National 8(a) June 2012 Summer Conference
GAO Investigations and 8(a) Enterprises What to Do When GAO Comes Calling
Don Carney – Rick Oehler – Christine Williams Perkins Coie LLP
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Perkins Coie
Offices: 18 across the United States and China, including Anchorage, Seattle and D.C.
Perkins has represented ANCs for well over 30 years
Perkins has a strong government contracts practice
Law360 Government Contracts Group of 2010
web based resources for government contractors
http://www.perkinscoie.com/government_contracts/
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GAO Investigations Agenda
Background of GAO Investigations
GAO Investigations of ANCs
Getting Your Costs Paid By Insurance
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GAO 101
Government Accountability Office
Formerly General Accounting Office
Independent Auditor of federal agencies and federal contractors
Led by Comptroller General
Part of the Legislative branch – created in 1921
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GAO 101
GAO generally supports Congress in meeting its responsibilities
GAO generally helps improve the performance of the federal government and ensures its accountability
GAO does so by conducting evaluations of federal programs and investigating whether there is improper use of federal funds
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GAO Authority
Investigate all matters related to use of public monies
Make an investigation ordered by either house of Congress or a Congressional committee with jurisdiction over revenue, appropriations or expenditures
Assist as needed a Congressional committee with jurisdiction over revenue, appropriations or expenditures
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GAO Authority
Can evaluate performance of federal programs and investigate all matters relating to the use of federal funds
GAO has broad rights of access to federal agency information
Can subpoena records from federal agencies and contractors
Recovery Act authorized GAO to interview Federal contractor regarding Recovery Act funded transactions
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GAO's Audit and Evaluation Work
Most GAO reviews are made in response to Congressional requests
Required to perform certain Congressional mandates
Also performs work requested by Committee Chairmen and ranking minority members
To extent possible, GAO responds to individual Congressional member requests
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GAO's Audit and Evaluation Work
Can consolidate similar Congressional requests
Will consider whether there is a related audit or investigation
GAO declines requests based on limited resources and can refer the request to a more appropriate agency
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Types of Questions GAO Answers
Is a federal program achieving desired results or are changes needed?
Are there better ways of accomplishing federal program objectives at lower costs?
Is a Government program being carried out in compliance with applicable law and regulations?
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Types of Questions GAO Answers
Are government program data furnished to Congress accurate?
Do opportunities exist to eliminate waste and inefficient use of public funds?
Are funds being spent legally and is the accounting for funds accurate?
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GAO Work Products
Oral briefings
Congressional testimony
Comments on legislation
Written reports
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GAO Written Reports
To Congress, committees or members
Vary in format and content depending on complexity of the assignment
GAO can work with the requester to revise the assignment and methodology as necessary
Usually will provide drafts to agencies and other directly impacted parties for comment
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GAO Written Reports
Usually 30 days to comment, but GAO can shorten this time
Will not permit an opportunity to comment if it would compromise the results of the work
The substance of these comments will be published as part of final report
Will hold an exit conference with agency officials
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GAO Written Reports
The substance and provide these drafts to Congress
Then issues final reports, but can hold up public release of certain reports for 30 days
Upon written request, GAO will grant Members access to its audit documentation
Once a report is released, GAO will answer questions from the media
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Office of Special Investigations (OSI)
Investigates congressional requests concerning specific allegations of federal fraud, waste and abuse or misconduct
Also conducts specific projects that require special investigative tactics
Includes senior criminal investigators
Broad authority
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Office of Special Investigations (OSI)
Responsible for investigating alleged violations of federal criminal law and serious wrongdoing concerning federal funds, programs and activities
Typically investigates allegations of fraud, corruption, abuse, ethics violations and conflicts of interest
Conducts work in accordance with standards established by President's Council on Integrity and Efficiency (PCIE)
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What Really Goes On
You are contacted by investigators.
Usually a team. Always be cautious.
Requested by a member of Congress.
Request has been accepted.
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The Request
Try to get the requestor(s) letter.
Did the GAO meet with the requestor(s)?
Did the request get revised?
If so, what is the true scope?
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Internal Investigation
What is needed in this situation?
Do we need to conduct an internal investigation?
Outside counsel/in-house experience
Did the first contact give you enough information?
Can we mitigate, if wrongdoing?
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The Team
Who is your investigative team?
What are their respective roles?
Who is your main contact?
Can you find out their experience in this area (subtle Google, review bios, etc.)?
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The Investigation
What are the activities you contemplate?
Is there another investigation you are conducting?
What is your time frame?
When is the draft and can I see it?
