Post on 26-Apr-2022
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Debarment Solutions InstituteLLC
Serving the needs of the business, nonprofit, government and legal
communities
Consulting Training Monitoring
In Cooperation with
Consulting Training Monitoring
The Society of Corporate Compliance and Ethics
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Presents
Consulting Training Monitoring
501Government Contracts and Relationship Risk:
What Every Ethics and Compliance Officer
Should Know
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Recent Congressional and White House Attention on Government Contracts and Assistance Risk
Common Blind Spots in Risk Prevention, Detection and Assessment Programs
Real World Examples of Successes and Failures
Today’s Objectives
Today’s Round Table Discussionwith
Robert F. MeunierDebarment Solutions Institute
Dirk CockrumKinder Morgan
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“Debarment” vs. “Suspension”
♦ Debarment – a final determination by an agency suspending and debarring official (SDO) that an entity or individual is not presently responsible to receive or participate in federal contracts and subcontracts, and/or assistance, loans and benefits (ALBs)
♦ Suspension – a temporary denial of participation in federal contracts and subcontracts, and/or ALBs pending completion of an investigation or legal proceedings
“Procurement” vs. “Non-procurement”
♦ Procurement – a relationship between a federal agency and another person in which the agency is acting as a purchaser of goods or services for its own use under the Federal Acquisition Regulation (FAR)
♦ Non-procurement – a relationship between a federal agency and another person in which the agency is acting as an enabler to assist in accomplishing a public objective (i.e., everything not covered by the FAR).
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“Contracts” vs. “Assistance”
♦ Contracts – Usually used in the context of a procurement relationship directly between an agency and a commercial entity, with subcontracts referring to lower tier relationship between the contractor and another entity
♦ Assistance – Refers to the entire range of transactions, including loans and other benefits (or ALB) that are other than procurements under the FAR. But it includes “contracts” with a recipient or participant at any tier under a non-procurement transaction
“FAR” vs. “NCR”
♦ FAR– Acronym for the uniform regulation governing all procurement activities of the Executive Branch. Suspension and debarment provisions related to a procurement relationship is located at Title 48 CFR Part 9, Subpart 9.4
♦ NCR –Acronym for “Non-procurement Common Rule” which refers technically only to the suspension and debarment provisions in a ALB or non-procurement relationship, and is located at Title 2 CFR Part 180
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“Statutory” vs. “Administrative” Debarment
♦ Statutory Debarment – Sometimes called “mandatory debarment” is a debarment that is imposed by Congress as a matter of legislative fiat
♦ Administrative Debarment – Sometimes called “discretionary debarment” is a debarment imposed by an Executive Branch agency under its inherent authority or by act of Congress that permits agency discretion in the imposition of the sanction
Congressional and Executive Branch Activities
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FY 2000-2012
Total spending of over $29.9 Trillion
Over $24.8 Trillion in ALBs
Only $5.1 Trillion in Contracts
Annual Average of over $2 Trillion for ALB
Annual Average of $427 Billion for Contracts
Federal Spending 2000-2012
82.9%
17.1%
Contracts
Assistance, Loans & Benefits
Total $ 29,924,980,900,000
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Federal Contracts 2000-2012
Large & Medium 77%
Small & Other Set Asides
23%
Federal Contracts 2000-2012
$3.927 Trillion Large & Medium
$1.173 TrillionSmall
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Media Attention
“Federal Contractor Indicted for Cost Mischarging”
“Local Firm Implicated in Small Business Scam”
“Millions Lost to Fraud in Disaster Relief Effort”
“Phantom Grantee Bilks Government for $2.3 million”
Public Perception of Government Contractors
Government contractors are dishonest opportunists looking to line their pockets with lucrative contracts, awarded by corrupt government officials in a system rife with fraud, waste and abuse of scarce taxpayer dollars.
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Taxpayer Frustration
This perception, right or wrong, has angered the public and fueled public demand for a change in the way the public’s business is conducted.
