TO: State Trail Administrators
FROM: Christopher Douwes
Date: Thursday, 05 October 2000 8:30 AM [updated February 6, 2006]
SUBJECT: Promotional Items Prohibition
FHWA recently issued new guidance on the purchase of promotional items. In general, the purchase of promotional items with Federal funds is prohibited. This includes pens, cups, shoelaces, key chains, baseball caps, paperweights, magnets, matchbooks, patches, t-shirts, scissors, balloons, and buttons. Also, you may not use the value of the items to count as a match for Federal funds. I'm incorporating the Guidance below. I also sent it to your FHWA Division contact.
While the guidance below was meant for internal FHWA purchases, please note the OMB Circulars on allowable costs clearly prohibit using Federal funds for the purchase of promotional items. For example, see OMB Circular A-87, Attachment B, item 1(f)(3). The OMB Circulars are available at http://www.whitehouse.gov/omb/circulars_default/.
THEREFORE: Don't use Recreational Trails Program funds, or count as match, the purchase of caps, t-shirts, patches, pins, pens, stickers, license plates, flashlights, etc.
If your State laws, regulations, and policies allow the purchase of promotional items, you may use State funds. But the items can't count as a State match for the Federal program.
Guidance on the Purchase of Promotional Items
Office of Acquisition Management
This guidance outlines FHWA policy related to the procurement of promotional materials purchased with FHWA funds. In general, the purchase of promotional items for purposes of recruitment, advertising and morale boosting is prohibited, absent specific statutory authority. Promotional material is any material used to promote the agency activity to any public or private individual or entity. These types of purchases commonly include such items as pens, cups, shoelaces, key chains, baseball caps, paperweights, magnets, matchbooks, patches, t-shirts, scissors, balloons and buttons. We are issuing this memorandum to ensure that questionable purchases of promotional material cease at once. Transactions not already completed should not proceed and outstanding orders should be canceled, if possible. This guidance outlines the basis for the prohibition, the scope of a number of statutorily based exceptions, and what actions should be taken with respect to purchases already made.
A. The basis for restrictions applying to the purchase of promotional items.
Appropriated funds may not be used for the purchase of gifts or promotional items unless your program has specific statutory authority for this type of purchase. The General Accounting Office (GAO) has consistently determined that unless specific statutory authority exists, the purchase of novelty items or give-aways for distribution to employees or others for the purpose of boosting morale, increasing support for agency programs, or for recruitment, promotional, or advertising purposes, is an unauthorized expenditure of appropriated funds. Such items typically provide little or no information about FHWA or its programs (except the DOT logo or some indication that this item was provided by FHWA). Prohibitions against such purchases hold whether the items are intended for distribution to Federal employees or to others, and adhere whether the purchase is made using a contract, purchase order, purchase card, or convenience check.
The GAO has repeatedly said that if an item is not specifically authorized by an appropriation act or statute, then you must turn to the "necessary expense rule" [31 USC §1301(a)]. Agency discretion must be used to determine whether the item in question will contribute to an agency's mission, objectives and goals; however, items in the nature of gifts can rarely be justified. Items that serve as no more than "favorable reminders," such as pens with only a slogan or logo to remind the recipient of his or her contact with the FHWA, are not considered to meet the necessary expense rule.
B. Items which may be purchased.
FHWA may purchase and distribute informational materials relating to its programs. Thus, this guidance does not apply to such things as pamphlets and books describing all or part of our program; as well as bookmarks, brochures, magazines, informational cubes, and other materials which contain more than minimal information about FHWA. When we refer to "promotional material," we do not include these types of informational materials.
In addition, FHWA has limited, specific authorizations that permit the acquisition and distribution of promotional materials. These exceptions are found in 23 U.S.C. §§ 502(a)(5)(B) and 506(a)(2) and §5210(a) of TEA-21. These areas include the Surface Transportation Research Program, and the ITS Outreach and the International Highway Transportation Outreach programs. [If you are aware of any other specific statutory authority that is applicable to your program, please consult with the individuals listed below.]
Purchases may be made under the auspices of the Government Employees' Incentive Awards Act, which allows such items to be presented as nonmonetary rewards to employees for specific job-related accomplishments or performance. These are generally inexpensive items of an honorary nature that can be worn or displayed, such as paperweights, small clocks, business card holders, and mugs. You may refer to Personnel Management Manual Chapter 9 Awards and Employee Recognition, Section 4, Attachment 3, "Other Special Awards," for specific information about "Inventive Incentives." Such purchases would only apply to FHWA employees, and may not be used to justify distribution of items to the public.
C. Consequences of the unauthorized purchase of promotional items.
If you are uncertain whether you have the requisite authority to purchase promotional items after reviewing this memorandum, do not proceed until after discussing it with the individuals listed below. The consequences of proceeding improperly can be serious, including incurring personal liability for the items purchased. Be advised that the agency cannot ratify a purchase for promotional items after-the-fact since the FHWA does not generally have statutory authority to purchase such items.
D. What to do if unauthorized purchases have occurred.
If you have already placed an order, try to cancel it. If you cannot cancel, explore options with the company (such as a return or, if practicable, alteration of the ordered item such that it clearly meets the definition of "informational material," as described in paragraph B above). If you cannot return the items and have not paid the vendor, inform the vendor that payment cannot be made immediately -- further instructions will be issued regarding payment. If you have already received and paid for the items, we request that you place them in inventory pending further guidance. If unauthorized purchases have occurred during FY 2000, send an e-mail to the Groupwise address "PROMO," including a description of the items purchased, number of items purchased and cost, date of purchase, and their purpose.
Please direct any questions, using Groupwise, to the following:
Legal Interpretation: Office of Chief Counsel (Wil Baccus - "wbaccus") or appropriate Federal Lands Highway or Resource Center Counsel
Procurement/Purchasing Issues: Office of Acquisition Management (Jodi Condes - "jcondes")
Purchase Card/Payment Issues: Office of Finance (Richard Meehleib - "rmeehleib")