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Supplier Mentoring Program Checklist

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Supplier Mentoring Program Checklist

  1. 1. Supplier Ethics: Program Checklist 1
  2. 2. Guidelines for Program Requirements • Federal Sentencing Guidelines (FSG) – Last amended 2010 – Effective Compliance and Ethics Program (Chapter 8, Part B, Section 2) • Due diligence to prevent and detect criminal conduct • Promote organizational culture encouraging ethical conduct and compliance with law • Defense Industry Initiative on BUSINESS ETHICS AND CONDUCT (DII) – Creating and Maintaining an Effective Ethics and Business Conduct Program • Suggestions for each element of an effective program • Good resource for possible additions / enhancements 2
  3. 3. Guidelines for Program Requirements (cont’d) • FAR Clause 52.203-13 “Contractor Code of Business Ethics and Conduct” – Requires government contractors to: • Exercise due diligence to prevent and detect criminal conduct • Promote an organizational culture that encourages ethics and compliance • Submit mandatory disclosures to the government – Mandates: • Code of Business Ethics and Conduct • Business Ethics Awareness and Compliance Program • Internal Control System – Subcontract Flowdown 3
  4. 4. Checklist • Checklist maps requirements of FSG and FAR, as well as DII recommendations, against program elements • Reviewers should refer to the source documents for more detail • Links to Source Documents – Federal Sentencing Guidelines §8B2 – FAR Clause 52.203-13 “Contractor Code of Business Ethics and Conduct” • DII Creating and Maintaining an Effective Ethics and Business Conduct Program • Note both potential gaps and highlights/best practices 4
  5. 5. Ethics & Business Conduct Program Sentencing Guideline Requirement Ethics & Business Conduct Program Standards and procedures  Code of Conduct  Distribution/Access  Internal Control Procedures FAR Requirement* Code of Conduct made available to each employee working on the contract  Corporate Policy Statements: _______________________________ _______________________________ _______________________________ Internal Control System Defense Industry Initiative Written policy signed by top official providing for key elements of program Code of Conduct, including potential content *for contracts of more than $5M and period of performance > 120 days Note: Bold text indicates minimum program requirement 5
  6. 6. Ethics & Business Conduct Program Sentencing Guideline Requirement Ethics & Business Conduct Program Board knowledge and oversight  Certifications of training  Frequency of reports to Board:  Quarterly  Bi-yearly  Yearly  Other: _____________  Oral report to Board  Written report to Board 6
  7. 7. Ethics & Business Conduct Program Sentencing Guideline Requirement Ethics & Business Conduct Program High-level person responsible for program • Report to executives and Board • Resources, authority and access  Access to company resources FAR Requirement Assignment of responsibility at sufficiently high level with adequate resources to ensure effectiveness of program (ICS)  Budget  Staff  Level of person responsible for ethics__________________________  Report to CEO  Hard line  Dotted line Defense Industry Initiative • Defined organizational structure  Report to Board of Directors  Hard line  Dotted line  Steering Committee 7
  8. 8. Ethics & Business Conduct Program Sentencing Guideline Requirement Ethics & Business Conduct Program Due diligence for substantial authority positions  Sources of information:  Background Checks  Ethics database check FAR Requirement Reasonable efforts not to include individual as a principal, whom due diligence would have exposed conduct in conflict with Code (ICS)  HR hiring processes  Frequency of checks once in position:  Upon offer only  Once a year  Other _____________________ 8
  9. 9. Ethics & Business Conduct Program Sentencing Guideline Requirement Ethics & Business Conduct Program Communication and training  Board of Directors training FAR Requirement  Employee training Ongoing ethics awareness and compliance program • • Reasonable steps to communicate periodically and in practical manner Contractor’s standards and procedures by – conducting effective training programs – otherwise disseminating information appropriate to individual’s respective roles and responsibilities Training for contractor’s principals and employees and, as appropriate, contractor’s agents and subcontractors Defense Industry Initiative  Code of Conduct (or general ethics) Training  Compliance Training  Training for agents and subcontractors  Ethics staff training  Employee communications  Ethics messages integrated  Standalone ethics communications • Rules-based compliance training based on risk assessment • Ethics awareness training and discussion • Comprehensive communication plan 9
  10. 10. Ethics & Business Conduct Program Sentencing Guideline Requirement Ethics & Business Conduct Program Monitoring, auditing, and periodic evaluation  Annual internal controls audit  Employee survey  Ethics program assessment  Frequency:  Once a year FAR Requirement Periodic reviews of business practices, procedures and internal controls (ICS)  Every other year  Other __________________  External benchmarking  Ethics metrics review  Frequency: Defense Industry Initiative  Monthly Regular program assessments, employee survey, metrics reporting, internal and external audits  Quarterly  Bi-Yearly  Yearly  Other __________________  General internal and external audits 10
  11. 11. Ethics & Business Conduct Program Sentencing Guideline Requirement Ethics & Business Conduct Program System for reporting misconduct or seeking guidance, without fear of retaliation  Anonymous reporting FAR Requirement  Help/hotline Standards and procedures to facilitate timely discovery of improper conduct (internal controls) Internal reporting mechanism, such as hotlines, to report suspected misconduct and instructions that encourage employees to make reports (ICS)  Ethics Officers  Other _________________________  Protection against retaliation  System to report  System to seek guidance  System for tracking contacts Defense Industry Initiative Place for employees, suppliers, customers and business relations to raise concerns / ask questions 11
  12. 12. Ethics & Business Conduct Program Sentencing Guideline Requirement Ethics & Business Conduct Program Consistent enforcement  Disciplinary process for violations FAR Requirement Disciplinary actions for improper conduct or failing to take reasonable steps to prevent or detect improper conduct (ICS)  Discipline review committees  Internal investigations 12
  13. 13. Ethics & Business Conduct Program Sentencing Guideline Requirement Ethics & Business Conduct Program Response to criminal activity  Audits  Corrective action analysis FAR Requirement  Discipline Corrective measures are promptly instituted and carried out (internal controls)  Internal investigations  Mandatory Disclosure policy  Voluntary Disclosure policy 13
  14. 14. Ethics & Business Conduct Program Sentencing Guideline Requirement Ethics & Business Conduct Program NEW (as of 2010): Obligation to communicate directly with the Board or a sub-group of the Board  Periodic reports (oral and written) to Board committee: _______________________________  Frequency of reports to Board:  Quarterly  Bi-yearly  Yearly  Other: _____________  Communication with board documented in company policy/procedure: _______________________________ 14
  15. 15. Ethics & Business Conduct Program FAR Requirement Ethics & Business Conduct Program Disclosures of violations of the civil False Claims Act or Federal criminal law shall be directed to the agency Inspector General, with a copy to the Contracting Officer  Process for making disclosures  Policy stating expectations for full cooperation Timely disclosure to the agency Inspector General of certain violations of law by principal, employee, agent or subcontractor Full cooperation with government agencies for audits, investigations and actions 15
  16. 16. Ethics & Business Conduct Program Defense Industry initiative Ethics & Business Conduct Program Leadership Commitment  Tone at the top  Engaged middle management  Reinforcing messages 16

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