Tuesday, September 3, 2013

The Importance of Telling the Truth

The Truth in Negotiations Act (TINA) criminalizes the submission of incorrect cost or pricing data when selling to the U.S. Government. TINA requires contractors to submit cost and pricing data and certify that the data is current, accurate, and complete. Submission and certification is an ongoing obligation required until agreement is reached on the final price at completion of the contact (sometimes referred to as the ‘handshake’). The U.S. Government takes seriously any violation of TINA, known as “deceptive pricing,” and therefore compliance with this law by domestic companies is essential when doing business with the U.S. Government.

Violation of the law may result in an adjusted price, penalties and interest costs in addition to imprisonment if the violation was willful. At the most extreme for a company, willful violations can result in debarment from future government business! Every invoice submitted with a “deceptive price” is a unique violation, and therefore the penalties can mount up quickly.

Compliance with TINA requires attention to detail. Pricing and costing information must be accurately recorded and tracked. Whenever this information changes the contractor has a duty to notify the U.S. Government. To ensure this attention to detail, a company must implement a TINA policy and proper procedures to enforce the policy.

For U.S. and Foreign companies anticipating or recipient of a U.S. Government award for the supply of goods and services over $650,000 it is necessary to be aware of the requirements of TINA and to follow them precisely. If this is not your strong point, or if you prefer to focus on your business, do not hesitate to reach out to professionals with experience with these laws.

Thursday, August 22, 2013

Contracting Under Government Set Asides - Self-Certification As A Small Business Poses New Risks and Harsh Penalties

If you have a Federal contract or you have ever represented or registered your company with the U.S. Government as a small business, then read on.  Changes to how companies register will go into effect on August 27, 2013.  In a move to increase the penalties for mis-registering as a small business, the Federal Government has eased its burden of proof regarding misrepresentation to provide for a ‘Presumption of Loss Based on the Total Amount Expended’. These changes to the Code of Federal Regulations (CFR) are a game changer for many medium companies, who may not be aware of their immediate impact.

Changes to Federal Regulations.  Here’s what will happen. Changes to 13 CFR 121 et. seq. are due to take place on August 27, 2013 and will severely increase the penalties for misrepresenting the size of your business entity. If a company soliciting to or contracting with a component of the Federal Government represents itself as being a small business, but is in fact not a small business, the Government has the right to assert that it has been damaged by the total value of the contract.  Performance does not matter. Value does not matter. And the company cannot mitigate potential costs or damages by using other small businesses. In other words, the company was not entitled to have the contract in the first place, so the Government may want its money back!  In full.

Risk Mitigation

So how do you prevent this from happening to you?  While inadvertent misrepresentation may result from a range of errors, the following two mistakes tend to be prevalent.

Mistake #1 - Failure to ensure that company representations and registrations are current and accurate.  Ensure that you understand your entity status and where you have recorded it. What have you asserted in the past? Check online with the Online Representations and Certifications Application (ORCA) and System for Award Management (SAM). Verify that these representations are still accurate and update them if necessary. Also, ensure that your business development and contracting staff understand and adhere to this.  If in doubt, it is not difficult to determine if you qualify as being a small business.  That depends on your North American Industry Classification Systems (NAICS) code, how many employees you have, and whether you are owned in common with other companies.  However, and this is important, if you are owned or controlled in common with another company, then their employees may count towards your total headcount and so prevent you qualifying as a small business!

Mistake #2 - Willingly soliciting for work under a ‘set-aside’ to which you are not entitled.  Submitting “a bid, proposal, application or offer for a Federal grant, contract, subcontract, cooperative agreement, or cooperative research and development agreement reserved, set aside, or otherwise classified as intended for award to small business concerns” will be deemed a certification that your company is a small business! Additionally, if your bid, proposal, etc. encourages the Government to set a contract aside for small businesses that would otherwise be opened to all bidders, then you are deemed to have legally certified your small business status. And finally, if you register in any Federal database as a small business concern then you are deemed to have self-certified.

Only once you are certain that you comply with the definition of a small business should you consider offering your products and services to the Federal Government as a qualifying small business.

Ignorance of the law is no excuse.  Don’t get caught out with the new rules meant to protect small business concerns. If you have ever represented yourself as a small business, then it is time to review, ensure your business status, and update your representations. A misrepresentation will cost you substantially, including the contract, no matter how much or how well you have performed.

