410: New Strategies for New Government Contractors on Compliance Challenges

Transcription

1 ACC s 2013 Annual Meeting Monday, October 28 4:30 PM - 6:00 PM 410: New Strategies for New Government Contractors on Compliance Challenges Stephen Daoust Vice President, Legal and Compliance Iridium Satellite LLC Steve Epstein Chief Counsel, Ethics and Compliance The Boeing Company Curtis Schehr Executive Vice President and General Counsel DCS Corporation Holly Svetz Partner Womble Carlyle Sandridge & Rice, LLP This material is protected by copyright. Copyright 2013 various authors and the Association of Corporate Counsel (ACC). Materials may not be reproduced without the consent of ACC or the copyright holder. Reprint permission requests should be directed to ACC s Legal Resources Department at legalresources@acc.com 1 of 52

2 Faculty Biographies Session 410 Stephen Daoust Stephen Daoust currently is Iridium Satellite LLC's vice president legal, contracts and compliance. In that capacity he is responsible for managing a team of 8 lawyers and contract professionals and providing daily legal, contracts and risk management advice to the company's executive management team. Mr. Daoust also is the company's chief compliance officer and manages Iridium's Security Department. Prior to working at Iridium, Mr. Daoust worked at PricewaterhouseCoopers LLP where at various times he acted as the chief counsel, director of contracts and chief compliance officer for the Firm's Washington Federal Practice. Mr. Daoust's primary activities included counseling PwC's executive management on government contract matters including, GSA contracting, advisory and assistance contracting, commercial item contracting, subcontracting (including mentor/protégé programs), data rights, FOIA, organizational conflicts of interest, performance based service contracting, government contractor ethics and compliance, and mergers and acquisition. Before joining PwC, Mr. Daoust was a vice president, group general counsel for Affiliated Computer Services, Inc. - a large public company specializing in information technology systems integration and business process outsourcing. Mr. Daoust also served as the chief ethics and compliance officer for ACS' federal services subsidiary - ACS Government Services, Inc.. Before joining ACS, Mr. Daoust practiced law in the Washington, D.C. office of McKenna & Cuneo in the areas of government procurement, compliance and complex litigation. Mr. Daoust also performed internal civil and criminal false claims investigations and defended clients from government prosecution of white collar criminal and civil charges. Steve Epstein Steve Epstein has been the chief counsel, ethics and compliance, for The Boeing Company since September In this capacity, he oversees the Boeing Law Department's work in ethics and compliance matters, provides legal guidance to Boeing's Office of Internal Governance, coordinates the company's Political Contribution Compliance Program, and serves as the Law Department's principal interface with federal executive and legislative branch ethics officials. Prior to joining Boeing, Mr. Epstein was the ethics and compliance (Government) leader for PricewaterhouseCoopers, LLP, where he managed the firm's federal contracting ethics and compliance practice as well as its international business compliance and state/local contracting. From , Mr. Epstein was the director of the standards of conduct office at the Department of Defense, where he oversaw DoD's ethics and compliance program, served as the ethics counselor for the Secretary of Defense and the Department's senior civilian and military leadership. 2 of 52

3 Mr. Epstein graduated from Washington and Lee University (B.A.), the University of Southern California (M.A.), and the University of Texas School of Law (J.D.). Curtis Schehr Curtis Schehr serves as executive vice president and general counsel of DCS Corporation, reporting to the CEO. As the company s first general counsel, Mr. Schehr plays a leading role in the company s mergers and acquisition activities. He organized and led due diligence and negotiation of several transactions in 2012 resulting in the acquisition of OptiMetrics, Inc. and Infoscitex Corporation (IST), and the concurrent divestiture of an IST subsidiary. Mr. Schehr advises management and the board of directors on matters including corporate governance, litigation, government contracts, bid protests and employment law. In addition, Mr. Schehr is responsible for key corporate initiatives including the company s ethics and compliance program and developing an enterprise risk management system. He is also the company s chief ethics and compliance officer. Mr. Schehr served previously as senior vice president, general counsel and corporate secretary of DynCorp International Inc., a publicly traded leading provider of missioncritical services to the federal government and international customers. Joining DynCorp in late 2006, Mr. Schehr managed a department of 17 employees, and as a member of the executive management team, actively participated in developing and implementing the company s growth strategy and policies. He also served as DynCorp s senior vice president, chief compliance officer and executive counsel. Mr. Schehr graduated summa cum laude from Lehigh University, where he was elected to Phi Beta Kappa and holds a JD, with honors, from the George Washington University Law School. Holly Svetz Holly Emrick Svetz is a partner in the Womble Carlyle Sandridge & Rice LLP law firm where she specializes in issues associated with government agreements. Her broad practice includes compliance, contract review and negotiation, regulatory advice, bid protests and disputes, and investigations. She often assists commercial companies that also have some government business as a prime or subcontractor, as well as traditional government contractors who develop their products or services for the government market. She has practiced in private law firms for twenty years after serving as an Air Force acquisition officer in engineering and program management positions for over ten years. Ms. Svetz served on the governing Council for the Section of Public Contract Law for the American Bar Association from , has been Co-Chair of several recent substantive programs, is Co-Chair of the Intellectual Property Committee, Vice Chair of the Cybersecurity, Privacy, and Data Protection Committee, is active in Air Force 3 of 52

