52.203-13
Contractor Code of Business Ethics and Conduct
Contractors with significant federal contracts must implement robust ethics programs, disclose violations, and ensure compliance throughout their supply chain to maintain eligibility and avoid penalties.
Overview
FAR 52.203-13 requires certain federal contractors to implement a written code of business ethics and conduct, establish an ethics awareness and compliance program, and maintain an internal control system to prevent and detect criminal conduct. The clause mandates timely written disclosure to the agency Office of Inspector General (OIG) and the Contracting Officer if credible evidence of certain violations is found. It also requires contractors to flow down these requirements to applicable subcontracts and to cooperate fully with government investigations. The rule is designed to promote ethical behavior and legal compliance in organizations performing significant government contracts.
Key Rules
- Written Code of Ethics
- Contractors must have a written code of business ethics and conduct within 30 days of contract award and provide it to all employees involved in contract performance.
- Ethics Program and Internal Controls
- Contractors (except small businesses and those providing commercial products/services) must establish an ongoing ethics awareness program and internal control system within 90 days of contract award.
- Timely Disclosure
- Contractors must promptly disclose credible evidence of certain federal criminal law violations or False Claims Act violations to the agency OIG and Contracting Officer.
- Subcontractor Flowdown
- The substance of this clause must be included in subcontracts exceeding the FAR 3.1004(a) threshold and with performance periods over 120 days.
- Full Cooperation
- Contractors must fully cooperate with government audits, investigations, and corrective actions.
Responsibilities
- Contracting Officers: Ensure inclusion of the clause in applicable contracts and monitor contractor compliance.
- Contractors: Develop, communicate, and enforce ethics policies; establish reporting mechanisms; disclose violations; cooperate with investigations; and flow down requirements to qualifying subcontractors.
- Agencies: Safeguard confidential disclosures and oversee contractor compliance.
Practical Implications
- This clause aims to prevent fraud, waste, and abuse in government contracting by fostering a culture of ethics and compliance. Contractors must invest in training, reporting systems, and internal controls, and failure to comply can result in penalties or loss of contracts. Common pitfalls include inadequate training, failure to disclose violations, or not flowing down requirements to subcontractors.