Creating an ethics compliance program.

• Author: Berry, Ryan
• Position: Ethics Corner

* Emerging government contractors are in an unenviable position when it comes to developing effective ethics and compliance programs.

On the one hand, profit margins are low, competition is fierce, and financial and personnel resources are scarce, particularly for tasks that do not contribute immediately to the bottom line.

On the other hand, government agencies and mature prime contractors expect emerging contractors to reflect the same "culture of ethics and compliance" that large companies commit substantial resources to implementing, and that the government increasingly commits substantial resources to policing.

The fear of compliance missteps and attendant risks such as reputational harm, contract termination, suspension/debarment, civil lawsuits and criminal prosecution, keeps many conscientious executives up at night. Simply scrolling through the titles of past Ethics Corner Articles would have some reaching for an antacid.

They realize that potential disaster looms if they do not commit appropriate resources to building out an effective ethics and compliance program, but are undecided on where to start and how best to utilize scarce resources. More often than not, they adopt a reactive, "whack-a-mole" approach to compliance, post hoc addressing the crisis of the day and little else. Meanwhile, that sense of dread never really goes away.

There is a better way. Undertake a formal risk assessment in four steps: identify, quantify, prioritize and act.

Identify. Contractors cannot meaningfully predict and mitigate risks without first identifying them. Most emerging contractors, however, don't have a legal and compliance staff with subject matter expertise to comprehensively spot the many ways they could run afoul of government ethics and compliance requirements. In those instances, it makes sense to retain outside legal counsel at the outset, or a seasoned ethics and compliance professional, to ensure that the company is proactively avoiding failures, instead of reactively bobbing and weaving among the "pop ups" that will inevitably plague those firms that don't prepare in advance.

These proven experts, who have lived through and/or helped to remedy ethical crises or shortfalls, can efficiently help put into place governing standards, interview the company's key managers, and identify specific areas of law and compliance that intersect the contractor's lines of business.

Quantify. Once there has been a keen sense of the risk landscape...