About the Authors

Robert Merting and Alec Mackenzie work for Defense Management Group (DMG), a government contracting consulting group with a focus on the defense industry. DMG personnel are well experienced in drafting proposals, negotiating contracts, and complying with the Federal Government through NAICS, ORCA, and SAM. If the above applies to you, and you would like help sorting through your requirements, please feel free to reach out to DMG.  

For information on other similar topics addressed by DMG, including NISPOM, FMF/FMS, FOCI, FCL and GSA please see our blogspot at http://defensemg.blogspot.com/

Tuesday, August 13, 2013

The Buy American Act and Other Not-So-Innocuous Clauses

When selling goods to the U.S. Government, a contractor must be aware of many contractual provisions that affect performance upon the contract. Buried within boilerplate language are clauses that alter what appears on the face of the contract. For instance, the request for certain goods may not state that country of origin is material, but within the boilerplate there will be included the Buy American Act (BAA).

Traditionally, the U.S. Government has preferred supplies originating in America through the BAA. In recent times this restriction has been relaxed by the Agreement on Governmental Procurement (GPA) and other trading agreements. BAA is largely inapplicable to supplies originating in countries that are signatories to the GPA.

What does this mean for the potential bidder? You must ensure that your products are sourced from the U.S. or countries who are signatories to the GPA. To offer goods from other countries would make you non-compliant and subject to contractual penalties.

However, if your non-U.S. country of origin appears on the GPA you are not yet in the clear. There are other requirements and amendments that place further restrictions on the origin of certain goods or classes of goods.

The Berry Amendment and other DoD specific restrictions limit foreign purchases of certain items to protect America’s ability to respond to national emergencies. These restrictions, applicable to most defense oriented goods, are designed to ensure that the U.S. can mobilize its armed forces without depending upon the supply of goods from potentially hostile countries or across contested shipping channels. Some goods from close allies, such as Canada, are allowed as substitutes, but each specific situation requires careful analysis with all current and applicable regulations.

Before Submitting Your Bid

Before bidding on a contract for the supply of goods, you must understand the source requirements for the goods and know whether your offered solution will be compliant with the requirements. This is doubly important in defense contracting where the restrictions are tighter. Ignorance is not an excuse, and even
where the U.S. ‘forgets’ to include a standard term required by Congress, the contractor is charged with knowing the term should be included. If you are at all uncertain of the proposed contract or your bid, reach out to a professional consultant who can answer these questions and ensure you and your company don't wind up non-compliant.

Tuesday, August 6, 2013

US Security Cooperation through FMF & FMS

U.S. Security Cooperation (SC)

The United States policy of Security Cooperation is based upon cooperation between the U.S. and other sovereign nations in order to meet common regional stability goals and enable friends and allies to improve their defense capabilities and needs. It consists of a group of programs authorized by the U.S. Foreign Assistance Act of 1961 (FAA), the Arms Export Control Act (AECA), and related statutes, under which the Department of Defense (DoD) or commercial contractor(s) provide defense articles and services in support of U.S. national policies and objectives. Each year the Administration submits requests to Congress for the Security Assistance budget. Congress reviews the request and appropriates funds under the Foreign Operations Appropriations Act (FOAA) for various international assistance programs, including Foreign Military Financing (FMF) and International Military Education and Training (IMET). The State Department’s Bureau of Political-Military Affairs sets policy for the FMF program, while the Defense Security Cooperation Agency (DSCA), within the DoD, manages it on a day-to-day basis. Security Assistance Organizations (SAOs) operating from U.S. embassies overseas play a key role in managing FMF within recipient countries.

Foreign Military Financing (FMF)

FMF is the U.S. Government program of grants and loans for financing the acquisition of U.S. military articles, services, and training. FMF helps promote U.S. national security interests by strengthening coalitions, cementing cooperative bilateral military relationships and enhancing interoperability with U.S. forces. Because FMF monies are used to purchase U.S. military equipment and training, FMF also contributes to a strong U.S. defense industrial base. FMF purchases are made through the Foreign Military Sales (FMS) program, which manages government-to-government sales. On a much less frequent basis, FMF also funds purchases made through the Direct Commercial Sales (DCS) program, which oversees sales between foreign governments and private U.S. companies. (For more information on DCS, please see the relevant DMG blog).

