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National Contract Management Association The Cape Canaveral Chapter. A Balancing Act Winter Education Conference Contracting February 23, 2007. Contract Compliance for Government Contractors. Dr. Ralph “Mike” Criss. Is This The View from Your Window?. What is Compliance?.

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a balancing act winter education conference contracting february 23 2007

National Contract Management Association

The Cape Canaveral Chapter

A Balancing Act

Winter Education Conference Contracting

February 23, 2007

what is compliance
What is Compliance?

People make choices, or choose behaviors, based on their understandings of what is proper and expected under the circumstances.

what is compliance1
What is Compliance?
  • Making Choices in a Framework
    • Behaviors
  • Government Contract Compliance
    • Government Contract Is The Basis
  • A Compliance Program
    • Framework For Choice Making
  • Ethics & Compliance Are Related
  • Ethics
    • Why People Make Choices
    • Personal Preferences
    • Morals
  • Compliance
    • External Activity (Behaviors)
    • Organizational Structures
take away
Take Away
  • Hire People With Ethics
    • They Make the Right Choices
  • Tell Them The Rules So They Can Comply
    • Can Choose the Right Behavior
the framework
The Framework
  • Organizational Guidelines
  • The Contract
  • Federal Sentencing Guidelines
  • A Charter and A Committee
  • Internal Control System
an overview of the organizational guidelines
An Overview of the Organizational Guidelines

Paula Desio, Deputy General Counsel, United States Sentencing Commission, has written a very nice one page summary of the organizational guidelines.

She includes eight key criteria for an effective compliance program.

Desio, Paula. An Overview of the Organizational Guidelines, United States Sentencing Commission, Organizational Guidelines,


organizational guidelines
Organizational Guidelines
  • Oversight by high-level personnel
  • Due Care in delegating substantial discretionary authority
  • Effective Communications to all levels of the organization
organizational guidelines1
Organizational Guidelines
  • Reasonable steps to achieve compliance, which include systems for monitoring, auditing, and reporting suspected wrongdoing without fear of reprisal
  • Consistent enforcement of compliance standards including disciplinary mechanisms
  • Reasonable steps to respond to and prevent further similar offenses upon detection of a violation
company policy
Time keeping

Expense reporting

Gifts and gratuities


Labor Laws

Sharp Business practices

Discriminatory Practices

Harassment in the Workplace

Violence in the Workplace

Procurement and Contracts

Company Policy

Internal Controls

federal sentencing guidelines
Federal Sentencing Guidelines
  • Part A-Offenses Against the Person
  • Part B-Basic Economic Offenses
  • Part C-Offenses Involving Public Officials and Violations of Federal Election Campaign Laws
  • Part D-Offenses Involving Drugs
  • Part E-Offenses Involving Criminal Enterprises and Racketeering
  • Part G-Offenses Involving Commercial Sex Acts, Sexual Exploitation of Minors, and Obscenity
  • Part H-Offenses Involving Individual Rights
  • Part J-Offenses Involving the Administration of Justice
  • Part K-Offenses Involving Public Safety
  • Part L-Offenses Involving Immigration, Naturalization, and Passports

Taken from the United States Sentencing Commission Guidelines Manual and reflect the sentencing guidelines as of November 1, 2005.


federal sentencing guidelines1
Federal Sentencing Guidelines
  • Part M-Offenses Involving National Defense and Weapons of Mass Destruction Treason, Sabotage, Espionage and Related Offenses, Evasion of Military Service, Prohibited Financial Transactions and Exports, and Providing Material Support to Designated Foreign Terrorist Organizations, Nuclear, Biological, and Chemical Weapons and Materials, and Other Weapons of Mass Destruction
  • Part N-Offenses Involving Food, Drugs, Agricultural Products, and Odometer Laws
  • Part P-Offenses Involving Prisons and Correctional Facilities
  • Part Q-Offenses Involving the Environment
  • Part R-Antitrust Offenses
  • Part S-Money Laundering and Monetary Transaction Reporting
  • Part T-Offenses Involving Taxation
  • Part X-Other Offenses
a charter and a committee
A Charter and A Committee
  • Corporate and Executive Committees
    • Who Should Serve?
  • Operational Level Committees
  • Vision Statement
  • Charter
  • Employee Reporting – Hotlines

Internal Controls

The Process

Is As Important As The Product

I attribute this phrase to Mr. Jim Dyer, colleague and friend. I do not know if he was this first to say it, but it was from him I heard it first. Jim, as of this writing is a contract manager for Parsons Engineering

It is very difficult to physically stop people from breaking the rules.
  • But, You need to make sure they understand there are consequences.
  • Compliance is not a policing action.
the decision
The Decision

Taking responsibility for compliance always comes down to personal choice no matter what level you are in the organization.

