AbstractThis paper will compare the similarities between the working relationship of the federal government and contracting officers and the traditional principal-agent contracting relationship. Also, this paper will discuss why contracting officers should not have to abide by the standards put forth by the Sarbanes-Oxley act and how a manager could communicate SOX adherence to a government contractor that they will be working with.
Keywords: Sarbanes-Oxley, obligations, adherence, government, contract
The role of a contracting officer who is contracting with the federal government can be compared to a principal-agent relationship. In a principal-agent relationship, the agent (or contracting officer) must act in the best interest of the principal in every financial or business sense of the current endeavor. When working as a federal government contracting officer, agents must be properly trained and educated in business, law, or other related fields so that they can provide the proper services that the government will need from them at that time. In comparison to the traditional principal-agent relationship, agents must complete tasks as close to the principal’s original directions as possible, just as a contractor in any other field would.
Contracting officers should not be held to the standards that the Sarbanes-Oxley Act creates because they impose expensive and redundant obligations for public companies who must attain additional certifications and procurements that will make the products provided to the U.S. government more expensive and their contractors less competitive in the general marketplace (Metzger & Scanlon, 2006, p. 1). As a manager, the best way that I would communicate adherence to the Sarbanes-Oxley Act to a government contractor that I am working with would be to outline exactly what is required of them in whatever specific endeavors that I will be contracting them for. Also, instead of telling them what they should do under the SOX Act, I would outline what can fall under violation of the act such as: knowingly or willfully intending to certify a report that is non-conforming, failing to report any cases of fraud, whether material or not, and/or experiencing performance or pricing problems that could require a government contractor to follow Sarbanes-Oxley reporting obligations because of any legal violations or financial risks occurring (Metzger & Scanlon, 2006, p. 3-5).
- Metzger, R. S., Scanlon, M. J. (Winter 2006). Sarbanes-Oxley and Government Contractors: Beyond the Regulatory Burden We Knew. American Bar Association, 2 (issue 41) retrieved from http://www.gibsondunn.com/fstore/documents/pubs/Procurement_Lawyer-W06-SOX-Metzger.pdf
