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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 11, 2007
ITT CORPORATION
(Exact name of registrant as specified in its charter)
Indiana 1-5672 13-5158950
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
4 West Red Oak Lane
White Plains, New York 10604
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (914) 641-2000
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (See General Instruction A.2. below):
[_] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Not Applicable
(Former name or former address, if changed since last report)
Item 8.01 Other Events
On October 11, 2007, ITT Corporation entered into an Administrative
Compliance Agreement with the United States Army on behalf of the U.S.
Government (the "Administrative Compliance Agreement"). The Administrative
Compliance Agreement requires ITT Corporation to take certain remedial actions,
including implementing certain compliance programs and appointing an independent
monitor for the oversight of ITT Corporation's compliance with the
Administrative Compliance Agreement, as described in more detail therein. A copy
of the Administrative Compliance Agreement is filed as Exhibit 99.1 to this
report and incorporated herein by reference. The Administrative Compliance
Agreement relates to a Plea Agreement and a Deferred Prosecution Agreement ITT
Corporation had previously entered into in connection with the settlement of a
Department of Justice investigation which began in 2001 regarding ITT Night
Vision's compliance with the International Traffic and Arms Regulations. The
Plea Agreement and the Deferred Prosecution Agreement are described in more
detail in, and attached as exhibits to, the Current Report on Form 8-K filed by
ITT Corporation with the Securities and Exchange Commission on March 30, 2007
and are incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
99.1 Administrative Compliance Agreement dated October 11, 2007 between ITT
Corporation and the United States Army on behalf of the U.S.
Government in furtherance of the Department of Justice settlement
(including Attachment 3).
99.2 Plea Agreement filed March 28, 2007 between ITT Corporation and the
United States Attorney's Office for the Western District of Virginia
on behalf of the United States (Attachment 2 to Exhibit 99.1 filed
herewith) (incorporated by reference to Exhibit 99.3 to ITT
Corporation's Current Report on Form 8-K filed with the Securities and
Exchange Commission on March 30, 2007).
99.3 Deferred Prosecution Agreement filed March 28, 2007 between ITT
Corporation and the United States Attorney's Office for the Western
District of Virginia on behalf of the United States (including
Appendix A--Statement of Facts; and Appendix B--Remedial Action Plan)
(Attachment 1 to Exhibit 99.1 filed herewith) (incorporated by
reference to Exhibit 99.4 to ITT Corporation's Current Report on Form
8-K filed with the Securities and Exchange Commission on March 30,
2007).
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ITT CORPORATION
By: /s/ Kathleen S. Stolar
-----------------------------------
Kathleen S. Stolar
Its: Vice President, Secretary
and Associate General Counsel
Date: October 12, 2007
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EXHIBIT INDEX
99.1 Administrative Compliance Agreement dated October 11, 2007 between ITT
Corporation and the United States Army on behalf of the U.S.
Government in furtherance of the Department of Justice settlement
(including Attachment 3).
99.2 Plea Agreement filed March 28, 2007 between ITT Corporation and the
United States Attorney's Office for the Western District of Virginia
on behalf of the United States (Attachment 2 to Exhibit 99.1 filed
herewith) (incorporated by reference to Exhibit 99.3 to ITT
Corporation's Current Report on Form 8-K filed with the Securities and
Exchange Commission on March 30, 2007).
99.3 Deferred Prosecution Agreement filed March 28, 2007 between ITT
Corporation and the United States Attorney's Office for the Western
District of Virginia on behalf of the United States (including
Appendix A--Statement of Facts; and Appendix B--Remedial Action Plan)
(Attachment 1 to Exhibit 99.1 filed herewith) (incorporated by
reference to Exhibit 99.4 to ITT Corporation's Current Report on Form
8-K filed with the Securities and Exchange Commission on March 30,
2007).
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ADMINISTRATIVE COMPLIANCE AGREEMENT
This Administrative Compliance Agreement ("Agreement") is made between the
United States Army ("Army"), acting through its Suspension & Debarment Official
("SDO"), on behalf of the U.S. Government as the lead agency for determining the
present responsibility and ITT Corporation (the "Contractor").
A. PREAMBLE
1. On March 26, 2007, ITT Corporation entered into a plea agreement with
the United States Attorney's Office for the Western District of Virginia
regarding allegations that, on numerous occasions between the mid-1980s and
2005, it violated the Arms Export Control Act, as implemented by the
International Traffic in Arms Regulations ("ITARs"). Specifically, ITT
Corporation's Night Vision Division was accused of knowingly violating the ITARs
by sending technical data, drawings, specifications, services and equipment
related to classified military night vision systems to parties in Singapore, the
United Kingdom and elsewhere without export licenses from the Department of
State. In addition, it is alleged that from the late 1990s through 2001, ITT
Corporation deliberately submitted false and misleading statements regarding its
compliance with ITARs to the Department of State to minimize and conceal this
activity. The charges included in the criminal information filed in support of
the plea agreement were two counts of Willful Export of Defense Articles Without
a License in violation of Section 38 of the Arms Export Control Act and Sections
127.1 (a) and 127.3 of the ITARs, and one count of Willful Omission of
Statements of Material Fact in Arms Export Reports, in violation of 22 U.S.C.
ss. 2778(c) and 18 U.S.C. ss. 2.
2. As a result of the March 26, 2007 agreement, ITT Corporation pled guilty
to one count of Willful Export of Defense Articles Without a License and the
charge of Willful Omission of Statements of Material Fact in Arms Export
Reports. Regarding the second count of Willful Export of Defense Articles
Without a License, ITT Corporation and the United States Attorney's Office
entered into a Deferred Prosecution Agreement on March 26, 2007. The Deferred
Prosecution Agreement provides that ITT Corporation pay a $2,000,000.00 criminal
fine, forfeit $28,000,000.00 of proceeds derived from its illegal actions, and
pay $20,000,000.00 in monetary penalties to the Department of State for the
ITARs violations. The Deferred Prosecution Agreement also contains a
$50,000,000.00 "Deferred Prosecution Monetary Penalty" and provides that ITT may
reduce on a dollar-for-dollar basis the amount of the $50,000,000.00 Deferred
Prosecution Monetary Penalty by:
[M]onies spent to accelerate and further the development and fielding
of the most advanced night vision technology [and] spent in
consultation with and with the prior agreement of the United States
Army
as further discussed in Attachment 3 hereto.
3. In order to assure its present responsibility, 1TT Corporation agrees to
execute and take the remedial actions specified in this Agreement, including
Section C, Contractor Responsibility Program, subject to the terms and
conditions described in Section D, General Conditions, and
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Section E, Administration of this Agreement. ITT Corporation also agrees to
acknowledge and abide by the provisions of the Appendices to this Agreement,
which provide supplemental information and guidance on the implementation of
specific remedial actions.
