Contract Compliance for Government Contractors

1
(No Transcript)
2
Contract Compliance for Government Contractors

• Dr. Ralph Mike Criss, Fluor Government Group

Thursday, November 20 1140 am 1240 pm
3
Is This The View from Your Window?
4
What is Compliance?

• People make choices, or
• choose behaviors, based on
• their understandings of what
• is proper and expected
• under the circumstances.

5
Reporting System

• New FAR Provision/Clause 52.209-13
• Contractor Code of Business Ethics and Conduct
• Requires
• Written Code of Business Ethics
• Provide Copy to each employee
• Awareness Program

6
Awareness Program

• Internal Controls
• Facilitate timely discovery of improper conduct
• Take corrective action
• Periodic Reviews
• Internal reporting mechanism
• Disciplinary action

7
More To Come

• Fewer Exclusions
• Reporting
• Where does it end?

8
What is Compliance?

• Making Choices in a Framework
• Behaviors
• Government Contract Compliance
• Government Contract Is The Basis
• A Compliance Program
• Framework For Choice Making

9
Ethics

• Ethics Compliance Are Related
• Ethics
• Why People Make Choices
• Personal Preferences
• Morals
• Compliance
• External Activity (Behaviors)
• Organizational Structures

10
Take Away

• Hire People With Ethics
• They Make the Right Choices
• Tell Them The Rules So They Can Comply
• Can Choose the Right Behavior

11
The Framework

• Organizational Guidelines
• The Contract
• Federal Sentencing Guidelines
• A Charter and A Committee
• Internal Control System

12
An Overview of the Organizational Guidelines

• Paula Desio, Deputy General Counsel,United
• States Sentencing Commission, has written a very
• nice one page summary of the organizational
• guidelines.
• She includes eight key criteria for an effective
• compliance program.
• Desio, Paula. An Overview of the Organizational
  Guidelines, United States Sentencing Commission,
  Organizational Guidelines, http//www.ussc.gov/org
  guide.htm

13
Organizational Guidelines

• Oversight by high-level personnel
• Due care in delegating substantial discretionary
  authority
• Effective Communications to all levels of the
  organization

14
Organizational Guidelines

• Reasonable steps to achieve compliance, which
  include systems for monitoring, auditing, and
  reporting suspected wrongdoing without fear of
  reprisal
• Consistent enforcement of compliance standards
  including disciplinary mechanisms
• Reasonable steps to respond to and prevent
  further similar offenses upon detection of a
  violation

15
Company Policy

• Discriminatory Practices
• Harassment in the Workplace
• Violence in the Workplace
• Procurement and Contracts

• Time keeping
• Expense reporting
• Gifts and gratuities
• Fraternization
• Labor Laws
• Sharp Business practices

Internal Controls
16
The Contract

• RTFC

17
Federal Sentencing Guidelines

• Part A-Offenses Against the Person
• Part B-Basic Economic Offenses
• Part C-Offenses Involving Public Officials and
  Violations of Federal Election Campaign Laws
• Part D-Offenses Involving Drugs
• Part E-Offenses Involving Criminal Enterprises
  and Racketeering
• Part G-Offenses Involving Commercial Sex Acts,
  Sexual Exploitation of Minors, and Obscenity
• Part H-Offenses Involving Individual Rights
• Part J-Offenses Involving the Administration of
  Justice
• Part K-Offenses Involving Public Safety
• Part L-Offenses Involving Immigration,
  Naturalization, and Passports

18
Federal Sentencing Guidelines

• Part M-Offenses Involving National Defense and
  Weapons of Mass Destruction Treason, Sabotage,
  Espionage and Related Offenses, Evasion of
  Military Service, Prohibited Financial
  Transactions and Exports, and Providing Material
  Support to Designated Foreign Terrorist
  Organizations, Nuclear, Biological, and Chemical
  Weapons and Materials, and Other Weapons of Mass
  Destruction
• Part N-Offenses Involving Food, Drugs,
  Agricultural Products, and Odometer Laws
• Part P-Offenses Involving Prisons and
  Correctional Facilities
• Part Q-Offenses Involving the Environment
• Part R-Antitrust Offenses
• Part S-Money Laundering and Monetary Transaction
  Reporting
• Part T-Offenses Involving Taxation
• Part X-Other Offenses

19
A Charter and A Committee

• Corporate and Executive Committees
• Who Should Serve?
• Operational Level Committees
• Vision Statement
• Charter
• Employee Reporting Hotlines

Internal Controls
20

• The Process
• Is As Important As The Product

I attribute this phrase to Mr. Jim Dyer,
colleague and friend. I do not know if he was
this first to say it, but it was from him I
heard it first.
21

• It is very difficult to physically stop people
  from breaking the rules.
• But, You need to make sure they understand there
  are consequences.
• Compliance is not a policing action.

22
The Decision

• Taking responsibility for
• compliance always comes
• down to personal choice
• no matter what level you
• are in the organization.

