far regulations for federal...
TRANSCRIPT
Presenting a live 90‐minute webinar with interactive Q&A
FAR Regulations for Federal ContractorsFAR Regulations for Federal ContractorsMeeting the Mandatory Disclosure and Code of Conduct Requirements; Implementing Internal Controls
T d ’ f l f
1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific
THURSDAY, NOVEMBER 18, 2010
Today’s faculty features:
Dorn C. McGrath, III, Shareholder, Greenberg Traurig, Washington, D.C.
Rodney A. Grandon, Assistant Deputy General Counsel for Contractor Responsibility,
Department of the Air Force, Arlington, Va.
Sean M. Connolly, Assistant Counsel, Pratt & Whitney Military Engines, East Hartford, Conn.
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FAR Requirements:Business Ethics and Conduct
Dorn C. McGrathGreenberg Traurig LLPGreenberg Traurig, LLPNovember 18, 2010
thd@ [email protected]
©2010. All rights reserved.
GREENBERG TRAURIG, LLP ATTORNEYS AT LAW WWW.GTLAW.COM 4
Key FAR Requirements
Code of Business Ethics and Conduct
Business Ethics Awareness and ComplianceBusiness Ethics Awareness and Compliance
Training Program to Support Code
I t l C t l S t d R ti Internal Control System and Reporting
Mandatory Disclosure Provisions
Implications for Subcontracts / Subcontractors
Non-Compliance, Suspension and Debarment
Promoting a Culture of Compliance
Recent Additions to FAR Requirements Recent Additions to FAR Requirements
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Code of Business Ethics and Conduct( AR 52 203 13(b))(FAR 52.203-13(b))
Prime and Subcontracts Over $5M / 120 Days
Applies to all Contractors, Including Small Businesses and Commercial Item Contracts
Withi 30 D Aft A d C t t M t Within 30 Days After Award, Contractor Must:□ Have Code of Business Ethics and Conduct
□ Make Code Available to Employees□ Make Code Available to Employees
□ Due Diligence to Detect/Prevent Criminal Conduct
□ Promote Compliance with Code
“Timely” Disclosure of “Credible Evidence” of “Violations”
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Business Ethics Awareness andC li P Compliance Program (FAR 52.203-13(c))
Applies to all Contractors, Except for Small B i d C i l It C t tBusinesses and Commercial Item Contracts
Within 90 Days After Contract Award Reasonable Steps to Communicate Periodically Reasonable Steps to Communicate Periodically
the Standards and Procedures Compliance Program Must Include “Effective p g
Training” Training Required for Contractor’s Principals
and Employeesand Employees Agents and Subcontractors May Require Training
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Internal Control System and Reporting
Assignment of Responsibility at Sufficiently High Level With Adequate Resources
bl ff l d d l Reasonable Efforts to Exclude Code Violators as Principals
Periodic Compliance ReviewsPeriodic Compliance Reviews□ Monitoring and Auditing to Detect Criminal Conduct□ Evaluation of Program Effectiveness
A t f Ri k f C i i l C d t□ Assessment of Risk of Criminal Conduct
Internal Reporting Mechanism/Hotline
Corrective Measures and Disciplinary Action Corrective Measures and Disciplinary Action
“Timely” Discovery/Disclosure of Violations
“Full Cooperation” With Govt Agencies Full Cooperation With Govt Agencies
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Mandatory Disclosure Provisions
“Timely Written Disclosure” to OIG and CO “Credible Evidence” Principal, Employee, Agent, or Subcontractor
Has Violated□ Federal Criminal Law involving Fraud COI Bribery □ Federal Criminal Law involving Fraud, COI, Bribery,
or Gratuity Violations in Title 18; or□ Civil False Claims Act
I C ti With A d P f In Connection With Award, Performance or Closeout of Prime or Subcontract
