Government Contracting and Relationships

Government Contractor Integrity and Responsibility: Risks and Opportunities in the Federal Marketplace

By Eric R. Feldman, CFE, CIG,[1] and Rodney A. Grandon[2]

Government contracting is a complex, ever-changing undertaking that offers financial opportunities, a certain degree of economic stability, and a virtual minefield of risks to the contractors who participate in the federal marketplace. One of the greatest of those risks is remaining in compliance with the thousands of regulations that comprise the Federal Acquisition Regulation (FAR)[3] and its supplements, the regulatory foundation of federal contracting. Contractors need to learn, and fully understand, the nuances associated with federal contracting, such as the special integrity rules that impose restrictions very different than those governing commercial transactions; unique government requirements, such as the Buy American Act,[4] the Truth in Negotiations Act,[5] the Procurement Integrity Act;[6] and myriad cost accounting principles, billing requirements, conflict of interest rules, and other provisions that, if violated, can cost the contractor millions in fines, result in suspension or debarment from future government business, and even end in criminal prosecution for both the company and its officers and directors.

Contractors can survive and, indeed, flourish in the world of government contracting, provided they understand the risks associated with federal contracting; focus on achieving compliance with the many “rules of the road” required to participate in the government sector; and embrace the role of ethics and compliance programs in promoting integrity in their business operations and demonstrating due diligence to government customers and regulators, including the enforcement community (e.g., the Department of Justice and agency Suspending and Debarring Officials) should problems arise.

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