Blog

September 07, 2013

Last thing on foreign subcontractors - DCMA doesn't check for FCPA compliance during CPSRs, even though it is a public law. Nor do they check on export controls or OCI certifications. Why not?

I submit that the easy conceptual answer is that those issues do not directly impact supply chain management in a way that mitigates risk to the government. In other words, if a member of your supply chain violates laws or regulations related to export, Foreign Corrupt Practices Act or OCI mitigation, the government suffers no harm. In the case of FCPA violations the government may actually get faster delivery and fulfillment of orders if the supply chain violates the applicable public law. Subcontractors that hide an OCI may have a competitive advantage that could assist them in more efficiently meeting customer deadlines (especially if they had a hand in writing the SOW). In any case, these violations do not go "up the chain" to the government as long as the government does its initial due diligence - they only go as high as the contractor. In those situations, DCMA has no incentive to enforce compliance via CPSR and, as a result, they don't. This may sound cynical, but I argue it's practical. Why else would DCMA conspicuously exempt FCPA from compliance initiatives? After all, it is a public law that directly applies to supply chain performance under a federal contract. The answer - the government suffers no harm if you break the law. As a result, DCMA has no interest in helping you comply with that public law. In fact it may be outside the scope of their responsibilities during a CPSR. 

 

That being said, just because DCMA doesn't enforce compliance in your supply chain doesn't mean that compliance isn't enforced by a host of other agencies and agents, including but not limited to the Department of Commerce, OIG, DOJ and DDTC. So do what you can to remind your Operations, Security and Legal departments to comply with these laws and regulations as needed. At least if you ring the alarm they can't effectively claim ignorance down the road.