Slide1 l.jpg
This presentation is the property of its rightful owner.
Sponsored Links
1 / 47

Richard P. Levi Counsel to the Inspector General General Services Administration PowerPoint PPT Presentation


  • 286 Views
  • Uploaded on
  • Presentation posted in: General

Office of Inspector General (OIG). Federal Acquisition Regulation (FAR) Disclosure Requirements and the American Recovery and Reinvestment Act (ARRA). Richard P. Levi Counsel to the Inspector General General Services Administration. May 6, 2010. AGENDA. Value to the Customer

Download Presentation

Richard P. Levi Counsel to the Inspector General General Services Administration

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Slide1 l.jpg

Office of Inspector General (OIG)

Federal Acquisition Regulation (FAR) Disclosure Requirements and the American Recovery and Reinvestment Act (ARRA)

Richard P. LeviCounsel to the Inspector GeneralGeneral Services Administration

May 6, 2010


Agenda l.jpg

AGENDA

Value to the Customer

  • Understanding FAR mandatory disclosure rule

  • Applicability to Recovery Act

  • How to Work with the Office of Inspector General


Far disclosure rule origins l.jpg

FAR DISCLOSURE RULE ORIGINS

  • Mandatory disclosures in other areas

  • National Reconnaissance Office contract clause

  • Lack of voluntary disclosures


New suspension debarment s d provisions l.jpg

NEW SUSPENSION & DEBARMENT (S&D) PROVISIONS

  • FAR 9.406-2 and 9.407-2; 3.1003

  • “Knowing failure by a principal, until 3 years after final payment on any Government contract . . .

  • to timely disclose to the Government,

  • in connection with the award, performance, or closeout of the contact


New suspension debarment s d provisions cont l.jpg

NEW SUSPENSION & DEBARMENT (S&D) PROVISIONS (cont.)

  • or a subcontract thereunder,

  • credible evidence of”:

    • Significant overpayments (other than financing payments)

    • Civil False Claims Act violation

    • Bribery, conflict of interest, gratuities, or fraud under Title 18


New contract clause l.jpg

NEW CONTRACT CLAUSE

  • FAR 3.1004 – Clause applies

    • if value expected to exceed $5 million and

    • 120 day performance period


New contract clause cont l.jpg

NEW CONTRACT CLAUSE (cont.)

  • Clause at FAR 52.203-13, Contractor Code of Business Ethics and Conduct

    • Required to “timely disclose, in writing, to the agency Office of Inspector General (OIG), with a copy to the Contracting Officer, whenever, in connection with the award, performance, or closeout of this contract, or any subcontract thereunder, the Contractor has credible evidence that principal, employee, agent, or subcontractor . . . has committed” a violation of:

      • Civil False Claims Act

      • Bribery, conflict of interest, gratuities, or fraud under Title 18


S d contract clause differences l.jpg

S&D/CONTRACT CLAUSE DIFFERENCES

  • Disclosure to “the Government” versus to the Inspector General

  • Obligation falls on “principal” versus the contractor

  • Significant overpayments reporting requirement


New contract clause9 l.jpg

NEW CONTRACT CLAUSE

  • Business ethics awareness and compliance program (does not apply to small businesses and acquisition of commercial items)

    • Training for principals, employees and, as appropriate, agents and subcontractors

    • Internal control system

      • Monitoring and auditing to detect criminal conduct

      • An internal reporting system such as a hotline

      • Timely disclosure

      • Full cooperation


New contract clause cont10 l.jpg

NEW CONTRACT CLAUSE (cont.)

  • Full cooperation (business ethics and awareness program)

    • Disclosure of information sufficient for law enforcement to identify the nature and extent of conduct and individuals responsible

    • Includes providing timely and complete response to Government auditors’ and investigators’ request for documents and access to employees with information


Recovery act arra overview l.jpg

RECOVERY ACT (ARRA) OVERVIEW

  • Creates significant opportunities

  • Accompanied by additional obligations


Recovery act overview cont l.jpg

RECOVERY ACT OVERVIEW (cont.)