4. The Army has determined that the terms and conditions of this Agreement,
if complied with, provide adequate assurance that the interests of the
Government will be sufficiently protected to preclude the necessity of debarment
or suspension of the ITT Corporation.
5. This Agreement is effective for a period of five years (60 months) from
the Effective Date. Upon the completion of the third year of this Agreement, ITT
Corporation may request a review of its performance under the Agreement and ask
that the SDO determine if it has fulfilled its obligations under this Agreement
and the Deferred Prosecution Agreement. The decision concerning the fulfillment
of these obligations shall be at the sole discretion of the SDO, in consultation
with the United States Attorney for the Western District of Virginia and the
Department of State. In addition, at any time after the completion of the third
year of the agreement, ITT Corporation may present information for consideration
by the SDO regarding its performance under the Agreement and request a
reconsideration of the SDO's decision to maintain the Agreement in force.
NOW THEREFORE, in consideration of the promises set forth herein and for good
and valuable consideration, the parties mutually agree as follows.
B. DEFINITIONS
1. "Arms Export Control Act" or "AECA" refers to the provisions of Title
22, United States Code, Chapter 39. Executive Order 11958, as amended, delegates
authority for implementation of the AECA to the Department of State via the
ITARs.
2. "Army" refers to the United States Army. Specific points of contact for
this Agreement are the SDO and the United States Army Legal Services Agency,
Contract and Fiscal Law Division, Procurement Fraud Branch and their designees.
Regarding Attachment 3 to the Agreement, points of contact will be designated by
the United States Army Research, Development & Engineering Command,
Communications and Electronics Research and Development Center, Night Vision &
Electronic Sensors Directorate.
3. "Attachment" refers to documents which are incorporated by reference
into this Agreement. Attachments contain material relevant to the basis for
entering into this Agreement or discuss specific aspects of its implementation.
Attachments may be modified after the entry of this Agreement into force without
altering the basic Agreement itself at the express agreement of the parties. As
executed, there are three "Attachments" to this Agreement: Attachment 1 -
Deferred Prosecution Agreement and its attachments; Attachment 2 - Plea
Agreement; and Attachment 3 -Deferred Prosecution Monetary Penalty
Implementation.
4. "Appendix" or "Appendices" refer to modifications to the Agreement
itself. Appendices may be added at the agreement of the parties to address a new
or unforeseen issue related to the implementation of the Agreement.
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5. "Contractor" refers to ITT Corporation, including its divisions,
operating units, groups, value centers and other subsidiaries, as appropriate,
including its directors, officers, and employees, while acting in their
capacities as such.
6. "Days" refers to calendar days.
7. "Deferred Prosecution Agreement" refers to the agreement signed on March
26, 2007 between the United States Attorney's Office for the Western District of
Virginia and ITT Corporation regarding one of two charges of Willful Export of
Defense Articles Without A License in violation of 22 U.S.C. ss.ss. 2778(b)(2),
2778(c), 18 U.S.C. ss. 2, and 22 C.F.R. 127.1(a) and 127.3. Included in the
Deferred Prosecution Agreement are Appendix A, the Statement of Facts and
Appendix B, the Remedial Action Plan. A copy of this agreement may be found at
Attachment 1.
8. "DFARS" refers to the Defense Federal Acquisition Regulation Supplement.
9. "Effective Date" refers to the date on which the SDO signs this
Agreement on behalf of the Army.
10. "Employee" refers to officers, managers, and supervisors. All other
full and part-time workers, whose performance is under the direct supervision
and control of the Contractor, will be considered "employees" solely for
training purposes. Consultants and temporary workers shall be made aware of the
compliance agreement and the standing Contractor Responsibility Program, and, to
the extent engaged in the formation or administration of government contracts,
furnished copies of the Code of Corporate Conduct and the Government Contracting
Policies and Procedures.
11. "Chief Ethics & Compliance Officer" refers to a managerial officer of
the Contractor who will be the first point of contact for all questions
regarding the terms and conditions of this Agreement.
12. "FAR" refers to the Federal Acquisition Regulation.
13. "Government" refers to any department, agency, division, independent
establishment, or wholly-owned corporation of the United States Government.
14. "Independent Cause for Suspension or Debarment" refers to a reason or
basis for such action not directly related to information set forth in the
Preamble or any document referred to in the Preamble.
15. "Independent Monitor" refers to an independent attorney, certified
public accountant, or other expert knowledgeable in the area of Federal
Government contracting policies and procedures who will act to ensure the
Contractor's compliance with the terms of this Agreement.
16. "International Traffic in Arms Regulations" or "ITARs" refers to
Chapter 22, Code of Federal Regulations, Parts 120 through 130.
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17. "Plea Agreement" refers to the agreement entered into on March 28, 2007
between the United States Attorney's Office for the Western District of Virginia
and the Contractor regarding the disposition of the charges against the
Contractor for violation of the AECA as implemented by the ITARs. A copy of this
agreement may be found at Attachment 2.
18. "U.S.C." refers to the United States Code.
19. "Temporary workers" shall mean persons who have worked for the
Contractor for more than ninety (90) days.
20. "Ombudsperson" shall mean the Office of the Ombudsman, located at Value
Centers and other business units of ITT, who will act as an alternative channel
of communication for ITT employees and other interested individuals who wish to
report what they consider to he infractions or violations of the Contractor's
Code of Corporate Conduct or ask questions regarding the Code.
C. CONTRACTOR RESPONSIBILITY PROGRAM
1. Existing Program Elements. The Contractor has a company-wide Contractor
Responsibility Program which provides the institutional means for achieving
present responsibility as a Government contractor. As of the Effective Date, the
Contractor has established the following elements of this program:
a. Code of Corporate Conduct. The Contractor has established and
continues to have in place corporate compliance and ethics policies,
programs, procedures and training as part of its ongoing business
practices. These include a Code of Corporate Conduct ("Code") setting
forth the Contractor's basic principles and standards for ethical
business conduct and integrity, and establishing the responsibility of
individual employees to comply with all applicable laws and
regulations. All of the Contractor's employees must annually certify
that they have reviewed the Code, have received training regarding the
Code, and understand that they are required to comply with its
provisions. Current versions of the Code are available at www.itt.com.
b. Management Involvement and Overall Interaction of Contractor
Responsibility Program.
(i) The Contractor's Board of Directors, directly or through
committees, assesses the activities and responsibilities of the
Contractor's Corporate Responsibility Program, including the
compliance activities of the Contractor, which further includes
compliance with applicable law and regulation, including
government contracts and export control regulations.
(ii) The Contractor has established Compliance Review Boards ("CRBs")
at the value center, group, and world headquarters levels. CRBs
are staffed by members of the human resources department, legal
department, and/or finance department, and/or the compliance
official at each level and are responsible to ensure that the
Contractor's Responsibility Program is a formal and documented
process for investigating
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Administrative Compliance Agreement
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potential violations of the Code. CRBs also have the
responsibility of assigning investigative teams to address
potential violations of the Code after they are discovered and
reported. This process, as well as the responsibilities of the
CRBs, is set forth in Corporate Policy 40-13, "Compliance Issue
Handling and Communication," dated May 5, 2005.
