Jay Rosen’s miniseries on suspension and debarment concludes with this look into the remedies federal agencies seek when misconduct is identified, and where the ultimate focus will lie: compliance.
The defense community largely led the process of putting together an effective ethics and compliance program. There were defense industry initiatives where the contractors got together and talked about what it takes to promote ethics and compliance; the defense industry been doing this for years. Unfortunately, nongovernmental commercial industries were not as far along as the defense industry.
Lately, there has been tremendous growth in the understanding that E&C is critical for any company.
Whether it’s in the defense sector or the commercial sector, companies have become more willing to do what is necessary to build these compliance programs, to instill within their workforce appropriate standards of conduct, to articulate clear expectations for employee behavior and to make clear that there are consequences for employee behavior. They worked hard to create cultures that allow communications to go up from the bottom and down from the top.
It all starts with the appropriate “tone at the top,” because integrity is critical for the company. Not simply to avoid problems, but to be honest with your customers and your stakeholders. All of this is absolutely critical. While the defense community led the way, the commercial community has as swiftly moved to catch up with.
Federal agencies, particularly within the Department of Defense, look to coordinate fraud remedies.
Where there is an indication of misconduct within the government contract or involving a government contractor (fairly broadly defined), there’s a focus on identifying and coordinating remedies – whether criminal, civil or administrative (including suspension, debarment or contractual). In almost every case there will at some point be an analysis.
The key analysis is going to come down to the integrity of that contractor. What does it have in place to achieve compliance within its business operations? The focus will be on the question of whether the contractor can be trusted to get it right. In the final analysis, the question will be “is there evidence to support the cause for the action?”
The next steps turn on the present responsibility determination (see part 4), and the inquiry goes to whether or not the contractor is presently responsible.
This will make the focus on ethics and compliance, and those companies that embrace their principles are going to have an advantage and be in a much better position. It is critical that companies take these challenges to ensure their E&C efforts and programs are tested and achieve the type of results expected in terms of employee behavior and good communication throughout the organization.
In the realm of suspension and debarment, government agencies are increasingly requiring independent corporate monitors as part of their settlement agreements with organizations facing suspension, debarment or criminal prosecution. An imposed monitorship can actually be an opportunity for a company.
Usually these agreements are in place for roughly three years, but they give the contractor an opportunity to more holistically look at its operations and assess what it needs to do to truly build a strong ethics and compliance program.
In most cases, the government will require the contractor that entered into the administrative agreements to hire an outside independent monitor to assess whether or not it is achieving those objectives. This creates this opportunity for companies to demonstrate the ability to be responsible and continue to participate in the federal marketplace while that trust relationship involving the contractor’s integrity is continuing to be established. This process also allows contractors to gain themselves a tremendous advantage in any of these sanctions reviews – civil, criminal or suspension and debarment – by having in place a strong commitment to ethics and compliance.
When my colleague Rod Grandon was a Suspending and Debarring Officer, he often required monitors as part of an agreement. He shared, “the Monitor is not there to be an advocate. The Monitor is there to be an independent and objective set of eyes and ears for the regulator, for the government. There has to be an arm’s-length relationship between that monitor and the contractor. That’s not to say it’s antagonistic, and it never should be a ‘gotcha’ proposition… where the monitor is trying, through trickery or otherwise, to put the contractor into an awkward situation.”
The monitor must understand how businesses operate and the challenges associated with a very diverse workforce – to take in all the various considerations and at the end of the day be reasonable.
Suspension and debarment are usually only considered important for those doing business with the federal government. However, every compliance practitioner should have more than a passing knowledge of the parameters of these two sanctions. Many of the best practices around compliance programs came out of the defense industry in response to the requirements under present responsibility. Companies doing business internationally and with the U.S. government need to have special awareness, as a FCPA violation unconnected to a U.S. government contract can still lead to either suspension or debarment.
In case you missed the earlier installments of this ongoing series, please see the links below.