Thinking Through the Suspension & Debarment - PowerPoint Presentation

Thinking Through the Suspension & Debarment Implications of FCPA Violations

Table of ContentsConducting Investigations Considerations for Ethics and Compliance ProgramsDisclosure PracticesLead Agency DeterminationEngaging the Suspension & Debarment Official (SDO)Considerations When Appearing Before an SDO Purpose of the Meeting with the SDOPreparing for a Meeting with the SDOWritten SubmissionsPreparing Your ClientWho to Bring 2

Table of Contents, Cont’dThe Meeting with the SDO Following the Meeting with the SDOSDO Decision Making Process Present ResponsibilityOverview of Present Responsibility FactorsPotential Outcomes Administrative AgreementsCorporate MonitorsImportant LinksContact Information3

Conducting Internal InvestigationsInitiate internal investigation of the alleged violation(s) Through the investigation, seek to understand:Whether a violation occurredIf determined that a violation did occur:Where/how the violation occurredWho committed it ?- position, responsibilities, authority Was the alleged violation done by a rogue employee or is it a systemic problem?What compliance measures/controls were in place to deter such a violation? 4

Conducting Internal Investigations, Cont’dMaintain policies that set forth procedures for responding to and investigating reports of non-compliance. Policies should: Ensure investigations are conducted promptlyEnsure issues to be investigated are identifiedIdentify who will conduct investigationEnsure investigator is experienced and capable of conducting an objective and independent investigation Engage management in the investigation and in crafting a response to the investigationDetermine whether, based on initial review, the investigation should be expanded to include other business units, other business transactions, other regions, etc.5

Considerations for Effective Ethics and Compliance ProgramsFor Ethics Programs: Select values that are tailored to your business or risk profileDefine and communicate values in a manner that makes sense to employeesEnsure leadership engagement in promotion of valuesFor Compliance Programs:Review and improve ethics and compliance training, policies, internal controls, practices and strengthen in light of investigation findings, lessons learned 6

Considerations for Effective Ethics and Compliance Programs, Cont’dIdentify your risk areas based on your organization’s specific industry, the nature and location of its operations, and the activities in which it engages When tailoring the program, pay particular attention to high risk areas – Ex. FCPA, FCA, FSA violationsPeriodically evaluate and update risk areas to reflect new contract requirements and changes in law and regulation Screen principals and other high level personnel to mitigate against the hiring of unethical actors Conduct periodic compliance audits particularly in high risk areas 7

Considerations for Effective Ethics and Compliance Programs, Cont’dRegularly remind employees to report concerns and the channels available to them Train those who may receive reports on how to respond following a report Educate and train employees based on lessons learned from investigations and audit findings Ensure violators of company policies are disciplined appropriately Evaluate the ethics and compliance programs of prospective suppliers during supplier approval process Require employees to review and re-certify compliance with the Code of Business Ethics &Conduct annually 8

Disclosure Practices - MandatoryMandatory Disclosures Maintain a policy establishing procedures for analyzing and handling events giving rise to potential mandatory reporting obligationsBe aware that mandatory disclosures are often shared with the relevant agency SDO so the disclosure should address the present responsibility concerns implicated by the disclosureSDOs often take action against individuals identified in disclosures so consider addressing the present responsibility of any individuals identified 9

Disclosure Practices - VoluntaryVoluntary Disclosures If no mandatory disclosure obligation, assess whether it would be beneficial to make a voluntary disclosureConsider disclosing to the SDO events that are likely to raise present responsibility concerns even if they do not fall within the mandatory disclosure ruleWhen making a voluntary disclosure, treat it as formally as a mandatory disclosure with the same considerations in mindDisclosures should be complete; vague or incomplete disclosures are likely to trigger further review and/or investigation and may dissipate the benefits of making the disclosure 10

What Happens if a Contractor Does Not Make a Disclosure? Suspension and Debarment Officials frequently receive Reports of Investigation from agency Offices of Inspector General that detail alleged or proven wrongdoings by contractors or settlement agreements between contractor and US GovernmentSuspension and Debarment Official will review report, and if necessary, engage contractor by:Exploratory Letter: Show Cause Letter, Request for Information Exclusionary Letter: Suspension or Proposal for Debarment Notice11

Lead Agency DeterminationProcess of coordination among Agencies through the Interagency Suspension & Debarment Committee (ISDC) to ensure that the most appropriate agency, the one with the strongest nexus to the company/ issue, receives the disclosure Nexus Considerations: Current and past contracts and subcontracts- volume and dollar amountSpecific statutory authorityNature of (alleged) violation Whether (alleged) violation occurred on a particular contract or subcontract12

Engaging the Suspension &Debarment Official (SDO)Know who your lead agency SDO is likely to be before non-compliance events occur Make disclosures and engage the SDO early and often!Even if the FCPA (alleged) violation did not occur in relation to a Federal Government contract or subcontract, does the company do any Federal business?If so, contractor should meet with SDO as the (alleged) violation may be a basis for suspension and debarment actionCompany should decide whether or not to engage outside counsel to handle matters before SDO 13

Engaging the SDO, Cont’d Be candid and complete in communications with SDO Keep the SDO informed of developments Identify and address compliance issues before meeting with the SDOInvite the SDO to maintain an open line of communication with the company 14

