Government contractors live in a world of unique risks beyond those encountered by your run-of-the-mill company. Conscious of this reality, the FAR (for many firms) requires a compliance framework to handle those potential landmines: a written code of business ethics and conduct, often accompanied by a compliance program.

In this post, we survey that requirement, including when such a written code is required, what it should entail, and why ignoring this offensive-defensive tool is foolishly myopic.

Must all contractors implement a code of business ethics and conduct?

Government policy and best practice dictate that all contractors should adopt a written ethics code. In fact, the FAR states that “[c]ontractors should have a written code of business ethics and conduct[.]” FAR 3.1002(b). Atop that written policy, the FAR also encourages all contractors to run a compliance training program and an internal control system that

  • are suitable for to the size of the company and extent of its involvement in Government contracting
  • facilitate timely discovery and disclosure of improper conduct in connection with Government contracts
  • ensure corrective measures are promptly instituted and carried out.

Encouragement turns to requirement, however, when a contractor receives a contract above $7.5 million with a performance period greater than 120 days. In that case, FAR 52.2013-13 mandates the adoption of a written code plus distribution to employees (performing on the contract) within 30 days. But there’s more. The clause also imposes multiple other obligations:

  • exercising due diligence to prevent and detect criminal conduct
  • promoting an organizational culture that encourages ethical conduct and legal compliance
  • disclosing to the Office of Inspector General and contracting officer when the contractor has “credible evidence” that a principal, agent, or subcontractor has either (1) violated a federal criminal law involving fraud, conflict of interest, bribery or gratuity or (2) violated the False Claims Act.
  • adopting (with some exceptions) a business ethics awareness and compliance system within 90 days of contract award
  • flowing down the clause to subcontracts above $7.5 million and a performance period of more than 120 days.

What should a written code cover?

The written code should focus on those subjects unique to Government contracting. It might address, among other things:

  • Organizational conflicts of interest, including a description of the various types and reporting obligations
  • Procurement Integrity Act considerations, including prohibitions on offering employment to certain federal employees
  • Anti-kickback and bribery prevention
  • Compliance with contract provisions
  • Accurate representations and certifications on SAM.gov and elsewhere
  • Accurate record keeping
  • Compliance with SBA socioeconomic program rules, such as maintaining program eligibility and compliance with the limitations on subcontracting for set-aside contracts
  • Independent pricing obligation
  • Reporting obligations
  • Non-retaliation for reporting noncompliance

In brief, a written code may address many topics. Ideally, the code furnishes a comprehensive, yet digestible discussion of unique Government contracting issues that employees must know and are obliged to actively follow. Moreover, the written code should be constantly recirculated among the firm’s workforce to ensure that its principles are top-of-mind and guide employee decision making.

Why have a written code of conduct?

Even if your firm is not required to have written code, you should get one! Obviously, a written code increases awareness of pitfalls among your workforce and thereby decreases the probability of a violation.

But it also comes in handy if a firm finds itself in hot water and is up for, say, debarment. In that scenario, an effective written code and compliance program is a potential mitigating factor—i.e., a reason not to debar the contractor despite the Government identifying a valid cause for debarment. FAR 9.406-1(a)(1).

Likewise, DOJ (in its Evaluation of Corporate Compliance Programs) considers the existence of a robust compliance program when deciding whether to bring charges or negotiate plea deals or other agreements. In that regard, DOJ asks three “fundamental questions” about a compliance program:

  • Is the corporation’s compliance program well designed?
  • Is the program being applied earnestly and in good faith? In other words, is the program adequately resourced and empowered to function effectively?
  • Does the corporation’s compliance program work in practice?

These questions should guide the formation and implementation of an effective code of conduct and compliance program.

Wrap Up

Plain and simple, a written code of business ethics conduct paired with a robust compliance program is either a contractual requirement or a really good idea. Ignore this aspect of Government contracting at your peril!

Understanding the Basics: Contractor Code of Business Ethics and Conduct was last modified: September 22nd, 2026 by John Mattox