The steady increase in federal spending and recent high-profile criminal and civil matters involving federal contractors have resulted in closer scrutiny of federal contractors in general. In the current environment, ensuring that your company's procurement policies, practices and procedures conform with applicable laws and regulations is more critical than ever.
Ethics and compliance audits of government contractors generally involve: (1) assessing current government contracts policies/practices/procedures through on-site audit and review of relevant documents and interviews of pertinent management and staff; (2) identifying existing ethics/compliance issues, weaknesses, and key areas of risk; (3) identifying recommendations for mitigating known risks; and (4) ongoing targeted quarterly reviews of specific areas. Where a compliance audit has been initiated in connection with, or in response to, a government investigation, the company will also need to develop and implement corrective action plans and other remedial measures critical to mitigating the risk of suspension/debarment based on any alleged misconduct.
Wiley Rein has conducted these types of ethics and compliance audits (and provided ongoing compliance-related counseling) for a variety of government contractors. By way of example, we recently completed such audits for a multibillion-dollar information technology services company with worldwide offices, a major systems integrator, a large "commercial item" hardware manufacturer, a software company and a number of organizations that provide construction, engineering and other types of services to the federal government. For these audits, typical areas of inquiry include assessment of: (1) compliance with applicable statutory and regulatory requirements; (2) compliance with prime or subcontract terms and conditions; (3) the effectiveness of the company's code of conduct or standards of conduct (if any); (4) compliance with socioeconomic/reporting requirements; (5) security clearance/export compliance procedures (where applicable); (6) the nature and extent of employee training, including the "tone at the top" set by management; and (7) internal controls designed to ensure overall compliance with government contracting requirements.