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Contract Management & Business Ethics

September 23, 2013

In the final instalment of my ‘moral dilemma’ series (see immediately previous blogs for other examples), our contract manager faces a not unfamiliar challenge – how to deal with deliberate over-billing.

Some of those who have made comments on these situations are perhaps missing the point. In every case, the ethical position is clear. My question is what role or responsibility does a contract or commercial manager have when faced with such situations. The easy answer is always ‘I was only following orders’, or perhaps ‘It’s industry practice’. But of course, neither excuse is morally correct.

My original blog in this series on ethics made the point that established professions operate with a code of conduct that includes an expectation of high ethical standards. It therefore raised the question of what standards should be observed by those in contract management or procurement, who have oversight and insight to the integrity of trading relationships. Each situation I have posed is based on real examples. And in each case, those who were overseeing the contract remained silent. Was that the correct thing to do and, if not, what should have been done?

Here is the last case study. Although this situation was probably extreme, it is also common.

You were involved in the negotiation and implementation of a large Government contract. Charging under this agreement is use-based. During implementation, you become conscious that the mechanisms for monitoring use are unreliable and may result in significant over-counting. Some time later, you hear that questions are being asked about possible over-charging. The business unit executives deny that this is – or could be – happening, but you know different. So what would you do?

  1. No question about it. First notify the appropriate people within your own organization, then notify your customer counterparts.

    This goes beyond just doing the right thing. Not taking action exposes your employer to great risk.

  2. Sylvia Prester permalink

    There’s the Federal Procurement Integrity Act which makes it illegal to overcharge the U.S. Government and to such withhold information An audit by the Government could reveal this. I would first bring the matter to the attention of my supervisor. If I wasn’t satisfied that the issue was being addressed appropriately, I would then seek out the company’s ethics advisor. All large government contractors are required to have an ethics policy and a system of reporting potential ethics violations.

  3. paul permalink

    good post!

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