Federal investigations of
government contractors will increase according to a White House press release issued January 20.
Federal contracting businesses can expect more Presidential
initiatives aimed at �protecting American taxpayer money and the
integrity of the Federal acquisition process in prevention of fraud. The
penalties for fraud range from loss of a contract, indefinite
prohibition on bidding on government contracts and / or civil fines and
Federal Acquisition Regulation Part 3:
BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST
Code of Federal Regulations (CFR)
Anyone, whether a service member, civilian employee, defense contractor,
or private citizen, who witnesses what he or she believes to be a
violation of ethical standards and/or the law, including but not limited
to fraud, waste, or abuse of authority, potential leaks of classified
information, or potential acts of terrorism, should report such conduct
directly to the
Inspector General of the Department of Defense.
Hotline at 800-424-9098 (e-mail:
Increased Scrutiny of Improper Certifications to Obtain Government
Firms must certify
their status in order to obtain the benefits of these preferences and
Of the total value of government contracts, 23 percent is reserved for
There are several
Set Asides in Government Contracting for Small Business
Emerging Small Business
Partial Small Business
Small Disadvantaged Businesses
Total HBCU / MI and Partial Historically Black College or
University / Minority Institution (MI)
Service-disabled veteran-owned businesses (SDVOSBs)
Women Owned Small Business Preference Program
Contractors need to
maintain the highest standards of conduct and compliance to do business
with the government.
The monitoring of
government contractors takes many forms:
US Government Accountability Office (GAO)
reports and legal decisions.
GAO provides a
forum for bidders and offerors seeking federal government
contracts who believe that contracts have been, or are about to
be, awarded in violation of the laws and regulations that govern
contracting with the federal government.
A bidder or offeror
can file a bid protest with GAO, and GAO issues a decision on
whether the federal agency has complied with statutes and
regulations controlling government procurement.
See how to file a
Filings by E-Mail
Presidential War on Waste, Fraud and Abuse Will Increase Pressure on
The President required that all federal
agencies by �every means available� identify every prime recipient
required to post a report on the
www. FederalReporting.gov Web site because
it received Recovery Act funds, and ensure that every funding recipient
has filed a report. The memorandum directs agencies to improve prime
recipient reporting compliance by, wherever authorized and appropriate,
terminating awards, pursuing suspension and debarment, reclaiming funds
and considering other �punitive� actions.
Government Efforts to Maintain the Integrity of the Federal Acquisition
Federal Acquisition Regulation, an
Interest (OCI) occurs where, because of other activities or
relationships with other entities, an entity is unable or potentially
unable to render impartial assistance or advice to the government, the
entity�s objectivity in performing the contract work is or might be
otherwise impaired, or the entity has an unfair competitive advantage.
There are three types of
organizational conflict of interest.
Unequal access to information
occur when a contractor
has access to nonpublic information as part of its performance of a
government contract and that information may provide the firm a
competitive advantage in a later competition for a government contract.
Biased ground rules cases occur in situations in which a firm, as part
of its performance of a government contract, has in some sense
set the ground rules for another government contract.
Situations in which a
contractor �s work
under one government contract could entail the company evaluating itself
through either assessment of its own performance under another contract,
or evaluation of its own and/or competitors� proposals in a procurement
conflict of interest
Result of industry
consolidation in which the same company produces products and provides
advisory services, the government�s lack of in-house expertise and the
government�s concomitant need for expert advice, and the use of broad
contract vehicles that encourage marketing by the contractor of a wide
range of goods and services.
A company�s failure to address the
potential organizational conflict of interest created by the company, or its subcontractor or team
member�s participation in the competition can subject the company to
civil penalties and/or loss of the contract.
There also has been
significant litigation concerning
organizational conflict of interest at the GAO in
the last year the US Government Accountability Office decisions, in response to bid protests filed by
unsuccessful offerors, reflect failures by the agency and awardee to
address Organizational conflict of interest. In these cases, the GAO has recommended that the awardee
or its subcontractor be eliminated from the competition.
Suspension and Debarment
A government contractor�s conduct considered
to be improper can result in suspension and / or debarment. When a firm
is suspended or debarred the contractor cannot bid on government
In addition to maintaining high standards concerning company conduct, a
firm must have, at a minimum, a satisfactory record of integrity and
business ethics. If the contracting officer concludes that a firm has an
unsatisfactory record of integrity or ethics, the contracting officer
can find the firm �nonresponsible� under individual procurements.
Interestingly, in this regard, the contracting officer can go beyond
conduct relating to contracts and consider activities not related to
government contracting, such as environmental, criminal or civil
Almost all government prime contractors and subcontractors are
now subject to mandatory disclosure requirements and specific
requirements under the
Codes of Business Ethics and Conduct. Contractors covered by these requirements must disclose to
the appropriate OIG and contracting officer when the contractor, during
the award, performance or closeout of a contract, has credible evidence
that a principal, employee, agent or subcontractor of the contractor has
committed a violation of federal law involving fraud, conflict of
interest, bribery or gratuity violations, or false claims to the
The contractor�s requirements to disclose are very
consistent with the government�s focus on fraud, waste and abuse and
curbing government contractor misbehavior. Companies that fail to adhere
to the appropriate Code of Business Ethics and Conduct are taking a
substantial risk in light of the heightened government scrutiny.