Ethics rule proposed for federal contractors

The Defense Department, General Services Administration and NASA are calling for public comment on a proposed rule to establish a code of ethics for contractors similar to the Federal Acquisition Regulation guidance on improper business practices and personal conflicts of interest by federal procurement officials.

The FAR currently does not discuss contractors' responsibilities with regard to a code of ethics and business conduct and the avoidance of improper business practices.

According to the announcement published in the Federal Register, the rule establishes a clear and consistent policy regarding contractor code of ethics and business conduct, responsibility to avoid improper business practices and procedures for displaying an agency Inspector General Fraud Hotline poster to facilitate the reporting of wrongdoing in federal contracting.

The rule proposes adding a Contractor Code of Ethics and Business Conduct to the FAR. It would require contractors receiving awards in excess of $5 million, with performance periods of 120 days or more, to have a written code of ethics and business conduct within 30 days after the contract is awarded.

Such contractors would be required to establish an employee ethics and compliance training program and an internal control system within 90 days after a contract award. They would also have to post an OIG fraud hotline poster and, where appropriate, a special disaster relief poster from the Homeland Security Department, at work locations in the United States and on the company Web site.

The rule includes a flow-down provision that applies to subcontracts at the same dollar level as the prime contract. It also provides for remedies if the contractor fails to comply with the rule.

Interested parties should submit written comments to the FAR Secretariat on or before April 17, 2007.