NCMA Columbia Basin Chapter Alan Rither, Esq. CPCM, NCMA
Fellow
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Weve all got ethics some folks just have more than others
Ethics are only for the weak not real leaders (like us) Ethics is
nothing more than expected behavior descriptive Whats right for you
is wrong for me situational ethics Corporation noun. An ingenious
device for obtaining profit without individual responsibility.
Ambrose Bierce, 1842-1914 American Columnist and writer; The Devils
Dictionary
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Ive heard people say: Thats how you see it, but I see it
differently But were not talking about 50 shades of gray (or is
that Grey?) legal but rather, is it legal or illegal?
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Its not about beliefs, its about behavior Everyone is entitled
to their own morality, but society decides what is acceptable
behavior Not everything that is legal is ethical nor is everything
that is ethical, legal
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Policy at FAR 3.1002 applies to all contractors and
subcontractors at every level Clause at FAR 52.203-13 is mandatory
if the value of the contract is expected to exceed $5,000,000 and
the performance period is 120 days or more. Subcontractor
violations that result in a false claim, and, if paid by you
because of reckless disregard, etc., become your false claim too.
It looks simple, but there are a number of unresolved issues like
what is credible evidence, how long can you investigate, and who is
a principal of the company. Confusion does not necessarily work to
your advantage.
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Contract Clause flowdown FAR 52.203-13 Contractor Code of
Business Ethics and Conduct in relevant subcontracts Within 30 days
of contract award contractors must have: Written code of business
ethics & conduct Make a copy available to each employee engaged
in performance of the contract Exercise due diligence to prevent
and detect criminal conduct Timely disclosure to the Inspector
General with copy to the C.O. whenever you have credible evidence
that a principal, employee, agent or subcontractor has violated:
Federal criminal laws fraud, COI, bribery or gratuity False Claims
Act
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Its the right thing to do Lack of public support / adverse
publicity Impact on customers / clients A penny saved is a penny
earned B. Franklin Government investigations lead to indictments
Potential penalties far outweigh any benefit from a second-rate
system Good policies require good practices
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Management is doing things right; leadership is doing the right
things. Peter Drucker
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The only thing necessary for the triumph of evil is that good
men do nothing. Edmund Burke
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I am more afraid of an army of 100 sheep led by a lion than an
army of 100 lions led by a sheep. Talleyrand, French diplomat
(1754-1838)
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Like a muddied spring or a polluted well are the righteous who
give way to the wicked.
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Personal leadership is the process of keeping your vision and
values before you and aligning your life to be congruent with them.
Stephen Covey, author
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TINA the Truth in Negotiation Act FCA the False Claims Act FERA
the Fraud Enforcement and Recovery Act FCPA the Foreign Corrupt
Practices Act AKA the Anti-Kickback Act LDA the Lobbying Disclosure
Act CDA the Contract Disputes Act and SOX the Sarbanes-Oxley
Act
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Can I get away with it?
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Requires government contractors to submit cost or pricing data
and to certify that such data is accurate, current and complete as
of the date of final agreement on price, commonly referred to as
the handshake. Cost or pricing information or data includes all
facts that prudent buyers and sellers would reasonably expect to
affect price negotiations significantly. Cost or pricing data are
factual, not judgmental, and are verifiable.
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Applies to contracts over $700,000 except if: Adequate price
competition exists The price is set by law or regulation The
acquisition is for a commercial item The head of the contracting
activity for the government agency grants a waiver.
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A federal law that prohibits U.S. organizations, directly or
through others (such as foreign representatives, consultants or
business partners) from Giving or offering any payment, gift,
bribe, or anything else of value to a foreign official For the
purpose of influencing an official act or failure to act, or
inducing the foreign government official or party to use influence
to affect the decision of a foreign government or agency.
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As business, including government contracting, becomes more
global, the interactions with foreign officials increase FCPA
jurisdiction is very broad applies to acts taken wholly outside the
US if a US concern commits the act The term foreign official has
been interpreted very broadly, to include low-level employees of
state-owned foreign entities Therefore, all interactions with
foreign governments must be closely scrutinized
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Legislation aimed at bringing a level of accountability to
federal lobbying practices. It was amended substantially by the
Honest Leadership and Open Government Act of 2007. The Byrd
Amendment prohibits the use of appropriated funds by recipients of
a Federal contract for purposes of influencing or attempting to
influence federal officials in connection with a Federal action,
such as the awarding of a Federal contract. The Act prohibits
contractors from using appropriated funds for lobbying in
connection with a contract, grant, loan or cooperative agreement
with a Federal agency.
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Claims by the contractor against the Government must be
submitted in writing to the CO for a decision. All claims by the
Government against the contractor must be the subject of a decision
by the CO. Except for alleged fraud in connection with a claim by
the contractor, all claims by either party must be submitted within
six years after the claim accrues. (like a statute of limitations)
Claims by the contractor that exceed $100,000 must be accompanied
by a certification that (i) the claim is made in good faith, (ii)
the supporting data are accurate and complete to the best of the
contractor's knowledge and belief, (iii) the amount requested
represents the contract adjustment for which the contractor
believes the Government is liable, and (iv) the certifier is
authorized to submit the certification on behalf of the
contractor
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Recent trend shows increasing importance COI: A situation in
which an individual who has authority to make or influence a
procurement decision may have past, present, or currently planned
personal, business or other interests with a vendor or competitor
in the subject procurement other than those of the employer Both
individual and corporate responsibility
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Do not solicit, directly or indirectly, any offer or promise of
future employment or business opportunity, or engage in any
discussion of future employment or business opportunity with any
contractor or prospective seller while participating in the
evaluation of proposals. Do not accept outside employment which
will interfere with contract work, or create or appear to create a
conflict of interest.
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Prohibits those involved in government contracting from
offering, accepting, or attempting to accept inducements for
favorable treatment in awarding contracts for materials, equipment,
or services of any kind. What is a kickback? Any money, gift,
gratuity, thing of value, or any other form of compensation which
is provided for the intended purpose of obtaining a contract or
favorable treatment under a contract.
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Introduced major changes to the regulation of corporate
governance and financial practice Requires certification by
corporate officers that the report: Does not contain any material
untrue statements/omission or be misleading Financial statements
and related information fairly present condition and results in all
material respects Signing officers are responsible for internal
controls and have evaluated these internal controls within the
previous 90 days and reported on findings All deficiencies reported
in internal controls and information on any fraud that involves
employees involved with internal activities Any significant changes
to internal controls or related factors that could have a negative
impact on the internal controls Penalties up to $1 million and 10
years imprisonment
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Managements Responsibility for Internal Controls Federal
equivalent of SOX Management has a fundamental responsibility to
develop and maintain effective internal control. The proper
stewardship of Federal resources is an essential responsibility of
agency managers and staff. Federal employees must ensure that
Federal programs operate and Federal resources are used efficiently
and effectively to achieve desired objectives. Programs must
operate and resources must be used consistent with agency missions,
in compliance with laws and regulations, and with minimal potential
for waste, fraud, and mismanagement.
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Federal managers must carefully consider the appropriate
balance between controls and risk in their programs and operations.
Too many controls can result in inefficient and ineffective
government; agency managers must ensure an appropriate balance
between the strength of controls and the relative risk associated
with particular programs and operations. The benefits of controls
should outweigh the cost. Agencies should consider both qualitative
and quantitative factors when analyzing costs against
benefits.