National 8(a) June 2012 Summer Conference

GAO Investigations and 8(a) Enterprises What to Do When GAO Comes Calling

Don Carney – Rick Oehler – Christine Williams Perkins Coie LLP

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Perkins Coie

Offices: 18 across the United States and China, including Anchorage, Seattle and D.C.

Perkins has represented ANCs for well over 30 years

Perkins has a strong government contracts practice

Law360 Government Contracts Group of 2010

web based resources for government contractors

http://www.perkinscoie.com/government_contracts/

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GAO Investigations Agenda

Background of GAO Investigations

GAO Investigations of ANCs

Getting Your Costs Paid By Insurance

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GAO 101

Government Accountability Office

Formerly General Accounting Office

Independent Auditor of federal agencies and federal contractors

Led by Comptroller General

Part of the Legislative branch – created in 1921

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GAO 101

GAO generally supports Congress in meeting its responsibilities

GAO generally helps improve the performance of the federal government and ensures its accountability

GAO does so by conducting evaluations of federal programs and investigating whether there is improper use of federal funds

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GAO Authority

Investigate all matters related to use of public monies

Make an investigation ordered by either house of Congress or a Congressional committee with jurisdiction over revenue, appropriations or expenditures

Assist as needed a Congressional committee with jurisdiction over revenue, appropriations or expenditures

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GAO Authority

Can evaluate performance of federal programs and investigate all matters relating to the use of federal funds

GAO has broad rights of access to federal agency information

Can subpoena records from federal agencies and contractors

Recovery Act authorized GAO to interview Federal contractor regarding Recovery Act funded transactions

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GAO's Audit and Evaluation Work

Most GAO reviews are made in response to Congressional requests

Required to perform certain Congressional mandates

Also performs work requested by Committee Chairmen and ranking minority members

To extent possible, GAO responds to individual Congressional member requests

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GAO's Audit and Evaluation Work

Can consolidate similar Congressional requests

Will consider whether there is a related audit or investigation

GAO declines requests based on limited resources and can refer the request to a more appropriate agency

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Types of Questions GAO Answers

Is a federal program achieving desired results or are changes needed?

Are there better ways of accomplishing federal program objectives at lower costs?

Is a Government program being carried out in compliance with applicable law and regulations?

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Types of Questions GAO Answers

Are government program data furnished to Congress accurate?

Do opportunities exist to eliminate waste and inefficient use of public funds?

Are funds being spent legally and is the accounting for funds accurate?

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GAO Work Products

Oral briefings

Congressional testimony

Comments on legislation

Written reports

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GAO Written Reports

To Congress, committees or members

Vary in format and content depending on complexity of the assignment

GAO can work with the requester to revise the assignment and methodology as necessary

Usually will provide drafts to agencies and other directly impacted parties for comment

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GAO Written Reports

Usually 30 days to comment, but GAO can shorten this time

Will not permit an opportunity to comment if it would compromise the results of the work

The substance of these comments will be published as part of final report

Will hold an exit conference with agency officials

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GAO Written Reports

The substance and provide these drafts to Congress

Then issues final reports, but can hold up public release of certain reports for 30 days

Upon written request, GAO will grant Members access to its audit documentation

Once a report is released, GAO will answer questions from the media

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Office of Special Investigations (OSI)

Investigates congressional requests concerning specific allegations of federal fraud, waste and abuse or misconduct

Also conducts specific projects that require special investigative tactics

Includes senior criminal investigators

Broad authority

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Office of Special Investigations (OSI)

Responsible for investigating alleged violations of federal criminal law and serious wrongdoing concerning federal funds, programs and activities

Typically investigates allegations of fraud, corruption, abuse, ethics violations and conflicts of interest

Conducts work in accordance with standards established by President's Council on Integrity and Efficiency (PCIE)

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What Really Goes On

You are contacted by investigators.

Usually a team. Always be cautious.

Requested by a member of Congress.

Request has been accepted.

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The Request

Try to get the requestor(s) letter.

Did the GAO meet with the requestor(s)?

Did the request get revised?

If so, what is the true scope?

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Internal Investigation

What is needed in this situation?

Do we need to conduct an internal investigation?

Outside counsel/in-house experience

Did the first contact give you enough information?

Can we mitigate, if wrongdoing?

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The Team

Who is your investigative team?

What are their respective roles?

Who is your main contact?

Can you find out their experience in this area (subtle Google, review bios, etc.)?

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The Investigation

What are the activities you contemplate?

Is there another investigation you are conducting?

What is your time frame?

When is the draft and can I see it?

