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Transcript of 2 Breakout Session # Presented by Dr. Tomi Bryan, President & General Counsel FedLinx, Inc. Date...
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Breakout Session #
Presented by Dr. Tomi Bryan, President & General Counsel
FedLinx, Inc.
Date April 15, 2008
Time 3:20p.m. – 4:20 p.m.
A Blueprint for Success: The Contractor Code of Ethics and Business Conduct
806
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Why You Will Be Glad You Came!
• This program examines the following:– The new Contractor Code of Ethics and
Business Conduct– The footprint for creating a code– Some best practices for meeting the new
requirements
• Goal: to have a compliance program in place that meets the FAR Requirements
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NEW FAR PART 3.10
• Mandates implementation of a Code of Business Ethics and conduct
• Mandates implementation of an Awareness Program and internal control systems
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NEW FAR PART 3.10
• 3.1002 Policy. – (a) Government contractors must conduct themselves
with the highest degree of integrity and honesty. – (b) Contractors should have a written code of
business ethics and conduct. To promote compliance with such code of business ethics and conduct, contractors should have an employee business ethics and compliance training program and an internal control system that—
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NEW FAR PART 3.10
• 3.1002 Policy continued: • (1) Are suitable to the size of the company
and extent of its involvement in Government contracting;
• (2) Facilitate timely discovery and disclosure of improper conduct in connection with Government contracts; and
• (3) Ensure corrective measures are promptly instituted and carried out.
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The Requirements
• Suitable to the size of the company and extent of its involvement in Government contracting – means the level of sophistication and
complexity of the written code of business ethics and conduct is driven by number of government contracts awarded to the contractor and size of the business
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What Contracts Are Covered – 3.1004
• Companies with contracts and subcontracts that have an expected value over the life of the contract of more than $5 million and a performance period of over 120 days
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What Contracts Are Covered – 3.1004
• Contract or subcontract is not for commercial items
• Contract or subcontract must not be performed entirely outside the United States
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Building a Program that Complies with FAR 3.10
• New regulation mandates a compliance program
• New regulation offers no guidance on how to create one
• Where does one look to build a compliance program?
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Building a Program that Complies with FAR 3.10
• Best place to start is a gap analysis– What should our company’s program
look like, taking into account the size of your company and the amount of government business it has
– What is the current state of the company’s compliance program
– Close the gaps!
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Creating the Gap Analysis – A Baseline“Stiff penalties are possible for those who fail to comply with the laws and rules of government contracting. This handbook, written by the law firm of Seyfarth Shaw LLP, will help you keep up with government contracting requirements. It explains each segment of compliance, including offenses and penalties, conducting compliance audits, responding to criminal investigations, procurement information, defective pricing, time charging, progress payments, product substitution, unallowable costs, cost accounting standards compliance, contract claims, acquisitions and mergers, domestic preference requirements, international sales, and foreign military sales.”
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Designing the Program
• A blueprint for managing responsibilities:– Identify the regulatory, statutory and agency
foundations for the program – Draw compliance standards from the
regulations, statutes, and agency requirements
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Designing the Program
• A blueprint for managing responsibilities continued:– Develop a policy for each standard – Establish and implement processes for each
of the policies– Engage in on-going program reviews
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Program Blueprint
Standards
Foundations
Identify foundations
for theprogram
Develop a policy for
each standard
Draw compliance standards from
regs, statutes and agency requirements
Establish and implement processes
On-going program reviews
Policy
Process
Review
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Designing the Program – Best Practices
• The starting point for any government contracting compliance program should be the Federal Sentencing Guidelines:– Updates to the Guidelines impose new,
tougher standards for ethical behavior and compliance
– Six factors are used to assign a culpability “score” to organizations
– The Guidelines apply to all organizations (large or small)
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Determining the Culpability Score
• There are four factors that increase punishment
• There are two factors that mitigate punishment, including the existence of an effective compliance and ethics program
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Requirements for an Effective Program
• Standards and procedures
• Board of Directors oversight
• Screen and exclude unethical people
• Effective training – optimal blend is internal and external
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Requirements for an Effective Program
• Evaluate effectiveness of program
• Promote and enforce program through incentives
• Respond appropriately to problems and act to prevent further similar behavior
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Compliance Program Pitfalls
• Company personnel are not adequately trained
• Compliance programs are poorly designed or are non-existent
• Inadequate recordkeeping