As a matter of best practice, nonprofits should disclose credible evidence of any violations of any federal criminal law to the Office of Inspector General of their grant-making agency in accordance with the higher standard required under the Federal Acquisition Regulation, despite only being legally required to provide actual violations under the Uniform Guidance.
Federal disclosure requirement differ depending on whether a nonprofit has a federal contract or subcontract, which is governed by the Federal Acquisition Regulation (FAR), or whether a nonprofit has a federal grant or cooperative agreement, which is governed by the Uniform Administrative Requirements, Cost Principles, and Audit Requirements (the Uniform Guidance).
However, in practice, this appears to be a distinction without a difference, as federal agencies appear to be holding all programs funded by federal dollars to the higher standard provided by the FAR.
The FAR requires “timely” written disclosure to a cognizant agency’s Office of Inspector General (OIG) of “credible evidence” that a principal, employee, agent or subcontractor of the contractor has committed a violation of federal criminal law or a violation of the federal False Claims Act.
The Uniform Guidance provides that all grant recipients are required to “timely” disclose in writing to the awarding agency (or pass-through institution) “all violations of federal criminal law involving fraud, bribery, or gratuity violations potentially affecting the federal award.”
The OIGs of federal agencies have been going beyond the legal text and asking that disclosures of “evidence” alone be brought to their attention. Some agencies in fact include this broader language in the grant agreement itself. Furthermore, the trend, in practice, is even extending the concept of criminality outward from criminal matters to now including conduct that would typically be reserved for civil actions.
This is certainly over-reaching under the law, but in practice, the recommendation is that it would be best for nonprofits to treat obligations to disclose similar to that provided under the FAR’s “credible evidence” standard and ensure that their relationship with the federal funding partner is as cooperative and candid as possible. So if you have evidence of any wrongdoing, it would behoove you to report that to your governing OIG in order to ensure that they do not question the capacity and judgment of your nonprofit to discover and redress any instances of wrongdoing.