  • Transparency

    • Contract performance

    • Job creation and retention

  • Oversight

    • Whistleblower rights

    • GAO and IG audit access


  • Recovery act overview cont13 l.jpg

    RECOVERY ACT OVERVIEW (cont.)

    • Three immediate goals:

      • Jobs

      • Spur economic activity/invest in long-term growth

      • Foster accountability and transparency

    • Makes $billions available for federal contracts, grants and loans

    • Recipients to report quarterly on how using money

    • All data is posted on Recovery.gov


    Arra disclosure requirement l.jpg

    ARRA DISCLOSURE REQUIREMENT

    • OMB Guidance M-09-10 and M-09-15

    • Requires agencies for grants, loans, and loan guarantees to include requirement similar to FAR mandatory disclosure rule


    Arra disclosure requirements cont l.jpg

    ARRA DISCLOSURE REQUIREMENTS (cont.)

    • Each grantee or sub-grantee awarded ARRA funds shall promptly refer to an appropriate inspector general:

    • Any credible evidence

    • That a principal, employee, agent, contractor, sub-grantee, subcontractor, or other person

    • Has submitted a false claim under the False Claims Act or

    • Has committed a criminal or civil violation of laws pertaining to fraud, conflict of interest, bribery, gratuity, or similar misconduct involving those funds.


    Arra v far disclosure l.jpg

    ARRA V. FAR DISCLOSURE

    • “Promptly” instead of “timely”

    • To appropriate Inspector General only

    • Criminal or civil violation

    • Not limited to Title 18

    • Includes “similar misconduct involving those funds”


    Identifying reportable conduct l.jpg

    IDENTIFYING REPORTABLE CONDUCT

    • Practical considerations for ARRA funds

    • Have programs to identify

      • any potentially criminal conduct

      • any potential false claims

      • any overpayments

    • Assess whether are reportable conduct as defined by FAR rule or ARRA reporting requirements

    • Consider erring on side of disclosure


    Far disclosure rule issues l.jpg

    FAR DISCLOSURE RULE ISSUES

    • “Sea change”

    • Articles/discussions/training

    • Numerous issues raised

    • Preamble best source of guidance

    • Applies to ARRA contracts


    Far disclosure rule 13 issues l.jpg

    FAR DISCLOSURE RULE - 13 ISSUES

    Issue 1: What does in connection with the award, performance, or closeout of a contract mean?

    • In both S&D and contract clause

    • “In connection with” generally broadly interpreted

    • Unsuccessful bidder

    • Indirect costs

    • Fixed price contract

    • Supplier with no direct sales to Government

    • Recovery Act contracts


    Far disclosure rule 13 issues cont l.jpg

    FAR DISCLOSURE RULE - 13 ISSUES (cont.)

    Issue 2: What types of criminal conduct are covered?

    • “Federal criminal law involving fraud, conflict of interest, bribery, or gratuities violations found in Title 18.”

    • Fraud – false statements, major fraud, theft/conversion/probably over 100 references

    • Non-title 18 statutes – consider conspiracy, mail/wire fraud

    • Same statutes apply to Recovery Act projects


    Far disclosure rule 13 issues cont22 l.jpg

    FAR DISCLOSURE RULE - 13 ISSUES (cont.)

    Issue 3: What constitutes a reportable violation of the False Claim Act (FCA)?

    Consider FCA Amendments - May 20, 2009

    • Prior – Knowingly cause or present false claim to Government (3729(a)(1))

    • Now – no longer has to be presented to Government; can be made to contractor, grantee or other recipient if money is spent on Government’s behalf or to further Government interest and Government provides any portion of money (3729(a)(1)(A))

    • Consider Recovery Act projects


    Far disclosure rule 13 issues cont23 l.jpg

    FAR DISCLOSURE RULE - 13 ISSUES (cont.)

    • Prior - Make, use or cause to be used a false record or statement to get Government to pay a false claim (3729(a)(2)

    • Now – Make, use or cause to be used a false record or statement material to a false claim (retroactive to all claims pending on June 7, 2008) (3729(a)(1)(B))

    • Material defined as a natural tendency to influence of being capable of influencing


    Far disclosure rule 13 issues cont24 l.jpg

    FAR DISCLOSURE RULE - 13 ISSUES (cont.)

