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., [email protected](703) 847-4431
David Black, Partner, Holland & [email protected](703) 720-8680
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