MAIL BAG: THE RISK OF SAYING NOTHING WHEN YOU KNOW THERE’S A PROBLEM

New reader F. Valli writes, “We just found out our subcontractor has been supporting our contract with beauty school dropouts, not college graduates, as required.  Our SVP doesn’t want to talk about it, the client doesn’t know about it, and we’ve been told not discuss it.  Are we at risk?”  The classic “hear no evil, see no evil, speak no evil” approach is certainly tempting, F., but yes, your company is at risk.  You know that your subcontractor is in violation of its contract with you and that, in turn, you’re in violation of your contract with the government.  This is a major risk for you and your sub and doing nothing is not an option.  First, you must get the sub to provide qualified people or, if they can’t, modify your contract so that you can provide qualified people to your government client.  Second, with the assistance of qualified counsel, a Mandatory Disclosure investigation and, if applicable, disclosure to the government client made.  The Mandatory Disclosure law requires contractors to disclose possible contract violations when they have “credible evidence” of non-compliance.  Failure to disclose now subjects both companies, but especially the prime, to more severe penalties, possible personnel terminations, and a likely visit with a suspension and debarment official.  The bottom line:  You violate the law and put your company at greater risk when you know of an issue.  Time to walk like a man.