Today, a new mandatory disclosure rule takes effect that dramatically alters the legal dynamic between government contractors and federal agencies. Specifically, an amendment to the Federal Acquisition Regulation (“FAR”) becomes operational that henceforth requires all contractors to “timely” disclose certain violations of law and overpayments to the government on penalty of suspension and debarment.

The new disclosure requirement applies not only to prospective violations, but also to violations known to a contractor “principal” as of the effective date of the rule (i.e., December 12, 2008). Also in effect as of today are new minimum standards for internal control systems intended to preclude violations by contractors.

Kelley Drye has prepared a Client Advisory that describes the new rule in detail and provides recommendations for contractors to adopt to help ensure that they remain in compliance.