Violation Reporting under the Federal Acquisition Regulations

Government contractors have new reporting requirements under the Federal Acquisition Regulations. Beginning December 12, 2008, contractors and subcontractors performing federal contracts—irrespective of monetary value or duration—will be legally obligated to disclose to the relevant federal agency’s Office of Inspector General credible evidence of

  • federal criminal law violations involving fraud, conflict of interest, bribery or gratuities;
  • violations of the civil False Claims Act; or
  • significant overpayment on the contract.

Contractors should not automatically disclose every potential violation. “Credible evidence” implies that you have the opportunity to conduct a preliminary internal investigation of the facts before determining whether or not disclosure is necessary.

Government contractors should not be caught by surprise when the rule becomes effective on December 12, 2008. They should consider the following questions before they are confronted with reported violations relating to the contract:

  • Who will determine whether disclosure under the FAR is required?
  • How should disclosure be made to the agency OIG?
  • Who should make the disclosure?
  • How will the resulting government investigation be managed?
  • How will public relations consequences be handled?

You should also consider legal consequences of mandatory reporting, including the effect of disclosure on the preservation of attorney-client privilege, self-incrimination, preservation of company defenses to government claims, and maintenance of coverage under applicable insurance policies.

See my prior blog posts:

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