Friday, May 30, 2014

Employee Interviews - By What Authority?

What gives the Government the right to go in to a contractor's facility and start interviewing employees; whether concerning their timecards or anything else? That's a good question, an age-old question (at least during the age of Government contracting), and one that almost every contractor asks the first time it happens.

There is no explicit authority, either regulatory, statutory, or contractual. The best that the Government can come up with is found in FAR 52.215-2(b).
... the Contractor shall maintain and the Contracting Officer, or an authorized representative of the Contracting Officer, shall have the right to examine and audit all records and other evidence sufficient to reflect properly all costs claimed to have been incurred or anticipated to be incurred directly or indirectly in performance of this contract. This right of examination shall include inspection at all reasonable times of the Contractor's plants, or parts of them, engaged in performing the contract.
The key words in the foregoing are "other evidence sufficient to reflect properly all costs..." and "...inspection ... of the Contractor's plants." The logic falls along the following: to ensue the propriety of labor charges, review timecards. To ensure the propriety of timecards, interview employees.

The practice of interviewing employees at their work stations is so entrenched in Government contracting practices that its rarely questioned. Even the big boys (Lockheed-Martin, General Dynamics, Pratt Whitney, Boeing) with pockets so deep that they can afford plenty of legal counsel, don't challenge the Government's right to interview their employees.

However, the issue does crop up from time to time - usually from companies new to the Government contracting environment. There have been cases where auditors showing up to perform unannounced floorchecks have been rebuffed, at least temporarily. By then, the element of surprise has been voided and the interview results are suspect.

Although not widespread, the situation has caught the attention of at least one senator, Senator McCaskill. She has introduced an amendment that has been added to the Senate version of the Fiscal Year 2014 NDAA (National Defense Authorization Act) that will give auditors from the Defense Contract Audit Agency specific authority to interview contractor employees as part of an audit. We don't know yet whether the provision will make the cut when the House and Senate versions of the NDAA are consolidated. We guess that it will survive the conference committee because it doesn't seem controversial and it doesn't change any current practices.

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