Contractor Code of Business Ethics and Conduct
Contractors with large federal contracts must implement and maintain a written code of ethics, employee training, and internal controls to prevent and report improper conduct.
Overview
FAR Subpart 3.10 establishes the requirements for a Contractor Code of Business Ethics and Conduct, aiming to promote integrity and ethical behavior in federal contracting. This subpart mandates that contractors maintain written codes of ethics, implement compliance programs, and report violations of law related to government contracts. It applies primarily to contracts exceeding $6 million with a performance period of 120 days or more, but its principles are broadly relevant to all contractors. The regulation outlines specific policies, definitions, and requirements, and prescribes contract clauses that must be included in applicable solicitations and contracts. The goal is to ensure contractors proactively prevent, detect, and address improper conduct and maintain high ethical standards throughout contract performance.
Key Rules
- Scope and Definitions
- Defines the applicability and key terms related to contractor ethics and compliance programs.
- Policy
- Establishes the federal government’s expectation that contractors conduct business with integrity and in compliance with the law.
- Requirements
- Requires contractors to have a written code of business ethics, implement an employee training program, and maintain an internal control system for detecting and preventing improper conduct.
- Contract Clauses
- Mandates inclusion of specific clauses in contracts meeting the threshold, requiring contractors to comply with these ethics and conduct standards.
Responsibilities
- Contracting Officers: Ensure inclusion of required clauses in applicable contracts and verify contractor compliance.
- Contractors: Develop, implement, and maintain a code of ethics, training, and internal controls; timely disclose violations; cooperate with government investigations.
- Agencies: Monitor contractor compliance and take action in cases of non-compliance or violations.
Practical Implications
- This subpart exists to reduce fraud, waste, and abuse in federal contracting by requiring robust ethics and compliance programs.
- Contractors must invest in training, reporting mechanisms, and internal controls to meet requirements.
- Failure to comply can result in contract termination, suspension, or debarment, making proactive compliance essential.