Overview
FAR 3.1003 establishes mandatory disclosure requirements for contractors regarding criminal violations, civil False Claims Act violations, and significant overpayments, while also outlining the administrative responsibilities of Contracting Officers and Inspectors General. It serves as the regulatory mechanism to enforce ethical conduct and transparency through the threat of suspension or debarment.
Key Rules
- Mandatory Clauses: While general ethical guidance applies to all, FAR clauses 52.203-13 (Code of Business Ethics) and 52.203-14 (Hotline Posters) are compulsory when contracts meet specific thresholds defined in 3.1004.
- Mandatory Disclosure Duty: Principals must timely disclose credible evidence of specific Federal crimes (fraud, bribery, conflict of interest, or gratuities) or civil False Claims Act violations.
- Suspension and Debarment: Failure to disclose known violations is a specific cause for suspension or debarment, and this liability persists until three years after final payment on the contract.
- Overpayment Remittance: Contractors are required to return overpayments; knowing failure to disclose a "significant overpayment" (excluding certain contract financing) is grounds for suspension or debarment.
- CO Coordination: Contracting Officers are mandated to coordinate with the agency Office of the Inspector General (OIG) upon notification of potential criminal or civil violations.
- Hotline Posters: Agency OIGs dictate the necessity and content of fraud posters, with specific requirements for disaster assistance funds managed by the Department of Homeland Security.
Practical Implications
- Continuous Compliance Monitoring: Contractors must maintain robust internal controls and "whistleblower" mechanisms to detect "credible evidence" of wrongdoing, as the duty to disclose applies regardless of whether specific ethics clauses are present in the contract.
- Extended Post-Contract Risk: The three-year window after final payment means that a company's debarment risk remains active long after performance ends, requiring long-term record retention and audit capabilities.