FCPA CORRUPTION ISSUES FOR GOVERNMENT CONTRACTORS

RC: In what ways has the regulatory risk and compliance landscape for government contractors evolved in recent years?

Schwartz: There are public procurement rules, not just in the US, but throughout the EU and in the rest of the world – certainly in the G20 countries, but almost everywhere there is a government procurement regime. On top of that, because it is an obvious touch point between a commercial organisation and government, either direct or indirect, all of the bribery and corruption concerns that go along with any other ‘government as customer’ situation are present for government contractors.

Ferat: The enactment of Federal Acquisition Regulation (FAR) clause 52.203-13, ‘Contractor Code of Business Conduct and Ethics’ has added an increased layer of risk to US government contractors dealing with potential FCPA issues. This clause, required in most government contracts greater than $5m, suggests that to the extent that an FCPA violation becomes known to a government contractor, regardless of materiality, it would arguably be required to disclose the infraction to the government. While non-government contractors usually have the choice – albeit an often difficult one – to self-disclose Foreign Corrupt Practices Act (FCPA) infractions to the government or not, government contractors appear to have much less leeway. In addition, contractors that are subject to oversight by the Defense Contract Audit Agency (DCAA) in particular, have seen an onslaught of increased scrutiny at all stages of the contracting process including bid proposal, ongoing contract execution and project close-out. This increased scrutiny stems from the highly critical 2008 US Government Accountability Office report of the DCAA performance.

Jan-Mar 2015 Issue

The Claro Group LLC

KPMG

Miller & Chevalier Chartered

Skadden, Arps, Slate, Meagher & Flom LLP