The Defense Contract Audit Agency stated last week that a contractor providing intelligence and support services to DOD in Afghanistan may have overcharged the government by more than $50 million.  If history is a guide, the entire contracting industry should brace itself for a backlash.  It doesn’t take much for Congress to react, or over-react, to the sins of one or two  contractors.  The early 2000’s saw a flood of new rules, not all of which were precisely written to apply only to non-commercial contracts or to companies working in war zones.  Even absent legislative change, contractors can be painted with a broad brush of guilt by association, in this case just by being another contractor.   The contractor in this case, New Century Consulting, is facing potential criminal charges and a stream of Congressional oversight hearings.  While not all companies may face such extreme outcomes for non-compliance, the costs of civil proceedings can easily run into the millions of dollars before any government fines are levied.  Some companies may insist that they can’t afford the systems and processes that ensure compliance.  Our view is that most contractors can’t afford NOT to make these investments.  We are always happy, however, to take consulting fees on audits or investigations, so you don’t have to listen.