Monday, October 29, 2012

Mandatory Disclosure Requirements - A Reminder

In November 2008, FAR was amended to require mandatory disclosure requirements involving fraud and overpayments on contractors (and subcontractors). These disclosure requirements apply to contracts greater than $5 million and a performance period greater than 120 days. This disclosure requirement applies to most types of contracts including commercial items and contracts awarded and/or performed overseas.

FAR 52.203-13 requires timely disclosure of violations against criminal and civil laws. Criminal laws include fraud, conflict of interest, bribery, or gratuity violations. Civil laws include the False Claims Act. There must be credible evidence of a violation and the violation must have been committed by any contractor principal, employee, agent, or subcontractor.

Disclosures must be made in writing to the appropriate Inspector General (e.g. the DoD Inspector General for DoD Contracts) and the contracting officer. The reporting period extends from contract award to three-years after final payment. Many contractors do not realize that the reporting period extends beyond the contract period of performance.

The term "credible evidence" is undefined. but the FAR Councils have noted that the term indicates a higher standard than "reasonable grounds to believe". Implicit in this distinction is an allowance of time for a contractor to investigate matters to make a "credible evidence" determination. Failure to disclose credible evidence of criminal and civil violations (and significant overpayments) constitute grounds for suspension and debarment.

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