(iii) Contractor has also appointed Ombudspersons at its Headquarters,
and at each of its groups, to receive and investigate reports of
possible violations of the Code.
(iv) All issues giving rise to an investigation by a CRB or
Ombudsperson will be registered and recorded in the Contractor's
"Compliance Tracking System" operated using EthicsPoint (see
below). This system is used to track and document all actions
taken from the beginning of the investigation until issue
resolution. The system is available by electronic means and has
various levels of security, as it is accessible by variously, the
CRB investigative team, the Ombudsperson, Legal Department, and
the Chief Ethics & Compliance Officer.
c. Ethics and Compliance Training.
(i) Code of Conduct Training. The Contractor provides training for
its employees regarding the Code and revisions thereto. For
example, the Contractor provided training in 2006 for its
employees following a 2006 revision to the Code. After providing
the training, the Contractor required that employees certify to
receiving the Code and participating in the training program.
This training has been revised and updated and will be provided
to employees during 2007.
(ii) Government Contracting Training. The Contractor provides
employees with Government contracting training opportunities. The
training program includes topics covering the more critical
issues faced by the Contractor when preparing for, entering into,
and administering Government contracts. The Contractor targets
certain employees who are directly involved with formation and
the performance of Government contracts to receive specialized
training in procurement laws, regulations, and policies. Like the
Code of Conduct training, employees are required to certify that
they attended the training and received a copy of the relevant
materials at the conclusion of the particular Government
contracts training course.
(iii) Frequency and Certification of Training. The Contractor conducts
and updates all ethics and Government contracting training and
employee certifications annually. The Contractor requires that
rosters of all employee certifications for ethics and Government
contracting training be maintained.
d. Government Contracting Policies and Procedures. The Contractor is
developing an updated set of Government Contracting Compliance
Policies and Procedures ("GCCP&P") setting forth the Contractor's
compliance obligations under relevant law and regulation. Specific
GCCP&P have been or will be created for specific value centers. The
Contractor will submit the GCCP&P(s) to the Army for review and, with
respect to those portions of the GCCP&P updated or issued after the
Effective Date,
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in advance of promulgation unless immediate promulgation is required
by law. The Contractor annually will review and update as necessary
the GCCP&P. Contractor management shall monitor employee compliance
with the GCCP&P, and consider such compliance when making decisions
concerning personnel decisions, including compensation.
e. Employee Telephonic and Web-based Hotlines. In addition to the CRBs
and Ombudsperson, the Contractor maintains a toll-free compliance
telephonic hotline operated by EthicsPoint which is available to
receive information 24 hours a day, 7 days a week.
(i) Contractor's hotline is available so that employees may report to
the Compliance Department any violations of the Code. In
reporting the alleged violation, employees are given the option
to do so anonymously, in accordance with local law and
regulation. Information on how to use or access the hotline is
readily available to all employees in work areas. Information
gathered and learned from the hotline is provided to the CRBs,
who will initiate investigations as appropriate.
(ii) Contractor, in addition to a telephone hotline, also uses
"EthicsPoint" as a database for recording alleged violations of
the Code. The Contractor, in addition to its telephone hotline,
also utilizes EthicsPoint to allow employees to report alleged
violations of the Code through the internet at
www.ethicspoint.com. Alleged violations of the Code are sent to
the CRBs for appropriate investigation.
f. Employee Newsletter. Contractor publishes a quarterly newsletter,
which provides employees with company information. As part of the
newsletter, the Contractor regularly prepares articles that serve to
inform employees on compliance issues and related matters.
g. Management Training Program. As part of its management development
program, Contractor's personnel receive training regarding ethical
behavior and adherence to the corporate compliance program. Personnel
identified for managerial positions are informed that the Code is
incorporated in employee performance assessments and is considered
when evaluating competency for advancement within the corporation, as
well as for compensation purposes.
h. Wallet-Sized Compliance Information. Contractor has prepared and
issued wallet-sized compliance information cards to all employees. The
card provides employees with the emergency contact information for the
Ombudspersons throughout the entire company and EthicsPoint, thereby
assisting employees in reporting violations 24 hours a day, 7 days a
week.
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2. Required Program Elements. The following steps and procedures shall be
implemented as part of this Agreement:
a. Code of Corporate Conduct.
(i) The Contractor shall maintain, and, as necessary, revise, the
Code to ensure that the Contractor maintains the business
integrity and honesty required of a Government contractor, and
that the Contractor's performance is in strict compliance with
the terms and conditions of its Government contracts.
(ii) The Contractor, when possible without violation of applicable
local law or regulation, shall add a requirement in the Code at
its next update that, in addition to the hotline and web-based
vendor service for reporting compliance issues, employees may
report any violation of the Code, whether committed by the
Contractor, a vendor, a subcontractor, or a Government employee.
(iii) Within 60 days of the Effective Date of this Agreement,
Contractor shall submit the latest edition of its Code to the
Army for written approval. If the Army objects to the Code as
failing to meet the requirements of this Agreement, Contractor
shall promptly revise the Code to meet the Army's objections and
resubmit it for approval.
b. Management Involvement and Overall Integration of Contractor
Responsibility Program.
(i) Within 90 days of the Effective Date of this Agreement, the
Contractor will implement a uniform system for reporting findings
of all complaints submitted through the CRBs, hotline,
Ombudsperson, EthicsPoint, or to the Independent Monitor. Such
system may utilize any means deemed appropriate to the
Contractor; however, at a minimum, the reporting system must
contain the following elements: 1) identification of the accused
individual (unless circumstances warrant protecting the
individual's identity further) and business unit; 2) a
description of the allegations; 3) a listing of the investigating
personnel; 4) the date of the initial report/complaint; 5) the
resolution to the issue; and 6) recommendation regarding
additional or preventative action to be taken. These reports
shall contain supporting documents collected during the course of
the investigation as attachments. This system, once approved by
the Army and the Independent Monitor, shall be applied to all
investigations. The Contractor will accomplish these goals
through the EthicsPoint system.
(ii) Within 120 days of the Effective Date of this Agreement, the
Contractor will develop and/or update its written corporate
policies and procedures to ensure uniform application of the
Contractor Responsibility Plan. These policies and procedures
shall be provided to the Independent Monitor and the Army for
review and will be the basis for the development of training
materials regarding the implementation of the Contactor
Responsibility Plan.
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c. Ethics and Compliance Training.
(i) Army Approval of Training Plans. Within 30 days of the Army's
approval of the update of the Contractor's GCCP&P, the Contractor
shall provide the Army and the Independent Monitor a training
plan with a detailed description of course materials it intends
to use in training classes. If the Army rejects the plan, the
Army will specify the reasons for doing so and the Contractor
will promptly propose another plan.
