Best practices for commercial contractors

For companies that don’t fully understand or comply with the requirements, the penalties can be severe: damaged reputation, significant cost and loss time due to litigation, heavy fines and penalties, suspension, or even debarment from making additional sales to federal government customers. Avoid these pit falls by following our top four critical strategies. 

1. Be thorough and thoughtful when administering Federal Supply Schedule (FSS) contracts

Several of the largest False Claims Act Settlements have involved largely commercial companies selling through GSA or VA Schedule contracts. FSS contractors need to be aware of the risks that they can be exposed to if these contracts aren’t structured and negotiated with care. Contractors must take the time to prepare current, accurate and complete pricing disclosures, and to negotiate contract terms and conditions in a manner that aligns with their commercial business practices and positions them for success after contract award.

2. Manage supply chain risk

Due to the constantly evolving and expanding regulations that govern commercial sales to the federal government, companies must understand their obligations and associated compliance risks. Contractors must have policies and processes in place to ensure that materials from their suppliers satisfy all contract requirements, including the Buy American Act, Trade Agreements Act, and anti- counterfeiting laws. Subcontractors and suppliers are subject to many of the same disclosure regulations as the prime contractor, and the prime contractor can be liable if a supplier is non-compliant. As a result, companies need to develop comprehensive strategies to identify, analyze and manage these risks and requirements at every level within the supply chain.

3. Strengthen contract management process

Effective contract management is the foundation of a strong compliance program. A few of the keys to a contract management program that helps to ensure compliance are: well-trained resources, internal controls that leverage the commercial business infrastructure, and robust policies and procedures that complement key business systems. By establishing and maintaining a scalable, compliant contract management process, companies can grow their federal business without assuming unnecessary additional risk or jeopardizing key components of the commercial business that may have taken years to develop.

4. Hope for the best, plan for the worst

Companies selling commercial products and services to the federal government should implement robust policies and procedures, maintain a strong contract management function, perform periodic internal compliance reviews, and maintain well organized systems and records. If an audit occurs or a whistleblower raises an issue, these strategies can significantly reduce overall risks and liabilities, minimize the emotional costs and time-drain for everyone involved, and help to defend against any negative findings from an investigation by government auditors or the Department of Justice. Outside experts who understand the process can be invaluable if the worst occurs, and can provide sound guidance during an internal review, an audit, a government investigation, or litigation.

For more information on this topic, or to learn how Baker Tilly government contractor specialists can help, contact our team.