November 21, 2019
The recent announcement by the US Department of Justice of a new interagency “strike force” to target bid-rigging and antitrust violations in government procurements highlights the importance of complying with the rules, policies and requirements of the Federal Acquisitions Regulation (FAR) by organizations that work with federal agencies.
While the requirements can be overwhelming, FAR Code of Conduct training is an effective way for organizations to communicate their written Code of Conduct, and reinforce the expectation that federal contractors, subcontractors and others engaged in the procurement process make the right ethical decisions and stay FAR compliant. Six key topics training should cover include:
- The purpose of FAR
FAR is designed to address fraud, waste and abuse, enhance the integrity of the procurement system, and promote regulatory clarity and consistency. It applies to both government agencies and contractors who win government contracts. Under FAR, contractors and subcontractors must adopt a Code of Business Ethics and Conduct and implement internal controls to encourage the reporting of misconduct.
- FAR essentials
Contractors need to be familiar with numerous regulations governing bribery and corruption, hiring government employees, conflicts of interest, gifts and entertainment, government audits, pricing mandates, supply contracts, communicating with government customers, rules for procurements, third party due diligence and recordkeeping. Rather than focusing on lists of rules and dos and don’ts, training can provide an overview and explain how these topics and associated risks apply in everyday situations.
- Different forms of bribery
Bribery, kickbacks and facilitation payments can result in costly penalties and serious consequences for both individuals and organizations. Knowing how to avoid even the appearance of improper behavior is key to staying FAR compliant. Training should explain the different forms of bribery, potential conflicts of interest and rules for business entertainment.
- Internal control systems
FAR requires contractors to implement an internal control system and reporting mechanism, such as a hotline for employees to anonymously report suspected instances of improper conduct. Organizations must also establish standards and procedures to facilitate timely discovery of misconduct in connection with government contracts, and ensure corrective measures are promptly carried out. In addition, organizations should regularly evaluate the effectiveness of their internal control systems and business ethics and compliance program, especially if misconduct has been detected.
- Communicating with government customers
In communicating with government customers, contractors need to be vigilant about representing products and services accurately and complying with contract specifications, requirements and clauses. This includes never misrepresenting information about pricing, contract status, place of manufacture, US content or other terms of sale.
- Keeping accurate records
Under FAR, organizations must maintain accurate and complete records. Time sheets, cash register receipts, purchase orders, contracts, expense reports, financial statements and other documentation must be complete and accurate. Employees must never falsify records, or alter, destroy or conceal them — if they do, it may be considered obstruction of justice.
FAR Code of Conduct training is an important step in ensuring that government contractors and subcontractors are familiar with the basic requirements of FAR, stay up to date with new rules and amendments, and understand how to establish and maintain honest and ethical practices.