4 Academy alumni activities, and represents veterans on a pro bono basis in obtaining disability benefits. She received a BS in Aeronautical Engineering from the United States Air Force Academy in 1980, a MS in Aeronautical Engineering from the Air Force Institute of Technology in 1983, a MS in Systems Engineering from the University of Southern California in 1987, and a JD from The George Washington University Law School in 1993 where she was on the Journal of International Law and Economics. 4 of 52

5 New Strategies for New Government Contractors on Compliance Challenges Session 410 Overview 5 of 52

6 Why Do Business With the U.S. Government 6 of 52

7 What s the Catch? Top Ten Major Differences between Government and Commercial Contracts 7 of 52

8 More Major Differences More Major Differences 8 of 52

9 Contractor Code of Business Ethics and Conduct (FAR )» 9 of 52

10 Contractor Code of Business Ethics and Conduct (FAR ) Contractor Code of Business Ethics and Conduct (FAR ) 10 of 52

11 Contractor Code of Business Ethics and Conduct (FAR ) Contractor Code of Business Ethics and Conduct (FAR ) 11 of 52

12 Contractor Code of Business Ethics and Conduct (FAR ) Contractor Code of Business Ethics and Conduct (FAR ) 12 of 52

13 Contractor Code of Business Ethics and Conduct (FAR ) Contractor Code of Business Ethics and Conduct (FAR ) 13 of 52

14 DETERMINING COMPLIANCE PROGRAM CONTENT Functional Involvement 14 of 52

15 All Functions - Ethics Gratuities the FAR FAR Gratuities. 15 of 52

16 Gratuities Ethics Regulations Gratuities Compliance matrix Subject/Topic Policy Procedure Audit Standard 16 of 52

17 Human Resources Post Government Employment Restrictions the FAR 17 of 52

18 Post Government Employment Restrictions Ethics Regulations Post-Government Employment Restrictions the Compliance Matrix 18 of 52

19 Procurement Finance/Pricing 19 of 52

20 Sales Government Enforcement 20 of 52

21 Suspension and Debarment Suspension and Debarment 21 of 52

22 Suspension and Debarment Suspension and Debarment 22 of 52

23 False Claims Act and Whistleblowers False Claims Act and Whistleblowers 23 of 52

24 False Claims Act and Whistleblowers False Claims Act and Whistleblowers 24 of 52

25 False Claims Act and Whistleblowers False Claims Act and Whistleblowers 25 of 52

26 Responding to a Government Investigation Responding to a Government Investigation 26 of 52

27 Responding to a Government Investigation Wrap-Up 27 of 52

28 Referenced Materials New Strategies of New Government Contractors on Compliance Challenges Statutes U.S.C. 207: Restrictions on former officers, employees, and elected officials of the executive and legislative branches U.S.C. 208: Acts affecting a personal financial interest U.S.C : Civil False Claims Act U.S.C. 423: Procurement Integrity Act Regulations 1. FAR, Part 3: (48 C.F.R.) Improper Business Practices and Personal Conflicts of Interest. 2. FAR Subpart 3.104: Procurement Integrity (Post Government Employment Restrictions) 3. FAR Subpart 3.2 Contractor Gratuities to Government Personnel 4. FAR Subpart 3.3 Reports of Suspected Antitrust Violations 5. FAR Subpart 3.4 Contingent Fees 6. FAR Subpart Buying-In 7. FAR Subpart Subcontractor Kickbacks 8. FAR Subpart Unreasonable Restrictions on Subcontractor Sales 9. FAR Subpart 3.6 Contracts with Government Employees or Organizations Owned by Them 10. FAR Subpart 9.4: Debarment, Suspension, and Ineligibility 11. FAR Part 3 clauses, including: a. FAR Clause: Certificate of Independent Price Determination b. FAR Clause: Gratuities c. FAR Clause: Covenant Against Contingent Fees d. FAR Clause: Restrictions on Subcontractor Sales to the Government e. FAR Clause: Anti-Kickback Procedures f. FAR Clause: Contractor Code of Business Ethics and Conduct g. FAR Clause: Fraud Hotline Poster 12. Office of Government Ethics Regulations 5 CFR Subpart B - gifts 13. Office of Government Ethics Regulations 5 CFR 2636 outside compensation 14. Office of Government Ethics Regulations 5 CFR 2637 post employment restrictions 15. Office of Government Ethics Regulations 5 CFR 2641 post employment restrictions Policies 1. Office of Government Ethics Gift Rule Summary 2. Office of Government Ethics Post Government Employment Rules ACC Materials Code of Conduct Compliance Portal 28 of 52

29 Cases U.S. ex rel. Longhi v. Lithium Power Technologies, 575 F.3d 458 (5th Cir. 2009) Other 1. Boeing Code of Conduct 2. Boeing Ethics Line and Program 3. Iridium Code of Business Conduct and Ethics WCSR v2 29 of 52

