In this episode I am joined by AMI Managing Director Rod Grandon. We have considered the responsibility of federal contractors to maintain their status as “Responsible Contractors” and explore the benefits of having an effective compliance and business ethics program to not only increase business efficiencies and profitability but prepare you in good stead if the regulators come knocking. In this episode, we consider how you can keep your compliance program fresh through ongoing monitoring.
To gain a better understanding of the effectiveness of corporate ethics and compliance efforts and to identify any gaps in the program’s scope, contractors are well advised to commit to an objective assessment of their ethical culture and ethics and compliance programs before a crisis occurs. Grandon stated, “part of the requirement for an ethics compliance program is that the contractor will conduct periodic reviews of the company’s business practices, procedures, policies, and internal controls for compliance with the Contractors Code of business ethics and conduct and the requirements associated with federal contracting.” Contractors should consider carefully whether the assessment can be performed using in-house resources, or whether the assessment should be performed by an independent and objective outside organization.
An independent, outside reviewer would in their report create a roadmap that a company could use to remediate any deficiencies if new risks had arisen, either in markets, products or services that could be used as a documented roadmap if a regulator ever came knocking. The company could show such regulator that “yes, we not only reviewed our program, but we have a roadmap and here are the steps we are taking based upon this roadmap to move forward into the future.”
To find out more about Affiliated Monitors, Inc. check out their website www.affiliatedmonitors.com.
Tag: Rod Grandon
In this podcast I am joined by AMI Managing Director Rod Grandon. We consider the responsibility of federal contractors to maintain their status as “Responsible Contractors” and explore the benefits of having an effective compliance and business ethics program to not only increase business efficiencies and profitability but prepare you in good stead if the regulators come knocking. In this episode, I get to ask Rod a question I have wanted to pose to him for some time, which is “why are we still talking about this?”
Grandon began by noting that this is a fair question given that many of the policies and procedures required in the Federal Acquisition Register (FAR) 3.1000 and 52.203-13 relating to contractor integrity and honesty have been in place since December 2007. Also, Sarbanes-Oxley (SOX) was passed in 2002 so those requirements have been around for nearly 17 years as well. Many contractors, particularly major prime contractors, have invested heavily over the years establishing and maintaining robust corporate ethics and compliance programs and internal controls. Additionally, major primes have taken steps to encourage and assist their subcontractors and suppliers to develop appropriate codes of conduct and related policies, procedures, and infrastructure. The limited research in this area to date has shown that such programs, when effectively implemented, produce positive results in reducing misconduct. Still, significant gaps remain within the federal marketplace, especially at the mid and lower tiers of the supply chain and services industries.
Grandon believes that while these responses to the FAR and legal requirements are “trickling down” to smaller organizations, unfortunately there are a large group of small and middle tier contractors that believe these programs are only for large government contractors, or they believe they lack expertise and resources to build and maintain appropriate programs. Many more do not focus on the requirements at all (until it is too late); instead focusing on building the business and thinking that their customer relationships will help them business survive any future challenges. Grandon also related, “frankly, a lot of small businesses and medium sized businesses either ignored this all together in their pursuit of business and revenues or they put in place a written policy set of policies and procedures, including a written code of conduct.” Perhaps they provided some training, but in most cases, “it was all a paper exercise. It never transcended into a way of doing business”. This has led to continued compliance and ethics lapses.
Regardless of size, for-profit businesses are hesitant to expend time, effort, and money on efforts that do not directly advance company market objectives or revenue growth. Government contractors are no exception. As such, while many contractors grasp the need for integrity programs, company leaders elect to forego necessary investments of time and resources into such programs. Instead, they operate under the assumption that they operate ethical companies; they believe their employees understand and embrace what we all should know from childhood: it is wrong to lie, cheat, and steal.
Grandon concluded by intoning, “even the best programs are threatened by complacency. Contractors must continuously strive to creatively spark their ethics and compliance programs to keep the objectives and expectations fresh and central to business operations.”
To find out more about Affiliated Monitors, Inc. check out their website www.affiliatedmonitors.com.
