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A Blueprint for Success  The Contractor Code of
Ethics and Business Conduct
Breakout Session Presented by Dr. Tomi Bryan,
President General Counsel
FedLinx, Inc. Date April 15,
2008 Time 320p.m. 420 p.m.
806
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Why You Will Be Glad You Came!

• This program examines the following
• The new Contractor Code of Ethics and Business
  Conduct
• The footprint for creating a code
• Some best practices for meeting the new
  requirements
• Goal to have a compliance program in place that
  meets the FAR Requirements

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NEW FAR PART 3.10

• Mandates implementation of a Code of Business
  Ethics and conduct
• Mandates implementation of an Awareness Program
  and internal control systems

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NEW FAR PART 3.10

• 3.1002  Policy.
• (a) Government contractors must conduct
  themselves with the highest degree of integrity
  and honesty.
• (b) Contractors should have a written code of
  business ethics and conduct. To promote
  compliance with such code of business ethics and
  conduct, contractors should have an employee
  business ethics and compliance training program
  and an internal control system that

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NEW FAR PART 3.10

• 3.1002  Policy continued
• (1) Are suitable to the size of the company and
  extent of its involvement in Government
  contracting
• (2) Facilitate timely discovery and disclosure of
  improper conduct in connection with Government
  contracts and
• (3) Ensure corrective measures are promptly
  instituted and carried out.

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The Requirements

• Suitable to the size of the company and extent of
  its involvement in Government contracting
• means the level of sophistication and complexity
  of the written code of business ethics and
  conduct is driven by number of government
  contracts awarded to the contractor and size of
  the business

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What Contracts Are Covered 3.1004

• Companies with contracts and subcontracts that
  have an expected value over the life of the
  contract of more than 5 million and a
  performance period of over 120 days

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What Contracts Are Covered 3.1004

• Contract or subcontract is not for commercial
  items
• Contract or subcontract must not be performed
  entirely outside the United States

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Building a Program that Complies with FAR 3.10

• New regulation mandates a compliance program
• New regulation offers no guidance on how to
  create one
• Where does one look to build a compliance
  program?

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Building a Program that Complies with FAR 3.10

• Best place to start is a gap analysis
• What should our companys program look like,
  taking into account the size of your company and
  the amount of government business it has
• What is the current state of the companys
  compliance program
• Close the gaps!

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Creating the Gap Analysis A Baseline

• Stiff penalties are possible for those who fail
  to comply with the laws and rules of government
  contracting. This handbook, written by the law
  firm of Seyfarth Shaw LLP, will help you keep up
  with government contracting requirements. It
  explains each segment of compliance, including
  offenses and penalties, conducting compliance
  audits, responding to criminal investigations,
  procurement information, defective pricing, time
  charging, progress payments, product
  substitution, unallowable costs, cost accounting
  standards compliance, contract claims,
  acquisitions and mergers, domestic preference
  requirements, international sales, and foreign
  military sales.

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Designing the Program

• A blueprint for managing responsibilities
• Identify the regulatory, statutory and agency
  foundations for the program
• Draw compliance standards from the regulations,
  statutes, and agency requirements

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Designing the Program

• A blueprint for managing responsibilities
  continued
• Develop a policy for each standard
• Establish and implement processes for each of the
  policies
• Engage in on-going program reviews

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Program Blueprint
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Designing the Program Best Practices

• The starting point for any government contracting
  compliance program should be the Federal
  Sentencing Guidelines
• Updates to the Guidelines impose new, tougher
  standards for ethical behavior and compliance
• Six factors are used to assign a culpability
  score to organizations
• The Guidelines apply to all organizations (large
  or small)

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Determining the Culpability Score

• There are four factors that increase punishment
• There are two factors that mitigate punishment,
  including the existence of an effective
  compliance and ethics program

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Requirements for an Effective Program

• Standards and procedures
• Board of Directors oversight
• Screen and exclude unethical people
• Effective training optimal blend is internal
  and external

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Requirements for an Effective Program

• Evaluate effectiveness of program
• Promote and enforce program through incentives
• Respond appropriately to problems and act to
  prevent further similar behavior

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Compliance Program Pitfalls

• Company personnel are not adequately trained
• Compliance programs are poorly designed or are
  non-existent
• Inadequate recordkeeping

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QUESTIONS

• Dr. Tomi Bryan
• tbryan_at_fedlinx.com or 336.379.0442