FAR 52.203-13: Contractor Code of Business Ethics and Conduct
Official federal procurement regulation analysis, contractor performance obligations, and risk mitigation strategies for small businesses.
What It Means in Plain English
Requires federal contractors on contracts exceeding $6.0 million with a performance period of 120 days or more to maintain a written code of business ethics, an ongoing ethics awareness program, and an internal control system, with mandatory disclosure of credible violations to agency OIG.
Mandatory in contracts and subcontracts expected to exceed $6,000,000 with a performance period of 120 days or more (except commercial item contracts under FAR Part 12).
Mandatory Statutory Requirements
- Written Code of Ethics: Must have a formal code of ethics copy provided to every employee within 30 days of contract award.
- Mandatory Disclosure: Contractors MUST timely disclose in writing to the agency Office of Inspector General (OIG) whenever they have credible evidence of False Claims Act violations or federal criminal law violations.
- Small Business Exemption: Small business contractors are exempt from formal ethics awareness training and internal control systems, BUT ARE NOT EXEMPT from the mandatory disclosure rule.
Contractor Compliance Obligations
- Prominently display agency OIG fraud hotline posters on job sites and employee portals.
- Establish an internal reporting mechanism where employees can report suspected fraud or retaliation confidentially.
Knowing about an erroneous overpayment from the federal government and failing to report and refund it triggers mandatory disclosure violations and debarment.
Frequently Asked Questions About FAR 52.203-13
Are small businesses exempt from FAR 52.203-13?
Small businesses are exempt only from the formal employee training programs and internal control system requirements, but remain 100% subject to the mandatory disclosure requirement to report credible evidence of fraud or overpayment.