In this podcast I am joined by AMI Managing Director Rod Grandon. In this episode, we discuss small business compliance programs. Companies do not need to “break the bank” in order to have an effective program. The United States Sentencing Commission Guidelines Manual (Guidelines) expressly provide that the “formality and scope of actions that an organization shall take to meet the requirements of [the] guideline, including necessary features of the organization’s standards and procedures, depend on the size of the organization.” Small concerns must still demonstrate the “same degree of commitment to ethical conduct and compliance with the law as large organizations,” but may do with “less formality and fewer resources” than would be necessary of a large concern.
These programs, and their benefits, extend beyond a written set of rules and policies. Companies use ethics and compliance programs to communicate company mission statements, goals and expectations; to encourage staff to share the same set of corporate values; and to drive their behavior in day-to-day business activities.
It may be appropriate for small concerns to rely on “existing resources and simple systems.” For example, it may be appropriate:
- For senior company leaders to discharge their responsibilities for oversight of an effective program by directly managing the company’s efforts, as opposed to hiring or designating others to do so.
- To train employees through informal staff meetings, and monitoring effectiveness through “regular ‘walk-arounds’ or continuous observation while managing the organization.”
- To use available personnel and resources, rather than employing separate staff, to run the program.
- To model the company’s ethics and compliance program on existing, high-quality programs and practices of other similar organizations (although, as noted above, there are no perfect one-size-fits-all programs – even if adopting an existing program, the company must tailor that program to the specific business needs and operational risks associated with the company’s activities).
In this podcast, I am joined by AMI Managing Director Rod Grandon. We engage in an in-depth discussion what the government expects from contractors. The heart of the business ethics and compliance program distils to three basic elements: PREVENT misconduct from occurring. DETECT misconduct when it occurs. CORRECT by taking appropriate steps to remediate the consequences of the discovered misconduct (internally, with customers, and with other stakeholders), to understand the root cause of the misconduct, and, based on the findings of the root cause analysis, to revise policies, practices, and controls to prevent similar acts in the future. Many of these same considerations are addressed in the United States Sentencing Commission Guidelines Manual (Guidelines) (as amended November 1, 2016), offering additional guidance for contractors to consider in developing and maintaining effective ethics and compliance programs. The Guidelines make clear that courts will assess effectiveness, at least for the purposes of federal sentencing, by determining whether an organization’s ethics and compliance program has been “reasonably designed, implemented, and enforced so that the program is generally effective in preventing and detecting criminal conduct.” To do so, the program must achieve two fundamental outcomes: (1) it must require the contractor to exercise due diligence to prevent and detect criminal conduct, and (2) otherwise promote an organizational culture that encourages ethical conduct and a commitment to compliance with the law.
In this episode, I visit with Rod Grandon, Managing Director of Government Services, from Affiliated Monitors, Inc. we consider the types of things a monitor would review to determine if a company adequately considered ethics and compliance during the M&A process. Grandon sees two distinct phases in the M&A process; pre- and post-acquisition. In each phase an independent monitor would look at different aspects of it. The first is the planning, the negotiation and the due diligence. This review goes up to the point at which the transaction is completed. From there is the post-acquisition phase, the integration phase. Grandon sees a distinct role in both the pre and post-acquisition phases for an independent monitoring. During the pre-acquisition transaction phase an “independent monitor can come in without preconceived notions, without shackles, as to any corporate expectations and do that deep dive that is really necessary for the parties if that information is shared or at least one of the parties to gain an understanding of what is being purchased or what is missing.”
In the integration phase, he noted the type of culture which exists through working with the respective workforces to understand what are their cultures. Are these cultures compatible in terms of bringing together a program to promote ethics and compliance? This requires, in many cases, deep dives, particularly the use of focus groups to get down to the workforce to get a true understanding of what some of the cultural elements that are in play. And in many cases, this is just a critical and complicated piece. From there, Grandon advocates moving into the controls area to literally put an independent set of eyes on the internal compliance controls. This is to help the parties understand the risk environment they find themselves in and the culture that is in play for the post-acquisition phase.
Moving to the post-acquisition phase Grandon noted that the independent monitor can also provide a key piece to help the integration phase. It can be a critical asset in this process of coming in helping management understand what it has acquired. This is the point there are no limitations on getting in and doing that deep dive with the workforce which already knows it’s been merged or acquired. Also the public already knows so no excuses for not getting in and getting a very good understanding the culture and how the workforce sees the ethics and compliance structure of the company.
