Wednesday, March 15, 2017

Contractor Disclosure Program - Contractor Repays $1.8 Million in Billing Discrepancy

Early on in our blog publication (February 2010), we discussed DoD's implementation of the voluntary disclosure program - an opportunity for contractors to self-disclose instances of contract "wrong-doing". You can read our initial post on the subject here and although that information is still current, we were reminded of it again after the the Justice Department announced a $1.8 million recovery under the program.

The Contractor Disclosure Program is not voluntary. It was once voluntary and called the Contractor Voluntary Disclosure Program. But sometime around 2008 or 2009, FAR Clause 52.203-13 was published making disclosures of certain violations of criminal law and violations of the civil False Claims Act not so voluntary so they dropped the word "Voluntary" and it became the Contractor Disclosure Program. Now, as part of the Business Ethics Compliance Program, contractors have an affirmative duty to report "credible evidence" of wrong-doing.

The Program has several key features.
  • It affords contractors a means of reporting certain violations of criminal law and violations of the civil False Claims Act discovered during self-policing activities
  • Provides a framework for Government verification of the matters disclosed.
  • Provide an additional means for a coordinated evaluation of administrative, civil, and criminal actions appropriate to the situation

Contractors can also report suspected counterfeit parts or non-conforming parts through the submission of a contractor disclosure.

Each Agency gets to designate an organization for managing the Contractor Disclosure Program. For most agencies, the responsibility for administering the program was handed over to the departmental Office of Inspector General (OIG) which makes sense as the OIG will most likely lead the investigation into the contractor disclosures.

As we mentioned earlier, the Department of Justice just announced a settlement in a Contractor Disclosure Program case. In this case, a contractor discovered during its self-governance activities that it had (inadvertently?) billed the Government for wages and associated costs for work that was not performed. The contractor disclosed the matter, it was investigated by the OIG and the Department of Justice's Civil Division, the contractor repaid $1.8 million and the case closed.

It seems to us that this was a quick and speedy resolution to what could have been a contentious and protracted settlement process had the over-billing been discovered say, through an audit or by a whistleblower. You can read the Justice press release here.

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