(ii) Notice of Training. Upon request, the Contractor will provide the
Independent Monitor and/or the Army a schedule of upcoming ethics
and Government contracting training sessions so the Independent
Monitor and/or the Army may attend the training.
(iii) Within 60 days of the approval of the training plan by the Army,
pursuant to paragraph (i) above, the Contractor shall commence
training of all employees directly involved with the formation
and performance of Government contracts, including specialized
training in laws, regulations, and contractor policies and
procedures related to Government contracting. These employees
shall sign and date a roster which may be in an electronic format
certifying they attended the training, received a copy of the
GCCP&P and were familiarized with its requirements. Within 90
days of being hired, the Contractor shall ensure that those
employees involved in the Government contracting process receive
training, a copy of the GCCP&P, and sign and date a roster
certifying they attended training and received and read a copy of
the GCCP&P.
d. Employee Hotline. The Chief Ethics & Compliance Officer shall ensure
that a record is maintained of all hotline submissions, or employee
reports to the CRBs, Ombudspersons, or Independent Monitor, using the
EthicsPoint system, to include: date and time of call; identity of
caller, if disclosed; summary of allegation or inquiry; and general
resolution or referral. The Contractor shall require that each call is
adequately investigated and resolved. Access to EthicsPoint will be
granted to the Independent Monitor solely to facilitate the duties
described in Section C.5(f) of this Agreement and, at its request, the
Army. The Contractor shall not assert an attorney-client or
work-product privilege with respect to the relevant contents of
EthicsPoint.
e. Notification to Employees of this Agreement. Within 60 days of the
Effective Date of this Agreement, Contractor's Chief Executive Officer
shall prepare and display, in places sufficiently prominent to be
accessible to all employees, a letter stating that the Contractor has
entered into this Agreement at facilities in the United States. A copy
of the Chief Executive Officer's letter will be forwarded to the Anny
for approval prior to distribution. The letter shall state:
(i) The basis for this Agreement;
(ii) Contractor's commitment to observe all applicable laws and
regulations, and to maintain the highest standards in conducting
business with the United States Government;
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(iii) A brief description of the features of the Contractor
Responsibility Program;
(iv) The toll-free telephonic hotline, EthicsPoint website, and
contact information of the Independent Monitor;
(v) The availability of the Chief Ethics & Compliance Officer or his
designee and the Independent Monitor to answer questions
concerning the Code;
(vi) Employees' ability to report matters to the Independent Monitor,
who will conduct an investigation, including a recommendation of
corrective action; and
(vii) That employees may make reports of violations of the Code
without revealing their identity, when such anonymity is possible
without violation of applicable local law or regulation.
f. On an annual basis, the Independent Monitor and the Contractor's Board
of Directors shall meet to discuss the implementation of this
Agreement, the status of ongoing investigations and other matters.
g. The Contractor shall submit written reports at the request of the
Independent Monitor for the purpose of preparing reports to the Army
as specified in Section C.7 of this Agreement.
The Contractor shall submit written reports at the request of the Independent
Monitor for the purpose of preparing reports to the Army as specified in Section
C.7 of this Agreement.
3. Investigations by Third Parties.
a. Subject to the provisions and requirements of the Deferred Prosecution
Agreement with the Department of Justice and Consent Agreement entered
into between the Contractor and the Department of State (the "Consent
Agreement"), the primary internal means of investigating violations of
the Code, including Government contracting regulations, and/or export
law and regulation by the Contactor shall be through and within the
Contractor Responsibility Program described herein. In certain cases,
the Contractor may engage the services of a third party, at its
discretion, to assist the Contractor in investigating allegations of
wrongdoing by the Contractor and/or its employees. Examples of cases
where third party investigations may be appropriate include those
which require special technical expertise on the part of the
investigator which is not otherwise available internally to the
Contractor, investigations of senior level (i.e. VicePresident or
higher) personnel, investigations which, due to their complexity,
would cause severe disruption to the operation of the business unit
affected or where the use of a third party is mandated by a government
authority, such as the Deferred Prosecution Agreement or Consent
Agreement referenced above, or law or regulation. Subject to the
Deferred Prosecution Agreement and Consent Agreement referred to
above, all investigations must be conducted within the framework of
the Contractor Responsibility Program.
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b. The Contractor shall, within 30 days of the Effective Date of this
Agreement, provide to the Independent Monitor and the Army, a list of
current internal investigations being conducted with the assistance of
third parties on behalf of the Contractor regarding violations of
Government contracting or export law or regulation This list shall
include the name of the third party conducting the investigation, the
general nature of the investigation subject matter, and the reason for
utilizing the resources of a third party to supplement the internal
investigation.
c. The Contractor shall provide notice to the Independent Monitor and the
Army within 7 business days of commencing any future internal
investigations regarding violations of government contracting or
export law or regulation that utilize a third party. This notice shall
include the name of the third party which will conduct the
investigation, the general nature of the investigation subject matter,
and the reason for utilizing a third party to supplement the internal
investigation.
d. As part of the quarterly report pursuant to Section C.7(a)(iii) of
this Agreement, the Contractor shall provide the Independent Monitor
with updates regarding the status of all open investigations regarding
violations of government contracting or export law or regulation where
third party resources are retained to support the investigation.
e. At the conclusion of any investigation regarding violations of
government contracting or export law or regulation whether conducted
using internal resources or by third parties, the Contractor shall
provide to the Independent Monitor a report of the findings of the
investigation and actions taken or to be taken in response to those
findings. This report will not be of a privileged nature and will be
included by the Independent Monitor as part of his or her regular
reports to the Army and other parties utilizing the services of the
Independent Monitor.
f. The use of a third party in an investigation by the Contactor does not
preclude a similar or simultaneous investigation by the Independent
Monitor pursuant to the provisions of Section C.3 of this Agreement.
4. Chief Ethics & Compliance Officer. The Contractor has appointed a Chief
Ethics & Compliance Officer to oversee its Corporate Responsibility Program. The
Chief Ethics & Compliance Officer has direct reporting responsibilities to the
Contractor's President and Chief Executive Officer, shall serve as the
Contractor's first point of contact for all questions regarding the terms and
conditions of this Agreement and Contractor implementation of this Agreement,
investigate complaints concerning Contractor's compliance with this Agreement,
and report to the Army concerning Contractor's compliance with this Agreement.
Any change in the Chief Ethics & Compliance Officer shall require prior Army
approval.
5. Independent Monitor.
a. General. The Independent Monitor is responsible for monitoring and
assessing the Contractor's compliance with the terms of this Agreement
to ensure that the Contractor performs its obligations in a timely and
satisfactory manner.