Foreign Military Sales (FMS) 

FMS is managed and operated by DoD on a no-profit and no-loss basis. As part of the DoD, the Defense Security Cooperation Agency (DSCA) coordinates the transfer of defense material, training and services to allies, as well as promotes military-to-military contacts. Foreign Military Sales division is the core activity of DSCA and annual sales range between US$30 and US$40 billion. Countries and international organizations participating in the program pay for defense articles and services at prices that recoup the actual costs incurred by the U.S. Th is normally includes a fee (currently 3.8% of what the defense articles and/or services cost) to cover the cost of administering the program. Procurement activity is conducted by DoD acquisition staff compliant to FAR and DFARS. Due to U.S. interest in encouraging standardization and interoperability among U.S. and SC countries, FMS normally involves the transfer of those items which have been fielded with U.S. forces. While available through FMS, nonstandard articles or services are normally acquired commercially under DCS.

Procedure Followed

Generally, when a foreign country requires U.S. defense articles or services a Letter of Request (LOR) will be submitted through diplomatic channels to the appropriate DoD Military Department or Defense Agency and copied to the Department of State (DoS) Bureau of Politico-Military Affairs and the DSCA. If the request is approved, the DoD will respond either with Price and Availability (P&A) information or a Letter of Offer and Acceptance (LOA). The LOA is a formal offer which, when accepted, forms the basis for the U.S. to provide the material and services offered.(For more information on LOA and P&A, please see the relevant DMG blog).

Preparing to do Business

There are significant opportunities present for U.S. and international suppliers of defense material and services to participate in and benefit from FMF and FMS. However, it is necessary to understand the requirement specification and acquisition process, as well as ensure that your offering will be compliant to regulations and eligible for consideration. If you find yourself needing help with the above, please reach out to us.

Monday, July 29, 2013

Security through the NISPOM

The National Industrial Security Program (NISP) was established by Executive Order 12829 on January 6, 1993 to safeguard in a cost effective and efficient manner classified information held by contractors, licensees, and grantees of the U.S. Government. The DoD, DoE, NRC and CIA all adhere to the NISP. The National Industrial Security Program Operating Manual (NISPOM) (DoD 5220.22-M) prescribes the requirements, restrictions and other safeguards that are necessary to prevent unauthorized, as well as control the authorized, disclosure of classified information released to contractors by U.S. Government Executive Branch Departments and Agencies. Industrial Security Letters (ISL) are binding NISPOM addendums issued between NISPOM publications. The Defense Security Service (DSS) is the office delegated to administer industrial security in a contractor’s facility on behalf of the contracting service agency. Their objectives are to foster greater security awareness in response to the potential threat to the facility and ensure that the security measures imposed are rational, appropriate and cost-effective.

To be eligible for receipt of a ‘classified contract’ the Contractor must first implement Facility Clearance (FCL) risk-management principles, security controls, personnel clearances (vetting) and supporting writt en ‘standard practice procedures’, as well as pass a site inspection conducted by the DSS. Where appropriate, the Contractor must also comply with Foreign Ownership Control and Influence (FOCI) mitigation measures, as well as establish procedures to ensure compliance with U.S. export control laws before executing any agreement with a foreign interest that involves access to classified information by a foreign national. (Please see the DMG Briefing Notes on FCL and FOCI). Further, NISPOM 1-304 requires that contractors establish and enforce policies that provide for appropriate administrative actions taken against employees who violate NISPOM requirements.

Implementing the NISPOM

Due to the immense risks posed to companies and employees for violating the NISP, it is important that companies doing business in the U.S. and engaging with foreign entities create, implement, and maintain physical controls and security procedures compliant with the NISPOM. Accomplishing this alone and without experience is a daunting task. Some help can be had from your sponsor and the Government agencies responsible for ensuring compliance, but when you need an extra boost, DMG is here and ready.

Monday, July 15, 2013

Security and the Facility Clearance

A Facility Clearance (FCL) is a Defense Security Services (DSS) administrative determination issued in accordance with the National Industrial Security Program Operating Manual (NISPOM), that a ‘facility’ is eligible for access to U.S. Government classified information or award of a classified contract. Essentially, an FCL is a ‘secure site’ where routine access is denied to U.S. citizens not holding appropriate security clearances and to all non- U.S. citizens. An FCL normally is awarded for a specific program, at a specific classification level. It is not transferable and may not be used in support of marketing. For every U.S. Military program being considered for supply by a U.S. or Foreign owned company there is a strong probability that holding an FCL will improve the likelihood of an award by granting a cleared company access to the classified supporting documents describing the threats, requirements and program goals.