30 Holly Emrick Svetz Womble Carlyle Sandridge & Rice LLP SAMPLE ONLY THIS SAMPLE MATRIX WAS DERIVED FROM A SPECIFIC GOVERNMENT CONTRACT AND ITS REQUIREMENTS AND IS NOT LIKELY TO COVER COMPLIANCE REQUIREMENTS OF ANY OTHER GOVERNMENT CONTRACT COMPANY X Government Contracts Audit Matrix For AGENCY Y Commercial Item Contract WCSR v1 1 Proprietary Information COMPANY X Not to be Disclosed or Reproduced without prior Written Approval 30 of 52

31 ALL FUNCTIONS Subject/Topic Policy Procedure Audit Standard False Statements / False Claims Required 31 USC Gratuities/ Gifts Record Retention COMPANY X will only submit to United States governmental entities and their prime contractors statements, invoices, and reports that are current, complete, and accurate. COMPANY X employees may not offer or give gifts or gratuities of any value to potential or actual United States government prime contractors, suppliers or subcontractors, or ultimate United States government customers where there may be any connection to United States government contracting or subcontracting now or in the future. All books and records addressing any aspect of performance of a United States government contract or subcontract should be retained at least six years after final payment on the contract. COMPANY X will ensure that at least two persons from the appropriate Business Unit and at least two persons from the Finance Department will review all invoices for United States government contracts and subcontracts for accuracy. COMPANY X will conduct training at least annually regarding the civil False Claims Act and False Statements Act to all employees involved directly or indirectly with performance of United States government contracts and subcontracts. United States government employees may not receive gifts or gratuities that exceed $20 or a cumulative total of $50 in any one year. Because even a lunch or tickets to a sporting event with tip, taxes can easily exceed $20, COMPANY X does not permit its employees to give gratuities or gifts of any value to United States government employees or employees of its prime contractors or suppliers. Any employee that has questions or wants to address special circumstances such as events sponsored by trade associations should contact the Legal Department for review. This procedure applies only to business units performing United States government contracts or subcontracts. The entire contract file, which should include the solicitation, the proposal, the United States government contract or subcontract, any correspondence reflecting negotiations, the deliverables, invoices, payment records, and the same information for subcontractors or suppliers, should be retained for at least six years after final payment on the United States government contract or subcontract. Six years from the time a claim arises is the statute of limitations on United States government claims against contractors based on contract. All statements, invoices, and reports are current, complete, and accurate. False Claims Act, 31 USC No improper gifts or gratuities are found in travel and expense requests. FAR and -7 Invoices, time sheets, payment statements, contract documents, contract correspondence (including ), and reports are retained for at least six years. FAR Proprietary Information COMPANY X Not to be Disclosed or Reproduced without prior Written Approval 31 of 52

32 ALL FUNCTIONS Subject/Topic Policy Procedure Audit Standard Duty to Perform The United States government has rights to take certain actions that its prime contractors typically require COMPANY X to accept that would be considered a breach of contract in a commercial setting, such as: to stop work temporarily, terminate the contract for its convenience, or make unilateral changes. COMPANY X understands that COMPANY X normally may not unilaterally terminate a United States government contract or subcontract and is obligated to continue performance to the extent not directed otherwise, and the contract price or other terms may be adjusted in consideration after the fact. Documentation supporting compliance with all policies included in this policy guide should also be maintained for at least six years after final payment on the United States government contract or subcontract. Review United States government contracts and subcontracts to determine if COMPANY X has a right to terminate. If COMPANY X may not terminate a United States government contract or subcontract and the government either issues a stop work order, termination for convenience, or unilateral change, COMPANY X should comply and take actions to mitigate costs, then prepare a request for equitable adjustment or claim with backup for costs requests and submit to the United States government. If COMPANY X or the United States government procuring agency cannot agree on resolution of the request for equitable adjustment or claim, recovery mechanisms under the disputes clause are permitted, however recovery is typically limited to actual costs incurred plus G&A and a reasonable profit. Can COMPANY X terminate? Issue a stop-work order or a termination of the contract, mitigate costs and damages. Follow proper steps under FAR to file a claim under the Contract Disputes Act. 2 Proprietary Information COMPANY X Not to be Disclosed or Reproduced without prior Written Approval 32 of 52