Until at Least 3 Years After Final PaymentUntil at Least 3 Years After Final Payment Applies to Small Businesses, Commercial Item
Contracts, and Outside United States Documentation of Findings and Decisions
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Implications for Subcontracts/ Subcontractors (FAR 52 203-13(d))Subcontractors (FAR 52.203-13(d))
Subcontracts That Meet Threshold Are Covered (>$5M / 120 Days)
Duties to Investigate and Disclose
Subcontractors May Report Violations to Government, not to Prime Contractor
Fl d P i i C S ifi Flowdown Provisions to Cover Specific Subcontracting Requirements
Flowdown Provisions to Cover Compliance Flowdown Provisions to Cover Compliance and Ethics
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Suspension and Debarment(FAR 9 406-2; 9 407-2)(FAR 9.406-2; 9.407-2)
Add’l Grounds for Suspension and Debarment
Applies to all Contractors, Including Small Businesses and Commercial Item Contracts
“Knowing Failure” by “Principal” to “Timely” Disclose “Credible Evidence” of:
Vi l ti f th D i t d F d l C i i l L□ Violation of the Designated Federal Criminal Laws
□ Violation of the Civil False Claims Act, or
Significant Overpayment on a Government Contract□ Significant Overpayment on a Government Contract
“Present Responsibility” Remains the Standard
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Headquarters U.S. Air ForceI n t e g r i t y - S e r v i c e - E x c e l l e n c e
Headquarters U.S. Air Force
Contractor Responsibility:C li & EthiCompliance & Ethics
Rodney A. Grandon, Assistant Deputy General Counsel(Contract Responsibility)(Contract Responsibility)[email protected]
November 18, 2010
FAR 9.406-1 Elements of Contractor ResponsibilityContractor Responsibility
Standards of Conduct/Internal Controls Timely Disclosure Internal Investigation/Disclosed to Government
C Full Cooperation Paid Costs/Restitution Employee Consequences/Discipline Employee Consequences/Discipline Implement Remedial Actions Ethics Training/Control Procedures Ethics Training/Control Procedures Management Recognition of Problems/Action to Prevent
Recurrence
I n t e g r i t y - S e r v i c e - E x c e l l e n c e 13
Compliance v. Ethics
Compliance Following the rulesCompliance – Following the rulesEthics –Doing the “right thing” in the absence of clear
authorityGoing beyond mere compliance – moving the
“game” to the middle of the fieldEncouraging all to recognize the difference
between that which each has the right to do, and that which is right to do
I n t e g r i t y - S e r v i c e - E x c e l l e n c e 14
and that which is right to do
Moving Beyond Compliance
Promoting an ethical culture is a business processprocess
Need for ownership and communication from the “top”the top
• Frequent meaningful ethics messages• Ensure appropriate resourcesEnsure appropriate resources
All employees must recognize that ethics is important to corporate leadership/managementp p p g
• Cascading training to all employees• Element of performance evaluation
I n t e g r i t y - S e r v i c e - E x c e l l e n c e 15
Empowered Ethics Officers
Seat at the business table – compliance Disclosures Management recognition of the problem
Seat at the business table businessSeat at the business table – business discussions
Company takes commitment to the next level in all aspects of Company takes commitment to the next level in all aspects of business decisions, not merely compliance
Design & oversee programs – “Best Practices” Provide advice & promote company standards of conduct Ethics training Investigations
I n t e g r i t y - S e r v i c e - E x c e l l e n c e 16
Investigations Direct access to CEO
Government’s PerspectivePerspective
Objective – working with industry toObjective – working with industry to promote best practicesCompliance as a baselineCompliance as a baselineValues-based ethics programs
