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

On April 21, 2008, the U.S. Department of the Treasury ("Treasury") proposed new rules relating to the procedures that the Committee on Foreign Investment in the United States (“CFIUS”) should use in reviewing (and potentially halting) foreign investments in U.S. companies based on a potential impact on national security.  See 79 Fed. Reg. 21861.  While Congress previously mandated that changes be made to the CFIUS process following the much ballyhooed Dubai Ports World controversy in 2006, the current rules are merely proposed, and are not yet final.  Treasury is accepting comments on the proposed rules until June 9, 2008.

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As previously discussed in this blog, there is a pending FAR rule relating to "Contractor Compliance and Integrity Reporting" pursuant to which a contractor could be suspended or debarred for failure to disclose to the agency IG and contracting officer that it has reasonable grounds to believe that there has been a violation of federal criminal law, or that it has received a significant overpayment, in connection with a contract or subcontract valued at $5 million or more.  Finding this disclosure overly narrow, DOJ recommended broadening the proposed rule to include mandatory disclosure of FCA violations as well.

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On April 23, 2008, the U.S. House of Representatives passed H.R. 3033, "Contractors and Federal Spending Accountability Act," agreeing by voice vote that GSA would maintain a centralized database of government contractors.  The GSA database would collect information on contract defaults, suspensions, and debarments, as well as "any civil or criminal proceeding, or any administrative proceeding" for which a contractor paid at least $5,000 in restitution, that has been "concluded" by the federal or state governments.  If a contractor committed in a three-year period more than one offense for which it could be debarred, the contracting officer must affirmatively demonstrate the contractor's responsibility prior to award.

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• Negotiate a Basis of Award you can live with - the time to figure out what you can live with is before, not after, award.
• Adopt a centrally controlled and monitored standard pricing structure - memorialize it in writing and enforce it.
• Institute redundant internal compliance safeguards.
• Limit the number of your people dealing with Government customers.
• Assign qualified people - and train them on your policies.
• Do not incentivize non-compliance - use a carrot and a stick.
• Be proactive in responding to non-federal concerns so the Schedule rules do not become a hindrance that folks try to circumvent.
• Conduct periodic, independent compliance reviews Sanction significant misconduct - don't have rules that are "winked at."
• Inform your counsel immediately of non-routine communications (e.g., audit letters, show cause letters, subpoenas etc.)

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