Government Contracts Blog : Government Contracts Lawyer & Attorney : Sheppard Mullin Law Firm : Bids, Licenses, Awards, Conflict of Interest.

The Court of Federal Claims’ recent decision in Axiom Resource Management v. United States, 2007 WL 2840414 (Sept. 28, 2007), illustrates the trend toward more robust judicial review of organizational conflict of interest (OCI) allegations. The case also highlights several issues contractors should consider in drafting successful OCI mitigation plans.

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An effective export control policy – one that addresses all of the applicable export regimes, effectively trains company personnel with respect to the companies’ obligations, and monitors adherence to the requirements set forth in the policy – is an essential element of a comprehensive corporate compliance program. Although the need for such policies may appear to be most obvious with respect to goods and services of a military character, the need is far more pervasive, applying generally to virtually any goods or technology that originate or are modified in the United States. Depending on the regulatory regime, restrictions can apply based on the character of the goods or services, the immediate or ultimate destinations, the uses to which the exports can be put, and, when overseas entities are involved, the extent to which United States persons may have been involved in the transaction. For an overview of the principal export control regulatory regimes, see Export Control Booklet.

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Throughout our nation's history, wars have inspired changes to our government contracting system. Given the nature of preparing for and implementing military action and reconstruction efforts, the Government has frequently sought and continues to seek goods and services from private contractors successfully to fulfill its mission. Whether the result of necessity or (as is so often the case in recent years) a response to prevailing public sentiments, the changes to the procurement system that follow resonate through-out the government contracting community.

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• Exporting products and technology from the United States is a privilege, not a right.   
• U.S. export laws have a broad reach -- they govern U.S. products and technology, foreign products and technology that reside in the U.S., and foreign products and technology that has any U.S. content, even if overseas.
• Classify your products -- "defense articles" are controlled by State under the ITAR; "dual use" products are generally controlled by Commerce under the EAR.
• Providing a controlled item to a "foreign person" inside the U.S. is an export.
• Know your employees -- "foreign persons" must not be given access to controlled information.
• Permanent resident aliens ("green card" holders) are "U.S. persons" for export purposes.
• Exports can occur through oral and written communication or via access to data and technology -- control your e-mail, control access to your server, and control visits to your facilities.
• Have -- and monitor and enforce -- an export compliance plan that includes training of all employees. 
• Perform basic due diligence on new customers to see if they are problematic -- US Government web sites can help. 
• Violations have consequences -- revocation of export privileges and civil and/or criminal penalties.

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If Government Agents Arrive,

Follow These Steps:

• Ask for identification of the agent-in-charge and the prosecutor. Get business cards.
• Contact your company’s inside or outside counsel. Ask the agents to talk to your counsel.
• Request the agents not begin the search until counsel can be present.
• Read the search warrant to learn what areas may be searched and what may be seized.
• You are not required to assist, but don’t interfere and don’t hide or destroy anything.
• Don’t volunteer information about your company or employees.
• Don’t consent to a search of any location or documents not identified in the warrant.
• If possible, send employees home.
• Advise employees it’s their choice whether to be interviewed by the agents.
• Employees can require that any interview occur at another time, with a lawyer present.
• Don’t talk to the media unprepared. Tell employees to keep the search confidential.
• Before the agents leave, ask for a detailed inventory of items seized.
• Inventory and photograph all areas searched as soon as the search is over.
• Identify all persons who had contact with the agents.

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John W. Chierichella and Marko W. Kipa
Legal Times
10-08-2007

Reform is not always popular among those who enjoyed the old regime. The current push to strip away protections afforded to contractors participating in commercial-item acquisitions illustrates this struggle - and why the reforms were valuable in the first place.

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The United States Court of Federal Claims recently decided a case that addresses a contractor's remedy in the event of a government breach of contract and provides a useful reminder regarding managing expectations in the negotiation of contract prices with the government. Praecomm, Inc. v. United States, 78 Fed. Cl. 5 (Aug. 9, 2007).

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E-mail is not private.

Once the Send button is hit it is virtually uncontrollable.

It is discoverable.

It is evidence.

Treat it as a business record.

“Grind your axes” elsewhere.

Don’t speculate about things you do not know.

Don’t be “cute.”

Don’t use shorthand.

Avoid “inflection” through punctuation marks.

Think before you hit the Send or Forward button.

Read it two or three times before you Send it.

Try to envision it in the hands of an enemy.

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