Contract Compliance for Government Contractors

2. Dr. Ralph “Mike” Criss, Fluor Government Group Contract Compliance for Government Contractors Thursday, November 20 11:40 am – 12:40 pm

3. Is This The View from Your Window?

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

5. 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 Reporting System

6. Internal Controls Facilitate timely discovery of improper conduct Take corrective action Periodic Reviews Internal reporting mechanism Disciplinary action Awareness Program

7. Fewer Exclusions Reporting Where does it end? More To Come

8. Making Choices in a Framework Behaviors Government Contract Compliance Government Contract Is The Basis A Compliance Program Framework For Choice Making What is Compliance?

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

10. Hire People With Ethics They Make the Right Choices Tell Them The Rules So They Can Comply Can Choose the Right Behavior Take Away

11. Organizational Guidelines The Contract Federal Sentencing Guidelines A Charter and A Committee Internal Control System The Framework

12. 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/orgguide.htm An Overview of the Organizational Guidelines

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

14. 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 Organizational Guidelines

15. Time keeping Expense reporting Gifts and gratuities Fraternization Labor Laws Sharp Business practices Discriminatory Practices Harassment in the Workplace Violence in the Workplace Procurement and Contracts Company Policy Internal Controls

16. RTFC The Contract

17. 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 Federal Sentencing Guidelines

18. 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 Federal Sentencing Guidelines

19. Corporate and Executive Committees Who Should Serve? Operational Level Committees Vision Statement Charter Employee Reporting – Hotlines A Charter and A Committee 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. Taking responsibility for compliance always comes down to personal choice no matter what level you are in the organization. The Decision

23. Being Personally Responsible Means That You Have Made A Choice To Do The Right Things It Also Means That You Don’t Tolerate Noncompliant Behaviors From Yourself Or Co-workers (At Any Level) This Is Difficult Responsibility

24. 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) The Reality

25. 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 The Reality Internal Controls

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

27. That They Are Receiving A Fair Bargain Competition Is Properly Obtained Social Programs Are Supported Transactions Are Transparent Their Best Interests Are Protected By Following The Processes, The Government, And The Public It Represents, Is Ensured:

28. Auditors Will Have Confidence That What They See Is Representative Of The Company’s Processes The Need For Additional Auditing And Investigating Is Minimized So Are The Costs Of Meeting Government Requirements More Specifically Internal Controls

29. It’s a Choice It’s Leadership Training Programs Reporting System Rewards and Consequences Roles What is a Compliance Program?

30. 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 Choice

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

32. Formal In House Training Programs Training is How an Employee Learns the Rules

33. Procurement Integrity Bribery and Illegal Gratuities Statute Anti-Kickback Statute Lobbying Standards of Ethical Conduct for Employees of the Executive Branch Berry Amendment Trade Agreements Act Foreign Ownership Control and Influence (FOCI) Foreign Corrupt Practices Act Export Control False Claims Act Some Formal Training

34. Consistent Talk the Walk Walk the Walk Involve Everyone Make a Commitment Use In-House and Outside Trainers Informal Training

35. Internal for Now What Constitutes a Reportable Issue Reporting Systems

36. Compliant Behaviors Should Be Openly Rewarded Noncompliant Behaviors Need To Have Visible Consequences Rewards and Consequences Internal Controls

37. 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 Roles

38. 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 Sustaining the Program

39. 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 What Compliance Programs Are Not

40. Tie Quality Control, Audit, Corporate Governance, and Common Sense Together Successful And Effective Compliance Programs

41. Is This Your Idea of Taking a Risk?

42. What Do the Following People Have in Common? Taking the Risk

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

50. Disclose