Standard 7

Always Remember That the Government Is a Unique Customer. We will conduct our government business with the highest degree of integrity and honesty.

An important part of our business is the work that we do on behalf of the federal government, such as our work for the Medicare program and the Federal Employee Program, along with our contracts with state and local governmental entities. When we act as a government contractor, we have a special obligation to the government (along with the public at large) to ensure that we perform that work with the highest degree of integrity. Accordingly, we must all be committed to compliance with not only the letter but also the spirit of the laws and regulations that apply to our government contracting business.

Although all of the standards discussed in this Code of Conduct are, of course, applicable whether the customer is the government or a private entity, the unique nature of doing business with the government implicates particular statutes and regulations that do not normally apply to commercial transactions. For example, under Title 18 of the United States Code, it is a crime to knowingly make a false claim for payment to the government or to knowingly make a false statement to the government. If you falsify data that is submitted to the government, even if you are not doing so in an attempt to obtain payment for the company, you have committed a crime. Both you and the company could be subject to criminal prosecution for your violation and could be subject to large penalties and fines. In addition, both you as an individual and the company as an organization could be prohibited, through suspension and debarment or exclusion, from working on government projects in the future.

If you engage in any conduct that results in a violation of this standard, you will be subject to the full range of disciplinary sanctions, up to and including termination for cause where appropriate. In addition, the company may have an obligation to refer your actions to the appropriate prosecutorial authorities, which could lead to criminal prosecution of both you and the company.

Set forth below are some examples of the types of situations where we must be especially vigilant in ensuring that we do not engage in conduct that could violate this standard or the special rules applicable to government contracts.

A. Cost Records, Price Estimates and Time Charging.

We are required to maintain and provide the government with access to accounting and other records to enable the government to substantiate its payments to us for work performed on existing contracts and to help it verify our cost and pricing estimates on future contracts. We must therefore ensure that accurate and truthful records are maintained and that records are preserved for the period of time required by applicable laws and contract provisions. We must charge all costs and labor accurately, to the appropriate account, regardless of the status of the budget for that account. If you engage in improprieties such as the charging of labor or material costs to the wrong contract, charging contract effort to an overhead or indirect account, falsification of time cards and improper destruction or alteration of records, you will violate this and other standards set forth in the Code of Conduct and will be subject to the full range of disciplinary sanctions, up to and including dismissal where appropriate.

B. Cost or Pricing Data.

We may be required to submit cost or pricing data to the government or to prime contractors and to certify that the data are current, accurate and complete. This is an affirmative disclosure obligation. Moreover, the definition of the "data" that must be disclosed is very broad and includes not only hard facts but also management decisions and estimates (based on verifiable data) which a reasonable person would expect to have a significant effect on price negotiations.

We must follow a policy of full disclosure in negotiations for government contracts or subcontracts. If your actions result in the submission of cost or pricing data that is not current, accurate and complete as of the date of agreement on price, you will violate this and other standards set forth in the Code of Conduct and will be subject to the full range of disciplinary sanctions, up to and including termination for cause where appropriate.

C. Unallowable Costs.

We may submit proposals for reimbursement of indirect costs to the government, either under cost reimbursement contracts or as part of overhead rates. You (or one of your co-workers) may be required to certify your belief that a proposal or cost submission does not contain any "unallowable" costs, and in particular, does not contain unallowable costs for advertising, public relations, donations, entertainment, fines and penalties, lobbying, defense of fraud proceedings and goodwill. We must take special care to ensure that these proposals seek reimbursement for only those indirect costs that are clearly allowable or as to which we have a good faith argument that the costs are allowable. If your actions result in the inclusion of clearly unallowable costs in cost proposals, you will violate this and other standards set forth in the Code of Conduct, and you will be subject to the full range of disciplinary sanctions, up to and including termination for cause where appropriate.

D. Quality Control, Testing and Compliance With Specifications.

We are often required to certify compliance with applicable quality control specifications and testing requirements for our products and services. We must make every effort to ensure that we deliver goods and services that not only meet all applicable contract requirements but also give the customer the highest degree of confidence in our products. If you engage in improprieties such as the delivery of nonconforming goods, components or services, the failure to conduct required inspection or testing, or the manipulation of test procedures, test data or contract performance data, you will violate this and other standards set forth in the Code of Conduct and will be subject to the full range of disciplinary sanctions, up to and including termination for cause where appropriate.

E. Certification and Representations.

As the three examples above illustrate, contracts and subcontracts on government projects often require the company to submit various certifications. These contracts also usually contain clauses wherein the company is required to make affirmative representations about a variety of matters in addition to those described above, such as compliance with socioeconomic programs, contract specifications, environmental laws and various procurement regulations.

These certifications and representations are serious matters. The company relies upon the truthfulness and accuracy of the information it receives from its employees when it submits these certifications. If your actions result in the knowing submission of a false certification or representation in connection with a government contract, both you and the company could be criminally prosecuted for making false statements to the government. For this reason, we must all exercise extreme diligence to ensure that these certifications and representations are truthful and accurate before they are submitted to the government.

Finally, although some of the subjects set forth below are discussed more fully in other standards, we must all take special care to ensure that the company is in full compliance with the following standards of conduct in contracting with the government:

F. Gratuities.

We should ensure that government employees are not offered or given, either directly or indirectly, entertainment, gratuities or other items, including transportation or meals at business meetings, that such employees are prohibited from receiving by applicable agency regulations. Accordingly, company employees should obtain clearance from the company's legal department before offering or giving any such item or service to a government employee.

G. Kickbacks.

We must never request or accept fees, commissions, compensation, gifts or gratuities from our subcontractors or suppliers, directly or indirectly, as a reward or inducement for business with the company. We must also never pay or offer to pay kickbacks to any person. Moreover, we must never offer or give anything of value to customer personnel under circumstances that could create even an appearance that we are seeking to induce preferential treatment or pay a reward for placing business with the company.

H. Classified Information and Confidential Data.

National security classified, procurement sensitive (e.g., budgets and evaluation criteria), and proprietary information shall not be accepted from any source, either directly or indirectly, in circumstances where there is reason to suspect that the release is unauthorized. In addition, we must ensure that all information we obtain about our competitors is done in compliance with the law and the standards set forth in the Code of Conduct. We must not solicit or obtain confidential information about a competitor in a manner that would be illegal or would require a person to violate a contractual agreement, such as a confidentiality agreement with a prior employer.

I. Former Government Employees.

Special restrictions apply to recruiting former government personnel and the activities of former government employees retained by the company as employees or consultants. Clearance must be obtained from the company's legal department before even mentioning possible employment to a current government employee, and before retaining any former government employee.

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