3.1003 Requirements
Source: FAR 3.1003 on acquisition.gov
Contractors must comply with mandatory ethics and disclosure requirements, including timely reporting of violations and overpayments, or risk suspension or debarment.
Overview
FAR 3.1003 outlines mandatory requirements for government contractors regarding business ethics, disclosure of violations, and handling of overpayments. It specifies when contractors must comply with the clauses at FAR 52.203-13 (Contractor Code of Business Ethics and Conduct) and 52.203-14 (Display of Hotline Poster(s)), based on contract conditions. The section also details the obligation to disclose credible evidence of certain violations (fraud, conflict of interest, bribery, gratuity violations, or False Claims Act violations) and significant overpayments, with failure to do so potentially resulting in suspension or debarment. Contracting officers are instructed on how to respond to notifications of possible violations, and agencies are given responsibilities regarding fraud hotline posters, especially for contracts funded with disaster assistance funds.
Key Rules
- Mandatory Ethics and Hotline Poster Clauses
- Contractors must comply with FAR 52.203-13 and 52.203-14 if their contracts meet the conditions in FAR 3.1004.
- Disclosure of Violations
- Contractors must timely disclose credible evidence of certain federal criminal law or False Claims Act violations, or risk suspension/debarment for up to three years after final payment.
- Disclosure of Overpayments
- Contractors must report and remit significant overpayments (excluding contract financing payments) or face suspension/debarment.
- Contracting Officer Actions
- Contracting officers must coordinate with the agency OIG or follow agency procedures if notified of possible contractor violations.
- Fraud Hotline Poster Requirements
- Agencies and OIGs determine the need and content for fraud hotline posters, with special requirements for disaster assistance-funded contracts.
Responsibilities
- Contracting Officers: Coordinate with OIG or follow agency procedures upon notification of violations.
- Contractors: Comply with ethics and hotline poster clauses, disclose violations and overpayments, and remit overpayments.
- Agencies: Oversee fraud hotline poster requirements and ensure compliance for disaster assistance-funded contracts.
Practical Implications
- This section enforces ethical conduct and transparency in government contracting.
- Contractors must have robust compliance programs to detect and report violations and overpayments.
- Failure to comply can result in severe penalties, including suspension or debarment, affecting future contract eligibility.
(a) Contractor requirements.
(1) Although the policy at 3.1002 applies as guidance to all Government contractors, the contractual requirements set forth in the clauses at 52.203-13, Contractor Code of Business Ethics and Conduct, and 52.203-14, Display of Hotline Poster(s), are mandatory if the contracts meet the conditions specified in the clause prescriptions at 3.1004.
(2) Whether or not the clause at 52.203-13 is applicable, a contractor may be suspended and/or debarred for knowing failure by a principal to timely disclose to the Government, in connection with the award, performance, or closeout of a Government contract performed by the contractor or a subcontract awarded thereunder, credible evidence of a violation of Federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations found in Title 18 of the United States Code or a violation of the civil False Claims Act. Knowing failure to timely disclose credible evidence of any of the above violations remains a cause for suspension and/or debarment until 3 years after final payment on a contract (see 9.406-2(b)(1)(vi) and 9.407-2(a)(8)).
(3) The Payment clauses at FAR 52.212-4(i)(5), 52.232-25(d), 52.232-26(c), and 52.232-27(l) require that, if the contractor becomes aware that the Government has overpaid on a contract financing or invoice payment, the contractor shall remit the overpayment amount to the Government. A contractor may be suspended and/or debarred for knowing failure by a principal to timely disclose credible evidence of a significant overpayment, other than overpayments resulting from contract financing payments as defined in 32.001 (see 9.406-2(b)(1)(vi) and 9.407-2(a)(8)).
(b) Notification of possible contractor violation. If the contracting officer is notified of possible contractor violation of Federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations found in Title 18 U.S.C.; or a violation of the civil False Claims Act, the contracting officer shall-
(1) Coordinate the matter with the agency Office of the Inspector General; or
(2) Take action in accordance with agency procedures.
(c) Fraud Hotline Poster.
(1) Agency OIGs are responsible for determining the need for, and content of, their respective agency OIG fraud hotline poster(s).
(2) When requested by the Department of Homeland Security, agencies shall ensure that contracts funded with disaster assistance funds require display of any fraud hotline poster applicable to the specific contract. As established by the agency OIG, such posters may be displayed in lieu of, or in addition to, the agency’s standard poster.