Presentation Transcript

1. Coping with Legal and Compliance Requirements for Mid-Sized Organizations

   Jennifer Izzo Molly Ruddock
2. COMPLIANCE OVERLOAD
3. Trends Litigations and investigations under the federal civil False Claims Act (“FCA”) and state false claims act statutes have been increasing. Suspension and debarment enforcement is uneven. There is increasing pressure from Congress and OMB on agencies to be more proactive. Defense Contract Audit Agency (DCAA) and Inspector General (IG) audits pose an increasing danger to contractors because of their scope and the possibility of a fraud referral. DCAA has become more aggressive and more rigid. Federal policy emphasizes the importance of contractors having effective compliance systems. FAR Clause at 52.203-13, where it applies, imposes contractual requirements concerning compliance systems.
4. Compliance systems If properly designed and used, can help contractors deal with various enforcement risks that are present. Defend allegations that the contractor knowingly violated the False Claims Act (FCA) Avoid suspension and debarment Debarment is discretionary, even if a cause is established, the key is whether the contractor is “presently responsible (see FAR 9.104) Position the company for better resolution of enforcement problems
5. Strategy for Managing the Overload What are the regulatory requirements? Resources for finding out what they are Baseline vs. new requirements Focus your energy on the issues that most interest the Government How do you know what they are focusing on?
6. Who should be involved? Management The Business Contracts Accounting Audit Ethics Officer Legal EVERYONE!
7. Process for Tackling Requirements Understand how requirement(s) applies to your organization and where responsibility lies Determine what policies/procedures are currently in place Identify gaps in compliance Assign priority rating for gap(s) Work with process owners to develop action plan for mitigating gaps
8. Action Plan for Setting up Compliance Program for each new Requirement Basic organizational framework for compliance must be in place Management support Clear roles & responsibilities related to that specific requirement Written procedures for that requirement Employee Training Internal Monitoring and Auditing
9. #1. Organizational Framework Management support Roles and Responsibilities Policies/procedures Internal controls Ethical culture Internal audits and investigations Employee training Continuous Improvement
10. #2: Management SupportConvincing Others To Get On Board Coping with aversions to change Value Better business results Having policies in place leads to more lenient treatment should misconduct occur Risk Federal debarment or suspension Prison Damaged reputation Fines Lost fees or contract revenue Recovery of actual and enhanced damages Voiding of Contracts
11. #3: Assigning Roles and Responsibilities Ownership of company policy Development of policy Performance of tasks within policy Performance of periodic reviews of policy Contact for questions
12. #4: Written Procedures Summarize key aspects of the regulation that are applicable to your organization Provide step by step procedures for anyone in the organization to follow Provide Appendices with definitions and examples
13. #5: Employee Training Audience Small or large session Frequency of sessions Annual or periodic refresher Outsourced or internal instruction Live or online Content Tracking of attendance and acknowledgement of policy
14. #6: Internal Monitoring and Auditing Periodic review of policies and procedures to ensure ongoing compliance Version control Are we doing what we said we would do Continuous improvement Who? – Process owners, legal, compliance, internal audit
15. Hot Compliance Topics – a few examples Hiring former government employees Export control laws Organizational Conflicts of Interest (OCI) A prediction for the future: heavier requirements for primes to monitor subs
16. Example: Hiring Former Government Employees DFARS 203.171 – Senior DoD officials seeking employment with defense contractors A DoD official who, within 2 years after leaving DoD service, expects to receive compensation from a DoD contractor, shall, prior to accepting such compensation, request a written opinion from the appropriate DoD ethics counselor regarding the applicability of post-employment restrictions to activities that the official may undertake on behalf of a contractor. FAR 3.104-2(b)(3) – Procurement integrity (3) Post-employment restrictions that prohibit certain activities by former Government employees, including representation of a contractor before the Government in relation to any contract or other particular matter involving specific parties on which the former employee participated personally and substantially while employed by the Government. Additional restrictions apply to certain senior Government employees and for particular matters under an employee’s official responsibility
17. Remember the Action Plan Basic organizational framework for compliance must be in place Management support Clear roles & responsibilities related to that specific requirement Written procedures for that requirement Employee Training Internal Monitoring and Auditing
18. Can an employment offer be made? Did candidate within the past year perform any of the following functions in their government position? PCO, source selection authority, member of the source selection evaluation board, chief of a financial or technical evaluation team, program manager, deputy program manager, or Personally made for the Federal agency a decision to award a contract, subcontract or modification, established overhead or other rates, approve issuance of one or more contract payments, or pay or settle a claim What restrictions apply if the candidate accepts the job offer? Depends on employment category “Personally and substantially” participated in a procurement to the contractor and not just a clerical or ministerial role Yes Cannot make job offer ?
19. Example: Export Control Laws U.S. export laws restrict export of products and service based on the type of product and destination of the export. Department of State - International Traffic in Arms Regulations (ITAR). Protects against defense exports. Department of Commerce - Export Administration Regulations (EAR). Protects dual use items listed on the Commerce Control List. It is illegal for a U.S. person or company to export controlled items and information to Foreign Persons, without: A valid government export license; or A valid exemption from export regulations
20. Consequences of ITAR Violations Debarment from U.S. Government contracting Large fines – up to $1M per violation in criminal cases Imprisonment Foreign policy and national security Harm to corporate reputation
21. Remember the Action Plan Basic organizational framework for compliance must be in place Management support Clear roles & responsibilities related to that specific requirement Written procedures for that requirement Employee Training Internal Monitoring and Auditing
22. Example: Organizational Conflict of Interest (OCI) An OCI arises where, because of other activities or relationships: A person is unable or potentially unable to render impartial assistance or advice to Govt; OR His/her objectivity in performing the contract work is or might be otherwise impaired; OR He/she has an unfair competitive advantage.
23. OCI – The Risks of Non-Compliance Ineligibility for award Exclusion from future contracts & subcontracts False Claims Act claim Protest by competitor Investigation and enforcement action by Inspector General / Department of Justice if misconduct not reported
24. Remember the Action Plan Basic organizational framework for compliance must be in place Management support Clear roles & responsibilities related to that specific requirement Written procedures for that requirement Employee Training Internal Monitoring and Auditing
25. Future Hot Topic: Prime’s Responsibility for Ensuring Sub Complies Representations and Certifications FAR 52.203-13: Ethics clause FAR 52.215-22 & 23: Excessive Pass-Through FAR 52.204-10: Reporting Executive Compensation and First-Tier Subcontract awards FAR 15.404-3: Subcontract pricing considerations
26. Questions?