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Eyak Technology, LLC
Compliance Training
Fall 2011
Conducting Business in the
Federal Government Marketplace
Introduction
Introduction
• Field Ethics Officer- John Spear
• Ethics Training Presenter- Paul Khoury, Partner, Wiley Rein LLP
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Introduction
• Company Values
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Honesty
Integrity
Fairness
Self Regulation
Overview
•Compliance in the Federal Government Marketplace
– Heavily regulated. Many laws and regulations that govern and/or restrict
certain types of conduct that may otherwise be permissible in the
commercial context. Example: entertainment of customers
• Laws and regulations govern dealings with federal prime and higher-tiered
subcontractor entities, most of whom have their own ethics/compliance policies
which impose many Federal requirements on their suppliers.
• “Level the playing field”/competitive procurements
– Severe civil and/or criminal penalties for violations are possible for
EyakTek and/or the EyakTek employee(s) involved.
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Overview
•EyakTek Compliance Program
– The EyakTek Standards of Business Conduct for the Government
Marketplace set forth specific guidelines for conducting business in the
federal marketplace
– Divided into the following areas:
• Integrity Issues
• Communications with the Government
• Accounting & Financial Concerns
• Socioeconomic Policies
• Information/Document Control & Retention
• Contract Performance Issues
• Government Audits and Investigations
• Reporting Violations
• Compliance & Discipline
– Compliance with these Standards of Conduct is essential.
Report any violations or suspected violations to EyakTek.
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Overview
•EyakTek Resources
– You should consult with the following individuals if you have questions
about the Standards:
• Your Supervisor
• The EyakTek Ethics and Compliance Officer
– The following slides also contain cross-references to the relevant section
of the Standards (i.e., Stds. §__) for further inquiry and review.
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Integrity Issues
Integrity Issues
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Improper Payments/Bribery (Stds. § II.B.11)
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It is illegal for EyakTek to, directly or indirectly, offer, solicit, make or
provide any kind of payments, favors or contributions for the purpose of:
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Obtaining, giving or keeping business
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Influencing customers, suppliers or U.S. or foreign government entities,
including their officials or employees
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Persuading any officials or employees of another company to fail to perform or
to improperly perform their duties
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Influencing legislation or regulations other than through appropriate lobbying
and legitimate political activity
Penalties can be severe and include both civil and criminal sanctions.
Integrity Issues
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Gifts & Gratuities (Stds. § II.B.8)
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It is a federal crime to give gifts or gratuities to a public official:
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Anything of value, such as a business courtesy
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Given, offered or promised to any public official
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For or because of an official act performed or to be performed by such
public official.
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No EyakTek employee shall give, offer or discuss offering a business
courtesy, regardless of value, to any employee or representative of
the U.S. Government.
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Seek guidance if unsure.
Integrity Issues
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Anti-Kickback Act (Stds. § II.B.10)
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Prohibits EyakTek from offering, soliciting, providing or accepting anything
of value for the purpose of obtaining, or rewarding favorable treatment in
connection with the award of a U.S. Government prime contractor
subcontract.
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For example, any money, meals, trips, lodging, tickets to sporting events,
loans, transportation, beverages, or personal services given to a customer
in the federal marketplace in exchange for favorable treatment may be
considered a violation of the Act.
Integrity Issues
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Foreign Corrupt Practices Act
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Prohibits U.S. companies conducting business with foreign government
entities from giving or offering to give anything of value to any foreign
officials for the purpose of influencing such individual in his official
capacity or causing such individual to influence the foreign government
in order to obtain or retain business.
Integrity Issues
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Procurement Integrity Act (Stds. § II.B)
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PIA enacted to maintain the public’s confidence in the integrity of the
procurement system.
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Two primary restrictions:
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Disclosure or receipt of competition-sensitive information
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Employment discussions with current and former government employees
Integrity Issues
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Competition-Sensitive Information (Stds. § II.B.3-6)
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PIA prohibits individuals from knowingly obtaining “contractor bid and
proposal information”
“Contractor bid and proposal information” includes:
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Cost or pricing data
Indirect costs and direct labor rates
Contractor proprietary information
Other information marked by the contractor as “contractor bid or proposal
information”
Integrity Issues
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Competition-Sensitive Information (cont’d)
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PIA also prohibits individuals from knowingly obtaining “source selection
information”
“Source selection information” includes:
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Proposed costs or prices submitted to the government
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Source selection or evaluation plans
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Evaluations of proposals
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Rankings of bids, proposals or competitors
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Reports and evaluations of source selection panels, boards or advisory
councils
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Other information marked “Source Selection Information”
Integrity Issues
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Employment Discussions (Stds. § II.B.7)
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Restrictions on employment of current and former Government
employees:
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Discussions relating to future employment opportunities with current federal
agency officials participating “personally and substantially” in procurements in
excess of $100,000 where EyakTek is competing.
