The Corporate Monitor: An Enigma No More

By Amy E. McDougal

Photo: iStock

It is a piece of paper that sends chills up any government contractor’s spine — the Notice of Proposed Suspension or Debarment for an ethical failure. These notices sometimes get resolved after a panicked call to legal counsel, and a timely and thoughtful response to the agency suspension and debarment official explaining mitigating circumstances or remedial actions taken.

At other times, resolution may take a few years when a contractor enters an administrative agreement with an agency to resolve the issues identified in the notice.

These agreements are designed to set forth the terms under which the government agency will permit a contractor to continue to do business with the government in lieu of suspending or debarring the company. While there is no prescribed format, a common theme behind many of them is to “right the ship” from an ethics and compliance program perspective.

The financial and reputational implications can be enormous. An administrative agreement may prescribe a range of ethics and compliance remedial actions the contractor is required to take, including but not limited to: appointment of a chief ethics and compliance officer; implementation and posting of specific policies related to the misconduct; changes in processes and procedures; implementation and internal promotion of a whistleblower hotline; removal, discipline, or reassignment of individuals who were involved in misconduct; training on ethics or compliance topics; reporting to the government agency; and appointment of a corporate monitor.

While most of these points are familiar to anyone who has worked for a government contractor, it is the last point that still remains somewhat enigmatic. Who is this “corporate monitor” and what exactly does he or she do?

Their main purpose is to supervise the execution of an administrative agreement and report back to the government on a contractor’s compliance. Though the monitor’s scope can vary, it is typically tailored to target the specific misconduct or issue that was the root cause for the notice of suspension or debarment.

Generally, it is safe to assume the monitor will be working closely with, or even within, a company for a period of several years and will be required to submit periodic reports to the government agency. The monitor will be communicating regularly with employees at all levels. It is therefore critically important that a contractor select someone whose personality is a fit with the contractor’s corporate culture.

Even though agencies frequently reserve the right to select or veto a contractor’s selection for its monitor, it is critically important for a company to nominate candidates who have the right qualifications and expertise for the scope of the role.

"The right monitor is a key element to the contractor’s success under the agreement."

Historically, most monitors have been attorneys. However, it needn’t be so unless specifically required by an administrative agreement. For example, if the terms of an agreement require extensive financial auditing and reporting or implementation of financial controls, it may be advisable to seek a monitor candidate who has an accounting background or is a certified fraud examiner. 

If on the other hand, the agreement requires a contractor to implement an ethics and compliance program, a candidate certified as a corporate compliance and ethics professional may be a better fit.

If the terms of an agreement involve oversight of or reporting on classified locations or contracts, a contractor would want to put forth candidates who hold, or would be eligible for, the appropriate security clearance.

The right monitor is a key element to the contractor’s success under the agreement. So, once a contractor identifies its ideal criteria, where can it find such a monitor? In the past, it has been challenging to find qualified individuals. This is especially true for smaller contractors who do not have the resources for a “big law” legal defense and its associated network of experienced candidates.

In response to the rise in use of monitors, the International Association of Independent Corporate Monitors was launched in 2016. Its mission is in part to demystify the concept of the corporate monitor and provide resources for companies, monitors and government agencies.

The association makes members’ profiles publicly available, enabling contractors to review the qualifications and experience of eligible monitor candidates. It also maintains a searchable database of publicly available agreements to provide access to a wide range of terms and conditions of previously implemented agreements.

Additionally, the association provides a forum for monitors to confidentially seek guidance and support in the execution of their duties under an agreement, so that they may maintain true independence from both the subject company and the government.

Contractors in the unenviable position of needing a monitor can tap the association’s resources to become better educated on how the monitor’s scope and role can be shaped during negotiations with the government agency and surf the profiles of eligible candidates.

Amy E. McDougal is a certified compliance and ethics professional, and is president of CLEAResources LLC. She is a regular columnist for Homeland Security Today and is an attorney with Ward & Berry, a boutique Washington, D.C. law firm with a focus on government contracting compliance and litigation.

Topics: Acquisition, Acquisition Programs, Defense Contracting, Defense Department, Ethics, Ethics Corner

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