The following information comes courtesy of David Laufman at Kelley Drye:

On Friday, a new mandatory disclosure rule took effect that dramatically alters the legal dynamic between government contractors and federal agencies. Specifically, an amendment to the Federal Acquisition Regulation (“FAR”) became 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 Friday are new minimum standards for internal control systems intended to preclude violations by contractors.

For further descriptions and detail of the new rule, take a look at this Client Advisory, prepared by Kelley Drye’s Government Contracts Practice. It also provides recommendations for contractors to help ensure that they remain in compliance.