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“One year ban” imposed for hiring certain former agency officials involved in
procurement in excess of $10 million.
Integrity Issues
•Former Government Employees
– Former government employees are prohibited from:
• Knowingly communicating with the Government on behalf of another entity
with the intent to influence the Government regarding a matter he/she
personally and substantially worked on during his/her Government tenure;
• For a period of two years, communicating with the Government regarding
matters for which the former employee had official responsibility;
• For a period of one year, aiding or advising anyone concerning ongoing
trade or treaty negotiations in which the former employee personally and
substantially participated and had access to protected information.
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Integrity Issues
•Former Government Employees (cont’d)
– Former government employees are prohibited from:
• If the former employee was a senior or very senior Government employee, for
a period of one year, knowingly, on behalf of any other person, communicating
or appearing, with the intent to influence, before the agency in which the
former employee served;
• Participating personally and substantially in a matter affecting the financial
interest of any entity with whom the Government employee is negotiating
employment or has any arrangement regarding future employment (“recusal”
necessary); or
• Knowingly disclosing contractor bid or proposal information or source selection
information to anyone not authorized to receive it.
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Integrity Issues
•Former Government Employees (cont’d)
– Prior to the employment of any current or former Government employee,
that employee must obtain a written advisory opinion from the Designated
Agency Ethics Official that acceptance of the employment offer will not
violate any ethics or conflict of interest statute, rule, regulation, or
executive order.
– This opinion must be reviewed and approved by EyakTek’s counsel.
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Integrity Issues
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Lobbying/Political Activity (Stds. § II.A.12)
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In the U.S., federal law prohibits corporations from donating corporate
funds, goods or services, directly or indirectly, to candidates for
federal offices.
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For this reason, no political contribution of corporate funds or use of
corporate property, services, or other assets may be made without the
written approval of the EyakTek Ethics and Compliance Officer.
Integrity Issues
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Suspended & Debarred Contractors (Stds. § II.A.13)
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The U.S. Government publishes a list of persons and companies that
are suspended or debarred from performing government contracts.
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It is EyakTek’s policy not to do business with such persons or
companies in the Federal Government Marketplace.
Integrity Issues
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Conflicts of Interest: Personal Conflicts (Stds. § II.A.1)
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All EyakTek business transactions and relationships must be free from
even the appearance of impropriety.
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All EyakTek employees must act in a fair and impartial manner in all
business dealings, to place the interests of EyakTek over personal
interests in matters relating to EyakTek business, and avoid financial,
business, or other transactions or situations in which personal interests
might conflict with, or be construed to conflict with, the interests of
EyakTek.
Integrity Issues
•Conflicts of Interest: Organizational Conflicts of Interest (“OCIs”) (Stds. §
II.B.14)
– EyakTek must be attentive to such conflicts which may result from prior
Government services work performed by the company.
– For instance, EyakTek development of specifications for an item or design
of a product for a federal customer may affect EyakTek’s ability to compete
under a future competitive acquisition to manufacture that product.
– Be alert to the presence of solicitation clauses relating to organizational
conflicts of interest and immediately report such situations to the EyakTek
Ethics and Compliance Officer.
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Integrity Issues
•Conflicts of Interest: Current Government Employees / Reservists
– EyakTek must be attentive to conflicts which may result from an
employee’s or potential employee’s current government employment.
– For instance, 18 U.S.C. § 205 prohibits a Government officer or employee
from acting as an agent for anyone before the Government in connection
with any “covered matter” (includes a contract) in which the United States
is a party or has a direct and substantial interest.
– Restrictions of § 205 could potentially apply to Reservist Officers working
for EyakTek.
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Integrity Issues
•Conflicts of Interest: Current Government Employees / Reservists (cont.)
– Similarly, 18 U.S.C. § 208 prohibits Government employees from
participating personally and substantially in a matter affecting the financial
interest of any person or organization with whom the employee is
negotiating employment opportunities or has any arrangement concerning
prospective employment.
