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The consequences of ethical lapses can be swift and significant. From April 1 to Sept. 30, 2006, the Department of Defense alone suspended 14 firms from government contracting for up to one year, debarred 34 firms for more than one year, imposed more than $30 million in criminal fines and recovered almost $2 billion in civil and administrative judgments.
Mistakes are made on a daily basis even as companies and individuals strive to comply with both the letter and the spirit of government ethics laws. Based on our experience and input from other experts, the following areas of compliance merit priority attention by all government contractors.
1 Formalize a Compliance Program
All contractors operating in the public sector should have a formal written compliance program that states the company's policies and processes for continually educating employees about the company's and the government's ethics standards. Most large companies have sophisticated programs to which a great deal of senior leadership attention is given. In many of those companies, a full-time corporate compliance officer reports directly to the CEO and/or the board of directors.
For larger companies, a compliance program typically includes a clear written statement of commitment from senior corporate officers, detailed written policies relating to key areas of business opportunity and risk, regular training in core and emerging ethical issues, and information regarding how employees report any concerns. New hires are typically required to attend an ethics class and sign a statement acknowledging that they have received the code of conduct and understand that it reflects the company's policies.
For smaller companies, the costs and complexity of ethical compliance programs may seem beyond reach. This is not the case; smaller firms have the flexibility to tailor compliance programs to their size, needs and markets. For example, while all companies can and should have a written statement of ethics commitment, their training could focus on significant areas of change or on those risk areas that are the most common to the business.
Having a formal compliance program achieves two goals: It sets a standard of acceptable behavior within the company and creates a first line of defense if an apparent violation occurs. At the very least, having a compliance program can show enforcement officials that a company had policies and processes in place for dealing with ethics breaches and what actions were taken to correct lapses.
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