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FCPA Compliance Report

Tom Fox has practiced law in Houston for 30 years and now brings you the FCPA Compliance and Ethics Report. Learn the latest in anti-corruption and anti-bribery compliance and international transaction issues, as well as business solutions to compliance problems.
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Jun 4, 2018

I conclude my five-part series on Suspension and Debarment, with Rodney A. Grandon, Managing Director at Affiliated Monitors, Inc., (AMI) the sponsor of this series. During his 27-year career with the US military and government, Grandon served as the Air Force’s Suspending and Debarring Official as well as a wide variety of other functions which gives him subject matter expertise into issues surrounding this topic. Over this series, we have explored several topics, including:

Part 1-Introduction to Suspension and Debarment;

Part 2-What is the difference between Suspension and Debarment?

Part 3-What is the convergence between Suspension & Debarment and the FCPA?

Part 4-What is a present responsibility determination? and

Part 5-Remedies and Compliance.

Today, we conclude the series with a discussion of remedies and compliance in suspension and debarment.

Grandon began by observing that the defense community largely led the process of putting together an effective ethics and compliance programs. “There were defense industry initiatives where the contractors get together and talk about what it takes to promote ethics and compliance and the defense industry been doing this for years.” This led Grandon to find, that non-governmental commercial industries were not as far along as defense industries.

However, Grandon believes there has “been a tremendous growth and understanding that ethics and compliance is critical for any company, whether it’s in the defense sector, the commercial sector, as companies have become more willing to do what is necessary to build these compliance programs, to try to instill within their workforce, appropriate standards of conduct, articulate clear expectations for employee behaviors and then understanding that there are consequences that flow from this. They worked hard to create cultures that allow communications to go up from the bottom of the workforce and down from the top of the workforce.”

In his experience, it all starts with the appropriate “tone at the top”. This is because “Integrity is critical for the company. Not simply to avoid problems, but it’s important to be honest with your customers and your stakeholders. All of this is absolutely critical.” While it is Grandon’s sense that initially “the defense community led this; the commercial community has as swiftly moved to catch up with this.”

We then turned to remedies where Grandon noted, “federal agencies, particularly within the Department of Defense, look to coordinate fraud remedies.” He said where there is an “indication of misconduct within the government contract or with involving a government contractor fairly broadly defined, there’s a focus on identifying and coordinating remedies, whether they be criminal, civil, administrative, to include suspension department or contractual in almost every one of these cases is at some point going to be an analysis.”

The key analysis is “going to come down to the integrity of that contractor. What does it have in place to achieve compliance within its business operations?” There is going to be a focus on the question of whether the contractor can be “trusted to get it right?” In the final analysis, the question will be “is there evidence to support the cause for the action?”

Grandon then walked through the next steps which would turn on the present responsibility determination. He said, “the inquiry goes to whether or not the contractor is presently responsible. This will make the focus on ethics and compliance and those companies that embrace their principles are going to have an advantage and be much better position.” Grandon emphasized that it is critical that companies take these challenges “so that they have ethics and compliance programs, that they test and make sure that those programs and those efforts are achieving the type of results that are expected in terms of employee behavior, in terms of good communication throughout the organization.”

In the realm of suspension and debarment, government agencies are increasingly requiring independent corporate monitors as part of their settlement agreements with organizations facing suspension, debarment or criminal prosecution. Grandon believes that an imposed monitorship can actually be an opportunity for a company. He said, “Usually these agreements are in place for roughly three years, but they give the contractor an opportunity to more holistically look at its operations and assess what it needs to do to truly build a strong ethics and compliance program. In most cases, the government will require the contractor which has entered into the administrative agreements, to hire an outside independent monitor to assess whether or not it is achieving those objectives. This creates this opportunity for companies to demonstrate the ability to be responsible, to continue to participate in the federal marketplace, while that trust relationship involving the contractors, integrity is continuing to be established.” This process also allows  contractors to “gain themselves a tremendous advantage in any of these sanctions reviews, civil, criminal or suspension and debarment, by having in place a strong commitment to ethics and compliance, solid training programs they are willing to test programs and stay on top of their risk profile.”

Grandon related that while he was a Suspending and Debarring Officer, he often required monitors as a part of an agreement. He said, “The Monitor is not there to be an advocate. The Monitor there is to be an independent and objective set of eyes and ears for the regulator, for the government. There has to be an arm’s length relationship between that monitor and the contractor. That’s not to say it’s antagonistic and it never should be a gotcha proposition. You know, where the monitor is, is trying to, I know through trickery or otherwise, put the contractor into an awkward situation.”

Grandon concluded by noting, “independence, objectivity of good business sense, the Monitor must understand how businesses operate, what are the challenges associated with a very diverse workforce. A monitor has to be able to take in all of these different considerations and at the end of the day be reasonable.”

I hope you have enjoyed this five-part series on suspension and debarment.

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