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b. Appointment. The Contractor has nominated Mr. John S. Pachter to serve
as an Independent Monitor at Contractor's expense for the oversight of
this Agreement. This nomination has been made in coordination with the
Department of Justice and the Department of State per the terms of the
Deferred Prosecution Agreement. Mr. Pachter's nomination has been
approved by the Army.
c. Removal of the independent Monitor. Any change of the Independent
Monitor appointed per this Agreement requires prior Army approval. At
any time, should the Army become dissatisfied with the performance of
the Independent Monitor, the Army may require the Contractor to
nominate a new Independent Monitor again subject to Army approval.
d. Nature of Employment. The Army intends for the Independent Monitor to
act as an independent check upon the Contractor's compliance with this
Agreement. The Independent Monitor shall not be an agent of the
Contractor, and his work shall not be subject to the Contractor's
assertion of the attorney-client privilege or the work-product
doctrine. The Army also intends that the Independent Monitor will work
with the Contractor's management team in implementing this Agreement.
The Independent Monitor will be consulted by both parties regarding
questions concerning the terms and conditions of this Agreement, and
will, at his discretion, investigate complaints concerning the
Contractor's compliance with this Agreement, and will report to the
Army concerning the Contractor's compliance with this Agreement. The
Independent Monitor may, as he reasonably requires, consult with other
counsel, at Contractor's reasonable expense, in performing any of his
responsibilities under this Agreement.
e. Annual Certification of Independence. Upon nomination, and upon each
anniversary of the Effective Date of this Agreement during its tenure,
the Independent Monitor shall furnish the Army with an affidavit
certifying that he has no financial interest in, or other relationship
with, the Contractor or its affiliates, other than that arising from
his appointment as the Independent Monitor. The affidavit must also
certify that his representation of any other client will not create a
conflict of interest or appearance thereof in fulfilling his
responsibilities as Independent Monitor. Any change in relationships
that would affect these certifications must be reported to the Army
before they occur or as soon as the Independent Monitor or Contractor
learns of them.
f. Duties. The Independent Monitor's duties shall include:
(i) Verification of the implementation of the Contractor
Responsibility Program described in Section C of this Agreement.
(ii) Investigation of allegations of violations of this Agreement and
matters arising under the Contractor Responsibility Program
involving violations of Goverrunent contract laws, rules, and
regulations, or other matters that raise questions concerning the
Contractor's present responsibility. For this purpose, the
Independent Monitor, at the conclusion of each of his
investigations, shall provide a written report to the
Contractor's Chief Ethics & Compliance Officer and to the Army,
detailing the substance of the allegations, evidence revealed by
the investigation, and the findings
11
Administrative Compliance Agreement
ITT Corporation
and recommendations. The Contractor shall take corrective actions
where appropriate. The Independent Monitor's complete
investigative file shall be furnished to the Army. This provision
does not preclude participation in the Department of Defense
Voluntary Disclosure Program.
(iii) Review of investigations made by the Contractor in accordance
with the provisions of Section C.3 of this Agreement.
(iv) Preparation and submission of reports to the Army as specified in
Section C.7 of this Agreement.
(v) Attending and monitoring employee training on the Code and
Government contracting as he deems appropriate.
(vi) On an annual basis, the Independent Monitor and the Contractor's
Board of Directors shall meet to discuss the implementation of
this Agreement, the status of ongoing investigations and other
matters. In addition, when necessary, but not less than
semiannually, the Independent Monitor shall meet with the
management of any of the Contractor's divisions, operating units,
groups, value centers and other subsidiaries, to discuss the
progress of implementing the Contractor Responsibility Program
described in Section C of this Agreement. Notice of such meetings
shall be provided to the Army by the Independent Monitor not less
than 30 days in advance to allow for attendance by the Army and,
if necessary, other parties to the Deferred Prosecution
Agreement.
(vii) Performance of other duties as described elsewhere in this
Agreement, or as deemed reasonably necessary by the Independent
Monitor, the Army, or the Department of Justice, to implement
this Agreement.
g. Staff. The Contractor agrees that the Independent Monitor shall:
(i) Have sufficient staff and resources, as reasonably determined by
the Independent Monitor, to effectively monitor the Contractor's
compliance with this Agreement; and
(ii) Have the right to select and hire outside expertise as reasonably
necessary to effectively monitor ITT's compliance with this
Agreement.
h. Fees and Expenses. The Contractor agrees to pay the reasonable fees
and expenses associated with an Independent Monitor for this Agreement
as negotiated between the Contractor and the Independent Monitor.
6. Deferred Prosecution Monetary Penalty. As part of the Deferred
Prosecution Agreement between the United States and the Contractor, the
Contractor agreed to a Deferred Prosecution Monetary Penalty of $50,000,000.00.
Payment of this penalty has been suspended by the United States for a period of
sixty (60) months. During that sixty (60) month suspension period, ITT may
reduce on a dollar-for-dollar basis the amount of the $50,000,000.00 Deferred
Prosecution Monetary Penalty, by up to $50,000,000.00, for monies spent to
accelerate and further the development and fielding of the most advanced night
vision technology.
12
Administrative Compliance Agreement
ITT Corporation
a. Accounting.
(i) Contractor further agrees to provide the Independent Monitor
quarterly reports detailing the monies spent as part of
offsetting the Deferred Prosecution Monetary Penalty. These
reports shall include, at a minimum, the following:
(1) The amounts expended;
(2) The nature of the expense;
(3) A brief description of how the expense qualifies under the
Deferred Prosecution Agreement as a corrective action
credit; and
(4) The total amount expended as of the date of the report.
(ii) Contractor shall provide reports to the Army Official designated
in Attachment 3 to this Agreement, for the purpose of monitoring
development and fielding associated with the Deferred Prosecution
Monetary Penalty Implementation. The frequency of and information
to be included in these reports shall be specified to the
Contractor by the designated Army Official.
7. Reports to the Army.
a. The Independent Monitor shall submit a quarterly report to the Army
that is postmarked no later than seven days after the first day of
October, January, April, and July, as appropriate, of each year that
this Agreement is in effect, until this Agreement has expired. The
report shall include:
(i) A description of the training conducted that is required by this
Agreement and the number of persons who attended, including a
statement of the percentage of total employees trained year to
date as of the date of the report.
(ii) The total number of hotline calls and other contacts made or
referred to the Independent Monitor. This part of the report
shall include:
(1) The means by which any alleged misconduct was reported
(e.g., call, letter, or drop-in visit, electronic means,
etc.);
(2) The category of any alleged misconduct (e.g., product
substitution, mischarging, defective pricing, etc.) and a
brief descriptive summary thereof,
(3) Whether the alleged misconduct was substantiated, in whole
or in part;
(4) Whether disciplinary action was imposed and if so, a
description of that action;
13
Administrative Compliance Agreement
ITT Corporation
(5) Whether corrective measures other than disciplinary actions
were taken and if so, a description of those actions.
