Government Begins Testing Contractor Compliance with New Ethics Rules

In late 2008, FAR was amended to require Government contractors to implement or beef up their ethics programs. Last summer, DCAA revised its audit guidance to test contractor compliance with the new regulations, particularly compliance with FAR 52.203-13. This Fall, DCAA began requesting contractors to gather up all of the evidence supporting compliance and provide it to the Government. DCAA is concentrating on the larger contractors first but undoubtedly, will expand to include most contractors since the implementation threshold for some of the requirements kick in with a $5 million contract. Specifically, the Audit Agency is requesting:

• Verification of the existence of a written code of conduct that adequately covers expected standards of conduct affecting significant internal and external business and employee relationships.
• Verification that there are policies and procedures for an ethics training program for all employees.
• Verification that the written codes of conduct are periodically communicated to all employees, are formally acknowledged and cite consequences for violations.
• Verification that the contractor performs periodic reviews (e.g.internal audits) for compliance with standards of conduct.
• Verification that the contractor is performing all of the self-governance activities required by FAR 52.203-13
• Verifying that the company has properly displayed the Hotline Poster.
• And many other items.  

We recommend contractors review FAR 52.203-13 to ensure that their ethics programs comply with the new regulations.