Ethics & Compliance

Subscribe to Ethics & Compliance
Photo of Peter J. EyrePhoto of Laura Baker

The General Services Administration’s (GSA) System for Award Management (SAM) announced its role in an ongoing Inspector General Investigation into alleged, third party fraudulent activity in SAM.

GSA suspects that the alleged fraudulent activity impacted only a limited number of entities.  GSA has since notified the affected entities, and deactivated their SAM registrations.  GSA also required these entities to validate and confirm their registration and bank account information in SAM before reactivating their SAM registrations.

Continue Reading After Fraudulent Activity in SAM, GSA Implements New Registration Requirements

Photo of David B. RobbinsPhoto of Peter J. Eyre

There is a substantial amount of confusion and concern about Section 1045 of the 2018 National Defense Authorization Act (NDAA), entitled “Prohibition on lobbying activities with respect to the Department of Defense by certain officers of the Armed Forces and civilian employees of the Department following separation from military service or employment with the Department.”  As with other acquisition-oriented, late breaking additions to the NDAA in years past (like acquisition prohibitions following felony convictions of companies or principals that were so broad that an executive speeding 15 miles an hour over the limit in Virginia, which is a felony, could eliminate the company from eligibility for contracts), guidance in Section 1045 is not as complete as industry would like.  But the rule is not terribly burdensome, either.

Very senior uniformed and civilian Department of Defense employees such as General Officers and their civilian equivalents (presumably members of the Senior Executive Service), face restrictions on “lobbying activities” and “lobbying contacts” with respect to the Department of Defense.  Section 1045 refers readers to the Lobbying Disclosure Act of 1995 (2 U.S.C. Section 1602) for definitions of relevant prohibitions, and exceptions from prohibitions.  And the Lobbying Disclosure Act offers comfort that substantial activities are still permissible.  Yes, representation back to the Department of Defense is more limited under Section 1045 of the 2018 NDAA than it was before, but not severely so.  And contractors already must monitor representation back to these officials’ former offices.  Section 1045 extends the monitoring requirement a bit farther.

It appears that industry is overly focused on the bolded and italicized wording of the Lobbying Disclosure Act’s definition of lobbying activity, ‘[t]he term “lobbying activities” means lobbying contacts and efforts in support of such contacts, including preparation and planning activities, research and other background work that is intended, at the time it is performed, for use in contacts, and coordination with the lobbying activities of others. The term “lobbying activities” means lobbying contacts and efforts in support of such contacts, including preparation and planning activities, research and other background work that is intended, at the time it is performed, for use in contacts, and coordination with the lobbying activities of others.’  This language poses a new compliance challenge for contractors because, in the post-employment context, behind the scenes work while waiting out a restriction is typically acceptable (putting aside for these purposes organizational conflicts of interest and other non-statutory considerations).  But for general officers and senior executive service members, Section 1045 presents an additional one- or two-year restriction (depending on their seniority) that can restrict even some “behind the scenes” work directly associated with lobbying.

But substantial lobbying related work is still permitted.  Indeed, there are 24 exceptions in the Lobbying Disclosure Act that permit lobbying related activity, including but not limited to: speeches, articles, publications, interviews, media appearances, meeting requests or similar administrative requests, service on advisory committees, responding to public notices in the Federal Register and other invitations for written submissions, written comment, public written petitions to an agency under certain circumstances, among other things.  In short, newly separated very senior Department of Defense Officials will not need to sit around doing nothing to wait out this restriction – plenty is still permitted.

Contractor concern may be driven by the merging of political law and government contracts law for this limited number of very senior, former Defense Department officials.  But the compliance steps are relatively straightforward, particularly if contractors already had a robust approach to complying with the restrictions in place before Section 1045 became effective.  Contractors are well advised to track for a year or two (depending on seniority) their former Defense Department general officers and equivalents, train them on these restrictions, and conduct a Lobbying Disclosure Rule driven analysis for communications back to “covered Executive Branch Officials.”

