Compliance, Investigations, and Mandatory Disclosures

The Federal Acquisition Regulation (FAR) was amended in November 2008 to require contractors to submit mandatory disclosures if a company or one of its employees violated certain criminal laws or the Civil False Claims Act. This FAR change also required most government contractors to have formal codes of conduct and an internal control system. The requirements for a Contractor Code of Business Ethics and Conduct only apply if the contract is expected to exceed $5M and the performance period is 120 days or more. Thus, many small businesses are never required to have a formal ethics compliance program. Nonetheless, they must still submit mandatory disclosures as a result of the actions of their employees and they can also be suspended or debarred for these actions. Having a formal compliance program also acts to mitigate fault and helps to show present responsibility, a key factor in the decision on whether or not a contractor should be suspended or debarred.

The issue for many small businesses is how they can justify the costs of a formal compliance program when it is not required by law. Unfortunately, this is clearly a case of an ounce of prevention is worth a pound of cure (or as attorneys describe this type of situation, pay me a little now or a lot later). Jody Reed is an experienced ethics and compliance attorney. She can setup a compliance program that is scalable to the size of the company.

It should also be noted that irrespective of the FAR requirements many prime contractors will not award a subcontract to any business that does not have a formal compliance program. A prime contractor will impose this requirement because they know that they can be potentially held responsible for their subcontractors.

We also have the experience, skills and resources to conduct investigations into allegations of wrong-doing. Recent circuit court decisions have made it clear that if the investigation is conducted under the supervision of counsel, the attorney-client privilege will apply. Thus, even if a company performs the majority of the investigation, to include the use of outside accountants or other consultants, so long as the investigation is conducted under privilege, the government is not entitled to the working papers. Moreover, if the investigation does result in a mandatory disclosure to the government, which Ms. Reed can also draft, the company controls what information is actually included in the disclosure and can protect all other information under privilege.

REA’s and Claims

Government contracts contain provisions for the equitable adjustment of the contract price due to events beyond the control of the contractor. Yet, frequently the customer balks at paying the contractor a fair price for goods and services provided.
Many claims can be resolved in a telephone call or a short meeting and, for reasons of client cost and efficiency, we prefer a non-adversarial approach with emphasis on collaborative communication with contracting officers who may not know all the relevant the facts. An early and reasonable settlement, either through negotiation or alternative dispute resolution saves both the government and the contractor time and money. We assist our clients with analyses of their performance and develop legal theories of recovery, including constructive claims for government-required services performed outside the statement of work. When the government customer proves intractable or unreasonable we do not hesitate to submit a formal claim and/or initiate litigation.

Contractor Performance

A key factor in all government contract awards is past performance. In order to be found to be a responsible contractor, a prospective contractor must have a satisfactory performance record. This record is kept by the government as part of its Contractor Performance Assessment Reporting System (“CPARS”). Contractors are strongly recommended to contact legal counsel to help in responding to any negative CPARS ratings.

Jody Reed’s experience as an in-house counsel has given her significant insight in how to respond to negative CPARS. She has helped draft responses both to in-house clients as well as to other clients.

Cost Accounting Standards and the Cost Principles

Ms. Reed is also experienced in helping companies with cost accounting issues. With a MS in Finance, Ms. Reed’s expertise in this area goes beyond purely the legal, but also includes being able to understand the accounting and financial impacts. This helps clients because she is able to quickly grasp and understand the accounting principles being described by the accountants.

Intellectual Property

The federal government has a host of regulations regarding intellectual property that is created or used in the performance of a U.S. government contract. Jody Reed has helped a number of companies work through these regulations to maximize the protection of their intellectual property in the performance of the contract. She has also developed and taught seminars on the topic. Finally, Ms. Reed is experienced in drafting contracting language to use in prime contracts with the government and in subcontracts with subcontractors, regardless of whether our client is the prime contractor or the subcontractor.

Small Business Contracting

The United States federal government is the largest purchaser of goods and services in the world, now exceeding $300 billion annually. By law, at least twenty-three percent of those contract dollars are supposed to be allocated for small business prime contracts. To participate and compete for those contracts, however, small businesses face highly complex and often confusing rules and regulations.

We can advise small businesses on general SBA matters, with particular expertise in issues involving specific set-aside programs: the 8(a) Business Development, Small Disadvantaged Business (SDB), Woman-Owned, Veteran-Owned and Service-Disabled Veteran-Owned program, as well as the HubZone Program. Large government contractors are also required, under most government contracts, to provide significant subcontracting opportunities to small businesses.

Other Areas of Significant Experience

  • Reviews of solicitations and Requests for Proposals.
  • Contract reviews and analysis to determine the rights and responsibilities of the parties and to negotiate favorable terms and conditions.