Ethical lapses provide valuable training tool.

• Author: Hickey, David T.
• Position: ETHICS CORNER

A recently proposed amendment to the Federal Acquisition Regulations (FAR) would call upon all government contractors to have a written code of ethics and business conduct.

Defense contractors know this requirement, because the Defense Federal Acquisition Regulation Supplement (DFARS) has mandated an ethics and compliance program for years. The new proposal would apply to contractors receiving awards larger than $5 million with a performance period greater than 120 days, and mandate a written code of ethics and business conduct, to include an internal control system promoting code compliance and an employee ethics and compliance training program.

The newly proposed FAR clause also specifies that the internal control system should facilitate early discovery, disclosure of improper conduct, and full cooperation with the government; specify corrective measures; require periodic reviews of company business practices, procedures, policies, and internal controls; contain internal reporting procedures--for example, a hotline, and internal and/or external audit systems--and spell out disciplinary action for improper conduct.

For those tasked with executing an ethics and compliance program, the Standards of Conduct Office of the Defense Department General Counsel ("SOCO") publishes an annual reminder of the importance of ethics and compliance issues--the annual "Encyclopedia of Ethical Failure" highlighting concrete examples of the prior year's ethically-challenged who continue to break the rules.

Last year, this column highlighted the more noteworthy and ironic examples of ethical failure from the 2006 encyclopedia. This year, the encyclopedia has added an additional 30 pages of new ethical lapses. The 2007 entries involved abuses of official positions, misuse of government resources and personnel, bribery, criminal conflicts of interest, misuse of government credit cards, financial disclosure violations, fraud, political activity violations, post-employment violations, salary for government work from non-government sources, time and attendance violations, and travel violations. Some highlights from the 2007 publication include:

* A former Defense Department employee, several former soldiers and numerous public officials, including two high-ranking U.S. Army officers, who rigged bids on Iraq reconstruction projects awarded to the same contractor. The contractor provided the officials with a variety of gifts, including over $1 million in cash...