Considerations When Appearing Before an SDO Understand the process and what to expect, including the requests the SDO may make Use the right tone with the SDO - candor and transparency are criticalAnticipate the agency’s perspective and specific concerns and be prepared to address them Ensure written submissions address all the issues raised by the non-compliance event The SDO expects the contractor to lead the meeting and to control the agenda so be prepared15

Purpose of Meeting with SDO To demonstrate to the SDO that despite the past bad act or omission, the contractor is presently responsibleDO NOT re-litigate your caseDo not get stuck on legaleseConfront and address the underlying (alleged) wrongdoing (cause for disclosure or suspension or debarment) SDO has discretionPresent responsibility determination is in part subjectiveMeetings help to inform the SDO’s discretionary decision 16

Preparing for a Meeting Review the extent of the issue: Has it affected distinct business units, individuals, subsidiaries? Is it localized?Affiliation and ImputationCompany vs. Individuals Prepare Written Submission If you have already provided a submission on behalf of client, not necessary to prepare a second submission unless new information/ change in case statusPrepare Your Client! 17

Written SubmissionsPreparing a Written Submission Written submissions and presentations are helpful and required by most SDOsWritten submissions often contain:Written explanation of the underlying issuePresentation of matters in oppositionRelevant supporting documentation Submit written materials in advance of the meeting to provide the SDO and his/her staff adequate time to review18

Preparing Your ClientPreparation of the client prior to the meeting is the most important job of counselClient should:Understand what suspension and debarment isRecognize that the meeting is not an adversarial proceeding Be prepared to address underlying issue, investigation (if applicable), company’s ethics and compliance programs, company plan going forward19

Preparing Your Client- Cont’dClient should do most of the talking Attorney can provide road-map, but then turn floor to client Client has unique knowledge of the day-to-day information about the company’s past and presentBringing various company officials, employees may be helpful to tell an effective story 20

Who to Bring?Ineffective for only counsel to meet with SDO Who to bring? –People with power to effectuate changeHead of company (CEO/President) if possibleIndividual in charge of particular business unit (if applicable)Individual in charge of ethics and compliance (if applicable)Individuals in charge of Government business (if applicable) Other individuals as dictated by the situation/corporate structure21

The Meeting with the SDOLevel of formality varies agency-by-agency (mostly informal) For most agencies, transcripts of the meetings are not created and info not part of record (EPA exception)Generally, the floor is provided to contractor and counsel to present materials about underlying issue and the company’s present responsibilityProviding a road map at the outset of presentation is helpfulSDO and staff may: Ask questions of the contractor and counselAsk for additional information or documentation to be provided after the meeting22

Following the Meeting with the SDOIf SDO asked for additional information/ documentation, provide this as soon as possible If the issue is at a point where a final decision regarding the company’s present responsibility can be made, SDO will provide a written decision as soon as possibleIf the issue is not at a point where a final decision regarding the company’s present responsibility can be made, SDO and company will continue to engage via meetings or providing SDO documentation until decision-making point is reached 23

SDO Decision-Making Process –Present Responsibility Focuses on the present and future ability of a contractor to responsibly contract with the Federal GovernmentIncludes a contractor’s ethics, integrity, compliance with applicable laws, and ability to adequately performA determination that a contractor is presently responsible is an overall evaluation of the contractor itself, not of any particular act or omissionMitigating Factors in FAR 9.406-1(a)(1)-(10) are used in present responsibility determination 24

SDO Decision-Making Process Cont’d -Overview of Present Responsibility Factors Standards of Conduct Voluntary Disclosure of IssueInternal InvestigationFull CooperationPaid Costs/RestitutionDisciplined Employee(s) Agreement to Implement Remedial ActionsEthics TrainingAmount of Time passedManagement Recognition of Problem 25

SDO Decision-Making Process, Cont’dSDO takes various factors into consideration: Company response/ mitigating factors established in FAR 9.406-1(a)(1)-(10)How the Government found out about the issueDisclosure vs. qui tam vs. Government-initiated investigation Stale event vs. recent eventCurrent leadership’s position on ethics, compliance26

Potential OutcomesSuspension 27 Proposed Debarment/Debarment Administrative Agreement/ Corporate Monitor Termination of Review

Administrative AgreementsWhen Considered : Contractor must have demonstrated to the SDO’s satisfaction that the contractor is “substantially on the way” to being presently responsibleAdministrative BurdenOn GovernmentTracking and review of submissionsOn Contractor May require a significant investment of resourcesMust be prepared to fulfill requirements. Violation of terms is an independent cause for debarment. 28

Corporate MonitorsConsidered when: Entering into an Administrative Agreement and SDO would prefer an independent third party review of the companyAlleged misconduct is pervasive and ingrained in company cultureAre beneficial for companies, as they provide:A neutral opinion on the state of the company’s culture, practices, procedures, ethics, compliance, internal controls, etc. Concrete ways for companies to improve processes20

Important LinksSystem for Award Management: www.sam.gov Interagency Suspension and Debarment Committee: http://www.epa.gov/ogd/sdd/isdc.htmFAR 9.4: https://www.acquisition.gov/far/current/html/Subpart%209_4.html#wp1083280 30