Government contractors are also familiar with disclosure obligations. Since it went into effect in December 2008, the Federal Acquisition Regulation (FAR) forced disclosure rule has been the stick the government has used to force contractors to report credible evidence of certain violations. The government is now issuing carrots to encourage disclosures from individuals, even if they are not required by the mandatory disclosure rules. Specifically, on April 15, 2024, the Department of Justice (DOJ) announced the Criminal Division's “Individual Voluntary Self-Disclosure'' document aimed at facilitating increased cooperation related to certain types of corporate crimes. announced a pilot program titled “Pilot Program.'' Some of these crimes include government contract fraud. Medical fraud, money laundering. So are bribes, kickbacks, and corruption.[1]
The pilot program applies to voluntary disclosures made by individuals to the Department of Justice Criminal Division on or after April 15, 2024. The pilot program allows individuals to receive a non-prosecution agreement (NPA) in exchange for meeting certain criteria, including acceptance of liability, waiver of ill-gotten gains, payment of restitution to victims, and cooperation. .
The pilot program establishes standardized criteria for collaboration.
1. original information. Individuals must provide “nonpublic information not previously known to the Criminal Division or any division of the Department of Justice.” Therefore, prompt reporting (prior to disclosure by others) increases the likelihood that he will be eligible for NPA under the pilot program.
2. voluntary cooperation. Only disclosures made in the absence of a government investigation, imminent threat of disclosure, or reporting requirement are eligible for the pilot program. Under the new policy, reports made in response to requests such as government investigations or subpoenas are not considered “voluntary.”
3. Full and true disclosure. Participants must disclose “all information known to the individual relating to any fraudulent activity in which the individual has participated and/or of which the individual is aware.” In other words, participants cannot provide information about any wrongdoing in the hope that the Department of Justice will not provide the information. Discover the full involvement of your participants.
Four. Full cooperation and great support. In addition to fully cooperating with the government, participants must provide “substantive assistance.” This generally includes providing evidence, such as documents and information, and participating in government interviews so that the government can investigate and prosecute people as guilty or more guilty than the participants themselves.
Five. Confiscation of ill-gotten gains and compensation. Finally, participants must agree to forfeit or forfeit any profits they received as a result of their misconduct and pay restitution to the victims.
Notwithstanding the foregoing, the Pilot Program is not available to Chief Executive Officers (“CEOs”), Chief Financial Officers (“CFOs”), foreign senior officials, domestic officials, or individuals who have organized or led a criminal enterprise .
The Department of Justice pilot program is not the only federal mechanism aimed at encouraging individuals to voluntarily disclose potential criminal violations. As we have seen already this year, we will see more Justice Departments encouraging individuals to voluntarily disclose potential criminal violations. For example, the United States Attorney's Office for the Southern District of New York (SDNY) and the United States Attorney's Office for the Northern District of California (NDCA) announced their own whistleblower exam programs in February and March 2024, respectively. There are several differences when compared to the DOJ pilot program, including that the pilot program includes federal or domestic bribery or corruption, whereas the SDNY program includes state or local bribery-related criminal activity. Nevertheless, U.S. law enforcement agencies see the benefit of marketing to individuals when investigating and prosecuting crimes.
Impact on federal contractors
As mentioned above, federal contractors already have several mandatory disclosure requirements. For example, under (FAR) Part 52.203-13, a government contractor may have “credible evidence” that a principal, employee, agent, or subcontractor has committed a civil law violation. must always be disclosed in a timely manner to the Office of the Inspector General of the relevant agency. Violations of the False Claims Act or any federal criminal law, including fraud, conflicts of interest, bribery, or gratuities. Another disclosure requirement is when a contractor has credible evidence of significant overpayments by the government.
With the introduction of this pilot program, individuals are encouraged to report broader misconduct directly to the Department of Justice. If an individual uses this pilot program to report a potential problem and a government investigation into the company is initiated, the contractor may receive less cooperation credit (if any) for subsequent voluntary self-disclosures. Please note that this may occur. . FAR subpart 9.4 (the subpart that deals with suspension and disqualification from government contracts) provides that a party knowingly fails to timely disclose such violations or to disclose material overpayments in a timely manner. Establishes additional grounds for suspension and disqualification of contractors in certain cases. Essentially, this new pilot program introduces new risk considerations when contractors become aware of potential fraud. Specifically, contractors should consider whether individuals within their organization may seek to take advantage of the pilot program's benefits to the contractor's detriment. Therefore, it is more important than ever for companies to consider promptly reporting potential fraudulent violations to the Office of the Inspector General (prior to disclosure by others).He is the Criminal Division of the Ministry of Justice. Maximize your chances of obtaining full credit, maximize your flexibility in remediation, and comply with applicable mandatory disclosure requirements.
What can you do?
To ensure prompt reporting, companies should ensure that:
• Implement effective whistleblowing and internal reporting mechanisms.
• Continually promote your internal hotline and the ways people can ask questions and voice concerns.
• Promote a “speak up” culture and encourage and reward employees who raise constructive concerns.
• Conduct internal investigations consistently and thoroughly, and follow up with whistleblowers when applicable to establish trust with personnel that the company also wants to resolve compliance concerns.
• Conduct internal audits on high-risk areas or topics that could lead to potential violations.
• Regularly review and update applicable compliance policies and procedures.and
• Train your personnel on these policies, how to mitigate high-risk compliance topics, and how to report concerns or raise questions.