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Scope

Questions they will likely ask you:

Direct about the scope of the investigation

Who else they need to talk to about the investigation

They usually have done a pretty thorough check and have a preliminary list

Do not feel like you have to match that list

I have not seen your list, so I do not know who I could add. Can I see it?

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Scope

Document Requests

Do you want to supply? Could there be a subpoena coming? 31 USC Title 7.

Do you have a concurrent investigation going on with another agency?

Do you need to be careful of what you disclose especially if you have a potential interference with another investigation?

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Document Requests

Treat and track documents like in litigation

Bates No (tracking numbers)

Review documents given

Leave a trail of when the documents were supplied

Do not expect all documentsto get reviewed

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Follow Up Activities to the Meeting

Are they talking to agencies:

FOIA request to those agencies

Review contracts other applicable documents

Talk to appropriate personnel (remember attorney client privilege/internal investigation procedures)

Ascertain what other information may be relevant

Do you have a timeline and cast of characters

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Draft Report

Always try to get a copy of the draft report

Analyze the report and methodologies

Determine if the report is accurate and reflective of the circumstances

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Draft Report

Supply comment, if appropriate

Any comment supplied should be supportedand facts verified a number of times

Credible evidence

Agency information

Statements

Timeline

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Draft Report

If possible, do you want to meet with the agency and discuss comments?

Have your agenda/goals in mind

Second draft report?

Comment again?

Comments generallyappended to the report

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Getting Your Costs of Responding to an Investigation Paid By Insurance

Responding to an investigation can be expensive

Insurance may cover the costs of your response

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Agenda

Investigation Costs

Potentially Applicable Insurance Policies and Coverages

Caselaw

Maximizing Your Claim for Coverage of an Investigation

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Investigation Costs

Investigation Types

GAO

OIG, DOJ

Potential Investigation Costs

Subpoena and document production

Maintain database

Interviews / Testimony

Legal

Investigation – interviews, FOIA requests, document requests

Strategy and counseling

Contact with Government and response to Government report(s)

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Potentially Applicable Insurance Policies and Coverages

Directors & Officers Policies

Errors and Omissions Policies

Comprehensive General Liability Policies

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Director & Officers Policies

Who is the Insured?

Coverages:

"Direct" or "Liability"

"Reimbursement" or "Indemnity"

"Entity"

Claims Made Policies

Defense Costs Reimbursed

Defense Costs Usually Erode Limits

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Policy Issues

Definition of "Claim" against the company

Formal versus informal processes

Co-defendant language

i.e. company co-defendant before coverage triggered

Definition of "Loss"

Conduct exclusions and adjudication language

Recission

"Black Hats" versus "White Hats"

Civil fines and penalties

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Common Exclusions and Policy Provisions Carriers Will Use

to Deny Coverage

Conduct exclusions

Known Claims Exclusions

"Relating back"

Severability

Misrepresentation in application process

Consent and Cooperation

Defense Cost Disputes

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Investigation Coverage Caselaw

Minuteman International, Inc. v. Great American Insurance Co., No. 03-C-6067, 2004 WL 603482 (N.D. Ill. Mar. 18, 2004)

Dan Nelson Automotive Group, Inc. v. Universal Underwriters Group, No. 05-4044, 2008 WL 170084 (D.S.D. Jan. 15, 2008)

MBIA Inc. v. Federal Insurance Company, 652 F.3d 152 (2d Cir. 2011)

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Maximizing Your Claim for Insurance Coverage of An Investigation

Assess the Claim and Determine Which Policies May Provide Coverage

Provide Prompt and Overinclusive Notice

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Maximizing Your Claim for Insurance Coverage of An Investigation

Present the Claim In A Manner that Maximizes Coverage

Evaluate the Insurance Company's Response to Coverage

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Maximizing Your Claim for Insurance Coverage of An Investigation

The Policyholder's Duty to Cooperate

Selection of Defense Counsel

Protecting Your Insurance Assets When You Settle the Underlying Claim

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Summary

Check your policies

Follow steps to:

Maximize coverage and

Avoid exclusions

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Perkins Coie and John Klein

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Questions or comments, please write, call or email:

Christine WilliamsPerkins Coie LLP 1029 West Third Ave., Suite 300 Anchorage, AK 99501 (907) 263-6931 CWilliams@perkinscoie.com

Rick Oehler Perkins Coie LLP 1201 Third Ave., 40th Fl. Seattle, WA 98101-3099 (206) 359-8419 (202) 654-6367 ROehler@perkinscoie.com

Don Carney Perkins Coie LLP 700 13th Street, NW, Suite 600 Washington, DC 20005-3960 (202) 654-6336 DCarney@perkinscoie.com

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