33 ALL FUNCTIONS Subject/Topic Policy Procedure Audit Standard Intellectual Property Protection When doing business with United States governmental entities or prime contractors, COMPANY X recognizes that special actions must be taken to protect intellectual property. The Legal Department must be included in the development of the intellectual property section of proposals. COMPANY X will notify the prime contractor, promptly and in reasonable detail, of each notice or claim of patent or copyright infringement based on the performance of this contract to allow the United States government to indemnify COMPANY X if appropriate. In solicitations requesting disclosure of background intellectual property, develop a disclosure matrix that describes the source of funding (private or government) for each element of background intellectual property. Where the funding is private, explain why COMPANY X has the intellectual property rights claimed. COMPANY X contract administrators will ensure that any subcontract under a United States government prime contract does not give work for hire rights to the prime contractor or any higher tier subcontractor in any intellectual property rights that arise in performance of the subcontract unless separate, private consideration is provided. When United States government contract or subcontract clauses cannot be negotiated, COMPANY X, and specifically COMPANY X contract administrators, will negotiate the list of deliverables or scope of work to limit impact upon COMPANY X s intellectual property rights. If an infringement claim is made for work under a United States government contract or subcontract, notify the prime contractor and United States government contracting officer as Authorization and Consent and 28 USC 1498 may permit the matter against COMPANY X to be dismissed and handled by the United States government. Disclosure of inventions arising under United States government subcontracts may be made directly to the government contracting officer with notice to the prime contractor, under subcontracts. Minimal information required by the DD Form 998 should be provided and disclosures must be made within 60 days of disclosure through the internal COMPANY X invention disclosure process. Contracts clearly define COMPANY X's background intellectual property and protect it from impact not required by law or regulation and limit the impact on rights in newly developed intellectual property. FAR , Proprietary Information COMPANY X Not to be Disclosed or Reproduced without prior Written Approval 33 of 52

34 ALL FUNCTIONS Subject/Topic Policy Procedure Audit Standard 4 Proprietary Information COMPANY X Not to be Disclosed or Reproduced without prior Written Approval 34 of 52

35 HUMAN RESOURCES Subject/Topic Policy Procedure Audit Standard Equal Opportunity Hiring and reporting Required FAR ; FAR ; FAR COMPANY X is committed to a policy of nondiscrimination in employment and to the cause of equal employment with advancement opportunity for all. Harassment or discrimination on the basis of race, color, gender, sexual orientation, national origin, religion, age, marital or family status, disability, citizenship, or status as a veteran is not tolerated. Further, COMPANY X has established affirmative plans to ensure representation in its employees with respect to minorities, workers with disabilities, and veterans. Where legally permitted, Human Resources will strive to collect applicable personal data on applicants, potential interviewees and interviewees. Employees will be requested to respond to COMPANY X surveys to self-identify in EEO-1 and VETS-100 categories regarding minority and veteran status. Human Resources will submit EEO-1 and VETS-100 reports annually by September 30 th. Human Resources takes and will continue to take affirmative actions to ensure that a wide array of applicants are employed, and that employees are treated, during employment, without regard to their race, color, religion, sex, age, veteran status, disability or national origin. Such actions specifically include, but are not limited to: o Employing persons without regard to race, color, religion, sex, age, veteran status, disability or national origin. Collect data on applicants and interviewees. 41 CFR Chapter 60 Submit EEO-1 by each September 30th to U.S. Department of Labor FAR or FAR (d); 41 CFR Chapter 60 Submit VETS-100 by each September 30th to U.S. Department of Labor Veterans' Employment and Training Service. FAR ; FAR ; FAR or FAR (d). o o o o Upgrading employees on the basis of performance and without regard to race, color, religion, sex, age, veteran status, disability or national origin. Demotion of employees on the basis of performance and without regard to race, color, religion, sex, age, veteran status, disability or national origin. Transferring employees, when an opportunity arises, on the basis of performance and without regard to race, color, religion, sex, age, veteran status, disability or national origin. Recruitment of and recruitment advertising to a broad array of people on the basis of qualifications and ability and without regard to race, color, religion, sex, age, veteran status, disability or national origin. 5 Proprietary Information COMPANY X Not to be Disclosed or Reproduced without prior Written Approval 35 of 52

36 HUMAN RESOURCES Subject/Topic Policy Procedure Audit Standard o o o This shall include posting conspicuous notices, in all solicitations or advertisements for employees placed by or on behalf of COMPANY X, stating that all qualified applicants will receive consideration for employment without regard to race, color, religion, sex, age, veteran status, disability or national origin. This shall also include conspicuous notice that COMPANY X is an equal opportunity employer that does not discriminate on the basis of race, color, religion, sex, age, veteran status, disability or national origin. Compensating employees with equal qualifications, responsibilities and job descriptions equally, on the basis of performance and without regard to race, color, religion, sex, age, veteran status, disability or national origin. Selecting employees eligible for special training or apprenticeships on the basis of past performance and future ability and without regard to race, color, religion, sex, age, veteran status, disability or national origin. Posting notice, in conspicuous locations, that explains COMPANY X s affirmative action plan, including what steps COMPANY X takes to ensure compliance with the affirmative action requirements. Human Resources will send, to each labor union or representative of workers with which COMPANY X has a collective bargaining agreement or other contract or understanding, the notice to be provided by the United States Government's procuring agency's Contracting Officer advising the labor union or workers representative of COMPANY X s commitments to affirmative action, and post copies of the notice in conspicuous places available to employees and applicants for employment. Proper notices are placed in conspicuous places for employees and applicants to be aware of them. Recruiting takes place in a wide variety of areas and includes outreach to a variety of potential applicants. Compensation is fair and based on ability and performance. Affirmative action plan posted in conspicuous location and sent to all labor unions and employee representatives. 6 Proprietary Information COMPANY X Not to be Disclosed or Reproduced without prior Written Approval 36 of 52