Matters pending resolution at the time of a reporting period
shall be included in each subsequent report until final
resolutions of the matters are reported;
(iii) Whether any investigations utilizing third party resources have
been initiated and the status of previously reported
investigations utilizing third party resources as required by
Section C.3(d) of this Agreement.
(iv) The status of expenditures made for the Deferred Prosecution
Monetary Penalty reduction as required by Section C.6(b) of this
Agreement.
b. In addition, the Contractor and the Independent Monitor shall submit a
report to the Army that is postmarked no later than 14 days after the
third anniversary date of the Agreement reviewing the Contractor's
compliance with the Agreement and the ethics environment within the
company. The report shall be reviewed by the Army and a review of the
Contractor's performance under this Agreement and the Deferred
prosecution Agreement shall be made to the SDO by the Independent
Monitor. This report , at a minimum, shall include a discussion of the
following:
(i) The state of the Contractor's compliance programs, including
progress made by the company during the term of the ACA;
(ii) A discussion of Contractor's training program and its compliance
with this requirement;
(iii) A summary of actions as Independent Monitor;
(iv) A list of recommendations and/or "lessons learned"; and
(v) A discussion of any other topic relevant to the Agreement.
c. At the conclusion of the Agreement, the Independent Monitor shall
prepare a report for review by the Army SDO. This report shall include
information regarding investigations conducted by the Independent
Monitor, information regarding the Contractor's implementation of the
Contractor Responsibility Program, a summary of hotline calls reviewed
pursuant to this Agreement, a summary of expenditures under the
Deferred Prosecution Monetary Penalty and any other topics requested
by the Army.
D. GENERAL CONDITIONS
1. Unallowable Costs. All unallowable costs, as described in FAR 31.205-47,
incurred for or on behalf of Contractor in response to or in preparation of
Government criminal, civil, or administrative actions related to alleged
violations described in the Section A of this Agreement, and all costs incurred
by Contractor in negotiating this Agreement, the Deferred Prosecution Agreement,
or Consent Agreement shall be deemed unallowable costs, direct or indirect, for
Government contract purposes. These unallowable amounts shall be separately
accounted for by
14
Administrative Compliance Agreement
ITT Corporation
the Contractor by identification of costs incurred: a) through accounting
records to the extent possible; b) through memorandum records, including diaries
and formal logs, regardless of whether such records are part of official
corporate documentation, where accounting records are not available; and c)
through good faith itemized estimates where no other reasonable accounting basis
is available.
a. Costs incurred in the reduction of the Deferred Prosecution Monetary
Penalty are specifically designated as unallowable costs. This
prohibition includes the direct or indirect inclusion of these costs
in any claim for payment or reimbursement made against the Government
by the Contractor.
2. Allowable Costs. The costs of all self-governance normally required
under FAR 9.104-1 and DFARS 203.7001, including the compliance, or ethics
programs, activities and offices in existence as of the Effective Date and which
are continued by the terms of this Agreement shall be allowable costs to the
extent otherwise permitted by law and regulation.
3. Modifications of This Agreement. Any requirements imposed on Contractor
by this Agreement may be discontinued by the SDO at his sole discretion. Other
modifications to this Agreement may be made only in writing and upon mutual
consent of the parties to this Agreement.
4. Approvals. Where this Agreement requires approval by the Army, or other
action or response by the Army, the Chief, Procurement Fraud Branch or his/her
designee, will normally provide such action. This does not restrict the ability
of the SDO to take such action as he may elect.
5. Business Relationships with Suspended or Debarred Entities. Contractor
shall not knowingly subcontract or enter into any business relationship in
support of a U.S. Government prime contract with any individual or business
entity that is listed by the General Services Administration (GSA) as debarred,
suspended, or proposed for debarment. In order to implement this provision, the
Contractor shall make reasonable inquiry into the status of any such potential
business partner, to include, at a minimum, review of the GSA's Excluded Parties
List System./1
6. Public Document. This Agreement is a public document. It, and any
attachments, appendices, addendums and/or modifications, will be posted on the
publicly assessable Army Fraud Fighter's Website./2
____________________
1/ Available at:
http://www.epls.gov/epls/servlet/EPLSSearcMain/1
2/ Available at:
https://www.jagcnet.army.mil/JAGCNETInternet/Homepages/AC/ArmyFraud.nsf'
(JAGCNetDocID)/HOME? Open Document.
15
Administrative Compliance Agreement
ITT Corporation
7. Release of Liability. Contractor releases the United States, its
instrumentalities, agents, and employees in their official and personal
capacities, of any and all liability or claims, monetary or equitable, arising
out of the negotiation of, and entry into, this Agreement.
8. Legal Proceedings. Contractor will provide, within 30 days of the entry
into force of this Agreement, a listing and status of all known ongoing
criminal, civil and administrative investigations and proceedings conducted by
any Government entity with regard to any allegation relating to the Contractor's
violation of government contracts or export law or regulation.
9. Information Sharing. The Contractor agrees that the Army and/or the
Independent Monitor, at their sole discretion, may disclose to any Government
department or agency any information, testimony, document, record or other
materials provided pursuant to this Agreement. Such disclosures shall be subject
to 18 U.S.C. ss. 1905 and other applicable exemptions to the Freedom of
Information Act.
10. Scope of This Agreement - Suspension and Debarment for Independent
Cause. This Agreement in no way restricts the authority, responsibility, or
legal duty of the Army, or any other federal agency to consider and institute
suspension or debarment proceedings against the Contractor based upon
information constituting independent cause for suspension or debarment
concerning events related or unrelated to the facts and circumstances set out
herein, including, but not restricted to, any substantive allegations of
wrongdoing under any past, present, or future hotline complaint or security
program investigations. The Army or any other federal agency may, in its sole
discretion, initiate such proceedings in accordance with the FAR Subpart 9.4.
a. The Army reserves the right to require additional protective measures
or modifications of this Agreement if an independent cause for
suspension or debarment should arise. Failure to institute such
proposed measures may constitute an independent cause for debarment of
the Contractor in accordance with FAR Subpart 9.4.
b. Suspension and/or debarment may be initiated at any time under the
same facts and circumstances underlying this Agreement should further
information become available that indicates such action is necessary
to protect the Government's interests.
c. Upon conclusive evidence that the Contractor has misrepresented any
aspect of its proffer in connection with this Agreement, the Army may
take suspension or debarment action as appropriate. Any such
misrepresentation or material breach of this Agreement will be
regarded as cause for debarment.
11. Survival of This Agreement. This Agreement shall inure to the benefit
of, and be binding upon, the parties and their respective successors and
assigns, unless the new owners request and show good cause why it should not be
applicable to their operations. Bankruptcy proceedings shall not prevent or stay
the enforcement of this Agreement or any debarment proceedings the Army deems to
be appropriate should the parties fail to comply with the terms of this
Agreement, or engage in such other conduct that is a cause for suspension or
debarment.
