When a contractor is accused of or found to have engaged in misconduct – whether through fraud, mismanagement, or regulatory breaches – government agencies and oversight bodies must act decisively.

One option is to terminate the contract and sever ties with the company. While this may seem like the most immediate and corrective response, it is not without significant challenges. Contract terminations, especially in large-scale government infrastructure projects, may lead to protracted legal disputes, financial losses, and disruptions to essential projects. Terminating a contract midstream may also pose significant logistical challenges such as finding a new, suitable contractor and renegotiating contracts, timelines, and budgets.

Alternatively, the agency can disregard the misconduct – and expose themselves to waste, reputational damage, and legal liability. Failing to acknowledge and address known instances of fraud, waste, and abuse erodes the public’s trust and the government’s ability to enforce accountability.

Neither of these options is ideal, which is why government agencies and oversight bodies should consider turning to a third, more balanced approach: imposing an integrity monitor. This solution allows work to proceed while providing a structured, real-time mechanism to identify risks and enforce corrective action.

How does imposed monitorship work?

An imposed monitorship is a mandatory oversight relationship in which an independent third party is retained to assess, oversee, and report on a contractor’s legal, regulatory, and ethical compliance. While typically mandated as part of a settlement agreement or enforcement action, this type of monitorship serves a broader purpose: acting as a proactive safeguard in high-risk situations where concerns about fraud, mismanagement, and other violations exist. 

The scope of an imposed monitor’s work varies based on the industry, the nature of the misconduct that occurred, and the terms of the monitorship agreement. The most common services provided include:

• Compliance monitoring
• Financial oversight
• Initial and ongoing procurement integrity review
• Risk management
• Internal controls assessment
• Onsite monitoring
• Ethics training

By delivering these services and more, the integrity monitor helps to ensure that companies meet regulatory requirements and avoid future violations.

Benefits to the agency imposing a monitor

By providing these services, integrity monitors offer significant benefits to agencies, helping to ensure compliance and improve program integrity.

Reduce financial and legal risks

• By identifying and mitigating misconduct or procedural breakdowns early, agencies can limit exposure to litigation, fines, and penalties and avoid prolonged investigations.

Rehabilitate reputational damage after incidents of fraud, waste, or abuse – and regain public trust

• When fraud, waste, and abuse occur, an integrity monitor can play a vital role in mitigating reputational damage and demonstrating the agency’s commitment to integrity and reform.

Develop and implement new mechanisms and culture for accountability and oversight

• An integrity monitor brings subject matter expertise in internal controls, ethics, and compliance, which they can use to develop training programs and risk management protocols that help create a culture of integrity within both the agency and the monitored entity.

Minimize project downtime while maintaining compliance

• An integrity monitor enables the project to move forward with watchful oversight in place. With clear expectations and stakeholder communication, structured guidance, and consistent reporting, the monitor functions as a close collaborator to the agency.

The cost of an integrity monitor: Burden or investment?

Typically, the entity that is subject to monitorship is responsible for the cost of the integrity monitor. This may strike some as punitive, adding another layer of expenses on top of legal or regulatory challenges. But the rationale is straightforward: Public funds should not be used to oversee a company that has engaged in misconduct or has a heightened risk of noncompliance. If the company wishes to continue to do work for the government entity, maintain its contracts, and/or restore its reputation, it must agree to fund and participate in the monitorship (which, despite the company’s funding, remains under the agency’s control). 

What’s more, an at-risk company can benefit from a well-implemented monitorship. Those that embrace the process can emerge with stronger compliance programs, operate more efficiently, and improve their reputation, all of which sets them up for future success and continued work.

Restore and protect your progress

Integrity monitoring isn’t just about compliance: It’s also about restoring confidence and driving change. Imposing a monitor after a breach in conduct can go a long way toward getting a project back on track and strengthening controls and culture for those that follow. 

CohnReznick brings a deep bench to integrity monitoring engagements that includes former inspectors general, auditors, investigators, and professionals experienced in construction and infrastructure. With firsthand experience working with evolving federal, state, and local regulations, we are prepared to provide holistic compliance monitoring services tailored to your specific needs. Contact our team to discuss how we can help you maintain a zero-tolerance stance against fraud, waste, and abuse.