Eyak Technology, LLC Compliance Training Fall 2011 Conducting Business in the Federal Government Marketplace

Eyak Technology, LLCCompliance TrainingFall 2011

Conducting Business in the Federal Government Marketplace

Introduction

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Introduction

• Field Ethics Officer- John Spear

• Ethics Training Presenter- Paul Khoury, Partner, Wiley Rein LLP

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Introduction

• Company Values– Honesty

– Integrity

– Fairness

– Self Regulation

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Overview

•Compliance in the Federal Government Marketplace– Heavily regulated. Many laws and regulations that govern and/or restrict

certain types of conduct that may otherwise be permissible in the commercial context. Example: entertainment of customers

• Laws and regulations govern dealings with federal prime and higher-tiered subcontractor entities, most of whom have their own ethics/compliance policies which impose many Federal requirements on their suppliers.

• “Level the playing field”/competitive procurements

– Severe civil and/or criminal penalties for violations are possible for EyakTek and/or the EyakTek employee(s) involved.

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Overview

•EyakTek Compliance Program– The EyakTek Standards of Business Conduct for the Government

Marketplace set forth specific guidelines for conducting business in the federal marketplace

– Divided into the following areas:• Integrity Issues

• Communications with the Government

• Accounting & Financial Concerns

• Socioeconomic Policies

• Information/Document Control & Retention

• Contract Performance Issues

• Government Audits and Investigations

• Reporting Violations

• Compliance & Discipline

– Compliance with these Standards of Conduct is essential.Report any violations or suspected violations to EyakTek.

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Overview

•EyakTek Resources– You should consult with the following individuals if you have questions

about the Standards:

• Your Supervisor

• The EyakTek Ethics and Compliance Officer

– The following slides also contain cross-references to the relevant section of the Standards (i.e., Stds. §__) for further inquiry and review.

Integrity Issues

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Integrity Issues

• Improper Payments/Bribery (Stds. § II.B.11) – It is illegal for EyakTek to, directly or indirectly, offer, solicit, make or

provide any kind of payments, favors or contributions for the purpose of:• Obtaining, giving or keeping business

• Influencing customers, suppliers or U.S. or foreign government entities, including their officials or employees

• Persuading any officials or employees of another company to fail to perform or to improperly perform their duties

• Influencing legislation or regulations other than through appropriate lobbying and legitimate political activity

– Penalties can be severe and include both civil and criminal sanctions.

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Integrity Issues

• Gifts & Gratuities (Stds. § II.B.8)

– It is a federal crime to give gifts or gratuities to a public official:

• Anything of value, such as a business courtesy

• Given, offered or promised to any public official

• For or because of an official act performed or to be performed by such public official.

– No EyakTek employee shall give, offer or discuss offering a business courtesy, regardless of value, to any employee or representative of the U.S. Government.

– Seek guidance if unsure.

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Integrity Issues

• Anti-Kickback Act (Stds. § II.B.10) – Prohibits EyakTek from offering, soliciting, providing or accepting anything

of value for the purpose of obtaining, or rewarding favorable treatment in connection with the award of a U.S. Government prime contractor subcontract.

– For example, any money, meals, trips, lodging, tickets to sporting events, loans, transportation, beverages, or personal services given to a customer in the federal marketplace in exchange for favorable treatment may be considered a violation of the Act.

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Integrity Issues

• Foreign Corrupt Practices Act

– Prohibits U.S. companies conducting business with foreign government entities from giving or offering to give anything of value to any foreign officials for the purpose of influencing such individual in his official capacity or causing such individual to influence the foreign government in order to obtain or retain business.

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Integrity Issues

• Procurement Integrity Act (Stds. § II.B)– PIA enacted to maintain the public’s confidence in the integrity of the

procurement system.