In the absence of an FCL and security cleared personnel, Government representatives as well as other cleared companies must limit all conversations and information exchange to non-classified data. Demonstrably, having access to such data is necessary for a company to make an informed bid for the vast majority of U.S. Government military programs. The FCL determination is based upon favorable background investigation adjudications of Key Management Personnel (KMP). These can include the chairman of the board, senior management officials, and the Facility Security Officer (FSO). All other KMP defined in company bylaws or operating agreements must be formally excluded unless they require access to classified information to perform work duties. Note that the granting of an FCL can be complicated by any Foreign Ownership Control and Influence (FOCI). To counterbalance the risk of exposing classified information, the U.S. Government requires foreign owned companies to take measures to mitigate FOCI. (Please see DMG Briefing Notes on NISPOM and FOCI).

Mitigation Measures

Due to the immense risks posed to companies and employees for violating the NISP, it is important that companies doing business in the U.S. and engaging with foreign entities create, implement, and maintain physical controls and security procedures compliant with the NISPOM. For foreignly owned companies wishing to secure an FCL, extra care must be taken to mitigate FOCI and negotiate a proxy agreement. For further information please feel free to contact DMG.

Monday, July 8, 2013

Mitigating the Control and Influence of Foreign Owners (FOCI)

To counterbalance the risk of exposing classified information, the U.S. Government National Industrial Security Program (NISP) requires that foreign owned companies being considered for award of a ‘classified contract’ take measures to mitigate Foreign Ownership, Control and Influence (FOCI). These measures are additional to the physical controls and security procedures necessary for determination by the Defense Security Services (DSS) of a Facility Clearance (FCL), as mandated under the National Industrial Security Program Operating Manual (NISPOM). (Please see the DMG Briefing Notes on NISPOM and FCL).

Essentially, to comply with FCL and FOCI mitigation measures, it may be necessary for a corporation to conduct significant changes to its physical assets, internal management structures and operating procedures. These include implementing on-site security and controls to permit the safe receipt, handling and storage of classified data and items in a manner that prevents foreign nationals from gaining unauthorized access; implementing changes to corporate control structures through establishing a ‘proxy board’ comprising only U.S. citizens eligible for appropriate security clearance so as to isolate foreign ownership from full visibility and operational control of ‘classified programs’; as well as ensuring that all Key Management Positions are filled by such U.S. citizens.Note that the FOCI mitigation measures require that the Proxy Board will be precluded under U.S. Law from disclosing to foreign shareholders, management and employees all information (technical and commercial) that has a bearing on classified and/or sensitive contracts.

What Actions Should You Take to Mitigate?

Due to the immense risks posed to companies and employees for violating the NISP, it is important that companies doing business in the U.S. and engaging with foreign entities create, implement, and maintain physical controls and security procedures compliant with the NISPOM. Drafting and executing a proxy agreement, while heavily dictated by the US Government, is not a one size fits all deal, but it is something you will have to live with for the life of the contract or longer. Take the time to do it right, and don't hesitate to get help when you need it.

Tuesday, July 2, 2013

Battlespace Electronics News Services

By the nature of our business DMG has come across many examples of excellence and best practice within both the US and the international defense industrial base.  We are delighted to be able to endorse the skills, capabilities and qualities of Battlespace Electronics News Services with whom we have gained experience and recommend their services.

For DMG’s U.S. clients seeking a United Kingdom centric perspective on defense and security emerging and current issues, we recommend your visiting ‘BATTLESPACE’.  This website along with its associated E-Zine and hard copy magazine are the products of an international defence electronics news service providing its readers with up to date developments within the UK defense industrial base, covering UK defence policy, MOD requirements, contracting and delivered capability.  Though broad in coverage there is a strong focus on the defence electronics industry. The publications and associated e-mail services reach an international readership across the world and report on a range of issues not necessarily easily visible within the U.S.  BATTLESPACE readers range from military electronic specialists through defence research establishments to the defence industry.

Monday, July 1, 2013

General Services Agreement (GSA)

Every year thousands of companies supply the U.S. Government and its agencies
through a Multiple Award Schedule (MAS) administered by the General Services
Administration (GSA). The MAS program enables US Governmental Agencies to
purchase commercial supplies and services quickly and efficiently while still complying
with the Federal Acquisition Regulations (FAR) and Defense Supplement to the FAR
(DFARS). The MAS program divides commercial products and services into 43
distinct schedules. Currently the MAS program offers over 11 million items under
nearly 19,000 contracts. The offerings under the MAS program grow every year as
thousands of firms submit offers to the GSA.

