Government Contracts Compliance

Representations/Certifications Compliance

Contractors must make certifications and representations on a wide variety of topics for state, local, commercial, and federal work and update their certifications periodically. This warrants active consideration as these are core elements of contracting and false entries (even implied) can lead to contract loss and civil and criminal penalties.

Flow Down Requirements

The U.S. federal government has strict requirements for procuring goods and services. These requirements also apply to subcontractors supplying goods and services to a contractor. Certain provisions of the prime contract must be “flowed down,” or included as contractual obligations in the subcontracts.

Supervising Subcontractors

Obtaining certification of compliance or other representations from subcontractors is helpful but does not exhaust the contractor’s obligations. A contractor may wish to inspect or take other steps to confirm the accuracy of a subcontractor’s representations. Ultimately, the government will hold the contractor responsible for any defects and often expects the contractor to employ certain good faith efforts to supervise subcontractor efforts.

Proprietary Data Protection/FOIA Responses

A contractor must preserve proprietary data with proper legends on proposals and other contract deliverables, or else it may lose its protections. Technology developed during the course of a government contract also has specific rules associated with who gets what intellectual property. Additionally, Freedom of Information Act requests that aren’t responded to in a timely manner can cause company proprietary information to be released.

GSA Schedule Contract Obligations

General Services Administration schedule contract and other government-wide acquisition vehicles offer broad sales opportunities but come with special additional compliance obligations. They include pricing, discounting, labor categories, and disclosures, among others, and require constant monitoring.

OCI/PCI

The work that a contractor performs may preclude it from bidding on or performing other work. These organizational Conflicts of Interest (OCIs) arise when there is unequal access to information, or the contractor is performing acquisition advisory and assistance services for the government. Personal Conflicts of Interest (PCI) are caused by divided loyalties or items that can raise the perception of divided loyalty in individual employees. PCIs are commonly addressed by screening certain employees for their outside business and personal activities.

Procurement Integrity

Perception of fairness in the award of government contracts is important to enforcers and regulators. Criminal law can punish obtaining or seeking government source selection sensitive information or competitor proprietary information in certain circumstances.

Anti-Kickback Act

Because perception of propriety is of the utmost importance in government contracting, even subcontracts must be awarded without the potential for perception of improper influence. Nothing of value may be offered, or accepted, with the intent to improperly influence the award of a government contract or subcontract.

Gifts/Gratuities

While it may be acceptable in the commercial marketplace to offer clients and prospective clients things of value – including but not limited to meals and gifts – these items can create criminal liability in government procurement. Policies, procedures, and monitoring are important to avoid liability and possible loss of ability to compete for or perform certain contracts.

Business Systems

Business Systems adequacy is required for certain federal cost-based projects. These systems have specific requirements that are unique to government contracting and require specific attention.

Audit Rights/Recordkeeping

Specific audit rights exist for many of the contractor’s financial, functional, and contractual processes. Specific record retention rules apply.

Classified Work

If the contractor performs classified work, it may require a company Facility Clearance and manage Personnel Clearances for certain individuals. Specific jobs are required to support such an effort, and there are certain additional oversight and reporting obligations.

Counterfeit Parts/Supply Chain Issues

Processes and procedures must be in place to source from qualified and appropriate suppliers, and receiving departments must also confirm that the parts received comply with contractual requirements. Supplier representation is rarely, if ever, sufficient.

Earned Value Management System

Earned Value Management System is a schedule management business system required over a certain dollar threshold that measures work completed against work planned.

Government Property Issues

There are specific identification, tracking, reporting, and return requirements for government-provided property and equipment used to support the Company’s contracts.

Human Trafficking

The U.S. government has a zero tolerance policy for human trafficking. There are specific policy and reporting requirements for contractor employees, as well as subcontractor employees, at home and abroad.

Cost Accounting Standards

These rules guide the contractor concerning the allocation of overhead costs to the Company’s contracts.

Certified Cost or Pricing Data

Certain contracts over a specific dollar threshold may require the contractor to submit its cost buildup information to enable the government to determine if it is offered a fair and reasonable price. This is called cost or pricing data.

Cost Allowability

Cost allowability deals with what charges may be passed on to the government in certain types of contracts.

Cost Estimating

Certain business system requirements exist for generating and proposing consistent and appropriate rates for contractor labor.

Incurred Cost Submissions

Among the many obligations associated with cost type contracts is the completion of incurred cost submissions that are accurate and timely.

Export Control

The contractor must comply with restriction on export of products and information. Export is broadly defined, and include among other things traveling outside the U.S. with controlled information stored on a laptop, even if the laptop is never turned on.

Small Business

If the contractor is a certified small business, certain reporting and other compliance requirements exist, including those that limit the money that executives may remove from the business. If the Company is a large business, then it may be required to submit small business subcontracting plans and exercise good faith effort to meet their proposed subcontracting goals.

Mandatory Disclosure

Candor with the U.S. government is often required. Disclosure is required for certain violations of criminal law, the civil False Claims Act, and for significant overpayments. Failure to disclose can lead to exclusion from government contracting by suspension/debarment.

Investigate When Problems Arise

Civil liability (among other consequences) can arise from deliberate ignorance of issues relating to government contracting. Government contractors are expected to investigate timely and thoroughly when issues arise.

Sanctions List

Contractors are expected to screen employees, suppliers, and certain individuals to avoid doing business with entities specifically excluded from the U.S. marketplace, such as those on the Specially Designated Nationals list.

Flow Down Requirements

A contractor has an obligation to “flow down” or otherwise include certain terms and conditions of its prime contract into its subcontract.

BAA/TAA

Certain laws exist limiting the goods and services that contractors can purchase to those manufactured, substantially transformed, or otherwise assembled in the U.S. Those laws include but are not limited to the Buy American Act and Trade Agreements Act. Each have their own requirements and exceptions that must be followed.

Specialty Metals

Certain laws exist limiting the melting and incorporation of certain metals into products for the U.S. government.

Information Security

Contractors are required to adhere to certain standards of care when handling, transmitting, or otherwise using sensitive information including but not limited to Personally Identifying Information, Sensitive but Unclassified Information, Controlled Unclassified Information, and Classified Information. Many contracts also include breach and incident notification requirements.

Timekeeping

Accurate timekeeping is a requirement under many government contracts. Civil and criminal laws can punish inaccurate timekeeping, and the company (and individuals) can be removed from the marketplace through suspension/debarment for certain time charging problems. Best practices include but are not limited to training on time charging and supervision of timekeepers.

Training

Contractors are obligated to create a culture and work environment that avoids misconduct. Training is a central element in that effort, as it informs the employee population of company norms and expectations.

Compensation and Disclosure

Certain disclosure obligations exist for executives of government contractors.

Background Checks

At a minimum, contractors should understand the citizenship and good character of their employees. Requirements increase as contracting opportunities become more sensitive, involve national security, or are classified.

Benefits

Contractual requirements impact minimum wage, pay, and benefits for government contract employees performing many types of government contracts. This also includes Service Contract Act (services contracting) and Davis-Bacon Act (construction contracting) provisions.

Anti-Discrimination

In addition to other laws, U.S. government contracts impose certain anti-discrimination policies and provisions and can cause loss of contract (among other remedies) for noncompliance.

Revolving Door

Specific rules exist for hiring and supervising former government employees. Additionally, certain restrictions exist concerning the duties that the former government employees may perform, as well as the interactions they may have with the government.

Lobbying Restrictions

U.S. government contract funds may not be used for the purposes of lobbying.