Congressional Reaction
Oversight Hearings
GAO Contract Reviews
Inspector General Reports
Legislation
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Executive Branch Reaction
Executive Orders
OMB Policy Directives
Government-wide Regulations
Investigations and Prosecutions
Suspension & Debarment
Interagency Suspension and Debarment Committee
Federal Law Enforcement Training Center
OMB
SDOs
National Procurement Fraud Task Force
DOJ Civil and CriminalPolicy Offices
Offices of Inspector General
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Competence
Ethics
Performance
Compliance
Ethics and Compliance Accountability
Risk Management for ECOs
Competence
Ethics
Performance
Compliance
Ethics and Compliance Program (ECP)
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Own an interest in/operate about 80,000 miles of pipeline and 180 terminals
Business is similar to a toll road 4th largest energy company in
North America based on combined enterprise value (a)
5 business segments Operations in 42 USA States, 4
Canadian Provinces, and 3 Mexican States
>11,000 Employees Substantial growth through
acquisition Low cost operator strategy
__________________________(a) Combined enterprise value of KMI, KMP & EPB;
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Kinder MorganAsset Footprint and Business Characteristics
Challenges and Blind Spots for Compliance Risk Assessments
Major incident prevention— …in addition to personal activities, process controls, and regulatory
requirements.— What keeps you up at night?— Lessons learned from other companies incidents.
Knowledge and information sharing across internal organizations Documentation
— If there isn’t documentation of a compliance activity, the presumption is it didn’t happen.
— Can you see your documentation through the eyes of an outside auditor?
— Does the randomly selected employee describe things happening the way your policy and procedure documents say they happen?
Tone at the middle When something goes wrong, why did the system not work?
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Real-world Examples
Motivations
— “It was a new, important customer, and the order was almost finished. So, when we had the problem, I just wanted to finish the order for them.”
— “I didn’t want anyone to think I couldn’t handle the situation.”
Disagreement and/or anger in one area leading to poor decisions in another.
Misunderstanding requirements, but continuing noncompliance after developing understanding.
What Works for KM
What gets reported gets managed.
— Are the right metrics getting reported?
— Is the data quality data?
Follow the procedure.
You don’t have the authority to operate out of compliance.
You can stop.
— From unsafe to unethical acts
Ask for help.
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Effective Ethics and Compliance Program
Stands as the Cornerstone of an Entity’s Self-Governance System
Designed to Maintain and Monitor Competence, Performance, Compliance and Integrity
Includes Internal Controls to Assess Risk; Prevent and Detect Misconduct, Non-Compliance and Poor Performance; Takes Corrective Action
Works Most of the Time
Mandatory Disclosure Rules
Federal Contractors/Subcontractors 48 CFR 52.203-13
Federal ALB Recipients/Participants 2 CFR 200-113 (Effective Dec 26, 2013, Implementation Dec 25, 2014)
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MDR at FAR 52.203-13 (cont.)
Contractor must –
• Timely disclose, in writing, to the agency OIG and the contracting officer, in connection with the award, performance or closeout of a contract or subcontract thereunder, credible evidence that a principal, employee, agent or subcontractor may have committed a triggering event
MDR Triggering Events
• A violation of a criminal law involving fraud, conflict of interests, bribery or gratuity violations found in Title 18 of the United States Code;
• A violation of the False Claims Act (31 USC §§ 3728-3733); or
• Significant overpayments
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Tone at the Middle
The Critical Position of the First-Level Supervisor
Many Reach this Level of First Line Management and top out after Years of on-the-job Experience
Can be an Attitude of Resistance to what may appear as the Policy Initiative of the Month
Assumptions about Ethics
“Everyone Knows Right from Wrong”
“Do not Project your Morals onto Others”
“We Make Sure that we do Everything Legal”
“Ethics is the job of the Ethics Officer”
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Checking the EPLS (Now SAM)
Check the EPLS on Contractors, Subcontractors and Suppliers
New Employees
Existing Employees on Periodic Basis
Decentralized Ethics Program
Can Diffuse and Confuse Workforce
More Suitable in Larger Organizations with Multiple Facilities or Locations of Operation
Prone to Hemorrhage Information Relevant to Internal Investigation and/or Risk Assessment
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Performance Standards
PARS System not Linked to Code of Conduct
Evaluations and Awards not Reflective of Ethics and Compliance Priority
Increased Emphasis on Company Conduct Codes
Conduct Codes are not Entirely new Ideas
Traditionally Direct or Restrict Activities
May Contain Sanctions
Observations About Conduct Codes
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Observations (cont.)
Government has no Shortage of Codes of Conduct (e.g. Criminal Code)
Employee Conduct is Heavily Regulated by Policy and Guidance
System is Subject to Strict Enforcement
Observations (cont.)
Conduct Codes and Polices are Useful and Necessary.
Despite such Efforts to Encourage, Foster or Coerce Compliance, America’s Prisons are Full.
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Damage Control Plan
Most Overlooked Part of a Company’s Self-Governance System
Some Examples
♦ IBM
♦BP
♦Archer Daniels Midland
♦Kinder Morgan
♦Lockheed Martin
♦Boeing
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