New Contractor Ethics Requirements

From D2DInc's January 2009 e-Newsletter

On December 12, 2008, new contractor ethics requirements went into effect that apply to all government contracts over $5 Million or with a period of performance longer than 90 days. These requirements are laid out in FAR 52.203-13 and have three parts:

1. An ongoing business ethics awareness and compliance program
2. An internal control system
3. Mandatory disclosure of violations

Ongoing Business Ethics Awareness and Compliance Program
All businesses must develop a written code of ethics and conduct, and distribute a copy of that code to all employees involved in the company’s government contracts. In addition, the contractor must conduct training so that all employees, subcontractors, and other relevant parties are educated on the company’s ethics awareness and compliance program.

Internal Control System
Businesses must develop an internal control system to establish procedures to “facilitate timely discovery of improper conduct in connection with government contracts; and ensure corrective measures are promptly instituted and carried out.” This means that companies must document:

• who is responsible for oversight of the corporate ethics awareness and compliance program;
• what resources are assigned to that person to ensure that the program is effective;
• the company’s procedures for detecting criminal conduct;
• establishment of an internal reporting mechanism, such as a hotline, for employees to report suspected violations; and,
• disciplinary actions to be taken against violators.

Mandatory Disclosure of Violations
Companies must disclose, in writing, to the agency Office of the Inspector General (OIG), with a copy to the Contracting Officer, whenever it has credible evidence that a principal, employee, agent, or subcontractor has committed a violation of Federal criminal law or the False Claims Act in connection with the award, performance, or closeout of the contract or any associated subcontract. Examples of violations that must be disclosed could involve fraud, conflict of interest, bribery, or gratuity regulations.

We’ve already seen a few RFPs that specifically ask if the bidder has an ethics program and conducts ethics training, and we expect this to be included in most services RFPs going forward. If you need help developing a program that complies with these new requirements, contact Molly Gimmel at (301) 657-4440.