37 HUMAN RESOURCES Subject/Topic Policy Procedure Audit Standard Human Resources will furnish, to the prime contractor or the contracting agency, all information and reports required by U.S. Executive Order No of September 24, 1965, and by the rules, regulations, and orders of the U.S. Secretary of Labor, or pursuant thereto, and will permit access to books, records, and accounts by the contracting agency and the U.S. Secretary of Labor for purposes of investigation to ascertain compliance with the affirmative action requirements and such rules, regulations, and orders promulgated in effecting U.S. Executive Order No COMPANY X will allow access to its premises, during normal business hours, by the contracting agency or the U.S. Office of Federal Contract Compliance Programs for the purpose of conducting on-site compliance evaluations and complaint investigations based on violations of the affirmative action requirements upon administrative notice or a showing of probably cause. Neither COMPANY X nor any of its representatives or employees will discriminate by paying membership fees or other expenses for employee participation in private clubs or organizations that discriminate on the basis of race, color, religion, sex, or national origin. Human Resources will investigate whether the club or organization restricts membership on the basis of race, color, religion, sex, or national origin prior to agreeing to pay for, or reimburse, membership costs to a club or organization. COMPANY X managers and Human Resources will construct and maintain employment records throughout an employee s tenure at COMPANY X and for at least two years from the date of the making of the record or the personnel action involved, whichever occurs later. Such records include, but are not limited to: Human Resources allows audits of books in a reasonable time. COMPANY X representatives allow access to COMPANY X premises in a reasonable time. No payments are being made to employee clubs or organizations that discriminate. 7 Proprietary Information COMPANY X Not to be Disclosed or Reproduced without prior Written Approval 37 of 52

38 HUMAN RESOURCES Subject/Topic Policy Procedure Audit Standard o Records pertaining to hiring, assignment, promotion, demotion, transfer, lay off or termination, rates of pay or other terms of compensation, and selection for training or apprenticeship, and other records having to do with requests for reasonable accommodation, the results of any physical examination, job advertisements and postings, applications, resumes, and any and all expressions of interest through the Internet or related electronic data technologies as to which COMPANY X considered the individual for a particular position, such as on-line resumes or internal resume databases, records identifying job seekers contacted regarding their interest in a particular position (for purposes of recordkeeping with respect to internal resume databases, Human Resources will maintain a record of each resume added to the database, a record of the date each resume was added to the database, the position for which each search of the database was made, and corresponding to each search, the substantive search criteria used and the date of the search; for purposes of recordkeeping with respect to external resume databases, Human Resources and company representatives are keeping accurate employee personnel files. o Human Resources will maintain a record of the position for which each search of the database was made, and corresponding to each search, the substantive search criteria used, the date of the search, and the resumes of job seekers who met the basic qualifications for the particular position who are considered by COMPANY X), regardless of whether the individual qualifies as an Internet Applicant under the definition in United States regulation 41 CFR , tests and test results, and interview notes. Notification of Employee Rights under the National Labor Relations Act COMPANY X will comply with all notice and other requirements to apprise employees of the right to unionize and to engage in certain protected activities under United States federal labor laws. In every subcontract and purchase order under a United States government contract or subcontract, COMPANY X will include a notice regarding employee's rights to organize. The employee notice clause contained in the Federal Acquisition Regulation need not be quoted 8 Proprietary Information COMPANY X Not to be Disclosed or Reproduced without prior Written Approval Proper physical and electronic notices posted. Physical and electronic notices contain the required language and 38 of 52

39 HUMAN RESOURCES Subject/Topic Policy Procedure Audit Standard Required FAR ; FAR ; verbatim in a contract, subcontract, or purchase order. Citation to the United States regulation 29 C.F.R. Part 471, Appendix A to Subpart A is sufficient. Human Resources will physically and electronically post notice in a language or languages that employees understand in accordance with 29 C.F.R. Part 471. are in the translations. All COMPANY X contracts, subcontracts and purchase orders exceeding the Simplified Acquisition Threshold include, at a minimum, a reference to the Notice of the Right to Organize. Service Contract Act COMPANY X will ensure that it pays the wages and benefits required by the Service Contract Act for its non-exempt employees working on government service contracts and subcontracts. Proposals for United States government subcontracts should be priced with these wage and benefits requirements in mind. COMPANY X contracts personnel will review all United States government contracts and subcontracts and notify Human Resources if the Service Contract Act clause, FAR , is included. If a collective bargaining agreement is in place for the employees performing the work, the collective bargaining agreement will serve as the wage determination. If there is no collective bargaining agreement, Human Resources will locate the appropriate wage determination based on the location where the particular labor categories of employees will be performing the work at Human Resources will ensure that any non-exempt employees performing work on United States government contracts and subcontracts governed by the Service Contract Act are being paid at least the wages and benefits contained in the applicable wage determination. Before submitting any price proposal for a United States government contract or subcontract covered by the Service Contract Act, Human Resources shall propose conformed classes for any employees performing work on the subcontract where there is no appropriate labor category in the wage determination so as to provide a reasonable relationship (i.e., appropriate level of skill comparison) FAR ; FAR ; Executive Order No ; 29 C.F.R. Part 471 All non-exempt employees working on service contracts receive wages and benefits at levels equal to or greater than relevant wage determination. Applicable employees received copies of the relevant wage determination. The Service Contract Act poster is posted. Applicable employees are paid at least twice monthly. FAR or FAR (k) 9 Proprietary Information COMPANY X Not to be Disclosed or Reproduced without prior Written Approval 39 of 52