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Scope
Questions they will likely ask you:
Direct about the scope of the investigation
Who else they need to talk to about the investigation
They usually have done a pretty thorough check and have a preliminary list
Do not feel like you have to match that list
I have not seen your list, so I do not know who I could add. Can I see it?
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Scope
Document Requests
Do you want to supply? Could there be a subpoena coming? 31 USC Title 7.
Do you have a concurrent investigation going on with another agency?
Do you need to be careful of what you disclose especially if you have a potential interference with another investigation?
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Document Requests
Treat and track documents like in litigation
Bates No (tracking numbers)
Review documents given
Leave a trail of when the documents were supplied
Do not expect all documentsto get reviewed
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Follow Up Activities to the Meeting
Are they talking to agencies:
FOIA request to those agencies
Review contracts other applicable documents
Talk to appropriate personnel (remember attorney client privilege/internal investigation procedures)
Ascertain what other information may be relevant
Do you have a timeline and cast of characters
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Draft Report
Always try to get a copy of the draft report
Analyze the report and methodologies
Determine if the report is accurate and reflective of the circumstances
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Draft Report
Supply comment, if appropriate
Any comment supplied should be supportedand facts verified a number of times
Credible evidence
Agency information
Statements
Timeline
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Draft Report
If possible, do you want to meet with the agency and discuss comments?
Have your agenda/goals in mind
Second draft report?
Comment again?
Comments generallyappended to the report
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Getting Your Costs of Responding to an Investigation Paid By Insurance
Responding to an investigation can be expensive
Insurance may cover the costs of your response
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Agenda
Investigation Costs
Potentially Applicable Insurance Policies and Coverages
Caselaw
Maximizing Your Claim for Coverage of an Investigation
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Investigation Costs
Investigation Types
GAO
OIG, DOJ
Potential Investigation Costs
Subpoena and document production
Maintain database
Interviews / Testimony
Legal
Investigation – interviews, FOIA requests, document requests
Strategy and counseling
Contact with Government and response to Government report(s)
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Potentially Applicable Insurance Policies and Coverages
Directors & Officers Policies
Errors and Omissions Policies
Comprehensive General Liability Policies
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Director & Officers Policies
Who is the Insured?
Coverages:
"Direct" or "Liability"
"Reimbursement" or "Indemnity"
"Entity"
Claims Made Policies
Defense Costs Reimbursed
Defense Costs Usually Erode Limits
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Policy Issues
Definition of "Claim" against the company
Formal versus informal processes
Co-defendant language
i.e. company co-defendant before coverage triggered
Definition of "Loss"
Conduct exclusions and adjudication language
Recission
"Black Hats" versus "White Hats"
Civil fines and penalties
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Common Exclusions and Policy Provisions Carriers Will Use
to Deny Coverage
Conduct exclusions
Known Claims Exclusions
"Relating back"
Severability
Misrepresentation in application process
Consent and Cooperation
Defense Cost Disputes
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Investigation Coverage Caselaw
Minuteman International, Inc. v. Great American Insurance Co., No. 03-C-6067, 2004 WL 603482 (N.D. Ill. Mar. 18, 2004)
Dan Nelson Automotive Group, Inc. v. Universal Underwriters Group, No. 05-4044, 2008 WL 170084 (D.S.D. Jan. 15, 2008)
MBIA Inc. v. Federal Insurance Company, 652 F.3d 152 (2d Cir. 2011)
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Maximizing Your Claim for Insurance Coverage of An Investigation
Assess the Claim and Determine Which Policies May Provide Coverage
Provide Prompt and Overinclusive Notice
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Maximizing Your Claim for Insurance Coverage of An Investigation
Present the Claim In A Manner that Maximizes Coverage
Evaluate the Insurance Company's Response to Coverage
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Maximizing Your Claim for Insurance Coverage of An Investigation
The Policyholder's Duty to Cooperate
Selection of Defense Counsel
Protecting Your Insurance Assets When You Settle the Underlying Claim
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Summary
Check your policies
Follow steps to:
Maximize coverage and
Avoid exclusions
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Perkins Coie and John Klein
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Questions or comments, please write, call or email:
Christine WilliamsPerkins Coie LLP 1029 West Third Ave., Suite 300 Anchorage, AK 99501 (907) 263-6931 [email protected]
Rick Oehler Perkins Coie LLP 1201 Third Ave., 40th Fl. Seattle, WA 98101-3099 (206) 359-8419 (202) 654-6367 [email protected]
Don Carney Perkins Coie LLP 700 13th Street, NW, Suite 600 Washington, DC 20005-3960 (202) 654-6336 [email protected]
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