Far compliance policies stand for the Federal Acquisition Regulation (or FAR), which serves as the guidebook government contractors use. It outlines the regulations, rules, and processes that need to be followed by contractors throughout contract formation, contract administration processes, and the acquisition planning phase when the government is acquiring services and goods. It's easy to overlook the FAR as many of the rules are about the finance departments and contracts within an organization. One part of the FAR that's related to the Human Resource department is the Contractor Code of Business Ethics and Conduct.

FAR Compliance: Code of Business Ethics and Conduct

According to the FAR, all contracts must keep up business practices that have the highest level of honesty and integrity, and it's mandatory that they have a written code of business conduct and ethics. The FAR suggests an internal control system and training program that's related to the code of business ethics and conduct that should do the following:

  • Be appropriate for the size of the involvement in government contracting and the organization's size
  • Allow disclosure that's timely for improper conduct to the client
  • Make sure that corrective measures are followed and in place when needed.

Government contracts that go over $5,000,000 within 120 days have more defined guidelines on the language that should be used in the contracts. Once that language is in the contract, it's up to the organization to make sure the terms and conditions are carried out. It's smart to have an ethics officer to look over the ethics program in the organization and make sure all of these requirements get met on a thorough and consistent basis. Ideally, the ethics officer is someone who's a senior member of the organization and isn't directly tied to the contracts administration.

It can be overwhelming to read the FAR, but it's essential to make sure the government contracting organization is compliant. Before enforcing the code of business ethics and conduct that's compliant with FAR, make sure to read all the language around the requirements so you fully understand what's required to establish and maintain as a contractor of the government. The rules don't enforce requirements that are mandatory for small business contracts, contracts done outside the United States, or commercial item contracts. However, the new business ethics policy serves as guidance for all government contractors.

Compliance Checklist for Federal Contractors

Although they're not often thought of in this way, government contractors are the sector of the economy that is the most heavily regulated. Any company that wants to work continuously in this field should know there are dozens of statutes that control its behavior. It's smart for companies in this area to take formal compliance training to make sure they're on the correct side of the law. They should also maintain and update reports, codes, and logs.

Many times they'll need to publish not only the Codes of Conduct and Business Ethics and Disclosure Policies, but educate their employees when it comes to compliance. This means they should positively engage all employees in matters of compliance and report potential problems or suspected misconduct. The context of the rules needs to be complied with in order to comply. A helpful starting point is the FAR, which applies to the contracting community and the government itself. It sets the rules for the acquisition process that executive agencies in the federal government acquire services and goods with appropriated funds.

There are three phases in the process, which include acquisition planning and need recognition, contract administration, and contract formation. The government uses an acquisition system to make sure they satisfy their customers' needs when it comes to quality, timeliness, and cost. They also reduce administrative operating costs and allow the government to perform business with fairness, openness, and integrity. The government contractor should recognize that the agency is using the FAR and respond in ways that are recognized by the FAR to the agency.

The other type of knowledge for government contractors is related to criminal regulations and laws that go into being a contractor. They relate to corruption, espionage, and fraud, and many are found in the Defense Federal Acquisition Regulation Supplement.

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