Photo of Lorraine M. Campos

On February 8, 2017, the Department of Justice Fraud Section posted a new guidance document on its website entitled, “Evaluation of Corporate Compliance Programs”  (“Compliance Guidance”).  This Compliance Guidance, comprised of a number of topics and questions, comes a little over a year after the Fraud Section hired Hui Chen as its resident compliance expert.  Tapping into her experience as both a prosecutor and a compliance professional at several large multinational companies, Ms. Chen has commented that an effective compliance program requires a whole-company commitment, and has emphasized the importance of leadership and key stakeholders in the compliance process.[1]  Her vision is evident in the Fraud Section’s recently released Compliance Guidance, which provides some insights into the mindset of prosecutors tasked with corporate investigations.[2]   The Compliance Guidance itself references two of the ten “Filip Factors,”[3] an enumerated set of factors used by prosecutors in making charging decisions related to corporate entities.  Although the Compliance Guidance cautions that the Fraud Section does not use a “rigid formula” to assess a company’s compliance program, the guidance provides a detailed list of compliance-focused sample topics and questions that the Fraud Section believes are relevant to its analysis.

Continue Reading DOJ Issues New Guidance on the Evaluation of Corporate Compliance Programs

Photo of Robert BurtonPhoto of Lorraine M. CamposPhoto of Peter J. EyrePhoto of David J. GinsbergPhoto of Elizabeth Buehler

On Saturday, January 28, President Trump issued an Executive Order setting forth the ethics regulations governing current and future executive agency appointments, which is both more restrictive and less restrictive than the 2009 Obama Executive Order addressing the same issue.  Specifically, and with respect to the former, President Trump’s order bans all executive agency appointees from engaging in “lobbying activities” with respect to the particular agency in which the appointee served for a period of five years after leaving the Administration, and further prohibits such appointees from lobbying on behalf of a foreign government or political party during the remainder of their lifetimes (if such activities would require registration “under the Foreign Agents Registration Act of 1938”).  See §§ 1.1, 1.4.  These two prohibitions were absent from the Obama-era counterpart and mirror two of Trump’s promises outlined in his Contract with the American Voter.

Continue Reading Trump’s Ethics Executive Order More Concerned with Post-Government Employment Activities

Photo of Lorraine M. CamposPhoto of Gail D. ZirkelbachPhoto of Nkechi Kanu

On November 18, 2016, the Office of Government Ethics (OGE) issued a final rule revising the Standards of Ethical Conduct for Employees of the Executive Branch (“Standards”)  applicable to the solicitation and acceptance of gifts from outside sources. See 5 CFR § 2635. The final rule imposes a duty to decline otherwise permissible gifts when the appearance of impropriety is present, adds new examples of how to apply the rules, codifies previous interpretations of the gift rule, and retains the $20 de minimis exception (despite pushback in comments to the proposed rule to raise the standard commensurate with inflation. ) Although Government employees are the primary subject of the final rule, the changes will have a direct impact on how contractors, referred to as “prohibited sources” can interact with Government officials.   It is important for government contractors to understand that being implicated by a Government official’s violation of these Standards can lead to various consequences, such as facing public embarrassment, a tarnished reputation in the marketplace, suspension and debarment, or penalties for violating the bribery or illegal gratuities statutes.

The rule becomes effective on January 1, 2017. Continue Reading OGE Finalizes Rule Regarding Solicitation and Acceptance of Gifts for Executive Branch Employees

Photo of Peter J. EyrePhoto of Agustin D. Orozco

On November 2, 2016, the Office of Government Ethics (OGE) issued a final rule amending the regulations that set forth the elements and procedures of the executive branch ethics program by defining and describing the executive branch ethics program, delineating the responsibilities of various stakeholders, and enumerating key executive branch ethics procedures.  The final rule amends 5 C.F.R. part 2638 by creating six new subparts: (A) Mission and Responsibilities; (B) Procedures of the Executive Branch Ethics Program; (C) Government Ethics Education; (D) Correction of Executive Branch Agency Ethics Programs; (E) Corrective Action Involving Individual Employees; and (F) General Provisions.  The final rule is effective January 1, 2017.

