1) Government
Contracts
Compliance
Backgrounder
©2012 Morrison & Foerster LLP | All Rights Reserved | mofo.com
2) Government Contracts
Compliance Backgrounder
What You Need to Know About Government Contracts Compliance
PRACTICE GROUP
CHAIRS
Richard J. Vacura
1650 Tysons Boulevard
Suite 400
McLean, VA 22102
(703) 760-7764
rvacura@mofo.com
The Government Can Be a Good Customer!
•
The Government represents a stable market in uncertain economic times.
•
The Government can also be a great source of funding and new business
opportunities for companies.
Why is Government Contracts Compliance Important to You?
Named 2012
Government Contracts
Practice Group of the
Year by Law360
Attorneys named
leading lawyers by
Chambers USA for
Government Contracts
and by Legal500 for
Supreme Court and
Appellate practices
Complex Laws and Regulations: As a customer, the Government operates
under extensive and complex procurement statutes, regulations, and rules
that are different from those in the commercial marketplace. Failure to follow
the rules can - and usually will - result in civil and criminal penalties.
•
Noncompliance Has Serious Consequences: Consequences of
noncompliance can be severe: termination for default, payment of excess reprocurement costs, adverse past performance ratings, charges of false
claims or false statements, and even suspension and debarment from
performing future government contracts.
•
Strict Ethics Rules: The U.S. Government imposes strict contractor
business ethics and compliance rules. These impact internal controls and
often force mandatory disclosure of violations. Through the suspension and
debarment rules, mandatory disclosure obligations apply to all contractors
and subcontractors.
•
Bradley D. Wine
1650 Tysons Boulevard
Suite 400
McLean, VA 22102
(703) 760-7316
bwine@mofo.com
•
Intellectual Property Can Be At Risk: Federal funds always come with
strings. Under the Bayh-Doyle Act and other federal regulations, the
Government will obtain intellectual property rights to a contractor's software
developed or customized for a federal government customer, and to
technical data delivered under a government contract.
•
GSA Schedule Enforcement: There has been phenomenal growth in the
quantity and value of GSA Schedule sales. The good news is that terms and
conditions do not need to be negotiated every time an order is placed; the
bad news is that the contractor is generally stuck with the terms and
conditions for the life of the GSA schedule contract, and enforcement actions
for noncompliance are at all-time highs.
•
Small Business Risks: Increased pressure by the Government on all
agencies to meet small business contracting and subcontracting goals has
resulted in a renewed emphasis on contractors meeting small business
contracting goals and on enforcement of liquidated damages provisions if
quotas are not met.
Government Contracts Compliance Backgrounder | 1
3) Government Contracts
Compliance Backgrounder
•
Contract Administration Is Critical: Contract administration requirements
can be a trap for inadvertent violations, which may result in civil and criminal
liability under the False Claims Act, as well as suspension and debarment.
Adequate contract administration not only is required to ensure compliance
with the many unique government requirements, but also is critical for a
contractor to affirmatively demonstrate compliance when challenged by the
Government, sometimes years after performance is complete.
•
Cost Accounting Issues: Cost accounting requirements are complex and
burdensome. Government contractors are subject to a number of cost
accounting principles and practices that can dramatically affect the way that
companies do business. For example, the Cost Accounting Standards
("CAS") dictate the way in which a contractor must maintain its accounting
system and how it must account for certain types of costs. Failure to adhere
to CAS or other cost principles may lead to false claims liability and/or
substantial unilateral reductions to the contract price.
•
International Risks: Doing business internationally triggers additional
requirements under federal laws and regulations, including the Foreign
Corrupt Practices Act and export control laws. Enforcement actions can
result in steep financial penalties for companies, and even the criminal
prosecutions of individuals.
•
Know The Rules: Sovereign immunity is a powerful shield! Many traditional
remedies are not available against the Government. Contractors are
presumed to know the law and must be extra careful to protect themselves
and mitigate the risks in contracting with the Government.
How Morrison & Foerster Can Help
•
We provide advice and counseling to clients through the full range of
government business transactions, from the contract formation process
through performance and close-out of the contract.
•
Our government contracts team has represented clients in the information
technology, defense, electronics, aerospace, shipbuilding, health care,
national security and intelligence, biotechnology, telecommunications,
engineering services, logistics support, transportation, manufacturing, and
facility services industries.
•
There is no substitute for doing the right thing. We help ensure that you have
the right infrastructure in place (operational, accounting, contract
administration, and socioeconomic), guide you through the regulatory
requirements, and help you manage the risks of working with the
Government.
•
We have vast experience in scores of government contracts matters for
major national and international companies, involving a wide range of
government contracts issues.
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