The FAR Council published a final rule November 12 laying out requirements for a contractor code of business ethics and conduct, an internal control system and mandatory disclosure to the government of violations of criminal law or civil False Claims Act (FCA). The final rule culminates numerous proposed rules put forth over the last year that incorporates several comments.

For internal controls, contractors must establish and maintain specific controls to detect and prevent improper conduct related to any government contract and subcontract. The Council provided a general framework where contractors can discover wrongdoing on their own and notify the government of possible wrong doing such as an anonymous hotline. Contractors can use their judgment in coming up with program details and the systems must be in place 90 days after receiving a contract.

Mandatory disclosure. Government contractors must notify the contracting agency’s inspector general and CO if it discovers credible evidence of a crime related to a contract or an FCA violation. The rule allows government officials to suspend or debar a company from government work if it knowingly fails to disclose crimes or significant overpayments by the government for more than three years after final payment. The contractor has the opportunity to examine the credibility of the evidence of the alleged crime before telling the government and before being charged with knowing failure to notify (Fed. Reg. 67064).

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