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Ethics and Compliance

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Government contracts typically include requirements that contractors comply with various regulations that promote social policy goals. These socio-economic regulations flow down to any subcontractor working under a prime government contract. These regulations range from Federal Acquisition Regulation (“FAR”), to the Drug-Free Workplace Act of 1998, and the Executive Order 11246 – Affirmative Action Plan. Government contract compliance and procurement integrity is vital when involved in a government contract. Companies need to develop and implement contractor ethics and compliance programs which meet the standards of the Federal Acquisition Regulation and Federal Sentencing Guidelines.

The New Business Ethics And Compliance Rules For Contractors
There has been much discussion lately about the recent changes in the Federal Acquisition Regulation which require contractors to implement a code of conduct and compliance training. The changes to the FAR, effective December 24, 2007, were enacted to promote the requirement in the wake of recent procurement scandals that contractors conduct themselves with the highest degree of integrity and honesty. In sum, the new rules require establishing (1) a written Code of Business Ethics and Conduct, and (2) an Employee Business Ethics and Compliance Training Program and internal control system, for companies having a contract with a value exceeding $5 million, and performance period of 120 days or more. This applies to primes as well as subs.

Drug Free Workplace Act of 1998
The Drug Free Workplace Act of 1998 was passed in a national effort to control illegal drug use through the regulation of government contractors. It requires all government contractors to certify that they provide a drug-free workplace, and to publish a statement at each facility listing prohibited drug related behaviors and the actions that will be taken against violators. Contractors are further required to establish an ongoing drug-free awareness program that educates and notifies employees of the availability of counseling programs and the penalties of abuse in the workplace. As a condition of employment, employees of government contractors must notify the contractor of any criminal drug convictions occurring in the workplace, and the contractor in turn must impose a penalty for an employee convicted of a drug violation in the workplace. All violations of the above requirements must be immediately disclosed to the procuring agency. Contractors who fail to comply with the Drug-Free Workplace Act of 1998 are subject to sanction.

Executive Order 11246 – Affirmative Action Plan
The U.S. Department of Labors Office of Federal Contract Compliance Programs (OFCCP) enforces the Executive Order 11246 and regularly conducts EEO audits and complaint investigations of government contractors. A contractor in violation of E.O. 11246 often must pay the alleged affected victims substantial amounts of back pay, front pay and interest to resolve alleged violations of the Executive Order. Further, a contractor in violation may have its contracts canceled, terminated, or suspended in whole or in part, and the contractor may in extreme cases be debarred. OFCCP has established a separate set of regulations to enforce affirmative action within the construction government contracts industry, but penalties for non-compliance are the same.

The Law Firm of Michael R. Nevarez can help assist with ethics and compliance training. Additionally, the Firm is experienced in conducting internal investigations of alleged improprieties and assisting in making disclosures. The Firm is able to represent contractors and individuals who have been suspended or proposed for debarment by numerous federal agencies.

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