The financial services industry has long embraced data analytics as a powerful crime prevention and policy enforcement tool. Many defense contractors, by contrast, have resisted incorporating advanced technology products into their compliance programs.
Without these tools, companies remain dependent on human identification of risks and violations, whether flagged by employees, hotline tips, whistleblowers or government auditors. Their compliance efforts often consist only of training employees to spot misconduct, and in setting aside financial reserves to fund expensive, after-the-fact investigations by outside counsel.
This approach to compliance harms contractors' ability to proactively identify risk, and may even expose them to potential litigation. Those contractors that fail to use state-of-the-art technical tools in compliance will inevitably expose their company to avoidable claims and even criminal prosecution and will decrease the odds of securing cooperation credit.
In deciding whether to charge a corporation following suspected criminal misconduct by employees, Department of Justice prosecutors rely on the Principles of Federal Prosecution of Business Organizations, also known as the Filip factors. One Filip factor directs the department to consider the existence and effectiveness of the corporation's pre-existing compliance program.
What determines the effectiveness of a compliance program? According to the US. Attorney Handbook, critical factors in evaluating any program include whether the program is designed for maximum effectiveness in preventing and detecting wrongdoing by employees and whether the contractor periodically revises the program in light of lessons learned. It directs prosecutors to consider the timeliness of any disclosure of wrongdoing to the government and whether the corporation's compliance staff is sufficient to audit, document, analyze and utili7e the results of the corporation's compliance efforts.
In public remarks this October, Marshall Miller, principal deputy assistant attorney general for the criminal division, declared that "in many ways the heart of effective corporate cooperation [is] whether that cooperation exposed and provided evidence against the culpable individuals who engaged in criminal activity. Even the identification of culpable individuals is not true cooperation, if the company fails to locate and provide facts and evidence at their disposal that implicate those individuals."