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. Government Contracts Compliance Backgrounder | 2 .