To qualify under the MAS the offer must generally meet the following guidelines:
  • The goods must be ‘off-the-shelf ’ (standard, non-customized) product, available for purchase by civilian customers under a published price list.
  • The goods must be produced in the U.S. or be capable of being produced in the U.S. if placed on the schedule.
  • The Offeror must have a two-year commercial history with at least six, but preferably 15, customers, and be able to estimate future sales volume. 

For U.S. and Foreign companies wishing to compete for the supply of goods and services through the GSA it is necessary to implement appropriate measures regarding Program Familiarization and Internal Preparation, complete the Application Process and maintain subsequent Reporting and Compliance requirements.

To learn more, please contact Defense Management Group.

Friday, June 28, 2013

Government Claims Under the False Claims Act

Recently the United Technologies Corporation (UTC) made national headlines in the defense industry, but this was not an article you would take home to show mom! UTC was penalized to the tune of $473 million for failing to include in a price proposal “historical discounts” that it was accustomed to receiving from suppliers.

The offense occurred in the last half of the 1980s when UTC was performing on a contract for F-15 and F-16 aircraft engines. Nearly a decade later in 1999 the Government discovered these discrepancies and brought a suit against UTC. The case made its way through a Federal District Court, to the Sixth Circuit, and then back down to Federal District Court.

When all was said and done the District Court awarded the Government $364 million in damages under the False Claims Act and an additional $109 million in damages under common law claims. To make matters worse for UTC, the Court will also calculate prejudgment interest to be levied against UTC that will likely bring the total north of $500 million.

So what is one to learn from this? Well, in the words of the Department of Justice (DOJ): “The department will relentlessly pursue justice against those who knowingly submit false claims to the government and abuse the public contracting process. It is vital that companies who do business with the government provide full and accurate information, and if they do not, they will pay the consequences.”[1]

The DOJ is looking for violations, and even actions a decade or more past may be brought to light. To ward off these actions and comply with the law, it is not enough that you tell the Government everything; you must also review the historical models of your business and ensure that you are disclosing any discounts that you can expect to receive. In short, discipline in evaluating price and writing a proposal will go a long ways when complying with the False Claims Act.

To see a complete list of recent enforcements please visit the DOJ’s website here: http://www.justice.gov/nsd/docs/export-case-fact-sheet.pdf

[1] Delery, Stuart, Acting Assistant Attorney General for the Civil Division. As quoted on Department of Justice release 13-696, http://www.justice.gov/opa/pr/2013/June/13-civ-696.html

Wednesday, June 26, 2013

Don’t Bribe the Officials; The Foreign Corrupt Practices Act (FCPA).

The FCPA is the U.S. law prohibiting the bribing of foreign officials. As a general prohibition the law is broad enough to ensure that any nefarious activity can be prohibited under its umbrella. Thus the law includes more than the proverbial ‘bags of cash’ and ‘brown envelopes.’ The law applies to all U.S. persons including corporations and other business organizations with operations in America. Natural persons, i.e. people, acting as agents, employees, officers, etc. for a company can incriminate not only themselves but also the company. However, Congress understood that rogue actors may exist and the law provides that some fines and penalties imposed directly upon individuals cannot be paid by the company for which the individual acted.

 So exactly what is illegal? The ‘payment,’ or gift, offer, promise, or authorization to pay, ‘anything of value’ to a ‘foreign official’ to secure that official’s assistance in obtaining and/or retaining business. ‘Foreign official’ includes political parties, members of the same, candidates for office, business executives of government owned companies, and close family to anyone in this group. ‘Anything of value’ is just that and could even be a meal, drink, or a ‘minor’ gift if such is lavish in the country where the “foreign official” serves.

Minimizing Your Risks

Failure to comply with the FCPA could result in millions of dollars in fines against the company and / or individual and subject the individual actor to criminal penalties including imprisonment. Due to the immense risks posed to companies and employees for violating the FCPA, it is important that companies doing business in the U.S. and engaging with foreign entities create, implement, and follow a robust anti-bribery/FCPA compliance policy. The Defense Management Group can assist U.S. and Foreign Companies in developing appropriate guidelines to ensure full compliance with the FCPA and so ensure continuance of lawful and ethical dealings with governments and foreign entities throughout the World. Please contact DMG for further information on general rules, other considerations and reporting requirements.

