WHAT TO DO WHEN YOUR CUSTOMER VIOLATES THE RULES
We recently wrote about why contractors shouldn’t always take the word of their CO as the final authority in all circumstances. What’s a contractor to do, though, when its customer asks them to bend the rules and then goes on to commit procurement fraud? The example set by the CEO of Spectral Energies is definitely one to follow. The CEO was asked by an important, well-respected customer to hire a young woman to work on his contract. The CEO and the customer had a good relationship and, like many contractors, the CEO was initially happy to comply. When it turned out that the new hire’s talents did not match the requisite job description, though, the CEO became concerned and moved to terminate the employee who then went to work for a competing firm. The customer, upset with Spectral, then divided its contract with the other firm, giving more than half to the company where the employee now worked. These are two major red flags. While the CEO didn’t want to initially upset the customer, he would certainly protect his business. He did the right thing, which in this case was contacting the Air Force Office of Special Investigations. Explaining that he was duped into hiring an unqualified person, the CEO went on to point out the other issues in the case. His communication saved his firm from any further problem and caused the Air Force to pursue the wrong doer. While contractors certainly want to maintain good relationships with their clients, bending or breaking the rules can have serious consequences. Companies should never hire unqualified workers, even at the urging of customers. Problems must be properly reported in a timely manner. Spectral Energies could have suffered millions in penalties and jeopardized future business if they had stayed silent. No single piece of business is worth risking your company for. For more on the details of this fascinating story, which we are not making up, search on the term “Spectral Energies fraud”.