– Two primary restrictions:

• Disclosure or receipt of competition-sensitive information

• Employment discussions with current and former government employees

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Integrity Issues

• Competition-Sensitive Information (Stds. § II.B.3-6)– PIA prohibits individuals from knowingly obtaining “contractor bid and

proposal information”

– “Contractor bid and proposal information” includes:• Cost or pricing data• Indirect costs and direct labor rates• Contractor proprietary information• Other information marked by the contractor as “contractor bid or proposal

information”

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Integrity Issues

• Competition-Sensitive Information (cont’d)– PIA also prohibits individuals from knowingly obtaining “source selection

information”

– “Source selection information” includes:– Proposed costs or prices submitted to the government

– Source selection or evaluation plans

– Evaluations of proposals

– Rankings of bids, proposals or competitors

– Reports and evaluations of source selection panels, boards or advisory councils

– Other information marked “Source Selection Information”

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Integrity Issues

• Employment Discussions (Stds. § II.B.7)

– Restrictions on employment of current and former Government employees:

• Discussions relating to future employment opportunities with current federal agency officials participating “personally and substantially” in procurements in excess of $100,000 where EyakTek is competing.

• “One year ban” imposed for hiring certain former agency officials involved in procurement in excess of $10 million.

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Integrity Issues

•Former Government Employees – Former government employees are prohibited from:

• Knowingly communicating with the Government on behalf of another entity with the intent to influence the Government regarding a matter he/she personally and substantially worked on during his/her Government tenure;

• For a period of two years, communicating with the Government regarding matters for which the former employee had official responsibility;

• For a period of one year, aiding or advising anyone concerning ongoing trade or treaty negotiations in which the former employee personally and substantially participated and had access to protected information.

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Integrity Issues

•Former Government Employees (cont’d)– Former government employees are prohibited from:

• If the former employee was a senior or very senior Government employee, for a period of one year, knowingly, on behalf of any other person, communicating or appearing, with the intent to influence, before the agency in which the former employee served;

• Participating personally and substantially in a matter affecting the financial interest of any entity with whom the Government employee is negotiating employment or has any arrangement regarding future employment (“recusal” necessary); or

• Knowingly disclosing contractor bid or proposal information or source selection information to anyone not authorized to receive it.

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Integrity Issues

•Former Government Employees (cont’d)– Prior to the employment of any current or former Government employee,

that employee must obtain a written advisory opinion from the Designated Agency Ethics Official that acceptance of the employment offer will not violate any ethics or conflict of interest statute, rule, regulation, or executive order.

– This opinion must be reviewed and approved by EyakTek’s counsel.

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Integrity Issues

• Lobbying/Political Activity (Stds. § II.A.12)

– In the U.S., federal law prohibits corporations from donating corporate funds, goods or services, directly or indirectly, to candidates for federal offices.

– For this reason, no political contribution of corporate funds or use of corporate property, services, or other assets may be made without the written approval of the EyakTek Ethics and Compliance Officer.

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Integrity Issues

• Suspended & Debarred Contractors (Stds. § II.A.13)

– The U.S. Government publishes a list of persons and companies that are suspended or debarred from performing government contracts.

– It is EyakTek’s policy not to do business with such persons or companies in the Federal Government Marketplace.

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Integrity Issues

• Conflicts of Interest: Personal Conflicts (Stds. § II.A.1)

– All EyakTek business transactions and relationships must be free from even the appearance of impropriety.

– All EyakTek employees must act in a fair and impartial manner in all business dealings, to place the interests of EyakTek over personal interests in matters relating to EyakTek business, and avoid financial, business, or other transactions or situations in which personal interests might conflict with, or be construed to conflict with, the interests of EyakTek.

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Integrity Issues

•Conflicts of Interest: Organizational Conflicts of Interest (“OCIs”) (Stds. § II.B.14)

– EyakTek must be attentive to such conflicts which may result from prior Government services work performed by the company.

– For instance, EyakTek development of specifications for an item or design of a product for a federal customer may affect EyakTek’s ability to compete under a future competitive acquisition to manufacture that product.

– Be alert to the presence of solicitation clauses relating to organizational conflicts of interest and immediately report such situations to the EyakTek Ethics and Compliance Officer.

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Integrity Issues

•Conflicts of Interest: Current Government Employees / Reservists

– EyakTek must be attentive to conflicts which may result from an employee’s or potential employee’s current government employment.

– For instance, 18 U.S.C. § 205 prohibits a Government officer or employee from acting as an agent for anyone before the Government in connection with any “covered matter” (includes a contract) in which the United States is a party or has a direct and substantial interest.

– Restrictions of § 205 could potentially apply to Reservist Officers working for EyakTek.

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Integrity Issues

•Conflicts of Interest: Current Government Employees / Reservists (cont.)