40 HUMAN RESOURCES Subject/Topic Policy Procedure Audit Standard between such unlisted classifications and the classifications listed in the wage determination by preparing a Standard Form (SF) 1444, Request For Authorization of Additional Classification and Rate and submitting it to the prime contractor or the United States government procuring agency. o o o o The affected employee and, if appropriate, their authorized representatives, must be given an opportunity to review the proposed conformed wages and benefits and to provide a written expression of agreement or disagreement. While COMPANY X requires the conformance procedure be completed before submitting a price proposal to ensure the conformed wages and benefits are covered by the proposed price, by regulation the SF 1444 must be submitted no later than 30 days after an unlisted class of employee (the labor category is not covered by the wage determination) performs any contract work. will notify the United States government procuring agency Contracting Officer within 30 days of receipt that additional time is necessary. Human Resources should furnish affected employees a written copy of the Wage and Hour Division determination. o The United States government procuring agency Contracting Officer will review the proposed classification and rate and promptly submit the completed SF 1444 (which must include information regarding the agreement or disagreement of the employees authorized representatives or the employees themselves together with the agency recommendation), and all pertinent information to the Wage and Hour Division, Employment Standards Administration, United States Department of Labor. The Wage and Hour Division will approve, modify, or 10 Proprietary Information COMPANY X Not to be Disclosed or Reproduced without prior Written Approval 40 of 52

41 HUMAN RESOURCES Subject/Topic Policy Procedure Audit Standard disapprove the action or render a final determination in the event of disagreement within 30 days of receipt or Human Resources will notify each service employee commencing work on a United States government contract or subcontract subject to the Service Contract Act of the minimum monetary wage and any fringe benefits required to be paid pursuant to that subcontract, or will post the wage determination attached to that subcontract. The poster provided by the United States Department of Labor (Publication WH 1313) must be posted in a prominent and accessible place at the worksite. Human Resources will ensure that COMPANY X unconditionally pays to each employee subject to the Service Contract Act all wages due free and clear and without subsequent deduction (except as otherwise provided by law or regulations, 29 CFR Part 4), rebate, or kickback on any account. o o These payments must be made no later than one pay period following the end of the regular pay period in which the wages were earned or accrued. A pay period under this Act may not be of any duration longer than semi-monthly. Excluded Parties COMPANY X will not hire employees or do business with vendors that have been debarred or suspended from government funded programs. COMPANY X will check the names of those individuals to whom offers of employment will be made as well as vendors against the United States government's list of individuals and entities debarred, suspended, proposed for debarment, excluded or disqualified under the nonprocurement common rule, or otherwise declared ineligible from receiving United States government contracts, certain subcontracts, and certain United States government assistance and benefits at No employees or vendors are named in the Excluded Parties List System. FAR and -6 or FAR (h) 11 Proprietary Information COMPANY X Not to be Disclosed or Reproduced without prior Written Approval 41 of 52

42 HUMAN RESOURCES Subject/Topic Policy Procedure Audit Standard Post-Government Employment Restrictions COMPANY X will not hire any former United States government employees where there would be a conflict of interest between their obligations to protect information they learned as government employees and their proposed position at COMPANY X under the Procurement Integrity Act or the criminal laws. Human Resources should determine whether any new hire has been employed by a United States government agency within three years before the date of their potential hire by COMPANY X in web site applications and similar resources. A follow-up questionnaire should be sent to new hires who respond positively, asking which United States government agency they worked for, whether they were involved in grants or contracts in technical, program management, or contracting functions. Those employees who respond positively should be asked to provide an Ethics Opinion Letter from the Ethics Counsel of the United States government agency for which they worked that analyzes the potential post-government employment restrictions that may be imposed by 41 USC 423 and 18 USC 207. To receive a well-informed opinion, the potential new hire must be able to describe the duties and specific projects and programs they would assume at COMPANY X. The Legal Department must review all Ethics Opinion Letters to determine whether placing the new hire in the intended position will cause a potential conflict of interest that may create personal liability for the new hire and endanger United States government subcontracts of COMPANY X. Former government employees should be identified and potential post-government employment restrictions should be assessed by legal. FAR (b) or FAR (r) 12 Proprietary Information COMPANY X Not to be Disclosed or Reproduced without prior Written Approval 42 of 52