– Restrictions of § 208 could potentially apply to Reservist Officers working
for EyakTek.
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Integrity Issues
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Contingent Fees (Stds. § II.B.12)
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Federal law limits EyakTek’s ability to enter into “contingent fee”
arrangements with any person or agency not considered a “bona fide
agency” or “bona fide employee” in order to solicit or obtain a U.S.
Government contract.
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“Contingent fee” means any commission, percentage, brokerage, or
other fee that is contingent upon the success that a person or agency
has in securing a government contract.
Integrity Issues
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Antitrust/Bid Rigging (Stds. § II.B.13)
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The antitrust laws are designed to ensure fair competition and to
preserve the free enterprise system. The following actions may be
perceived as anti-competitive:
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An agreement with one or more competitors to:
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Agree on prices
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Allocate markets or customers
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Boycott certain suppliers
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Limit production or quality
An agreement with a customer to:
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Dictate resale prices
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Give preferential pricing or terms
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Restrict marketing efforts (territory, customers)
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Require tie-in sales (require purchase of one product as condition of selling another
Integrity Issues
• Contact with Foreign Governments and Overseas Manufacturing
– Many laws limit Company’s ability to provide certain products to foreign
governments.
– Company must be alert to requirements or certifications under the Buy
American/Trade Agreement Acts involving the provision by Company of
“domestic end products”.
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Communications with the
Government
Communications with the Government
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Representations and Certifications (Stds. § II.B.2)
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Federal solicitations frequently require representations and
certifications from contractors regarding the existence of certain facts.
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When conducting business with any customer in the federal
marketplace, EyakTek must be accurate and complete in all
representations and certifications.
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Be alert to requirements where EyakTek is asked to provide or “certify”
cost or pricing data as being “current, accurate and complete”.
Communications with the Government
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False Statement Act
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Prohibits knowingly and willfully making a false statement concerning a
matter within the jurisdiction of any department or agency of the U.S.
Need not be directed to the Government. Example: subcontractor
invoice to prime qualifies.
Must be “material,” but the Government need not rely on, be deceived
by, or be damaged by the statement.
The prohibition extends to both oral and written statements (sworn or
unsworn), forms, certifications, invoices, letters, time cards, receipts
and quotes.
Communications with the Government
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False Claims Act
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It is a crime to knowingly assert a false claim against the Government.
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A claim is a written demand or assertion seeking payment arising
under or relating to a Government contract. Example: invoice
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The claim need not be presented directly to the Government to trigger
the severe penalties associated with non-compliance. Example: false
subcontractor invoice to prime
Accounting & Financial Concerns
Accounting & Financial Concerns
•Truth in Negotiations Act (“TINA”)
– TINA requires a contractor to submit cost or pricing data prior to:
• The award of a negotiated contract or subcontract in excess of $550,000; or
• To the pricing of a change or modification greater than $550,000.
– Cost or pricing data is not required:
• Where the price agreed upon is based on adequate price competition;
• Where the price agreed upon is based on prices set by law or regulation; or
• In the acquisition of commercial items.
– Even when an exception applies, the CO may require submission of
“other than cost or pricing data” to support price reasonableness or cost
realism.
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Accounting & Financial Concerns
•Truth in Negotiations Act (cont’d)
– TINA allows the Government to audit a contractor for three years after
final payment to evaluate accuracy, completeness, and currency of
pricing data.
– A price reduction, as well as potential civil and criminal liability, may
follow if the data is found to be inaccurate, incomplete, or out of date.
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Information/Document Control &
Retention
Information/Document Control & Retention
•Government Provided Information (Stds. § II.B.6)
– EyakTek is committed to protecting Government information in its
possession.
– Failure to comply with contractual requirements for protection of such
data could lead to contractual and civil penalties.
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Information/Document Control & Retention
•Document Retention (Stds. § II.A.9)
– The laws governing government contracts contain strict rules requiring
EyakTek to maintain accurate and complete records, even after contract
performance has ceased.
– Transactions between EyakTek and outside individuals and organizations
must be promptly and accurately entered in EyakTek books in
accordance with generally accepted accounting principles.
– No EyakTek employee should rationalize or even consider
misrepresenting facts or falsifying records.
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Contract Performance
Contract Performance
•Overview (Stds. § II.B.5)
– All EyakTek federal contracts or subcontracts must be performed in
accordance with their terms. Example: specifications, quality control
provisions and contract clauses
– You must strive to attain and maintain the highest standards of contract
performance in EyakTek’s work in the Federal Marketplace.
