New Required Disclosures of Proceedings and Settlements for Contractors and Grantees

On March 23, 2010, the FAR Councils issued a final rule amending the FAR to implement the Federal Awardee Performance and Integrity Information System, known as FAPIIS. The stated purpose of the rule, with an effective date of April 22, 2010, is to enhance the government's ability to evaluate for responsibility determinations the ethics and performance of prospective contractors competing for federal contracts and grants. But, most significantly for industry, many contractors will have to submit certified disclosures pertaining to certain criminal, civil, and administrative proceedings and settlements at the federal and state level.

Unfortunately, even though these requirements are being rolled out right now, there are many unanswered questions. For instance, what are "administrative proceedings" – does the term include tax assessments, environmental citations, workers' compensation claims, and government claims for contract refunds? Must confidential settlement agreements be reported? What about deferred prosecution agreements? How should contractors respond to a question in CCR if the question is not consistent with the rule? Aside from the challenges relating to interpreting the rule and responding accurately in CCR, there are many other unknowns. How will the government use this vast amount of information? Will it have an impact on bid protests? Will this information be publicly available via FOIA or otherwise? It is essential that contractors are attuned to these traps because of the potential civil and criminal ramifications that exist for the unwary.