New Contractor Code of Ethics Requirement

A rule creating a new Federal Acquisition Regulation (FAR) Subpart 3.10 that requires federal contractors to establish codes of conduct has stirred some controversy. A Government Executive story explains:

"When fully implemented, these rules fundamentally change what is expected of government contractors," Denett [an OMB official] said in an e-mailed response to questions from Government Executive. "These rules move us from well-established principles of contractor self-governance and voluntary disclosure to contractual requirements [to establish ethics awareness programs and internal control systems] and mandatory disclosure [of violations of criminal law in connection with the award or performance of any government contract or subcontract]."

But some industry experts suggest the change will have little impact on the performance of federal contractors.

Larry Allen, president of the Coalition for Government Procurement, a trade group in Washington that represents contractors, said most firms already have well-established ethics programs that could be applied toward the new rule.

This new ethics rule complements another rule also enacted last month that requires contractors to report improprieties or risk suspension or debarment.