Defense Bill Shows Importance of Ethics and Compliance Programs

Article excerpt

On May 24, the Senate Armed Services Committee finalized its version of the National Defense Authorization Act for fiscal year 2013. The SASC version of the bill, which authorizes funding for the Defense Department and the defense programs in the Department of Energy, includes several key policy changes that will affect government contractors.

One change revises the Defense Department's process for suspending or debarring contractors deemed not presently responsible to participate in government contracting.

The committee markup comes on the heels of multiple congressional hearings on perceived problems with government contractor performance. At one hearing held by the Senate Homeland Security and Governmental Affairs Committee in November, Committee Chairman Sen. Joe Lieberman, I-Conn., criticized agencies for using suspension and debarment "all too rarely," and thereby permitting millions of dollars of waste, fraud or abuse.

Many SASC changes were influenced by the final report of the Commission on Wartime Contracting, an independent congressional body created to study wartime contracting in Iraq and Afghanistan. In its final report the commission advocated increased use of suspension and debarment for contractors and stated, "suspension and debarment can be powerful tools to protect the government's interest in doing business only with contractors capable of performing their contractual obligations and maintaining acceptable standards of behavior."

In this latest iteration of the act, the committee strengthened the Defense offices responsible for suspension and debarment. The suspension and debarment officials of the departments of the Army, Navy and Air Force as well as the Defense Logistics Agency now must be independent of acquisition officials and the Inspectors General. They must limit engagement to suspension, debarment and other fraud-remedies activities. They must document final decisions, and develop written policies to administer suspension and debarment.

The act also requires automatic referral to suspension and debarment officials of any person--including a corporation--charged with a crime related to a government contract, accused of committing civil or criminal fraud, or who has failed to pay or refund money owed to the government.

This automatic referral requirement tracks Sen. Claire McCaskill's, D-Mo., and Sen. James Webb's, D-Va., Comprehensive Contingency Contracting Reform Act of 2012 (S. 2139), which has passed neither the Senate nor the House. This bill requires automatic suspension of Defense Department, Department of State or United States Agency for International Development contractors supporting contingency operations charged with a crime related to a government contract, charged with civil or criminal fraud, or that have failed to pay or refund money owed to the government.

During an April hearing, Defense and State Department representatives testified against an automatic suspension provision as inimical to the government's best interest.

These new SASC provisions, while providing more discretion to the suspension and debarment officials, cover all defense contractors, not just those supporting overseas contingency operations. …