To disclose or not to disclose-that is not the only question.
The Mandatory Disclosure Rule can be challenging for government contractors to work with, and common methods of analyzing disclosure obligations cause contractors to miss potentially significant risks to their enterprise. The requirement to timely disclose credible evidence of a Federal criminal law involving fraud, conflict of interests, bribery or gratuity violations, violations of the civil False Claims Act, or significant overpayments on federal government contracts can be challenging to interpret. The terms “timely disclose,” “credible evidence,” and “significant overpayments” are not defined in the rule, and no authoritative guidance is available about their meaning or their interpretations. As a result, contractors spend significant time and money assessing whether – and when – a disclosure is required, and then crafting their disclosures to help explain their analysis.
While this analysis is important, it is also too limited and may miss important risk areas. Multiple enforcement and audit offices across the government review mandatory disclosures, and contractors submitting disclosures rarely have insight into the idiosyncratic methods of analysis and specific interests of these offices. Because uniform procedures and guidance concerning mandatory disclosures do not exist, it is challenging at best to conduct this analysis. But it is vitally important that the analysis occur.
After all, offices of Inspectors General, auditors, contracting officers, contracts managers, suspension and debarment officials, and the Department of Justice are among the offices that review mandatory disclosures. They all have different timelines, missions, areas of interest and focus, and enforcement priorities. And many of these stakeholders conduct trend analyses in deciding whether to bring enforcement action as a result of a disclosure, or in assessing the completeness and veracity of disclosures.
Contractors and their legal representatives have spoken repeatedly in the press and at Bar Association functions over the years about their frustration with the lack of generally accepted disclosure practices and definitions. And that frustration is well-founded. Finding an experienced professional to assist with this analysis can be difficult because of the siloed nature of the government’s disclosure evaluation processes.
For several years, military department procurement fraud remedies coordinators (like author David Robbins) followed and were aware of the government-wide responses to disclosures. Disclosure program managers within high-disclosure-volume offices Inspector General also have broad experience in this area. But these populations of professionals experienced with government-side evaluation of mandatory disclosures are not prevalent in private practice.
So what are some of the other questions contractors should ask above and beyond whether there is a disclosure requirement?
1) Does the conduct fall into an enforcement priority for any of the offices that will review the disclosure?
2) Do the company’s policies and procedures cover the conduct to be disclosed? Is any policy revision or remedial training required?
3) Is the tone and word choice of the disclosure attuned to the preferences of the offices that will receive the disclosures?
4) Does the disclosure reflect that adequate investigation has occurred?
5) Will any individuals mentioned in the disclosure tell similar stories if contacted by enforcement officials? Given the current trend in many agencies for suspending and debarring officials to focus on individuals named in disclosures, contact is likely. If stories differ substantially, how will that impact the government’s view of the credibility of the company’s disclosures over all?
6) What trends might the government observe from this, and other, disclosures? For just some examples:
a) Are particular business units more commonly impacted by disclosures? Is there a reason for that?
b) Are charging practices able to be called into question in a civil False Claims Act setting?
c) Do the words used on the disclosure – and across disclosures within a company – reflect appropriate levels of business integrity?
We at Crowell & Moring can and do track this information for clients who are interested in better understanding how the government might react to an individual disclosure, and to trends in disclosures over time. Obviously each disclosure is unique and we cannot guarantee the government will react or not react in any specific way, but our clients find this sort of information helpful in assessing the risks involved in making disclosures and which mitigation strategies to employ.