March 19, 2009 -
As of December, organizations that serve the
federal government must meet new ethics program federal acquisition
regulation (FAR) rules.
We recommend that those with government
contracts consult with their legal counsel regarding the new FAR ethics
rules. Your legal firm (or
Ethical Advocate) can help you in determining if your organization is meeting the letter of the regulation.
If
you don't have legal representation specializing in this area, the
following law firms are on the ball related to this ruling. They have
all written about the new ethics policy, ethics training, and employee
hotline rules. Below are links from each of the leading firms and
quotes that give an overview of the FAR ethics requirements:
"That
rule requires... companies receiving awards of government contracts and
subcontracts expected to exceed $5 million and with performance period
of 120 days or more to:
- Have a code of business ethics and conduct within 30 days of award;
- Implement a formal 'awareness' or training program on the code within 90 days of award;
- Develop internal controls to support the code, also within 90 days of award; and
- Display a hotline poster."
- Holland + Knight - Construction Accounting and Taxation; "
New FAR Rule on Compliance Programs and Ethics" - January/February 2009
"According
to FAR Subpart 3.10, an effective internal control system must
facilitate timely discovery of improper conduct in connection with the
government contract, ensure prompt corrective action and include...
(a)n internal reporting mechanism, such as a hotline, by which
employees may report suspected instances of improper conduct, and
instructions that encourage employees to make such reports." - Squire
Sanders, "
Ethics and Compliance Program for Government Contractors"
One
of the 16 published checklist items from a recent seminar on how to
meet the new FAR requirements is "Establish procedures to detect
overpayment and report (via a hotline or the equivalent) any potential
violations" - Reed Smith, "
Federal Forecaster", Winter 2009
"(T)he
contractor must have an internal reporting mechanism, such as a
hotline, which allows anonymity or confidentiality, by which employees
may report suspected instances of improper conduct, and instructions
that encourage such reports. While the regulations indicate that
contractors can use a government hotline and informational poster to
meet this requirement, abdicating such an important element of the
program to the government is generally not the most effective way for a
contractor to establish an ongoing effective program." - Pepper
Hamilton - "
A Roadmap of Requirements for Codes of Business Ethics and Conduct", January 9, 2009
"(The)
final rule imposes new requirements for mandatory disclosure when a
contractor has 'credible evidence' that a principal, employee, agent,
or subcontractor has violated the civil False Claims Act (FCA) or has
committed certain violations of federal criminal law." - Arnold +
Porter - "
Client Advisory", November 2008
"Contractors
who knowingly fail to report these violations or overpayments when a
principal officer or employee has 'credible evidence' may face
suspension or debarment." - Wiley Rein, "
The Dawn of Mandatory Disclosures", November 8, 2008