C t & Sti kCarrot & StickReinforce positive behaviorPunish/address misconduct
I n t e g r i t y - S e r v i c e - E x c e l l e n c e 17
SEAN M. CONNOLLYASSISTANT COUNSEL
PRATT & WHITNEY MILITARY ENGINES860.557.0258
November 18, 2010
FAPIISFederal Awardee Performance and Integrity Information System
October 2008: Congress required a Database of Specific Integrity and Performance Information on Covered Federal Agency Contractors (Pub L 110 417)Contractors (Pub. L. 110-417)
September 2009: FAR Councils Proposed FAR Amendments toSeptember 2009: FAR Councils Proposed FAR Amendments to Implement the Database Requirement of the Clean Contracting Act of 2008
March 2010: FAR Councils Issued Final Rules Implementing FAPIIS (75 FR 14059)
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FAPIISExpands the Range of Information Sources for COs’ Evaluation of Contractor Integrity and Performance“One-Stop” Shopping for Contracting Officers
• Excluded Parties List Systems (EPLS) (FAR 9.404)• Past Performance Information Retrieval System (PPIRS)
(FAR 42.1503(c) and (e))• Contracting Officers’ Determinations
• Non-Responsibility (FAR 9.105-2(b)(2))C t t T i ti (FAR 42 1503(f)(1)(iii))• Contract Terminations (FAR 42.1503(f)(1)(iii))
• Agency Defective Pricing Determinations (FAR 42.1503(f)(1)(i)• Administrative Agreements with SDOs (FAR 9.406-3(f) and 9.407-3(e))• Contractors’ Self-Reported Information (CCR) (FAR 52.209-7
and 52.209-8)• Criminal Proceedings
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• Civil Proceedings• Administrative Proceedings
FAPIISContracting Officers’ DeterminationsNon-Responsibility (FAR 9.105-2(b)(2))
(i) The contracting officer shall document the determination of nonresponsibility in FAPIIS (available at www.cpars.csd.disa.mil, then select FAPIIS) if—
(A) The contract is valued at more than the simplified acquisition threshold; ( ) p q ;
(B) The determination of nonresponsibility is based on lack of satisfactory performance record or satisfactory record of integrity and business ethics;
Contract Terminations and Defective Pricing Determinations (FAR 42.1503)
(1) Agencies shall ensure information is reported in the FAPIIS module of PPIRS ithi 3 ki d ft t ti ffiwithin 3 working days after a contracting officer—
(i) Issues a final determination that a contractor has submitted defective cost or pricing data; …
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(iii) Issues a final termination for cause or default notice; or …
FAPIIS
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FAPIIS Data Entry Menu for Contracting Officers
FAPIISFAPIIS Data Entry Screen
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FAPIISAdministrative Agreements with SDOsFAR 9.406-3 (f)(1) If the contractor enters into an administrative agreement with the Government(f)(1) If the contractor enters into an administrative agreement with the Government in order to resolve a debarment proceeding, the debarring official shall access the website (available at www.cpars.csd.disa.mil, then select FAPIIS) and enter the requested information.
(2) The debarring official is responsible for the timely submission, within 3 working days, and accuracy of the documentation regarding the administrative agreement.
FAR 9 407-3FAR 9.407 3(e)(1) If the contractor enters into an administrative agreement with the Government in order to resolve a suspension proceeding, the suspending official shall access the website (available at www.cpars.csd.disa.mil, then select FAPIIS) and enter the requested information.
(2) The suspending official is responsible for the timely submission, within 3 working days, and accuracy of the documentation regarding the administrative agreement.