– Similarly, 18 U.S.C. § 208 prohibits Government employees from participating personally and substantially in a matter affecting the financial interest of any person or organization with whom the employee is negotiating employment opportunities or has any arrangement concerning prospective employment.

– Restrictions of § 208 could potentially apply to Reservist Officers working for EyakTek.

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Integrity Issues

• Contingent Fees (Stds. § II.B.12)

– Federal law limits EyakTek’s ability to enter into “contingent fee” arrangements with any person or agency not considered a “bona fide agency” or “bona fide employee” in order to solicit or obtain a U.S. Government contract.

– “Contingent fee” means any commission, percentage, brokerage, or other fee that is contingent upon the success that a person or agency has in securing a government contract.

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Integrity Issues

• Antitrust/Bid Rigging (Stds. § II.B.13) – The antitrust laws are designed to ensure fair competition and to

preserve the free enterprise system. The following actions may be perceived as anti-competitive:

• An agreement with one or more competitors to:

– Agree on prices

– Allocate markets or customers

– Boycott certain suppliers

– Limit production or quality

• An agreement with a customer to:

– Dictate resale prices

– Give preferential pricing or terms

– Restrict marketing efforts (territory, customers)

– Require tie-in sales (require purchase of one product as condition of selling another

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Integrity Issues

• Contact with Foreign Governments and Overseas Manufacturing

– Many laws limit Company’s ability to provide certain products to foreign governments.

– Company must be alert to requirements or certifications under the Buy American/Trade Agreement Acts involving the provision by Company of “domestic end products”.

Communications with the Government

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• Representations and Certifications (Stds. § II.B.2)

– Federal solicitations frequently require representations and certifications from contractors regarding the existence of certain facts.

– When conducting business with any customer in the federal marketplace, EyakTek must be accurate and complete in all representations and certifications.

– Be alert to requirements where EyakTek is asked to provide or “certify” cost or pricing data as being “current, accurate and complete”.

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• False Statement Act – Prohibits knowingly and willfully making a false statement concerning a

matter within the jurisdiction of any department or agency of the U.S.

– Need not be directed to the Government. Example: subcontractor invoice to prime qualifies.

– Must be “material,” but the Government need not rely on, be deceived by, or be damaged by the statement.

– The prohibition extends to both oral and written statements (sworn or unsworn), forms, certifications, invoices, letters, time cards, receipts and quotes.

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• False Claims Act

– It is a crime to knowingly assert a false claim against the Government.

– A claim is a written demand or assertion seeking payment arising under or relating to a Government contract. Example: invoice

– The claim need not be presented directly to the Government to trigger the severe penalties associated with non-compliance. Example: false subcontractor invoice to prime

Accounting & Financial Concerns

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•Truth in Negotiations Act (“TINA”)– TINA requires a contractor to submit cost or pricing data prior to:

• The award of a negotiated contract or subcontract in excess of $550,000; or

• To the pricing of a change or modification greater than $550,000.

– Cost or pricing data is not required:• Where the price agreed upon is based on adequate price competition;

• Where the price agreed upon is based on prices set by law or regulation; or

• In the acquisition of commercial items.

– Even when an exception applies, the CO may require submission of “other than cost or pricing data” to support price reasonableness or cost realism.

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•Truth in Negotiations Act (cont’d)

– TINA allows the Government to audit a contractor for three years after final payment to evaluate accuracy, completeness, and currency of pricing data.

– A price reduction, as well as potential civil and criminal liability, may follow if the data is found to be inaccurate, incomplete, or out of date.

Information/Document Control & Retention

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•Government Provided Information (Stds. § II.B.6)

– EyakTek is committed to protecting Government information in its possession.

– Failure to comply with contractual requirements for protection of such data could lead to contractual and civil penalties.

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•Document Retention (Stds. § II.A.9)

– The laws governing government contracts contain strict rules requiring EyakTek to maintain accurate and complete records, even after contract performance has ceased.

– Transactions between EyakTek and outside individuals and organizations must be promptly and accurately entered in EyakTek books in accordance with generally accepted accounting principles.

– No EyakTek employee should rationalize or even consider misrepresenting facts or falsifying records.

Contract Performance

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•Overview (Stds. § II.B.5)

– All EyakTek federal contracts or subcontracts must be performed in accordance with their terms. Example: specifications, quality control provisions and contract clauses

– You must strive to attain and maintain the highest standards of contract performance in EyakTek’s work in the Federal Marketplace.

