Over the last several years, I have encouraged contractors to create an ethics policy, compliance manuals and conduct training to educate their estimators and superintendents on what they can and cannot do in various situations.
I also have encouraged contractors to put a monitoring program in place to ensure compliance. In presentations to industry groups I explain that implementing these procedures can help avoid mistakes that could lead to a criminal indictment and can be used as a mitigating factor when a government agency considers suspension and debarment. After several presentations around the country, I wrote a column on this for the November 2003 issue. Since then I have wondered if contractors had taken heed of my advice.
Last year I spoke to contractors at an industry conference. I began by asking each person in the audience to honestly answer questions I had for them by raising their hand.
I asked: “How many of you do not have an ethics policy or compliance manuals?” Almost everyone raised their hand. “How many of you do not have an ethics officer or someone in your company responsible for ethics and compliance with the laws affecting you?” Almost everyone raised their hand. “How many of you do not do training on antitrust, DBE fraud and false claims?” Almost everyone raised their hand.
What to do
Contractors should consider adopting a formalized ethics policy and corporate compliance program. Your attorney can help you identify the legal requirements and risks to be addressed in an effective program. Your plan must consider the overall scope of the federal laws that drive companies to maintain such a compliance program.
Specifically, in order to have an effective one, the company must clearly understand the U.S. federal sentencing guidelines first, as well as the relevant substantive areas of law under the guidelines and other relevant areas of law.
What areas create the greatest risk? While a contractor may not face a risk in each of them, based on my experience, I believe the following are the greatest risk:
- False claims;
- Equal employment opportunities;
- OSHA/safety and health;
- DOT (trucking);
- Disadvantaged business enterprises;
- Product substitution; and
- False testing.
A detailed review of the law in all of the areas of the compliance program would be necessary in order to achieve actual compliance with the current state of the law. Keeping current is obviously the chief concern.
There are no strict rules governing how the program must be set up. However, irrespective of the size of your organization, an effective structure must include two functions: (1) education and training; and (2) management and monitoring performance. It is worse to have an ethics and compliance program that is ignored than not to have one at all. After all, Enron had one of the best ethics policy statements I have ever seen.
I will be speaking again this year at national industry conferences about the importance of ethics and compliance in the post-Enron era. I will urge state chapters of the highway contractor groups to do their own statewide programs and I will encourage contractors to have their lawyers do their own training and development of compliance manuals.