Among the more notable amendments, the final rule centralizes the procedures for the executive branch ethics program under subpart B.  Currently, these procedures are not only found in various subparts of the existing regulations, including subpart C (Formal Advisory Opinion Service) and subpart F (Executive Branch Agency Reports), but also in several advisories available on OGE’s website.  These procedures relate to the furnishing of information, records and reports to OGE; the executive branch’s collection of financial disclosure reports; and the issuance of formal advisory opinions and other written guidance by OGE.  Further, the amended subpart B includes procedures that pertain to ethics preparations for presidential transitions.

The final rule also amends subpart D, which establishes procedures for the correction of executive branch ethics programs. These procedures are implemented when there are indications that an agency ethics program is not in compliance with the requirements set forth in applicable government ethics laws and regulations.  Subpart D amends the current procedures by enumerating several informal actions that the Director of OGE may take in order to bring the agency into compliance.  These informal actions are in addition to the formal action that may be taken by the Director of OGE in the event informal action does not resolve the deficiency.

 

Photo of Steve McBradyPhoto of Jason M. CrawfordPhoto of Kris D. MeadePhoto of Robert Burton

On May 4, 2016, the FAR Council’s draft final rules and the Department of Labor’s draft final guidance implementing the “Fair Pay and Safe Workplaces” Executive Order arrived at the White House’s Office of Information and Regulatory Affairs (OIRA) for review, setting in motion the final steps prior to the issuance of burdensome new compliance and reporting obligations for federal contractors and subcontractors (discussed here).  OIRA has 90 days to conduct its review of the rules before sending them to the FAR Secretariat for publication, a period during which OFPP and other OMB offices, contractors, and industry trade groups, may meet with OIRA to share their concerns, in advance of the publication of new FAR rules likely to trigger vigorous legal challenges from industry.

Photo of David B. RobbinsPhoto of Peter J. Eyre


There are always clues.

After-action reviews nearly always identify signals that a crisis was about to begin. Small hints, tips, strange comments, or different attitudes from a customer. Something will be there. But these clues can be difficult to spot in the moment by busy in-house counsel or senior executives on the front lines of the business.

While skilled lawyers and professionals are available to support companies in full-blown crises, these teams with their cross-cutting skills are often engaged too late to shape the narrative before an all-consuming defense effort begins.

So the question becomes, how do government contractors get out in front of emerging issues, manage their risk, and mitigate as much of an impending crisis as possible? One possible answer is that systematic risk assessments and response protocols need to evolve to consider the emerging risk of parallel enforcement proceedings—to include suspension and debarment from further government contracting work—as well as the changing dynamics involved in settling a matter with the Department of Justice without a fulsome disclosure of misconduct by individuals.

Continue Reading Rethinking Government Contracts Crisis Management: Identifying Risk Before a Crisis Begins

Photo of Jason M. CrawfordPhoto of Charles Baek

On March 22, the comment period is set to close on a new rule proposed by the FAR Council titled, “Federal Acquisition Regulation: Contractor Employee Internal Confidentiality Agreements.” This rule will prohibit federal dollars from going to companies that require employees or subcontractors to sign restrictive confidentiality agreements that could limit the ability of employees to report suspected fraud and abuse to the government. In “Walking The Line: Balancing Legitimate Interests And Compliance With New FAR Requirements For Confidentiality Agreements,” a “Feature Comment” published in the Government Contractor, C&M attorneys highlight the history and recent developments behind the new rule and explore the risks contractors face in light of the rule, such as contract termination, False Claims Act liability, and more.

Photo of Ashley BaileyPhoto of Namrata Kotwani

On November 27, 2015, the Office of Government Ethics (“OGE”) issued a proposed rule that would revise the portions of the Standards of Ethical Conduct for Executive Branch Employees that govern the solicitation and acceptance of gifts from outside sources (“Standards”). See 5 CFR § 2635. Although it is a proposed rule (with the comment period closing on January 26, 2016), the OGE has identified several areas in which the new language is meant to “clarify” the existing rules and “incorporate past interpretive guidance.”

Continue Reading OGE Issues Proposed Rule Regarding Gifts for Executive Branch Employees