16
Administrative Compliance Agreement
ITT Corporation
12. Truth and Accuracy of Submissions. Contractor represents that all
written materials and other information supplied to the Army by its authorized
representatives during the course of discussion with the Army preceding this
Agreement are true and accurate in all material respects, to the best of the
Contractor's information and belief, false statements are punishable under Title
18, United States Code, Section 1001.
13. Violations of this Agreement. Any violation of this Agreement that is
not corrected within ten days from the date of receipt of notice from the Army
may constitute an independent cause for debarment. If correction is not possible
within ten days, the Contractor shall present an acceptable plan for correction
within that ten-day period. The Army may, at its sole discretion, initiate
suspension or debarment proceedings in accordance with FAR Subpart 9.4.
Alternatively, in the event of any noncompliance, the Army may in its sole
discretion extend this Agreement for a period equal to the period of
noncompliance. Contractor does not, by this Agreement or otherwise, waive its
right to oppose such action under FAR Subpart 9.4, or any other substantive,
procedural, or due process rights it may have under the Constitution or other
applicable laws or regulations of the United States.
14. Press Releases. The Contractor agrees that it will cooperate in good
faith with the Army regarding any press release related to this Agreement. The
Contractor will not unilaterally release any press release related to this
Agreement without first obtaining Army approval, which the Army agrees to timely
review and not to unreasonably withhold.
15. Agreement. This Agreement, and its attachments, constitute the entire
agreement between the Army and the Contractor, and supersedes all prior
agreements or understandings, oral or written, with respect to the subject
matter of this action. This Agreement shall not supersede the Deferred
Prosecution Agreement with the Department of Justice or the Consent Agreement
with the Department of State.
E. ADMINISTRATION OF AGREEMENT
1. Addresses for Agreement Correspondence. All submissions required by this
Agreement shall be delivered to the following addresses, or such other addresses
as the parties may designate in writing.
If to the Army:
Procurement Fraud Branch
Contract and Fiscal Law Division
U.S. Army Legal Services Agency
ATTN: DAJA-PFB (Brian A. Persico)
01 North Stuart Street - Suite 700
Arlington, Virginia 22203-1837
If to the Contractor:
Ann D. Davidson
Chief Ethics and Compliance Officer
17
Administrative Compliance Agreement
ITT Corporation
ITT Corporation
4 West Red Oak Lane
White Plains, NY 10604
2. Certification of Compliance. Within 120 days of the Effective Date of
this Agreement, Contractor will provide the Army with a certification that all
terms and conditions of this Agreement have been implemented or will be
satisfied within the times specified in this Agreement.
3. Access to Books and Records.
a. During the term of this Agreement, the Army Procurement Fraud Branch
(PFB), the Independent Monitor or any agency or office of the
Department of Defense designated by PFB for a particular inquiry,
shall have the right to examine, audit, and reproduce Contractor's
books, records, documents, and supporting materials related to any
report, allegation or complaint of suspected violation of law or
regulation, whether criminal, civil, administrative, or contractual
and whether reported through the hotline program, or by any other
means, and any resulting inquiries or investigations related thereto.
Such hotline reports, inquiries, investigations, and all related
books, records, documents and supporting material are considered by
Contractor to be administrative and managerial and are not
investigations, books, records, documents, material, reports, or
investigations protected by the attorney-client privilege or any other
privilege.
b. PFB, the Independent Monitor and/or their designees shall have the
opportunity to review the books, records, documents, materials,
reports, and investigations directly related to compliance with this
Agreement.
c. PFB, the Independent Monitor and/or their designees shall also have
the opportunity to interview any Contractor employee for the purpose
of evaluating: (1) compliance with the terms of this Agreement; (2)
future compliance with federal procurement policies and regulations;
and (3) maintenance of the high level of business integrity and
honesty required of a Government contractor.
d. The interviews and materials described above shall be made available
to PFB, the Independent Monitor and/or their designee(s) at company
offices at reasonable times. Contractor's obligation under this
Agreement with respect to employee interviews is limited to making its
employees available for an interview at their place of employment
during normal business hours. The individual employee shall have the
right to determine whether or not to submit to an interview. To the
extent it is permitted to do so by law, regulation, or policy, the
Army shall protect Contractor's confidential and proprietary business
information from public disclosure.
e. The materials described above shall be made available at Contractor's
offices at reasonable times for inspection, audit, or reproduction.
Neither PFB, the Independent Monitor nor their designees shall copy or
remove Contractor's technical or other proprietary data without
Contractor's permission.
18
Administrative Compliance Agreement
ITT Corporation
4. Corporate Officer List. Contractor shall provide the Army with a list of
its directors and officers and a copy of its organizational chart, which will be
updated, as changes occur.
5. Administrative Costs. Within ten days of the Effective Date of this
Agreement, Contractor shall deliver a check in the amount of $25,000.00 to the
Army, payable to Treasurer of the United States, in order to compensate the Army
for the cost of negotiating and administering this Agreement, to include costs
associated with Army visits to Contractor and any of its divisions or its
subsidiaries authorized under this Agreement.
6. Expiration. This Agreement shall expire at midnight not later than five
years after the Effective Date of this Agreement.
7. Governing Law. This Agreement shall be governed by the laws of the
United States with regard to all matters arising under and individuals located
within the United States.
/s/ Steven R. Loranger /s/ Robert N. Kittel
- ------------------------------------- --------------------------------------
STEVEN R. LORANGER ROBERT N. KITTEL
Chairman, President and Army Suspension and Debarment Official
Chief Executive Officer
ITT Corporation
10/04/07 10/11/07
- ------------------------------------- --------------------------------------
DATE DATE
19
Administrative Compliance Agreement
Attachment 3
Deferred Prosecution Monetary Penalty Implementation
1. Purpose and Duration. This Attachment addresses the implementation of
the effort to be undertaken by ITT Corporation ("Contractor") with respect to
the conversion of the Deferred Prosecution Monetary Penalty of fifty million
dollars ($50,000,000.00), to a credit, as discussed in Paragraph 22.d of the
Deferred Prosecution Agreement ("DPA"). This Agreement was entered into between
the United States Department of Justice ("DOJ") and the Contractor on 28 March
2007 (See Attachment 1 to the Administrative Compliance Agreement) and permits
the Contractor to engage in activities to accelerate and further the
..development and fielding of the most advanced night vision technology over a
period of a maximum period of sixty (60) months, beginning on the date of the
DPA's entry into force.
2. Research Proposals.
a. Dates of Submission. Within 30 days of the Effective Date of the
Administrative Compliance Agreement (ACA), the Contractor shall submit
the first series of Research Proposals regarding the expenditure of
the Deferred Prosecution Monetary Penalty Implementation from 28 March
2007 through 31 December 2007. On or before 31 October 2007, the
Contractor shall submit Research Proposals covering the 12-month
period starting January 1, 2008. Future Research Proposals shall be
submitted annually on 31 October covering the 12-month period for the
following calendar year until the expenditure of the entire amount of
the Deferred Prosecution Monetary Penalty or the end of the 60-month
period, whichever occurs first.
