By Carol L. O’Riordan
It’s clear from a great many recent news articles that if you are a government contractor, putting in a successful bid and being selected for a contract is only the beginning. A great many requirements, some of them onerous, come with a federal contract, including compliance with applicable laws and regulations. State and local contracts, incidentally, bring with them equally severe compliance risks as their federal counterparts, as states and localities have adopted their versions of federal statutes.
In general, the combination of an ever-growing plaintiff’s bar, statutes offering whistleblowers protection from retaliation and a share in recoveries, and aggressive government enforcement has created an environment that is quite perilous for contractors that lose their way.
Here are a few examples of areas in which an unknowing contractor can trip up.
A contractor must “timely” disclose “credible evidence” of a violation of federal criminal law within the company that involves fraud, conflict of interest, bribery, or gratuity — or of a violation of the civil False Claims Act. And “knowing failure” to disclose can be a cause for suspension or debarment until three years after final payment on a contract. Information is considered “known” under federal contracting law, and a failure to disclosure is considered “knowing,” if a principal of the company is aware of the information. That’s not a very high standard.
Federal law not only requires documentation of all the work that is performed under the contract; it also provides for an adverse presumption in the case of missing or unclear records. This means that lack of documentation often creates a presumption that you were NOT in compliance. The required documents that must be available could include emails, correspondence with the government, disclosure and negotiation documents, contract compliance documentation and internal communications, contract modifications, and reports and submissions to the government.
So if compliance is “owned” solely by your legal department, you may have exposure that you’re not aware of.
Compliance requires a top-down assessment of your organization, its operations, and its policies. You must look into what things are being done (or not done) by all departments: HR, contracts, administration, payroll, accounts receivable, accounts payable, and so on. You should collect your records and make sure that you have a formal document retention policy and that your departments are following it, so that when you are audited (and you will be), you can locate the documentation that you will need to establish that you were in compliance.