  • Being Personally Responsible Means That You Have Made A Choice To Do The Right Things
  • It Also Means That You Don’t Tolerate Noncompliant Behaviors From Yourself Or Co-workers (At Any Level)

This Is Difficult

the reality
The Reality
  • If People Choose To Be Noncompliant
    • It Is Hard To Stop Them
  • Compliance Is A Knowledge Activity
  • If People Know The Rules, and
  • Understand Why They Exist
  • They Will Not Normally Knowingly Violate Them (Ethics)
the reality1
The Reality
  • If People Are Going To Knowingly Violate The Rules
  • They Need To Know What The Consequences Can Be
  • For Some, They Will Comply Simply Because They Know There Are Consequences

Internal Controls

take away1
Take Away
  • Reimbursablity Is Based On Compliance
  • Or Stated Another Way, Being Compliant Ensures Your Company Gets Paid For The Work It Performs
by following the processes the government and the public it represents is ensured
By Following The Processes, The Government, And The Public It Represents, Is Ensured:
  • That They Are Receiving A Fair Bargain
  • Competition Is Properly Obtained
  • Social Programs Are Supported
  • Transactions Are Transparent
  • Their Best Interests Are Protected
more specifically
More Specifically,
  • Auditors Will Have Confidence That What They See Is Representative Of The Company’s Processes
  • The Need For Additional Auditing And Investigating Is Minimized
  • So Are The Costs Of Meeting Government Requirements

Internal Controls

what is a compliance program
What is a Compliance Program?
  • It’s a Choice
  • It’s Leadership
  • Training Programs
  • Rewards and Consequences
  • Roles
  • No System Or Program Can Make People Behave In A Compliant Way.
  • People Must Choose To Do So.
  • Employees Must Be Selected That Will Make The Right Choices When They Understand What Choices They Can Make And What Is Expected
  • Everybody is a Leader
  • No Tolerance Policy
  • A Method to Report
    • Chain of Command
    • Investigations
    • Surveys
    • Hotlines
training programs
Training Programs
  • Formal
  • In House

Training is How an Employee Learns the Rules

some formal training
Procurement Integrity

Bribery and Illegal Gratuities Statute

Anti-Kickback Statute


Standards of Ethical Conduct for Employees of the Executive Branch

Berry Amendment

Trade Agreements Act

Foreign Ownership Control and Influence (FOCI)

Foreign Corrupt Practices Act

Export Control

False Claims Act

Some Formal Training
informal training
Informal Training
  • Consistent
  • Talk the Walk
  • Walk the Walk
  • Involve Everyone
  • Make a Commitment
  • Use In-House and Outside Trainers
rewards and consequences
Rewards and Consequences
  • Compliant Behaviors Should Be Openly Rewarded
  • Noncompliant Behaviors Need To Have Visible Consequences

Internal Controls

  • Executive Management Must Take A Proactive Role In Leading The Compliance Program
  • They Must Challenge Their Functional Managers To Support The Elements Of The Compliance Program And Find Innovative Ways To Implement It
  • Mostly However, The Executive Manager Has To Set The Example
sustaining the program
Sustaining the Program
  • Once A Compliance Program Has Been Implemented, Sustaining It Becomes Important
  • The Downside Of Not Sustaining The Program Is That Management Loses Credibility And Adherence Is Likely To Be Worse Than If No Program Had Existed
what compliance programs are not
What Compliance Programs Are Not
  • Programs That Solely Point To Their Audit Efforts
  • Rely On The Number Of Findings
    • Not Successful Or Effective
  • Inspection Programs
    • Inspection Programs Belong More In The Realm Of Quality Control
successful and effective compliance programs
Successful And Effective Compliance Programs

Tie Quality Control, Audit, Corporate Governance, and Common Sense Together

taking the risk

Taking the Risk

What Do the Following People Have in Common?

Randy “Duke” Cunningham

David Safavian

Darleen Druyun

Kevin Marlowe

Tom Spellissy

Robert Stein

Jeff Mazon

Glenn Powell

Stephen Seamans

Christopher Cahill

Andrew Rose

Lloyd Holliman

Mitchell Kendrix


Since 2004, there have been at least 20 indictments or convictions of government officials and contractors for corruption related to procurement. These have included the conviction of a senior Republican congressman, the indictment of the top White House procurement officials, and the conviction of one of the most senior procurement officials at the Air Force. Corruption has tainted a wide array of contract initiatives, including the reconstruction in Iraq, the response to Hurricane Katrina, and major Defense Department procurements.

Dollars Not Sense

Government Contracting Under the

Bush Administration

Prepared for

Rep, Henry A. Waxman

United States House of Representatives

Committee on Government Reform – Minority Staff

Special Investigations Division

June 2006