Ethics vs. Compliance

Unfortunately enough, there is a BIG difference between ethics and compliance in many people’s minds.  I have had the opportunity to be in a company that was both compliant (to the letter of the law), but also unethical.  Seems strange that the two should be mutually exclusive, doesn’t it?

 First, ethics.  This is simply choosing right versus wrong.  It can be said that in order to be an ethical person you normally choose to do things in good faith and with good intentions.  Basically, you choose to do what is right.  On the other hand, you can choose to do something that you know to be wrong, but is what is expected of you.  Notice the second example mentions expectations.  Does anyone else hear “TONE AT THE TOP”?  If upper management expects you to do whatever it takes to “seal the deal”, “win the award”, and “complete the mission”, there are many times when both the ethical and compliant paths do not run the same course.

 Compliance, on the other hand, is adherence to the rules and requirements.  The compliant contractor does what is required in the contract and regulations. 

  • FAR clause requirements – check. 
  • Deliverables delivered – check.
  • Cost accounting posted and reconciled – check. 
  • Done!  Right?!

The problem here is that we miss the point by merely choosing to be compliant.  I know it seems idealistic, but I think the reason that compliance programs should exist is to meet the requirements of federal government contracting regulations in an ethical decision-making way.  I am, like all of you, a taxpayer.  I would hope that scruple are being applied to the use of my money for the common good.

 And this is where the conversation starts to get up on a soap box.  Have you ever considered, when working on a government contract, that the end customer is NOT the government?  Why does the government exist in the first place?  TheUS is organized as a democratic republic – one in which our elected officials serve the common good.  Therefore, any US Agency is meant to serve those people who gave them the authority to create the Agency.  Keeping up?

Let’s take a step back.  Do you give to charity?  Do you buy Girl Scout cookies?  Would you report to the police if you saw your neighbor’s house being robbed?  Or my personal favorite – what would you do if you found $100 on the sidewalk?  Chances are you would do something ethical – the right thing in your own mind – in any of these situations.  Taxpayers (that’s you) pay for government contracts.  With that in mind, shouldn’t we want the government to spend our own money ethically like we normally do?

 Sorry for that diatribe, but this isn’t about whether the government spends money ethically.  This is about being both ethical and compliant when working on government contracts.  I can go into all the reasons why it is a legally good decision to act ethically (False Claims Act, transparency, bribery, freedom of information, conflict of interest, disbarment, etc.) but I think the point has been made for now.

In my humblest of humble opinions, a good compliance program can only truly function in a system where upper management not only walks the proverbial walk with compliance, but also leads in an ethical manner and chooses to push down the right message.  I believe the trend in regulatory compliance and regulatory ethics is leading this way. 

I am interested to hear your stories and thoughts of this same nature.  I know I have heard a few, but maybe I will write a book some day and yours could be in it.

 Resources:  Ethics in Government Act, 1978  P.L. 95-521;

About Marty Herbert

With 13 years of government contract administration, analysis, finance, and audit experience, I have established a firm baseline in ethics and a specialization in government contracts that has prepared me to become a subject matter expert in my field. I am currently working on enhancing government contracts management and compliance through workflow tools and product offerings - attempting to make the process proactive as opposed to reactive.
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