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FAPIISContractors’ Self-Reported InformationReporting Obligations (FAR 52.209-7)
• Federal Contracts and Grants Totaling Over $10M
• Offeror or its Principals Subject to Federal or State Proceedings
• Criminal Proceedings: Convictions
• Civil Proceedings: Findings of Fault and Liability Resulting in fine, penalty, reimbursement, restitution, or damages of $5K or more
• Administrative Proceedings: Findings of Fault and Liability Resultingin a fine or penalty of $5K or More or Reimbursement, Restitutionp yor Damages Over $100K
• Any Criminal, Civil, or Administrative Proceeding Settled by Consent orCompromise Whereby the Offeror or Principal Acknowledges Fault and
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Compromise Whereby the Offeror or Principal Acknowledges Fault andthe Proceedings Could have led to one of the Outcomes Above
FAPIISCCR Contractor Reporting – Proceedings
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FAPIISCCR Contractor Reporting – Proceedings Detail
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FAPIISContractors’ Self-Reported Information• Updating Reports (FAR 52.209-8)
• Contractors Must Update FAPIIS Information semiannually throughoutthe life of the contract
• Contractors will Receive a Notification if the Government PostsNew Information to their Record and May Provide Comments in Response
• Contractors’ Comments will be Retained with the Associate InformationContractors Comments will be Retained with the Associate Information
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FAPIISCOs’ Use of FAPIIS Information• COs Must Review FAPIIS Prior to Awarding a Contract Above
th Si lifi d A i iti Th h ld (FAR 9 104 6( ))the Simplified Acquisition Threshold (FAR 9.104-6(a))
• COs Must Consider FAPIIS and Other Past Performance Informationin Making a Responsibility Determination (FAR 9.104-6(b) and 9.105-1(c))
• COs Must Obtain Sufficient Information to be Satisfied that aOfferor is Responsible (FAR 9.105-1(a))
• COs Should use Sources Outside of FAPIIS, EPLS, PPIRS,including (FAR 9.105-1(c)):
• Preaward Survey ReportsPreaward Survey Reports• Publications• Knowledge of Government Contracting and Audit Personnel
• Supplemental Appropriations Act for Fiscal Year 2010,
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Supplemental Appropriations Act for Fiscal Year 2010,Pub. L. No. 111-212, § 3010, 124 Stat. 2302, 2340 (July 29, 2010)(except for performance reviews, FAPIIS data to be publically available?)
Executive Compensation
September 2006: Congress Required OMB to Establisha Free Website with Certain Information for each Contracta Free Website with Certain Information for each Contract Award
J 2008 C A d d th W b it R i tJune 2008: Congress Amended the Website Requirementto Include Total Compensation for the Contract Awardees Five Most Highly Paid Officersg y
July 2010: FAR Councils Issued Interim Rule Mandating Executive Compensation Reporting (75 FR 39414)Executive Compensation Reporting (75 FR 39414)
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Executive CompensationPrime Contractors
FAR 52 204-10 Requires Prime Contractors to Report theFAR 52.204-10 Requires Prime Contractors to Report the Executive Compensation for the Five Most Highly Compensated Executives if:
• At Least 80% of Annual Gross Revenues fromFederal Contracts/Subcontracts;
• At Least $25M in Annual Gross Revenues; and
• Public Does Not Already Have Executive CompensationInformation Under SEC or IRC Reporting
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Executive CompensationCCR Contractor Reporting -Executive Compensation
Executive CompensationSubcontractorsFAR 52.204-10 Requires Prime Contractors to Report S b t t I f ti f ll Fi t Ti S b t t f tSubcontract Information for all First-Tier Subcontracts of at Least $25K, including:
• DUNS for Subcontractor and Subcontractor’s Parent;• DUNS for Subcontractor and Subcontractor s Parent; • Subcontractor Name and Address• Amount of Subcontract Award• Date of Award• Product or Service Description for Subcontract• Subcontract No.• Prime Contract No.• Awarding/Funding Agency
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• Awarding/Funding Agency• Applicable NAICS
Executive CompensationSubcontractorsFAR 52.204-10 Requires Prime Contractors to Report E ti C ti f S b t t ’ Fi M tExecutive Compensation of Subcontractors’ Five Most Highly Compensated Executives for all First-Tier Subcontracts of at Least $25K if:
• At Least 80% of Annual Gross Revenues fromFederal Contracts/Subcontracts;
• At Least $25M in Annual Gross Revenues; and
• Public Does Not Already Have Executive Compensationy pInformation Under SEC or IRC Reporting
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Executive CompensationSubcontractors
FAR 52.204-10 Provides Phase-In for Subcontracts Reporting of $25K or More:
• July through September 2010: FAR RequiredS b t t R ti l h P i C t t A dSubcontract Reporting only when Prime Contract Awardwas $20M or More;
• October 2010 through February 2011: FAR Requires• October 2010 through February 2011: FAR RequiresSubcontract Reporting only when Prime ContractAwards are $550K or More; and
• March 1, 2011: FAR Requires Subcontract Reportingwhen Prime Contracts are $25K or More
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