    • Noncompliance with law, rule or regulation

    • Probably depends on whether is “material” to payment


    Far disclosure rule 13 issues cont25 l.jpg

    FAR DISCLOSURE RULE - 13 ISSUES (cont.)

    • Prior – Used a false record to conceal, avoid, or decrease obligation to pay or transmit money or property to the United States (3729(a)(7)

    • New – Knowing conceal or avoid/decrease obligation to pay or transmit money to Government

    • “Obligation” – established duty, whether or not fixed, arising from retention of overpayment

    • May apply broadly to retention of overpayments in Recovery Act contracts


    Far disclosure rule 13 issues cont26 l.jpg

    FAR DISCLOSURE RULE - 13 ISSUES (cont.)

    • Prior – conspire to defraud the Government by getting a false claim allowed or paid (3729(a)(3))

    • New – conspires to commit a violation of the liability provisions of the False Claims Act (3729(a)(1)(C))


    Far disclosure rule 13 issues cont27 l.jpg

    FAR DISCLOSURE RULE - 13 ISSUES (cont.)

    Issue 4: What is a significant overpayment?

    • FAR clauses require reporting/return of overpayments (FAR 52.212-4(i)(5), 52.232-25(d), 52.232-26(c) & 52.232-27(l))

    • “Significant overpayment” not defined

    • Preamble states, “implies more than just dollar value and depends on the circumstances of the overpayment as well as the amount”

    • Consider relationship to False Claims Act


    Far disclosure rule 13 issues cont28 l.jpg

    FAR DISCLOSURE RULE - 13 ISSUES (cont.)

    Issue 5: What is credible evidence?

    • Both S&D and contract clause require reporting of “credible evidence”

    • Other contexts – “credible evidence” means worthy of belief based on circumstances

    • Allows for some evaluation time

    • Role of affirmative defenses


    Far disclosure rule 13 issues cont29 l.jpg

    FAR DISCLOSURE RULE - 13 ISSUES (cont.)

    Issue 6: Who is a principal?

    • An “officer, director, owner, partner, or a person having primary management or supervisory responsibilities within a business entity (e.g., general manager; plant manager; head of a subsidiary, division or business segment; and similar positions.” FAR 2.101(b)(2)

    • Preamble –interpret broadly; could include compliance officers, directors of internal audit, or other positions of responsibility.


    Far disclosure rule 13 issues cont30 l.jpg

    FAR DISCLOSURE RULE - 13 ISSUES (cont.)

    Why definition of principal matters

    • Suspension/debarment and look-back apply to knowledge of “principal”

    • Internal control system includes reasonable efforts not to employ as “principal” those who due diligence would expose as engaged in conduct in conflict with ethics and conduct code


    Far disclosure rule 13 issues cont31 l.jpg

    FAR DISCLOSURE RULE - 13 ISSUES (cont.)

    Issue 7: What are requirements regarding subcontractors?

    • Subcontract – any contract entered into by a subcontractor to furnish supplies or services for performance of a prime contract or subcontract.

    • Under S&D provision, must disclose credible evidence of violation regarding contract or a “subcontract awarded thereunder.”

    • Contract clause - must disclose credible evidence that a “principal, agent, employee, or subcontractor” has committed violation regarding contract or a “subcontract awarded thereunder.”


    Far disclosure rule 13 issues cont32 l.jpg

    FAR DISCLOSURE RULE - 13 ISSUES (cont.)

    • For others than small businesses or contracts for acquisition of commercial items, maintain business ethics awareness and compliance program that includes:

      • Training that is provided as appropriate to contractor’s agents and subcontractors

      • Internal compliance program that reports credible evidence of violation by subcontractor

      • Flow down if subcontract over $5 million and 120 days


    Far disclosure rule 13 issues cont33 l.jpg

    FAR DISCLOSURE RULE - 13 ISSUES (cont.)

    Issue 8: What is a “timely” disclosure?

    • All the disclosure provisions require “timely” disclosure

    • Reasonable time for internal investigation

    • No specific definition

    • Consider early reporting

    • Do Recovery Act timeframes mean timely needs to be sooner


    Far disclosure rule 13 issues cont34 l.jpg

    FAR DISCLOSURE RULE - 13 ISSUES (cont.)

