On February 6 of this year, the Air Force proposed for debarment the San Antonio office of Booz Allen. The Air Force proposed the San Antonio office for debarment because a former Air Force official who joined Booz Allen brought with him to work and disclosed to others in the office non-public, procurement sensitive information concerning an upcoming Air Force procurement. Booz Allen intended on competing in the procurement. The non-public information was not only disclosed to San Antonio Booz Allen personnel, the information also was passed around and used by these personnel, including supervisory personnel, in capture meetings. The nature and sensitivity of the information ultimately was recognized by a pricing analyst who tipped off the Booz Allen’s in-house legal counsel.
The Air Force’s proposed debarment of Booz Allen is a cautionary tale to those who hire personnel from Government. It is not enough to get an ethics opinion from the government agency allowing the former official to accept employment with a contractor; a contractor also must ensure that the former government official does not bring non-public, source selection information with him or her to the new place of employment.
On April 13, 2012, the Air Force entered into an Administrative Agreement with Booz Allen in which the Air Force agreed to terminate the proposed debarment in exchange for Booz Allen’s commitment to take a number of remedial measures. Chief among these commitments is to have an outside monitor (Affiliated Monitors, Inc.) evaluate Booz Allen’s ethics program and report regularly to Booz Allen and the Air Force regarding Booz Allen’s efforts to inculcate its entire workforce with its “ethics message.” In addition, Booz Allen agreed to have an outside law firm evaluate Booz Allen’s handling of the matter, including the investigation undertaken by the in-house lawyers and the decisions made on reporting the ethics violations to the Air Force. A third law firm (what am I, chopped liver?) was retained by Booz Allen to advise it on developing internal protocols for detecting and reporting ethics violations. The Administrative Agreement’s term is three years.
The Administrative Agreement and promises made by Booz Allen therein are instructive. While the retention of outside consultants and law firms likely is too expensive and too resource intensive for any contractor other than those of a size of a Booz Allen, the Administrative Agreement contains other commitments Booz Allen made which any contractor easily can incorporate into its ethics program. For example, per the Administrative Agreement:
- Booz Allen now will require all employees, including newly-hired employees, to certify affirmatively that they do not possess non-public or proprietary information from a past employer and do not intend to bring such information to Booz Allen upon their employment. The cognizant hiring manager also has to certify that he or she has reviewed this policy with the new hire.
- Booz Allen now requires the source of pricing information included in any proposal to be documented in the capture and proposal files and certified by the Capture Manager.
- Booz Allen will institute a Preferred Supplier Program which is designed to reward, “in some manner,” suppliers/subcontractors that have instituted compliance and “values-based” ethics programs.
- Booz Allen will verify the status of all current and potential employees or consultants by reviewing EPLS.
Last week, the GSA held an informal round table on “Suspension and Debarment: What Industry Needs to Know.” The panel made some interesting points. One was that suspensions and debarments should not be used in a punitive manner or as a quick method of “scoring political favor.” The panel acknowledged that the way many agencies use a Notice of Proposed Debarment is as a “Show-Cause Letter,” where a “Show-Cause” letter is, indeed the better option.
The second point made by the panel was that small businesses are in a unique and particularly tough position with respect to suspension and debarment proceedings. Most small businesses are not required to go the “full Monty” with respect to ethics and compliance programs. Many small businesses, however, mistakenly believe that they are no specific ethics or compliance requirements imposed on small businesses by the Government. In fact, under the FAR, every contractor must have a Code of Business Ethics and Conduct, whether the contractor is small, mid-size or large and whether the contractor has low-value or large-value contracts. In addition, every contractor must ensure that the values espoused in such Code of Business Ethics and Conduct are implemented within the company. Larger companies must undertake specific actions with respect to training and compliance; smaller companies are allowed flexibility to develop a compliance program commensurate with the size of the company or complexity of its contracts. According to Steve Shaw, Air Force Deputy General Counsel for Contractor Responsibility, the more a company does on the “front end” and the “back end”, the less likely it will be debarred. In other words, a company with a robust ethics program has an advantage should it find itself staring down the barrel of a debarment action. As does a company that responds quickly and forcefully to any reports of misconduct. So, for small firms with limited resources and no specific requirements, the choices they make or fail to make could be critical. The panel emphasized that a small company does not need to have “high-end training with glossy materials.” What is important, the panel emphasized, was ensuring that company employees receive the company’s policy on ethics and proper business conduct.
The Booz Allen Administrative Agreement, therefore, is a good play-book for both large and small contractors because it details a broad spectrum of actions a company can take to implement an ethics policy inside a company. Look forward to this government contracts lawyer’s next blog post on the top ten issues any code of business ethics or compliance program should address.