Overview
This section establishes the federal government’s expectation that contractors maintain high standards of ethical conduct and implement formal internal controls to detect and prevent improper activity.
Key Rules
- Integrity Mandate: Contractors are required to conduct all business with the highest degree of honesty and integrity.
- Ethics Infrastructure: Contractors should maintain a written code of business ethics and conduct, supported by an employee training program.
- Internal Control Systems: Contractors are expected to establish systems that:
- Are proportional to the company’s size and the volume of its government business.
- Enable the timely discovery and self-disclosure of improper conduct.
- Ensure that corrective actions are implemented promptly once issues are identified.
Practical Implications
- Scalability: Compliance requirements are not "one size fits all"; small businesses can implement simpler systems than large defense contractors, provided they still effectively facilitate discovery and disclosure.
- Proactive Disclosure: The policy shifts the burden to the contractor to police themselves and voluntarily report misconduct to the government to mitigate potential legal or administrative penalties.