENCY: General Services Administration (GSA).

ACTION: Final rule.

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which have not been superseded are being reissued in an internal GSA 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