43 HUMAN RESOURCES Subject/Topic Policy Procedure Audit Standard Employment Eligibility Verification Combating Human Trafficking Required FAR Employees must provide truthful citizenship and immigration status information to COMPANY X and COMPANY X will take steps to ensure that employees meet regulatory requirements under the E-Verify and export controls regulatory regimes for their positions. COMPANY X will not permit its activities to support trafficking of human beings. In furtherance of the government s zero tolerance policy towards human trafficking, no COMPANY X employee engaged in the performance of work under subcontract shall use coercion, forced labor, involuntary servitude or any other form of human trafficking to effect any subcontract requirements. Human Resources must check the immigration status of (i) all applicable newly hired employees and, (ii) within 90 days after United States government contract or subcontract award or within 30 days after being assigned to the United States government contract or subcontract, all employees working on United States government subcontracts over $3,000 where any work is being performed in the United States. COMPANY X has enrolled in the E-Verify program to allow a current check of all applicable employees immigration status. Human Resources will hang posters in applicable business units notifying employees of the E-verify requirements, including the right to work. Business Units and contract administrators will identify any non-u.s. persons (individuals not US citizens or permanent residents) working on a contract where any export controlled technology is being used or transferred, and contact the Trade Compliance Department to determine if further action is necessary. Notify all COMPANY X employees who work on United States government contracts or subcontracts outside of the United States of the Government's zero tolerance policy and that they shall not engage in illegal recruitment, harboring, transportation, or obtainment of a person -- human trafficking -- for any reason. Notify applicable employees of the actions that will be taken against employees for violations of this policy. Such actions may include, but are not limited to, removal from the contract, reduction in benefits, or termination of employment. Provide an awareness program that includes the information included in FAR Part 22.17, which can be a mitigating factor in the event of a violation. E-Verify check must be made for all employees working on government contracts or subcontracts. Posters must be posted. Non-U.S. persons must be identified if any export controlled technology is being used or transferred. FAR All COMPANY X employees working on United States government contracts and subcontracts outside of the United States have received notice of the zero tolerance policy and possible corrective actions that can be taken. All non-us based COMPANY X employees are aware of what acts can constitute human trafficking. FAR Proprietary Information COMPANY X Not to be Disclosed or Reproduced without prior Written Approval 43 of 52

44 HUMAN RESOURCES Subject/Topic Policy Procedure Audit Standard Employees must inform Human Resources, who will in turn inform either the prime contractor or the United States government contracting officer, after consultation with the Legal Department, of: o Any information they receive from any source (including host country law enforcement) that alleges a COMPANY X employee, subcontractor, or subcontractor employee has engaged in conduct that violates this policy; and Any actions COMPANY X has taken against COMPANY X employees who violate the policy. 14 Proprietary Information COMPANY X Not to be Disclosed or Reproduced without prior Written Approval 44 of 52

45 PROCUREMENT Subject/Topic Policy Procedure Audit Standard Small and Minority Subcontractors Required FAR ; FAR COMPANY X supports the United States government's goals to provide businesses owned by minority and underrepresented groups opportunities to subcontract under United States government contracts. If a small business subcontracting plan is required, responsible individuals from Procurement will send representations and certifications to intended suppliers and subcontractors performing part of the scope of work under United States government contracts and subcontracts, seeking certifications as to small business status. Procurement will develop a Small Business Subcontracting Plan that works towards achievement of the United States government's goals of 25% small, 5% small disadvantaged, 5% women owned, 3% HUBZone, and 3% servicedisabled veteran-owned small business and submit it for approval by the United States government contracting agency and United States Small Business Administration. This can be done on a contract basis or using the entire company's subcontracting spend on a commercial plan. Procurement will submit data on actual small business subcontracting spend by category using as required, depending upon the funding agency. Procurement will flow down a requirement for a Small Business Subcontracting Plan where there are subcontracting opportunities exceeding $500,000 and the subcontractor or supplier under United States government contracts and subcontracts is other than a small business. COMPANY X has certifications of small business size from all its subcontractors and suppliers for its government contracts and subcontracts, has an approved Small Business Subcontracting Plan, has reported its small business subcontracting spend as required, and has flowed down obligations as required. FAR ; Proprietary Information COMPANY X Not to be Disclosed or Reproduced without prior Written Approval 45 of 52

46 PROCUREMENT Subject/Topic Policy Procedure Audit Standard Flowing Down Requirements to Suppliers and Subcontractors Required FAR (c)(1) COMPANY X will include all United States government contract or subcontract clauses or provisions in its subcontracts or purchase orders that are required, are necessary to obtain information, or limit risk to COMPANY X. This procedure only applies to the subcontractors and suppliers performing parts of the scope of work of a United States government contract or subcontract. At a minimum, COMPANY X will flow down the mandatory clauses for commercial item subcontractors found in FAR (c), which change regularly and can be found at COMPANY X will also include other clauses in its subcontracts under United States government contracts and subcontracts that require information from lower tier subcontractors and suppliers, examples are: Buy American Act/Trade Agreements Act clauses requiring information on country of manufacture or origin of components and toxic chemical reporting clauses. COMPANY X will include in subcontracts and purchase orders issued under United States government contracts or subcontracts the requirement to provide Notice about Employee Rights to Organize and Bargain Collectively with Their Employers are required by United States regulation 29 CFR Part 471. COMPANY X will take such action with respect to any such subcontract or purchase order as may be directed by the United States Secretary of Labor as a means of enforcing such provisions, including the imposition of sanctions for non-compliance. If COMPANY X becomes involved in litigation with a subcontractor, or is threatened by a subcontractor with litigation, as a result of the United States Secretary of Labor's direction, COMPANY X may request the United States to enter into the litigation to protect the interests of the United States. In addition, COMPANY X will flow down other United States government contract and subcontract clauses that require COMPANY X to operate under business terms that are not standard, such as termination for convenience only allowing termination by the Government, patent and data rights clauses giving the United States government certain rights, changes clauses allowing unilateral changes by the government, and unique disputes clauses allowing claims to be passed through the prime contractor to the government. Mandatory flow down clauses inserted into all supplier and subcontractor contracts. FAR (c) 16 Proprietary Information COMPANY X Not to be Disclosed or Reproduced without prior Written Approval 46 of 52

