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Crowell & Moring is pleased to offer a no-cost review of common compliance issues that can drive down sales price or increase borrowing costs for emerging government contractors, as well as prevent purchasers from receiving full value for their investments.  Government contractors face a long road to sale, fundraising, and post-acquisition integration – these processes can be derailed easily by compliance missteps, recordkeeping problems, or a multitude of other issues that may not be top-of-mind for sellers and even some purchasers.  Once diligence begins, addressing these issues becomes significantly more expensive and problematic.

At Crowell & Moring, we believe in long-term strategic partnerships with our clients and stand ready to proactively assist with an analysis of potential compliance issues very early in the sale/fundraising process to avoid diligence or post-acquisition surprises.  With knowledge across the whole range of government contract issues, we are well suited to evaluate a company’s government business  and identify non-obvious (but very real) areas of risk.

Continue Reading No Cost Compliance Check-Up for Government Contractors

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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

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Starting on October 25, many new solicitations will contain the new clauses required under the Fair Pay and Safe Workplaces Final Rule.  These new clauses will impose significant new compliance and reporting obligations on federal contractors (and eventually on subcontractors). In a “feature comment” published in the Government Contractor, C&M attorneys provide an overview of the key provisions and discuss what contractors should be doing now to start preparing for day-one compliance with the new requirements.

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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

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Will it be more of the same for government contractors in 2016? Can contractors expect increased oversight, intense competition, new regulations, and consolidation? On Thursday, January 14, Crowell & Moring will be hosting a webinar to discuss the likely trends in the coming year. Topics to be covered include: cost, commercial items, update on Executive Orders, investigations, compliance, suspension/debarment, GSA and VA schedules, mergers & acquisitions, small business, procurement fraud and much more. Our presenters are some of the most experienced in their field. To register for this free webinar, please click here.

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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

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In response to several requests from industry to extend the a 60-day comment period for the proposed rulemaking (NPRM) and guidance implementing the “Fair Pay and Safe Workplaces Executive Order,” the FAR Council and the DoL have extended the comment period to August 11, 2015 (from the current date of July 27, 2015). As discussed previously here, the NPRM and related DOL guidance (available by PDF here and here and explained in more detail on our government contracts blog) would add onerous labor compliance reporting requirements for all contractors and subcontractors on contracts valued over $500,000 (and on non-COTS subcontracts valued over $500,000) and inject uncertainty and subjectivity into the procurement process through the addition of “Agency Labor Compliance Advisors” advising the CO with respect to responsibility determinations based upon a review of the contractor or subcontractor’s labor compliance data over a 3-year period, which has prompted many contractors and trade associations to express their concerns about the scope and potential impacts of the Proposed Rule and Guidance.

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Just last week, the Department of Justice announced another large False Claims Act settlement with a GSA Schedule contractor – for $60.9 million. A review of the underlying qui tam complaint, filed by a former vice president of the contractor, reveals multiple alleged failures by Tremco Inc. and RPM International to comply with the basic – yet often very challenging – requirements of the contract: disclosure of commercial pricing and compliance with the Price Reduction Clause. Among a number of allegations, the complaint alleges that the roofing supplies and services contractor failed to disclose to GSA that it offered better pricing to its commercial customers than identified on its published price list. As a result, the complaint states that the government was disadvantaged by negotiating higher pricing than it would have, had it known about the contractor’s actual commercial pricing practices. The complaint also alleges that, during the course of performing the GSA Schedule contract, the contractor failed to provide price reductions to government customers when it provided discounted pricing to its commercial customers. Continue Reading GSA Schedule Contracting: Does Your Company Have Sufficient Internal Controls to Minimize Noncompliance Risks?

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The start of a new year is a perfect opportunity for government contractors to refocus and rejuvenate their compliance efforts. Regardless of whether a company is contractually required to have a compliance program, contractors should take time to determine the contractual obligations and risks they face now and in the year ahead. Is your company subject to the Trade Agreements Act? Does your company comply with the FAR cost principles and Cost Accounting Standards? Is your company making good faith efforts toward its small business subcontracting plan? Does it understand the risks associated with the False Claims Act?

An investment of time, attention, and resources for purposes of ensuring your company’s compliance efforts are sufficiently robust can have significant pay-off in the long run, including avoiding contract performance disputes, monetary penalties, fraud allegations, litigation and defense costs – all of which distract from the company’s core purpose, cause preventable PR problems, and drain resources. So how best to review and bolster a contractor’s compliance efforts?

The following are some of the basic steps any contractor should take in reviewing its compliance efforts:

1. Make sure the company understands the risks associated with its government contracts. Read and understand the contractual requirements, including the long litany of FAR and other agency clauses often incorporated into contracts by reference only. Often hidden within these long lists are fairly substantive legal requirements and, therefore, compliance risks if the contractor does not comply with the requirements.

2. Evaluate and improve internal controls, policies, and procedures. Review the existing compliance infrastructure to identify any weaknesses and necessary changes. Compare the written policies and procedures with actual practices and determine why there might be variances between the two. Do the written documents need to be updated to reflect changes in law or changes in company structure or operating procedures? Or do actual practices need to be revised to bring them in line with the company’s intention expressed in its written policies and procedures? Test the robustness of internal controls. Are there loopholes that need to be addressed? Is there management support of the internal controls?

3. Refresh employee training and education. A contractor’s commitment to compliance can be derailed by a workforce that lacks an understanding of the rules and the reasons for the internal controls, policies and procedures. Review and update training materials to keep the information current and accurate and ensure the presentation is engaging. Revisit the categories of personnel who receive training to evaluate whether additional groups should be trained. Consider adding more training or supplementing with alternative educational opportunities, ranging from more rigorous certification programs for certain key employees to regularly highlighting compliance success stories on the company internet.

4. Consider a third-party review or audit of the compliance program. Many contractors bring in an outside party, such as a law firm or consultant, to review or audit the company’s compliance efforts. This type of review or audit can be invaluable to the contractor. A qualified outside party brings its expertise and breadth of experience to bear in conducting its evaluation, and can provide useful guidance for improving compliance efforts, getting buy-in from management, and implementing best practices. Engaging in a third-party review can also demonstrate to key stakeholders, such as employees and the government, the contractor’s commitment to compliance.