Compliance and Ethics Programs in Department of Defense Government: Relationship Between Compliance and Ethics Programs and Contracting Fraud Penalty Cost

Abstract

Compliance with regulatory directives has been at the forefront of concern regarding federal contract spending. Private firms, federal agencies, and scholars allocate tremendous amounts of time, effort, and resources to produce efficient methods and strategies to combat the proliferation of compliance infractions, that often result in sanctions. The purpose of this research is to assess the performance of companies with C&E programs and those without C&E programs. A literature review of historical and current unclassified government data was collected from several public U. S. Government systems to determine the statistical relationship between Compliance and Ethic programs and non-Compliance and Ethic program penalties. The population under study consisted of 49 DoD contractors totaling an aggregate value of $212.4 billion obligated contracting dollars. A total of 364 fraud cases and $6.2 billion in fines were identified in this study. The study concluded that companies with Compliance and Ethics had a statistically significantly higher penalties and a penalty ratio than those without Compliance and Ethics. However, there were no differences in dollars obligated based on Compliance and Ethics programs. The implication of Compliance and Ethics programs decreasing fraud penalties in DoD contracting supports the need for effective regulatory oversight within organizations and future research on the compliance and ethics programs of firms contracting with the DoD.