23
Responsibility

• Being Personally Responsible Means That You Have
  Made A Choice To Do The Right Things
• It Also Means That You Dont Tolerate
  Noncompliant Behaviors From Yourself Or
  Co-workers (At Any Level)
• This Is Difficult

24
The Reality

• If People Choose To Be Noncompliant
• It Is Hard To Stop Them
• Compliance Is A Knowledge Activity
• If People Know The Rules, and
• Understand Why They Exist
• They Will Not Normally Knowingly Violate Them
  (Ethics)

25
The Reality

• If People Are Going To Knowingly Violate The
  Rules
• They Need To Know What The Consequences Can Be
• For Some, They Will Comply Simply Because They
  Know There Are Consequences

Internal Controls
26
Take Away

• Reimbursablity Is Based On Compliance
• Or Stated Another Way, Being Compliant Ensures
  Your Company Gets Paid For The Work It Performs

27
By Following The Processes, The Government, And
The Public It Represents, Is Ensured

• That They Are Receiving A Fair Bargain
• Competition Is Properly Obtained
• Social Programs Are Supported
• Transactions Are Transparent
• Their Best Interests Are Protected

28
More Specifically

• Auditors Will Have Confidence That What They See
  Is Representative Of The Companys Processes
• The Need For Additional Auditing And
  Investigating Is Minimized
• So Are The Costs Of Meeting Government
  Requirements

Internal Controls
29
What is a Compliance Program?

• Its a Choice
• Its Leadership
• Training Programs
• Reporting System
• Rewards and Consequences
• Roles

30
Choice

• No System Or Program Can Make People Behave In A
  Compliant Way.
• People Must Choose To Do So.
• Employees Must Be Selected That Will Make The
  Right Choices When They Understand What Choices
  They Can Make And What Is Expected

31
Leadership

• Everybody is a Leader
• No Tolerance Policy
• A Method to Report
• Chain of Command
• Investigations
• Surveys
• Hotlines

32
Training Programs

• Formal
• In House

Training is How an Employee Learns the Rules
33
Some Formal Training

• Berry Amendment
• Trade Agreements Act
• Foreign Ownership Control and Influence (FOCI)
• Foreign Corrupt Practices Act
• Export Control
• False Claims Act

• Procurement Integrity
• Bribery and Illegal Gratuities Statute
• Anti-Kickback Statute
• Lobbying
• Standards of Ethical Conduct for Employees of the
  Executive Branch

34
Informal Training

• Consistent
• Talk the Walk
• Walk the Walk
• Involve Everyone
• Make a Commitment
• Use In-House and Outside Trainers

35
Reporting Systems

• Internal for Now
• What Constitutes a Reportable Issue

36
Rewards and Consequences

• Compliant Behaviors Should Be Openly Rewarded
• Noncompliant Behaviors Need To Have Visible
  Consequences

Internal Controls
37
Roles

• Executive Management Must Take A Proactive Role
  In Leading The Compliance Program
• They Must Challenge Their Functional Managers To
  Support The Elements Of The Compliance Program
  And Find Innovative Ways To Implement It
• Mostly However, The Executive Manager Has To Set
  The Example

38
Sustaining the Program

• Once A Compliance Program Has Been Implemented,
  Sustaining It Becomes Important
• The Downside Of Not Sustaining The Program Is
  That Management Loses Credibility And Adherence
  Is Likely To Be Worse Than If No Program Had
  Existed

39
What Compliance Programs Are Not

• Programs That Solely Point To Their Audit Efforts
• Rely On The Number Of Findings
• Not Successful Or Effective
• Inspection Programs
• Inspection Programs Belong More In The Realm Of
  Quality Control

40
Successful And Effective Compliance Programs

• Tie Quality Control, Audit, Corporate Governance,
  and Common Sense Together

41
Is This Your Idea of Taking a Risk?
42
Taking the Risk

• What Do the Following People Have in Common?

43

• Glenn Powell
• Stephen Seamans
• Christopher Cahill
• Andrew Rose
• Lloyd Holliman
• Mitchell Kendrix
• Majors Momon and Cockerham

• Randy Duke Cunningham
• David Safavian
• Darleen Druyun
• Kevin Marlowe
• Tom Spellissy
• Robert Stein
• Jeff Mazon

44

• INDICTMENTS
• AND
• CONVICTIONS

45
Since 2004, there have been at least 20
indictments or convictions of government
officials and contractors for corruption related
to procurement. These have included the
conviction of a senior Republican congressman,
the indictment of the top White House procurement
officials, and the conviction of one of the most
senior procurement officials at the Air Force.
Corruption has tainted a wide array of contract
initiatives, including the reconstruction in
Iraq, the response to Hurricane Katrina, and
major Defense Department procurements.
Dollars Not Sense Government Contracting Under
the Bush Administration Prepared for Rep, Henry
A. Waxman
United States House of Representatives Committee
on Government Reform Minority Staff Special
Investigations Division June 2006
46
Following the Rules is not Enough
47
You Need Common Sense
48
What Do You Do When Things Go Wrong
and they will
49
(No Transcript)
50
Disclose
51
Questions?