The subgrantee must maintain written standards of conduct governing the performance of its employees engaged in the award and administration of subcontracts. No employee, officer, or agent shall participate in the selection, award, or administration of a subcontract supported by federal funds if a real or apparent conflict of interest would be involved. Such a conflict would arise when the employee, officer or agent, any member of his/her immediate family, his/her partner, or an organization which employs or is about to employ any of the parties indicated above, has a financial or other interest in the firm selected for an award.

The officers, employees, and agents of the subgrantee shall neither solicit nor accept gratuities, favors, or anything of monetary value, from subcontractors or parties to subcontracts. However, subgrantees may set standards for situations in which the financial interest is not substantial or the gift is an unsolicited item of nominal value. The standards of conduct shall provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents of the subgrantee.