A new rule being drafted by the federal government would require many local companies with government contracts to adopt new ethical guidelines.
The General Services Administration is reviewing comments to a proposed rule that would require companies with $5 million or more in government contracts to have a written code of ethics within 30 days and employee ethics and compliance training within 90 days of the award. The new rule amends the Federal Acquisition Regulation, the law that governs the federal procurement process.
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“In view of the significant sums of Federal dollars spent by agencies to acquire goods and services, this 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 Office] Fraud Hotline poster to facilitate the reporting of wrongdoing in Federal contracting,” the proposed rule states.
Once the rule is finalized by GSA, it will be sent to the Civilian Agency Acquisition Council and the Defense Acquisitions Regulations Council for final approval.
The rule would require a number of local companies to adopt the ethical guidelines if they want to continue doing business with the federal government. It comes after a series of business scandals that dealt with ethical issues, such as the Enron collapse.
Reaction to the proposed rule has been mixed, with many organizations claiming the rule would be excessively burdensome. The Small Business Administration said small businesses “bear a disproportionate share of the regulatory burden.”
The Council on Government Relations, a group representing research universities and affiliated laboratories, said they supported the objective of the rule but had problems with its implementation.
“Because universities and other nonprofit organizations receive federal funding through the full range of mechanisms — grants, contracts, cooperative agreements, etc. — it is equally important to have common practices across mechanisms,” the group said. “A code of conduct and the internal controls necessary to discover and correct ethical violations would be a critical component of a broad-based compliance program.”
