There are a number of facets to the code of ethics and conduct clause but today we want to focus on just one of those; the requirement for contractors to disclose to the Government, credible evidence of criminal violations involving fraud, conflict of interest, bribery, gratuity violations, or violations of the civil False Claims Act. The exact wording reads as follows:
(3)(i) The Contractor shall timely disclose, in writing, to the agency Office of the Inspector General (OIG), with a copy to the Contracting Officer, whenever, in connection with the award, performance, or closeout of this contract or any subcontract thereunder, the Contractor has credible evidence that a principal, employee, agent, or subcontractor of the Contractor has committed—This is a significant clause and more than a few contractors are getting tangled up in failing to comply with the requirements. Some contractors have plead ignorance to a particular situation maintaining that they didn't know about the impropriety. Some have maintained that the impropriety had no impact on Government contracts. Others have tried to wiggle around the word "credible", asserting that a hint or inkling doesn't make it "credible". Still others have maintained that they didn't know the "impropriety" rose to the level of criminal law or violations of the False Claims Act.
(A) A violation of Federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations found in Title 18 of the United States Code; or
(B) A violation of the civil False Claims Act (31 U.S.C. 3729-3733).
The DoD-IG (Inspector General) has made it rather easy to file a written notice of violations. They've set up a special website called the Contractor Disclosure Program where contractors can complete an on-line form and wait for a knock on their door from their investigators. Other Agency's have similar programs. The purpose of this website is to
- Afford contractors a means of reporting certain violations of criminal law and violations of the civil False Claims Act discovered during self-policing activities
- Provide a framework for government verification of the matters disclosed; and
- Provide an additional means for a coordinated evaluation of administrative, civil, and criminal actions appropriate to the situation.
This particular website has additional information that will be useful to contractors preparing to self-disclose some form of contract irregularity.
"Reporting" is not a matter to be taken lightly and we always recommend that contractors contact legal counsel before doing so.
If you need assistance in setting up an ethics program for your firm, give us a call.