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Contract Performance
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Quality Control
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EyakTek is committed to producing quality work product that meet all
contractual obligations and our own quality standards.
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The products we deliver must:
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Meet contract specifications
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Be made from the quality of materials ordered
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Be properly tested and inspected
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Be properly identified as to domestic or foreign-origin, if applicable
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Comply with all applicable laws and regulations
Be alert to, and comply with, special quality control requirements and/or
additional standards imposed on EyakTek by its customers in the Federal
Marketplace.
Contract Performance
•Export Control Laws / International Trade in Arms Regulation (“ITAR”)
– The ITAR controls the export of military use items and “deemed exports”
to foreign persons.
– An export of technical data or a defense service occurs when data is
physically transferred to or a service is performed in a foreign country. A
“deemed export” occurs when data is disclosed or a service is provided to
a foreign person in the United States.
– Items subject to the ITAR are listed on the U.S. Munitions List (“USML”).
– The U.S. State Department, Directorate of Defense Trade Controls is
responsible for ITAR administration, enforcement, and licensing.
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Contract Performance
• Export Control Laws / Office of Foreign Assets Control (“OFAC”)
– OFAC administers and enforces U.S. laws and regulations that impose
economic sanctions on certain designated countries, individuals, or
entities.
– OFAC administers comprehensive economic embargoes against Cuba,
Iran, and Sudan, and more limited sanctions are in place against Liberia,
Myanmar (Burma), North Korea, Sierra Leone, Syria and Zimbabwe.
– OFAC maintains a list of persons subject to sanctions, known as the list
of “Specially Designated Nationals” (“SDNs”), with whom U.S. individuals
and companies must not do business.
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Government Audits &
Investigations
Government Audits & Investigations
•Audits & Investigations (Stds. § II.A.11)
– Procurement investigations can be classified into four categories:
• Audits;
• Interviews;
• Subpoenas; or
• Search warrants
– EyakTek employees should notify EyakTek’s Ethics and Compliance
Officer of all investigations immediately.
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Government Audits & Investigations
•Obstruction of Justice
– Criminal statutes punish interference with Federal investigations.
– Statutes specifically prohibit:
• Knowingly and willfully making false statements concerning a matter within the
jurisdiction of U.S.;
• Falsifying, concealing, or covering up material fact that is required to be
disclosed;
• Attempting to influence, obstruct, or impede a Federal auditor in performance
of official duties; and
• Attempting to influence, obstruct, or impede the due administration of justice.
– Witness tampering statutes prohibit influencing a witness or informant by
threats, force, or misleading conduct with the intent to hinder, delay, or
prevent the communication of information to a Federal law enforcement
official regarding the possible commission of an offense.
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Reporting Violations
Reporting Violations
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Employee Responsibility (Stds. § II.B.15)
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Each employee has an individual responsibility for understanding and
complying with the Standards of Business Conduct.
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You are expected to report any suspected violations of the Standards of
Business Conduct or other irregularities to your Supervisor or the
EyakTek Ethics and Compliance Officer.
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Consult your Supervisor and/or the EyakTek Ethics and Compliance
Officer with any questions.
Reporting Violations
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Reporting Hotlines (Stds. § III.E)
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Employees should report violations or suspected violations to their
Supervisor.
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A “Hotline” number is being established by EyakTek for individuals not
comfortable reporting violations to the a Supervisor or the EyakTek
Ethics and Compliance Officer.
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Reports of violations or suspected violations will be handled in
confidence.
Reporting Violations
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Non-Retaliation and Whistleblower Protections
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No adverse actions or retribution of any kind will be taken against an
employee because he or she reports a suspected violation of the
standards or any other irregularity.
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Federal “whistleblower” statutes supplement EyakTek’s non-retaliation
policies and specifically prohibit retaliation against an employee who
reports any violation of the law to a public body or for participating in an
investigation, hearing or inquiry held by that public body or a court.
Compliance & Discipline
Compliance & Discipline
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Compliance and Discipline (Stds. § III.G)
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EyakTek will conduct periodic unannounced internal compliance
audits. Cooperation is expected and required.
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Failure to comply with the Standards of Conduct may subject an
employee to disciplinary action, including sanctions ranging from a
warning to termination, referral for criminal prosecution, and
reimbursement to EyakTek for any losses or damages resulting from
the violation.
Questions?