47 PROCUREMENT Subject/Topic Policy Procedure Audit Standard Procurement Procedures Under its United States government contracts and subcontracts, COMPANY X will engage in competitive procurement from amongst at least three subcontractors or suppliers; document its review catalog or market prices of at least three subcontractors or suppliers, or document the reason why competition or market research was not possible or necessary. This procedure applies only to the subcontracts and supply agreements being put in place to perform parts of the scope of work of a United States government contract or subcontract. To the maximum extent practicable, Purchasing will engage in competition amongst at least three potential subcontractors or suppliers who are performing part of the scope of work in support of United States government contracts and subcontracts and document the selection process. Where the item being purchased is marketed on a catalog or market price basis, Purchasing will use its E-Sourcing tool or compare the catalog or market prices of at least three potential subcontractors or suppliers and document the selection process Where only one source is being considered for a subcontract, Purchasing must document the rationale for foregoing competition. Documentation of the process used to advertise and compete subcontracts or purchase orders should cover every agreement except those where documentation for a sole source award is maintained. 17 Proprietary Information COMPANY X Not to be Disclosed or Reproduced without prior Written Approval 47 of 52

48 PROCUREMENT Subject/Topic Policy Procedure Audit Standard Restrictions on Certain Purchases Required 31 CFR Chapter V COMPANY X will not acquire, for use in the performance of its United States government contracts and subcontracts, any supplies or services from countries that are sanctioned by the Office of Foreign Assets Control (OFAC) in the Department of the Treasury. This procedure applies only to the subcontracts and supply agreements being put in place to perform parts of the scope of work of a United States government contract or subcontract. All COMPANY X procurement employees will be made aware that the United States government prohibits transactions of supplies or services by any COMPANY X entity or person outside of the United States' jurisdiction where it would be prohibited by a person under United States jurisdiction. Automated systems should initially reject and ask for Trade Department approval of most transactions involving Cuba, Iran, and Sudan, which are generally prohibited, as are most imports from Burma or North Korea, into the United States or its outlying areas. These countries change from time to time and should be verified with the Trade Department. Lists of entities and individuals subject to economic sanctions by the United States government are included in OFAC s List of Specially Designated Nationals and Blocked Persons at More information about these restrictions, as well as updates, is available in the OFAC s regulations at 31 CFR Chapter V and/or on OFAC s website at Finance Department employees will refuse to pay for purchases that stem from one of the aforementioned countries made under a United States government contract or subcontract. No sales or purchases with or in Cuba, Iran, Sudan, Burma, and North Korea. 31 CFR Chapter V 18 Proprietary Information COMPANY X Not to be Disclosed or Reproduced without prior Written Approval 48 of 52

49 PROCUREMENT Subject/Topic Policy Procedure Audit Standard Anti-kickback Required 41 U.S.C No COMPANY X employee shall accept or offer any monetary gift or donation of any kind from potential subcontractors or suppliers for United States government subcontracts. This procedure applies only to the subcontracts and supply agreements being put in place to perform parts of the scope of work of a United States government contract or subcontract. Procurement employees will be made aware of what the anti-kickback laws prohibit. o o Kickback, means any money, fee, commission, credit, gift, gratuity, thing of value, or compensation of any kind which is provided, directly or indirectly, to any United States government prime Contractor, prime Contractor employee, subcontractor, or subcontractor employee for the purpose of improperly obtaining or rewarding favorable treatment in connection with a prime contract or in connection with a subcontract relating to a prime contract. The Anti-Kickback Act of 1986 (41 U.S.C ) (the Act), prohibits any person from Providing or attempting to provide or offering to provide any kickback; Soliciting, accepting, or attempting to accept any kickback; or Including, directly or indirectly, the amount of any kickback in the contract price charged by a prime Contractor to the United States or in the contract price charged by a subcontractor to a prime Contractor or higher tier subcontractor. Finance employees will decline a payment from a potential supplier or subcontractor of COMPANY X s under its United States government contracts and subcontracts. Procurement department is aware of anti-kickback laws. 41 U.S.C Proprietary Information COMPANY X Not to be Disclosed or Reproduced without prior Written Approval 49 of 52