Q. Does the government have the right to audit its government contractors?
A. Yes. The federal government often has the right to audit, inspect and investigate its contractors, and that authority is provided both by statue and by the terms and conditions of a government contract. Many audits conducted during contract performance typically concern financial matters including defective pricing, overcharges, accounting methods, and various compliance issues such as compliance with required socio-economic programs. Government contractors are generally required to maintain records pertaining to contract performance for three (3) years following the contract’s completion.
Occasionally, contractors are the subject of criminal investigations conducted by the various offices of Inspector General, U.S. Department of Justice and the Federal Bureau of Investigations, usually for fraud, disclosure of classified information, or other violations of the laws governing government contractors.
How an audit or investigation is handled from beginning to end can often make the difference between a favorable outcome and one not so favorable. Having legal representation from the very beginning can facilitate the investigative process, and can greatly minimize a contractor’s or individual’s exposure to penalties, both criminal and civil.
