A couple of days ago we discussed certain provisions of the Anti-Kickback Act of 1986. Not only does the Act make it unlawful to pay and accept kickbacks, but it i) requires contractors and subcontractors to self-disclose any kickbacks it becomes aware of, and ii) requires contractors to implements and follow procedures designed to prevent and detect violations of the Act.
So, who's going to check and see whether contractors have implemented policies and procedures designed to prevent and detect violations of the Act? Well, DCAA (Defense Contract Audit Agency) for one. DCAA has reproduced the text of the Act in its Contract Audit Manual and has issued guidance to its auditors on how to report suspected violations of the act that they encounter during an audit. Additionally, auditors are required to "ascertain that contractors have informed their personnel...of the Act".
Most contractors have some sort of code of conduct and ethics program. We believe the easiest way to ensure compliance with the "prevention and detection" requirements of this Act is to modify existing ethics rules and employee training and awareness programs to include coverage of prohibitions against kickbacks. Annual employee declarations that they have violated no ethics rules would then cover kickbacks as well. Additionally, the "prevention and detection" provisions are not applicable to everyone in the company; only those personnel that have involvement with purchasing/procurement/subcontracting, or who might otherwise be in a position to influence the process.