P o l i c i e s a n d P r o c e d u r e s f o r F e d e r a l C o n t r a c t o r s

Presented by CohnReznick’s Government Contracting Industry Practice

Rebecca Kehoe, Esq., Manager & David Black, Partner,

Holland & Knight

P L E A S E R E A D

This presentation has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice.

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A G E N D A

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Goals: Corporate vs. Federal

What are Policies, Procedures and Controls?

Why Do Federal Contractors Need Them?

How Do They Help Achieve the Goals?

Which Ones are Important to Have?

What does the Federal Government Require?

What are Best Practices for your Compliance Program?

Questions?

G O A L S : C O R P O R AT I O N S V S . F E D E R A L G O V E R N M E N T

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W H A T ’ S I N T H E O V E R L A P ?

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Corporations:

• Policies

• Procedures

• Controls

Federal Government:

• Law, Regulations and Guidance• Code of Federal Regulations

• Federal Acquisition Regulations

• OMB

W H A T A R E P O L I C I E S , P R O C E D U R E S A N D C O N T R O L S ?

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Policies:

– Guidelines by which employees are to conduct themselves and conduct business for their

employer

Procedures:

– The steps to be taken by the employee to ensure the Policies are being implemented

Controls:

– The steps taken by the employer to ensure the employees are meeting the requirements of

the Policies and Procedures

W H Y D O F E D E R A L C O N T R A C T O R S N E E D P O L I C I E S , P R O C E D U R E S A N D C O N T R O L S ?

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Pre-2007: Voluntary Compliance & Disclosure

2007: Mandatory Code of Conduct

2008: Mandatory Disclosure

2008: Mandatory Compliance Program

2009: FCA Amendments

2010: Proposed OCI Regs

2010: Proposed PCI Regs

W H Y D O F E D E R A L C O N T R A C T O R S N E E D P O L I C I E S , P R O C E D U R E S A N D C O N T R O L S ?

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July 2009: DCAA revises audit guidance to review

contractor compliance programs

Sept 2009: GAO recommends DFARS amendment

to authorize DCMA to review

compliance programs

W H Y D O F E D E R A L C O N T R A C T O R S N E E D P O L I C I E S , P R O C E D U R E S A N D C O N T R O L S ?

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Plus, another unique risk when the Government is your customer…

W H Y D O F E D E R A L C O N T R A C T O R S N E E D P O L I C I E S , P R O C E D U R E S A N D C O N T R O L S ?

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H O W D O P O L I C I E S , P R O C E D U R E S A N D C O N T R O L S H E L P T O A C H I E V E T H E G O A L S ?

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Corporations:

• Improved Efficiency

• Improved Morale

• Enhance Profit

Federal Government:

• Compliance with Law and

Regulations

• Enhance Efficiency

• Focus on Mission

W H A T P O L I C I E S S H O U L D F E D E R A L C O N T R A C T O R S C O N S I D E R ?

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F I N A N C I A L M A N A G E M E N T

Accounting Policy

FAR Part 30 – Cost Accounting Standards (CAS) Administration

FAR Part 31 – Contract Cost Principles and Procedures

Proper segregation of costs-Direct vs. Indirect and Job cost

Allocation of indirect costs

Accumulation of costs under General Ledger control

Timekeeping System / Labor Distribution

Exclusion of Unallowable Costs

Costs by Contract Line Item (when applicable)

Policies and Procedures to ensure proper and adequate billings

Generally Accepted Accounting Principles (GAAP) compliant

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F I N A N C I A L M A N A G E M E N T

Purchasing Policy

Competition vs. sole source justification

Record keeping

Prime Contract flowdown clauses and provisions

Debarred, suspended, ineligible vendor certification

Processing Changes/Modifications

Government Property Administration

Representations and Certifications

Small Business Subcontracting

Subcontract Management/Administration/Close-Out

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F I N A N C I A L M A N A G E M E N T

Estimating Policy

FAR Sub-Part 15.4 – Contract Pricing

Cost Estimate Development

Summary of Total Cost by Element

Cross-referenced to each line item

Breakdown of Labor (FAR 15.408, Table 15-2 II.B.)

Hours

Rates and Costs by Appropriate Category

Consolidated Priced Bill of Materials

Types, Quantities, Cost

FAR 15.408, Table 15-2 II.A.

Monitoring/Internal Audit and Training

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B U S I N E S S D E V E L O P M E N T

• Restrictions on Requesting Source Selection Information and Contractor Bid & Proposal

Information

• Restrictions on Gratuities and Bribes

• Restrictions on Employment Discussions with Federal Employees

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B U S I N E S S D E V E L O P M E N T

• Organizational Conflict of Interest: Assessment, Disclosure, and Mitigation

• Foreign Corrupt Practices Act

• Subcontractor Kickbacks

• Restriction on Contingent Fees

• Limitation on Payments to Influence Certain Federal Transactions

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G S A S C H E D U L E S

• Price Reductions Clause Reporting and Compliance

• Industrial Funding Fee Reporting and Compliance

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C O N T R A C T P E R F O R M A N C E

• Timekeeping

• Quality Assurance

• Intellectual Property and Data Rights Marking and Protection

• National Industrial Security Program Operating Manual

• Export Controls (ITAR)

• Contractor Past Performance Information

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S O U R C I N G

• Buy American Act and Trade Agreements Act Compliance

• Berry Amendment Restrictions

• Small Business Subcontracting Program Compliance

• Mandatory FAR Clause Flowdown Requirements

• Restrictions on Subcontractor/Vendor Gratuities

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H U M A N R E S O U R C E S

• Applicability of Labor Laws to Federal Acquisitions (FAR Part 22)

• Safety

• Personal

• Facility

• Information

• Equal Employment, Nondiscrimination, and Affirmative Action Requirements

• Child and Convict Labor

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H U M A N R E S O U R C E S

• Service Contract Act Requirements (if applicable)

• Employment Eligibility Verification

• Drug-Free Workplace Requirements

• Whistleblower Protections for Contractor Employees

• Post-Federal Employment Restrictions Applicable to Former Federal Employees

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E T H I C S P O L I C Y

• Code of Conduct

• Business Ethics Awareness and Compliance Program and Internal Control System

• Hotline Poster

• Mandatory Disclosure of Certain Violations

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E T H I C S P O L I C Y

• Responding to Government Investigations and Inquiries

• Civil False Claims Act (applicable to most functional areas and business processes)

• Personal Conflicts of Interest

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B E S T P R A C T I C E S

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C O M P L I A N C E P R O G R A MC O N T R O L F R A M E W O R K

• Assign overall responsibility at a sufficiently high level

• Establish roles and responsibilities for key compliance functions

• Regular “up the chain” reporting to the Board or Audit Committee

• Provide sufficient resources to run the program

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C O M P L I A N C E P R O G R A MK E Y C O N T R O L F U N C T I O N S

• Identify key risk areas

• Establish Policies and procedures in key risk areas

• Communicate with employees about the program

• Train employees who face specific risks

• Identify and Periodically Audit business processes that pose key risks

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C O M P L I A N C E P R O G R A MK E Y C O N T R O L F U N C T I O N S

• Establish Internal reporting of questions and concerns (anonymous hotline)

• Promptly respond to internal reporting

• Investigate and discipline violations

• Timely Mandatory Disclosure to the government

• Keep good records of the program

• Periodic review of the program

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Q U E S T I O N S / C O M M E N T S

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R E S O U R C E S

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Rebecca Kehoe, Esq., Managerrebecca.kehoe@cohnreznick.com(703) 847-4431

David Black, Partner, Holland & KnightDavid.black@hklaw.com(703) 720-8680

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