    Issue 9: What are the “look back” requirements?

    • S&D provisions apply for 3 years after final payment on any contract

    • Business ethics and awareness program requires disclosure on any Government contract for 3 years after final payment


    Far disclosure rule 13 issues cont35 l.jpg

    FAR DISCLOSURE RULE - 13 ISSUES (cont.)

    Issue 10: What should be the form and content of disclosures?

    • In writing

    • Recommend some immediate reports

    • Electronic forms available

    • Consider definition of “full cooperation” – information sufficient to identify nature and extent of offense and individuals responsible


    Far disclosure rule 13 issues cont36 l.jpg

    FAR DISCLOSURE RULE - 13 ISSUES (cont.)

    Issue 11: Who should disclosures be made to?

    • To respective OIG for crimes and False Claims Act (FCA), with copy to contracting officer (CO)

    • To CO for only overpayments (CO should notify OIG)

    • If relates to more than one contract, to OIG with higher contract value

    • If relates to procurement instrument used by multiple agencies, notify OIGs of ordering agency and agency responsible for basic contract, and agencies’ COs


    Far disclosure rule 13 issues cont37 l.jpg

    FAR DISCLOSURE RULE - 13 ISSUES (cont.)

    Issue 12: Are there still voluntary disclosures?

    • Yes

    • Reasons for voluntary disclosures include

      • Belief that will not constitute an admission

      • More protection from disclosure under FOIA

      • Caution

    • Applies to Recovery Act contracts as well


    Far disclosure rule 13 issues cont38 l.jpg

    FAR DISCLOSURE RULE - 13 ISSUES (cont.)

    Issue 13: How to preserve confidential and privileged information?

    • Government will safeguard disclosures to extent permitted by law and regulation

    • Label any proprietary information

    • Disclose facts


    Working with the oig l.jpg

    WORKING WITH THE OIG

    • Statutory role of OIG

    • Detect and prevent fraud, waste, and abuse

    • Promote economy and efficiency


    Working with the oig cont l.jpg

    WORKING WITH THE OIG (cont.)

    • Overpayment notices

      • To contracting officer

        • Should advise OIG

        • Many go directly to OIG as well

    • Credible evidence of violations

      • To OIG

      • With copy to contracting officer

    • All parties need to work together


    Working with the oig cont42 l.jpg

    WORKING WITH THE OIG (cont.)

    • Each disclosure evaluated by OIG team

    • Provide contracting officer a copy

    • Inform Department of Justice

    • Generally meet with contractor, invite contracting officer and Department of Justice


    Working with the oig cont43 l.jpg

    WORKING WITH THE OIG (cont.)

    • Majority of disclosures to date characterized as overpayments

    • Contractors identified over $11 million in potential overcharges

    • Generally try to work with contractor

    • Advise contractor when matter closed


    Contractor cooperation with oig l.jpg

    CONTRACTOR COOPERATION WITH OIG

    ARRA and FAR Rule comparison

    • FAR disclosure rule – full cooperation

      • Disclosure of information sufficient for law enforcement to identify the nature and extent of conduct and individuals responsible

      • Includes providing timely and complete response to Government auditors’ and investigators’ request for documents and access to employees with information


    Contractor cooperation with oig cont l.jpg

    CONTRACTOR COOPERATION WITH OIG (cont.)

    • Recovery Act - OIG authorized

      • To examine any records of the contractor or grantee, any of its subcontractors or subgrantees, or any State or local agency administering such contract, that pertain to, and involve transactions relating to, the contract, subcontract, grant, or subgrant;

      • To interview any officer or employee of the contractor, grantee, subgrantee, or agency regarding such transactions.


    Oig and contracting officers l.jpg

    OIG AND CONTRACTING OFFICERS

    • Need to work together

    • Share information

    • Disclosure is only start of process


    Questions l.jpg

    Questions?

    Contact information:

    Richard Levi

    Counsel to the Inspector General

    1800 F. St. NW

    Washington, DC 20405-0001

    (202) 501-1362

    [email protected]


  • Login