Friday, June 21, 2013

US Defense Exports Facing Delays due to Sequester

Recent reports coming from the US Defense Department warn of delays in response time to export requests due to Sequester. Furloughs across multiple agencies have slowed the Government’s actions, and the consequences are reaching the export community. Now more than ever it is important to plan ahead and secure export permission long before it is required. The discipline to sit down and evaluate what TAAs, DSP-5s, or DSP-73s are needed when a project begins will now mean the difference between on time success or painful delays.

To see the full article visit Defense News here

Tuesday, June 18, 2013

ITAR: Keeping America Safe

The International Traffic in Arms Regulations (ITAR)1 are the Federal Government rules controlling the export of defense products and technical data. More than a mere export control law, ITAR affects the governance of a company due to the broad definitions of technical data and export. If you are a defense manufacturer you must register with the DDTC whether or not you intend to export. Additionally, you must ensure that your systems, computer and otherwise, prevent the unintended export to a foreign national even if that person is on U.S. soil. Violations of ITAR can carry a multi-million dollar fines in addition to incarceration for willful violations. Critically, ITAR can apply to a foreign national operating outside of the U.S. if that person is involved in the unauthorized supply of controlled supplies and services. (Please see the forthcoming  DMG Briefing Note on DDTC).

For the mundane, ITAR controls how and when physical products can be sent out of the US. Exporters are required to apply for a license and identify all parties that will receive the product. Importantly, foreign recipients are required to agree to abide by U.S. law for any re-export or onward supply to a third party.

This however pales in comparison to the restrictions placed upon digital information as technical data. Technical data is any information more than a basic marketing description that describes any defense product or service. This includes training manuals, diagrams, parts lists, and work product from those involved in designing a defense product. For defense contractors, technical data abounds on the network and in their computers.

Exports include transfers to foreign nationals even if within the US. These so called deemed exports restrict who can work on any given defense project. Involving a top notch university with your project will carry special hazards if their program includes foreign students. Likewise, for multinational companies it is imperative that U.S. projects remain in the U.S. and are not sent abroad.

 DMG Expertise and Assistance

 DMG personnel are fully aware of and experienced in ITAR. We understand the consequences for violating the law. Establishing a compliance policy and providing ITAR secure cloud storage are just two ways in which we can help you meet your ITAR compliance requirements.

Want to learn more? Join us for one of our upcoming ITAR Symposiums or Seminars. Look here to see what is available.

1. As confusing as the ITAR is, we provide this link to the annotated version of the ITAR regulations created by James Ellwood Bartlett III. available here.

Friday, June 7, 2013

DMG Blog: Company Establishment

Laying Your Company Foundation is Everything.

Establishing any new company is fraught with many unknowns. From choosing a legal entity and drafting by-laws, or an operating agreement to hiring employees and entering into a lease, an entrepreneur is faced daily with decisions. To be successful, you will need to know your state and local requirements to do business, ensure you comply with all tax laws and business license requirements, and be aware at all times of your risks. 

When you first enter Federal Government contracting or defense manufacturing, the number of unknowns increases exponentially. Entering the world of government contracting is more than proposal writing and negotiating a contract. Acquiring a DUNS number and registering with FedBizOps is just the start. Contractors must be prepared to deal with the NISP, TINA, FAR and DFARS when drafting a proposal and progressing through the negotiation phase. (Please see forthcoming DMG Briefing Notes on FedBizOpps, NISPOM, TINA, FAR and DFARS).

Once a contract is won compliance requirements become a major concern. Contractors must know and comply with FCPA, ITAR, EEOC, and Veteran employment reporting in addition to a myriad of other Federal laws that apply to all companies. Depending on the terms of the contract and the size of the company, the contractor may have to draft a Business Code of Ethics, an Affirmative Action Plan, and policies to implement compliance programs for applicable Federal law. (Please see forthcoming DMG Briefing Notes on FCPA, ITAR and EEOC).

Performing the contract on time and within budget is a requirement, but it is not all that is required. You must be prepared for a government audit from one of the Federal audit agencies such as the DCAA. Ensuring that your accounting is in proper order and that all materials are tracked correctly will go a long way to minimizing any disruption caused by an audit. It is essential that you prepare for this possibility on day one when you begin to develop your first proposal.

The founders at DMG have established defense contractors and have first hand experience setting up a successful company. From drafting proposals to building a compliance department, DMG can deliver advice and guidance that will allow you to focus on the core of your business. We have been through government audits and we know the disruption they can cause. More importantly, we know how to prepare for one starting with a proper proposal draft.