Embedded in the facts of a December 14, 2017 Supreme Court of Virginia opinion is an unfortunate example of how a promise to improve a company’s compliance and ethics program only got it so far in its fight to avoid a suspension.
The company was competing for an Air Force contract when it became embroiled in an ethics scandal related to the mishandling of a competitor’s bid that was inadvertently emailed to the company by an Air Force contracting officer. The contracting officer quickly realized her mistake, but the email had already been forwarded internally within the company to six employees.
The next morning, the company employee who received the email informed the contracting officer that he had distributed the email internally, but had deleted all copies. The contracting officer asked for affidavits from all employees who received the email describing their actions upon receipt of the email that inadvertently attached the competitor’s bid.
After the affidavits were submitted, the Air Force asked each employee to answer questions that focused on whether information related to the inadvertently shared competitor’s bid affected the final bid that the company submitted after receiving the email.
The Air Force suspended the company and four employees from participating in government contracting. The suspension barred the company from submitting bids on new government contracts and renewing existing contracts. The Air Force found that the four suspended employees unethically held meetings to discuss information in the email after they were notified that such information was inadvertently disclosed. The Air Force also found that the employees helped prepare the final bid despite possessing information about a competitor’s bid.
Promising to improve its ethics and compliance program briefly resulted in the lift of the suspension.
The Air Force and the company entered an Interim Administrative Agreement that lifted the company’s suspension. In lifting the suspension, it was noted that the company acknowledged its: (1) improper conduct; (2) the improper conduct of its employees; and (3) its deficient procedures. Moreover, the company promised to improve its ethics and compliance programs.
Unfortunately, the lift of the suspension was short lived. After the Air Force learned that one employee made false statements in his affidavit, the Air Force terminated the Interim Administrative Agreement and reinstated the suspension.
The takeaway is that even if a company makes promises to improve its ethics and compliance program, the fruits of those promises can be undermined by an employee’s dishonesty.
MCR Fed., LLC v. JB&A, Inc., 2017 Va. LEXIS 176