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UNDERSTANDING NEW FAR CODE OF ETHICS, BUSINESS CONDUCT As if there was not
enough to keep track of at the end of the year, the Federal Acquisition
Regulation was recently amended. The amended version adds new requirements
for government contractors to develop a "Contractor Code of
Business Ethics and Conduct" and to display a hotline poster.
Subcontractors are required to abide by the same provisions. The
new FAR went into effect on December 24, 2007. The regulations that changed include:
There are some exemptions to the new regulations. A business of any size is exempt if the contract is a commercial acquisition under FAR Part 12 or if the contract is performed completely outside the United States. A business of any size is also exempt if the contract value does not exceed $5,000,000 or is less than 120 days of performance. Small businesses are exempt from the requirement of developing internal controls and an awareness program within 90 days as outlined below. The new regulations include a series of requirements. A contractor has 30 days after the award of the contract to establish a written code of business ethics and conduct and provide a copy of the code to all employees who are performing only on the new contract. The contractor must use the code of ethics and conduct to train and inform their personnel in compliance matters. Requirements necessary within 90 days for large business contractors include: an active business ethics awareness program, an internal control system, and specific internal control mechanisms. The internal control system must achieve, in a timely manner, the recognition of inappropriate conduct and the establishment of a corrective action plan with appropriate follow-up. Examples of internal control mechanisms are: on-going internal reviews of business policies and procedures to confirm compliance with government contract regulations and established business code of ethics and conduct; establishment of a hotline to support "whistle-blowers" in the event of improper activities; internal and/or external audits as required; and punitive consequences to improper employee actions. The above information is detailed in the Federal Register: Vol. 72, No. 225, Friday November 23, 2007, Rules and Regulations, pages 65881 and 65882. A link to the Federal Register is as follows: http://a257.g.akamaitech.net/7/257/2422/01jan20071800/edocket.access.gpo.gov/2007/pdf/07-5800.pdf To discuss these regulations and their
impact, please contact Mr. Calabrese at pcalab@rubino.com.
For more information about Rubino & McGeehin, please visit http://www.rubino.com/.
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