In 2008, under FAR 52.203-13, “Contractor Code of Conduct and Business Ethics and Conduct” – the clause promulgated that appears in all Federal prime contracts that exceed $5 million and have a period of FAR Federal Code of Ethics for Contractorsperformance of 120 days or more and is required to be included in subcontracts of that dollar amount and period of performance.

As a matter of practice, the Federal government has initiated greater scrutiny on government contractors for lack of sufficient internal policies and controls. Getting your people involved with ethics training for government contractors will prove to be a wise investment.

Your code of ethics is especially important when your company is targeted for suspension and debarment or some level of a federal government investigation. Having one shows a mitigating circumstance that can also have some impact on the outcome.

If you are doing business with the government, you should have already implemented your contractor code of business ethics and conduct policy, code of ethics in contracting and internal contract compliance program. When issues arise or audits occur, having some level of ethics control can help to mitigate adverse results. Find out how to avoid mistakes with SDVOSB joint ventures.

 FAR Basic Statutory Requirements

 Under FAR 3.10 Contractor code of business ethics and conduct,  government contractors should have a written policy in place. To promote compliance with the statutory requirements, you should have a code of ethics for government contractors and a compliance training program plus an internal control system that—

(1) Are suitable to the size of the company and the extent of its involvement in Government contracting;

(2) Facilitate timely discovery and disclosure of improper conduct in connection with Government contracts; and

(3) Ensure corrective measures are promptly instituted and carried out.

Having Internal Contractor Code of Ethics and Conduct Can Avoid Suspension or Debarment

When companies are targeted for suspension and debarment actions, convincing the officials that you have documented government contractor ethics programs in place can go a long way when you propose an Administrative Agreement to give your company another chance.

FAR code of ethics for government contracts should be made available to each employee working on the contract. If you ever become subject to a government investigation or subject to a debarment or suspension action, you will find that such an investment can save your business’ future and the ability to continue to do business with the federal government.

Disclosure of wrongdoing is a must when it comes to ethics in government contracting. As a matter of contractual and legal obligation, under your contractor code of conduct for government contractors you are also required to make disclosures to the government when you have “credible evidence” of a violation of certain criminal laws or the Civil False Claims Act.  

An awareness policy is required. Unless you are a small business or the contract is to provide a commercial item, the clause also requires you to have a FAR Contractor Code of Business Ethics and Conduct awareness policy and an internal control system.

See relevant information about responsibility determinations and business ethics when you submit a government proposal.

Consider the above-mentioned information requirements when establishing your code of conduct for contractors, whether you are new to government contracting or an existing provider of products or services (although there are exemptions, you should still go over and beyond the basic requirements).

Can Contractor Code of Conduct and Business Ethics Prevent Government Contract Fraud?

No. There is no absolute guarantee that fraud will not occur in your company. However, having a viable code of conduct and business ethics can help to reduce the adverse impact of any criminal allegations to your company. Federal law enforcement offices are aggressively targeting small businesses and large DOD companies for government contracting fraud. You want to take the time to invest in strong ethics and a code of conduct. When fraud is alleged and you have valid programs in place, it may be that you may have an isolated employee who was acting outside of his or her authority.

Make it mandatory that you revise your contractor code of ethics at least every twenty-four months. Also, have your employees take annual training. This can help your company in the event of a government investigation.

Need Ethics Training for Government Contractors?

If you find that your company’s day-to-day operations and you later become subject to suspension and debarment actions, showing that you have undergone ethics training for government contractors could potentially reduce the adverse impact in your specific case.

Speak to an Attorney & Get a Free Initial Consultation

Call our government contract compliance lawyers for help with your contractor code of ethics and business conduct at 1-866-601-5518 for a FREE INITIAL CONSULTATION.

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