The ‘Criminalization‘ of Government Procurement

Laws and regulations governing federal government contracts are proliferating. Every firm that does business with a federal agency should have an internal program to prevent violation of laws that now make some actions criminal. Between 1984 and 1990, the government’s procurement regulatory system, the Federal Acquisition Regulation, grew by 43% in page count in the Federal Register. This “criminalization” of the federal procurement process can affect any firm, even if it only has five employees. New sentencing guidelines for organizations that became effective in November 1991, raised fines up to four times, but states that a firm’s fine can be reduced up to 25% if an effective compliance program is in place. A list of suggestions for such a compliance programs is offered. Among the components are a company ethics, a training program, a company “hotline” or other mechanism for reporting suspected wrongdoing, effective discipline when employees are found to be violating codes, and other similar provisions.