Can DII help me understand Anti-Corruption Laws?

Government contractors and their suppliers must comply with the U.S. Foreign Corrupt Practices Act and other applicable anti-corruption laws (e.g., the UK Bribery Act), directives and/or regulations that govern operations in the countries in which they do business, regardless of local customs.

DII has a network of members and resources to help companies navigate appropriate Anti-Corruption safe guards and due diligence. 

How can Business Courtesies be unethical?

Companies must not use the exchange of business courtesies to gain an unfair competitive advantage. In any business relationship, companies must ensure that the offering or accepting of any gift or business courtesy is permitted by applicable laws and regulations, and that these exchanges do not violate the rules and standards of the recipient's organization, and are consistent with reasonable marketplace customs and practices.

What is a Conflict of Interest?

Conflicts of interest can arise when personal interests interfere or appear to interfere with a person's ability to make objective business decisions or perform their duties without bias. This applies to a conflict between the interests of our company and the personal interests of those working on our behalf, or their close relatives, friends, or associates.

DII's network and resources can help with identifying potential conflicts of interest

What should be our first step in setting up an ethics and compliance program?

The first step is to obtain leadership support for an ethics and compliance program. Without leadership support, both in concept and financial resources, your chances for establishing and maintaining an effective ethics and compliance program will be significantly hindered.

After this initial support is obtained, the individuals undertaking this effort need to have a solid understanding of all aspects of your business, know of any prior misconduct, and realistically assess the risk profile stemming from the government contracts that your company holds. You must know what government contracts or subcontracts your company holds, what representations and certifications have already been made to the federal Government and prime government contractors, what clauses are in your organization’s contracts or purchase orders (whether in full or incorporated by reference), which agencies your organization contracts with and whether any agency-specific regulations are incorporated into the contract, etc. Without understanding the clauses and requirements included in your company’s contracts, it will be difficult to implement a targeted and effective program.

Who should be involved in this process of setting up an ethics and compliance program?

This will depend on the risk profile of your business, the internal organization, and where the compliance program will sit. In addition to getting buy in from senior leadership, consider including senior leaders from the Law Department, Human Resources, Internal Audit, Business Management, Operations, Communications, Security, Information Technology and other departments with which the compliance function will need to partner.

What kind of resources do I need to spend on an ethics and compliance program?

The amount of resources that should be devoted to an ethics and compliance program will vary on a case-by-case basis. Some consideration should be given to the following:

  • What kind of training should your business do each year and how many employees will it be necessary to train?
  • How much will it cost to adopt and roll out policies and procedures and how many employees must review and certify that they have reviewed these policies and procedures?
  • How much will it cost to staff a compliance and ethics program to ensure compliance, conduct investigations, and make required disclosures?
  • Who will audit the ethics and compliance program and how much will such an audit cost? How often will such an audit be completed?

Make sure you consider not only direct costs but also opportunity costs. For example, in training employees, you should consider the opportunity cost of spending an hour training all necessary employees versus what they could otherwise be doing.

We are a small business struggling to get on our feet – what if I only have a limited amount of time and funds to spend on an ethics and compliance program? 

Undoubtedly one of the greatest limitations on small businesses with regards to establishing or maintaining an ethics and compliance program is resources, both in time and funds. So here are some key considerations:

First, build a business case for your leaders in order to convey the importance of having a strong ethics and compliance program – it could mean the difference between obtaining or keeping government contracts and losing them.

Second, prioritize where you will spend your limited resources based on the risk to the business. Depending upon the most significant issues or potential issues you are facing, and the overall risk those issues pose is where you want to focus your resources. For instance, if you don’t have a company Code of Conduct and are required to have one as a defense contractor.

Third, the DII has free resources to help build your program. You may review those material here.  

Fourth, as a DII member, you have the opportunity to get free assistance from another DII member via DII’s Mentor Program. This can be a very effective way to get the information you need quickly. Learn more about becoming a member.