Subpart 3.10 - Contractor Code of Business

Ethics and Conduct

Parent topic: Part 3 - Improper Business Practices and Personal Conflicts of Interest

3.1000 Scope of subpart.

This subpart-

(a) Implements 41 U.S.C. 3509, Notification of Violations of Federal Criminal Law or Overpayments;

and

(b) Prescribes policies and procedures for the establishment of contractor codes of business ethics

and conduct, and display of agency Office of Inspector General (OIG) fraud hotline posters.

3.1001 Definitions.

As used in this subpartSubcontract means any contract entered into by a subcontractor to furnish supplies or services for

performance of a prime contract or a subcontract.

Subcontractor means any supplier, distributor, vendor, or firm that furnished supplies or services to

or for a prime contractor or another subcontractor.

United States means the 50 States, the District of Columbia, and outlying areas.

3.1002 Policy.

(a) Government contractors must conduct themselves with the highest degree of integrity and

honesty.

(b) Contractors should have a written code of business ethics and conduct. To promote compliance

with such code of business ethics and conduct, contractors should have an employee business ethics

and compliance training program and an internal control system that-

(1) Are suitable to the size of the company and extent of its involvement in Government contracting;

(2) Facilitate timely discovery and disclosure of improper conduct in connection with Government

contracts; and

(3) Ensure corrective measures are promptly instituted and carried out.
3.1003 Requirements.

(a) Contractor requirements.

(1) Although the policy at 3.1002 applies as guidance to all Government contractors, the contractual

requirements set forth in the clauses at 52.203-13, Contractor Code of Business Ethics and Conduct,

and 52.203-14, Display of Hotline Poster(s), are mandatory if the contracts meet the conditions

specified in the clause prescriptions at 3.1004.

(2) Whether or not the clause at 52.203-13 is applicable, a contractor may be suspended and/or

debarred for knowing failure by a principal to timely disclose to the Government, in connection with

the award, performance, or closeout of a Government contract performed by the contractor or a

subcontract awarded thereunder, credible evidence of a violation of Federal criminal law involving

fraud, conflict of interest, bribery, or gratuity violations found in Title 18 of the United States Code

or a violation of the civil False Claims Act. Knowing failure to timely disclose credible evidence of

any of the above violations remains a cause for suspension and/or debarment until 3 years after final

payment on a contract (see 9.406-2(b)(1)(vi) and 9.407-2(a)(8)).

(3) The Payment clauses at FAR 52.212-4(i)(5), 52.232-25(d), 52.232-26(c), and 52.232-27(l) require

that, if the contractor becomes aware that the Government has overpaid on a contract financing or

invoice payment, the contractor shall remit the overpayment amount to the Government. A

contractor may be suspended and/or debarred for knowing failure by a principal to timely disclose

credible evidence of a significant overpayment, other than overpayments resulting from contract

financing payments as defined in 32.001 (see 9.406-2(b)(1)(vi) and 9.407-2(a)(8)).

(b) Notification of possible contractor violation. If the contracting officer is notified of possible

contractor violation of Federal criminal law involving fraud, conflict of interest, bribery, or gratuity

violations found in Title 18 U.S.C.; or a violation of the civil False Claims Act, the contracting officer

shall-

(1) Coordinate the matter with the agency Office of the Inspector General; or

(2) Take action in accordance with agency procedures.

(c) Fraud Hotline Poster.

(1) Agency OIGs are responsible for determining the need for, and content of, their respective

agency OIG fraud hotline poster(s).

(2) When requested by the Department of Homeland Security, agencies shall ensure that contracts

funded with disaster assistance funds require display of any fraud hotline poster applicable to the

specific contract. As established by the agency OIG, such posters may be displayed in lieu of, or in

addition to, the agency’s standard poster.

3.1004 Contract clauses.

(a) Insert the clause at FAR 52.203-13, Contractor Code of Business Ethics and Conduct, in

solicitations and contracts if the value of the contract is expected to exceed $6 million and the
performance period is 120 days or more.

(b)

(1) Unless the contract is for the acquisition of a commercial product or commercial service or will

be performed entirely outside the United States, insert the clause at 52.203-14, Display of Hotline

Poster(s), if–

(i) The contract exceeds $6 million or a lesser amount established by the agency; and

(ii)

(A) The agency has a fraud hotline poster; or

(B) The contract is funded with disaster assistance funds.

(2) In paragraph (b)(3) of the clause, the contracting officer shall–

(i) Identify the applicable posters; and

(ii) Insert the website link(s) or other contact information for obtaining the agency and/or

Department of Homeland Security poster.

(3) In paragraph (d) of the clause, if the agency has established policies and procedures for display

of the OIG fraud hotline poster at a lesser amount, the contracting officer shall replace " $6 million "

with the lesser amount that the agency has established.