Following up on my post about the Yates Memo, I started to think more about the areas of compliance that federal highway contractors must face. Contractors certify many things and interact with a wide variety of governmental agencies. Similar to what occurred after the bid-rigging scandals, governmental scrutiny has increased because of a loss of trust.
So, my question to contractors is: Do you have a corporate compliance program designed to avoid purposeful or inadvertent violations of law by your employees?
In 1991, after defense contractor scandals, the U.S. Sentencing Commission issued sentencing guidelines for corporations. For a corporate compliance program to be effective, the guidelines provide it must, as a minimum, include the following elements:
- Reasonable compliance standards;
- Effective oversight of program;
- Due care in delegating authority;
- Communication to employees;
- Enforcement of program;
- Consistent enforcement; and
- Periodic review of program.
The Top Ten
What are the potential issues facing highway contractors? Here are my top ten
- False claims;
- OSHA/safety and health;
- DOT (commercial driver’s licenses);
- Procurement and government contracting;
- Finance and tax; and
Each of these areas is guided by specific statutory law or by guidelines published by the pertinent regulatory agencies. It is important to understand the law and the regulations in each of the areas of the compliance program and to develop a code of conduct for each area.
Keeping current is obviously a concern. For example, a couple of years ago the U.S. DOT revised the DBE regulations. The U.S. DOT issued new rules with respect to commercial driver’s licenses that may have broad applicability to trucking.
The structure or organization is a key component of whether a company is truly abiding by its compliance program. The highest level of management must propose the standards for them to have legitimacy within the corporation. Next, a high-level person or persons must be responsible for overseeing compliance.
Many different examples of the structure have been used, and no strict rules determine how the program must be set up. Some firms have compliance committees, others a compliance officer who both has the respect of the employees and the clout to deal with those who may create a problem. The individual should answer directly to the CEO of the company or a committee of the board. This individual may be called an ombudsman or an ethics officer. Either way, this individual is an absolute necessity in the compliance program.
Any compliance officers or committees should be formally designated as such by the highest level of management. Formal acknowledgement affirms the company’s commitment and lends credibility to the structure. To carry out their duties, these individuals must have and understand a manual outlining how to carry out the program.
If a problem ever arises, the government agency is likely to look at the relationship of the contractor’s efforts to comply and how the problem occurred. In this context paper compliance programs may be worse than not having a compliance program. If employees at the appropriate level do not know of or understand the compliance program, then the contractor has not taken compliance seriously. As a result, contractors must ensure their employees are well trained. That may be no small effort.
Finally, there must be accountability. Obviously, contractors hope they will have no problems. Using the program in their decision making is one way to anticipate and avoid problems. Reviewing and auditing activities in each of the risk areas is essential. Additionally, violations of law or ethics must be identified, investigated and addressed.
Over the next several months and years, corporations will be placed under a higher degree of scrutiny than before. With a strong compliance program, contractors can take steps to avoid willful or inadvertent violations of law or regulations by their employees.