Embracing mandatory disclosure can save contractors time, trouble and legal fees: government contracting.

• Author: Robbins, David

The mandatory disclosure rule--which requires federal government contractors to report fraud and overpayments--is in the news again.

The American Bar Association public contract law section procurement fraud committee conducted a meeting recently concerning possible revisions to the rule. Brian Miller, General Services Administration inspector general, held several recent interviews discussing its benefits.

There are few other areas in government contracting, perhaps excluding suspension and debarment, that have received this amount of attention, but generated so little guidance. What is disclosed varies by agency, and by contractor, leaving many to wonder exactly what should be disclosed.

But focusing on the baseline requirement is the wrong approach. Given the vague language of the mandatory disclosure rule, there is a large swath of misconduct or error that arguably does not need to be disclosed. There, the question should not be "Are we required to disclose?" Rather, it should be

"What are the benefits of disclosing?"

There are real and underused benefits to disclosure. But the absence of any guidance--real, timely, lessons-learned driven guidance--concerning the impact of mandatory disclosures can cause contractors to spend more time and money analyzing what and how to disclose than the government lost during the underlying, generally small-dollar misconduct.

Why so much confusion? Certainly the mandatory disclosure rule contains challenging, vague standards like "credible evidence" or "timely disclosure" reached after substantial debate and compromise, rendering the rule subject to customer-specific, and contractor-specific interpretation. Federal Acquisition Regulation (FAR) 52.20313 does not contain definitions for these standards, but the final rule goes to great lengths to provide the reasoning for the inclusion of these standards.

According to the regulatory history, the Department of Justice recommended the term "credible evidence" in the final rule after discussions with industry representatives. Prior to adding this standard in the final rule, the proposed rule included the standard, "reasonable grounds to believe." Many thought this standard was too low, below the "probable cause" standard needed for more serious activity. Accordingly, the final rule removed the proposed rule standard and added the "credible evidence" standard with the following guidance: "This term indicates a higher standard, implying that the contractor...