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• Quality Control

– EyakTek is committed to producing quality work product that meet all contractual obligations and our own quality standards.

– The products we deliver must:

• Meet contract specifications

• Be made from the quality of materials ordered

• Be properly tested and inspected

• Be properly identified as to domestic or foreign-origin, if applicable

• Comply with all applicable laws and regulations

– Be alert to, and comply with, special quality control requirements and/or additional standards imposed on EyakTek by its customers in the Federal Marketplace.

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•Export Control Laws / International Trade in Arms Regulation (“ITAR”)

– The ITAR controls the export of military use items and “deemed exports” to foreign persons.

– An export of technical data or a defense service occurs when data is physically transferred to or a service is performed in a foreign country. A “deemed export” occurs when data is disclosed or a service is provided to a foreign person in the United States.

– Items subject to the ITAR are listed on the U.S. Munitions List (“USML”).

– The U.S. State Department, Directorate of Defense Trade Controls is responsible for ITAR administration, enforcement, and licensing.

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• Export Control Laws / Office of Foreign Assets Control (“OFAC”)

– OFAC administers and enforces U.S. laws and regulations that impose economic sanctions on certain designated countries, individuals, or entities.

– OFAC administers comprehensive economic embargoes against Cuba, Iran, and Sudan, and more limited sanctions are in place against Liberia, Myanmar (Burma), North Korea, Sierra Leone, Syria and Zimbabwe.

– OFAC maintains a list of persons subject to sanctions, known as the list of “Specially Designated Nationals” (“SDNs”), with whom U.S. individuals and companies must not do business.

Government Audits & Investigations

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•Audits & Investigations (Stds. § II.A.11)

– Procurement investigations can be classified into four categories:

• Audits;

• Interviews;

• Subpoenas; or

• Search warrants

– EyakTek employees should notify EyakTek’s Ethics and Compliance Officer of all investigations immediately.

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•Obstruction of Justice

– Criminal statutes punish interference with Federal investigations.

– Statutes specifically prohibit:

• Knowingly and willfully making false statements concerning a matter within the jurisdiction of U.S.;

• Falsifying, concealing, or covering up material fact that is required to be disclosed;

• Attempting to influence, obstruct, or impede a Federal auditor in performance of official duties; and

• Attempting to influence, obstruct, or impede the due administration of justice.

– Witness tampering statutes prohibit influencing a witness or informant by threats, force, or misleading conduct with the intent to hinder, delay, or prevent the communication of information to a Federal law enforcement official regarding the possible commission of an offense.

Reporting Violations

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• Employee Responsibility (Stds. § II.B.15)

– Each employee has an individual responsibility for understanding and complying with the Standards of Business Conduct.

– You are expected to report any suspected violations of the Standards of Business Conduct or other irregularities to your Supervisor or the EyakTek Ethics and Compliance Officer.

– Consult your Supervisor and/or the EyakTek Ethics and Compliance Officer with any questions.

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• Reporting Hotlines (Stds. § III.E)

– Employees should report violations or suspected violations to their Supervisor.

– A “Hotline” number is being established by EyakTek for individuals not comfortable reporting violations to the a Supervisor or the EyakTek Ethics and Compliance Officer.

– Reports of violations or suspected violations will be handled in confidence.

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• Non-Retaliation and Whistleblower Protections

– No adverse actions or retribution of any kind will be taken against an employee because he or she reports a suspected violation of the standards or any other irregularity.

– Federal “whistleblower” statutes supplement EyakTek’s non-retaliation policies and specifically prohibit retaliation against an employee who reports any violation of the law to a public body or for participating in an investigation, hearing or inquiry held by that public body or a court.

Compliance & Discipline

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Compliance & Discipline

• Compliance and Discipline (Stds. § III.G)

– EyakTek will conduct periodic unannounced internal compliance audits. Cooperation is expected and required.

– Failure to comply with the Standards of Conduct may subject an employee to disciplinary action, including sanctions ranging from a warning to termination, referral for criminal prosecution, and reimbursement to EyakTek for any losses or damages resulting from the violation.

Questions?

Documents

Eyak Technology, LLC Compliance Training Fall 2011 Conducting Business in the Federal Government Marketplace