Thursday, February 11, 2010

Contractor Disclosure Program

In December 2008, the Federal Acquisition Regulations were changed to require all contractors to timely disclose to the Government in connection with the award, performance, or closeout of a government contract or a subcontract, credible evidence of a violation of federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations, or violations of the false claims act and remit any significant overpayment amount.

In connection with this rule, the Department of Defense, Office of Inspector General, established a Contractor Disclosure Program which affords contractors a means to disclose such incidences either in writing or electronically.

Contractors must disclose early and fully cooperate with the investigation and resolution. The Government's aim is to encourage contractors to self-report, respond quickly, speed up Department of Justice decisions, focus and complete investigations, establish coordination between the IG and contractors, and provide feedback to contractors.

About a year has passed since the rule became effective and the Contractor Disclosure Program was established. Since then, eighty disclosures have been submitted to the Government from companies of all sizes. Three of the eighty were administratively closed. Contractors were probably erring on the side of caution in submitting those three. Sixteen of the 80 have been referred for investigation. Twelve have been investigated and closed. The remaining 49 are still under consideration by the IG's office.

Contractors have disclosed such things as kickbacks to suppliers, labor mischarging (timecards), defectively priced contracts, and misrepresented certifications (SBA 8a certification).

In deciding whether to disclose under this regulation, a key consideration is that there must be "credible evidence" of a wrong-doing. That is a subjective term but certainly it requires something more than a hunch or suspicion. Once credible evidence has been established, the regulations require "timely" disclosure to the Government. 

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