Evaluating ethics, compliance programs.

• Author: Harris, Anne R.
• Position: Ethics Corner

Last fall, the Department of Justice hired Hui Chen as its first full-time compliance counsel. Chen came to the DoJ with experience as both a prosecutor and a corporate compliance officer. This new role is designed to enhance the department's approach to evaluating companies' compliance programs.

The creation of this new position sends a powerful message about the current focus on compliance across industry. Indeed, Assistant Attorney General Leslie R. Caldwell has stated that the establishment of this new role "should be an indication to companies about just how seriously we take compliance."

It should also serve as a healthy reminder to contractors to evaluate their own ethics and compliance programs. The policy for federal contractors on "Contractor Code of Business Ethics and Conduct" can be found at Federal Acquisition Regulation (FAR) Subpart 3.10. In addition, there are specific contractual requirements at FAR 52.203-13 for contracts valued at over $5.5 million and with a period of performance of 120 days or more--subject to certain exceptions for small businesses and commercial item contracts.

These prescribe program elements comprising a written code of conduct, communications and training, an internal reporting mechanism such as a hotline, and more, including a specific requirement to conduct periodic evaluations of the effectiveness of the program.

While a government contractor may never have its ethics and compliance program assessed by the Justice Department, it is likely to have it reviewed by the Defense Contract Audit Agency and other agencies or customers. It behooves contractors to be prepared for such reviews, rather than having to scramble in response to the proverbial knock on the door.

An evaluation of an ethics and compliance program's effectiveness should be done vis-a-vis all applicable requirements or guidelines. The overall goals the program is designed to achieve --such as creating a culture of integrity or safeguarding the company's good reputation--should also be borne in mind. It is not a check-the-box exercise. For example, it is not enough to ask whether compliance policies exist. It is important to ask whether employees know what the policies mean in relation to their own jobs and how to use policies or other resources to help them respond in a tricky or uncomfortable situation.

In a recent interview published by Ethics and Compliance Initiative, an Arlington, Virginia-based association devoted to corporate...