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Ethics Corner 

Statement of Defense Industry Ethics 

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In November 2004, after several months of in-depth review by the National Defense Industrial Association Board of Governor’s Ethics Committee, and invaluable input from many of the association’s esteemed members and their senior staff and counsel, NDIA finalized and published in National Defense Magazine its Code of Ethics.

Five years later in 2009, NDIA undertook to review, and, in a small number of ways made minor but we believe worthy revisions. This code has been widely distributed, and publicly lauded, among others by Deputy Undersecretary of Defense for Acquisition, Technology and Logistics Ashton Carter as a worthy industry standard. We think it fitting to republish this simple code, along with its preamble, as it enjoys features, some unique, that are important to all of us, and vitally important to our customers: our men and women in uniform, and the American people.
 
Joe R. Reeder
Chairman, Ethics Committee
NDIA Board of Governors


Preamble

NDIA Member Companies should adhere to the highest ethical standards and seek to place the defense industry at the forefront of business ethics in America. At a minimum, NDIA members must adhere to applicable laws and regulations governing the conduct of their business. Moreover, entrusted to our care are the lives of armed forces personnel who bear the ultimate risk for their country to provide security to their fellow citizens. Thus, our common ethical mandate is a higher imperative than our individual business interests. This statement of ethics is intended to capture that mandate by setting forth common ethical principles and emphasizing particular practices that NDIA members may use to put those principles into action.

Mission

NDIA shall serve in a leadership role in setting high ethical standards for the industry and communicating industry efforts in this area to the public and government officials. NDIA will work with its membership to facilitate the practices set forth below.

Common Ethical Principles and Practices for NDIA Membership

NDIA members should aspire to the following ethical principles and make every effort to implement the following practices:
  • Advance national security by promoting trust among the defense industry, our government customers, the U.S. public and our men and women in uniform.
  • Strengthen the integrity of a federal procurement system that encourages competition, rewards technical innovation and ensures that American fighters have the decisive advantage on the battlefield and wherever else our nation’s enemies may be found.
  • Operate our businesses from a foundation of ethical readiness where economic pursuits do not overtake our responsibility to our soldiers, sailors, marines and airmen, while acknowledging that America’s technological and military preeminence are sustained by promoting the financial health of the defense sector.
  • Contribute to the common good of our industry and promote industry ethics whenever and wherever possible by sharing best practices in ethics and business conduct among NDIA members and including ethics training in NDIA sponsored events.
  • Implement effective ethics programs for company activities at home or abroad. When contemplating any international sale to a governmental or quasi-governmental buyer, it is imperative that effective measures be undertaken to ensure full compliance, not only with the letter, but also the spirit of the Foreign Corrupt Practices Act, as amended, and the FCPA’s bar against improper payments to foreign officials.
  • Establish effective mechanisms of control over employees and agents operating overseas to promote ethical conduct based upon principles, in addition to full compliance with local and international law.
  • Protect U.S. national security when performing contracts with foreign parties by committing to compliance with U.S. export control licensing regimes, and with all anti-boycott and embargo requirements.
  • Establish corporate integrity as a business asset, rather than a requirement to satisfy regulators, by making ethics compliance integral to all aspects of corporate life and culture, including employee appraisals and promotions, to foster an environment where employees aspire to do the right thing.
  • Recognize that self-governance is key to management’s commitment to abide by ethical standards. Accordingly, charge corporate boards with responsibility for creating an environment where ethical conduct is the order of the day, including developing and implementing a corporate-level process or procedure to review company best practices, policies and procedures governing ethics.
  • Demonstrate the company’s and its leadership’s commitment to ethics by making the chief executive the top ethics officer.
  • Implement a formal company ethics program that includes a written code of conduct to communicate institutional values and expectations and guide employees and management in their decisions and conduct.
  • Organize training programs as an integral component of company ethics programs to commit employees to the company’s written code of conduct, encourage them to discern the difference between right and wrong, and to act on that knowledge despite pressures to compromise standards.
  • Establish and communicate procedures for employees and business partners to identify and report suspected violations of the code of ethics without fear of retribution, establish mechanisms to promptly and effectively communicate violations to the government, and promote full cooperation with internal and government investigations.
  • Ensure that employee reports of ethics violations receive immediate and objective attention from company leadership by establishing a reporting system that promptly, within 24 hours, informs the chief executive or his designees of any allegation that raises ethical implications.
  • Establish measures that ensure prompt and appropriate corrective action; and conspicuously respond by rewarding exemplary conduct, and disciplining ethical lapses.


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