(i) Research Proposals may include status reports regarding "work in
progress" of previously approved projects to fulfill the annual
submission requirements. See Section 2.d of this Attachment.
(ii) The term "Research Proposals", in the context of this Attachment,
is meant to describe a list of possible topics by the Contractor
to accelerate and further the development and fielding of the
most advanced night vision technology. The number and subject
matter of the topics presented is at the discretion of the
Contractor.
b. Scope Proposals. Research Proposals submitted by the Contractor shall
address specific approaches to accelerate and further the development
and fielding of the most advanced night vision technology. Each
Research Proposal shall be submitted for review and approval to the
United States Army Research, Development & Engineering Command,
Communications and Electronics Research and Development Center, Night
Vision & Electronic Sensors Directorate ("NVESD"). At a minimum, each
Research Proposal shall include the following features:
(i) Identify specific topics to be worked on during the yearly period
including the technical objectives, approach, and rationale.
(ii) Research Proposal schedule including technical milestones and
proposed NVESD technical reviews. An annual technical review
shall take place at the completion of each one year effort.
1
Administrative Compliance Agreement
Attachment 3
(iii) Estimated dollar value of the effort. Cost estimates shall be
itemized for each technical milestone in the following areas: 1)
engineering labor, 2) materials, 3) costs associated with the use
of subcontractors, and 4) other costs.
(iv) Identification and rationale of any proposed capital equipment or
prototype fabrication testing to accelerate the fielding of the
most advanced night vision technology.
(v) Validation criteria for each technical milestone, including data,
simulations, demonstrations and/or deliverables.
c. Interim Changes. At any point during the performance of an approved
research project, the Army reserves the right to request additional
topics, to broaden an existing topic or inform the contractor that the
topic is no longer eligible to reduce the Deferred Prosecution
Monetary Penalty. Such allowable deviations from approved topics may
be made in writing to ITT by NVESD to the points of contact listed in
Section 4 of this Attachment or their designated successors.
d. Work In Progress. Research projects that need to extend beyond a
12-month period shall be identified in the original project's
submission, together with the rationale for the extended period, and
shall identify appropriate milestones in the proposed schedule. Such
efforts shall be started upon approval by NVESD of the proposed topic,
and may continue beyond the 12-month timeframe until the project
reaches its "logical conclusion" or the contractor is told that the
project is no longer eligible to reduce the Deferred Prosecution
Monetary Penalty. The Contractor and NVESD shall consult with each
other throughout the progress of research.
3. Research Proposal Approval Process.
a. Review of Submissions. NVESD will review each project and provide
written approval or disapproval of each specific topic that ITT
proposes receiving credit for expenditures on the project against the
$50,000,000.00. The Army, through its representative, NVESD, may, at
its discretion, accept or reject applying credit for topics undertaken
by the Contractor to meet the requirements of the DPA.
b. Selection of Research Projects. The Contractor shall provide a list of
proposed projects to NVESD in the format described in Section 2 of
this Attachment. NVESD may then select any, all or none of the
individual topics submitted by the Contractor for approval of credit
against the $50,000,000.00 at its sole discretion. NVESD may also
request additional information or clarification of an individual topic
from the Contractor to assist in making this determination.
c. Resubmissions of Rejected Proposals. The Contractor will be given
thirty (30) calendar days to amend and re-submit revised topics based
on the review guidance provided by NVESD, if deemed appropriate.
Resubmitted topics will be reviewed with the same criteria and in the
same manner as the original projects. As part of the review guidance,
NVESD may also, at its discretion, inform the Contractor that the
resubmission of a particular topic is not required for technical, cost
or other reasons.
2
d. Commencement of Work. The Contractor is authorized to begin work on an
approved topic at any time after receiving a written confirmation of
approval of a topic from NVESD.
e. The Department of Justice will act as the final arbiter of eligibility
for credit against the Deferred Prosecution Monetary Penalty.
4. Reports to the Army.
a. ITT shall provide an interim milestone report not later than thirty
(30) calendar days after each technical review and an annual report
not later than thirty (30) calendar days after the completion of each
annual review to the following Army Official at NVESD:
Philip Perconti
Night Vision Electronic Sensors Directorate
AMSRD-CER-NV-ST
10221 Burbeck Road
Fort Belvoir, VA 22060
b. The interim milestone and annual reports shall contain both a
technical section and a cost section. NVESD shall review and approve
the technical section. NVESD shall forward the cost section of the
reports to the Independent Monitor appointed by the ACA for review.
The Independent Monitor shall send a copy of any comments based upon
its cost review to NVESD, the Assistant Secretary of the Army for
Acquisition, Logistics and Technology, and the United States Attorney
for the Western District of Virginia.
c. Approval of both the technical and cost sections of each annual report
is required for the associated expenditures to be accepted as partial
fulfillment of the Contractor's obligations under Paragraph 22.d of
the DPA by DOJ with input from the Army.
d. The NVESD shall designate alternate or additional Army Officials as
needed and shall inform the Contractor of such changes as they occur.
5. General Provisions.
a. Extensions of Time. Requests for extensions of time for the submission
of any of the proposals, reports or other materials required by this
Attachment must be submitted in writing to NVESD not later than ten
(10) working days in advance of the date which they are due. Requests
for extensions of time may only be granted for good cause as
demonstrated by the Contractor, with the length of time to be granted
to be determined by NVESD. NVESD will provide a written approval or
disapproval to any such request, with a copy provided to the
Independent Monitor.
b. Costs. No costs associated with the work accomplished per the Research
Proposals submitted in accordance with this Attachment or costs
directly associated with any of the requirements of those plans are
recoverable by the Contractor as allowable costs.
3
The Contractor may not attempt to recover any portion of these funds
either directly or indirectly as part of an overhead or G&A pool. The
Army expressly reserves the right to seek any and all criminal, civil
and administrative remedies should the Contractor attempt to recover
any portion of these funds either directly or indirectly from the
Government.
c. Government Purpose Rights. The Contractor will provide to the
Government "Government Purpose Rights," as defined by DFARS
252.227-7013, in any computer software produced, or partially
produced, and in any technical data related to any item, component, or
process developed, or partially developed, in connection with the
efforts described in this document in accordance with Paragraph 22.d
of the DPA. Such computer software and/or technical data shall be
deliverable upon NVESD's request at no cost.
d. Expiration of Terms. This Attachment shall remain in force for the
duration of the ACA between the Army and the Contractor. Any portion
of the )Deferred Prosecution Monetary Penalty not converted to credits
at the end of the sixty (60) month duration of the DPA shall be
accounted for by the Contractor to the Independent Monitor not later
than 29 March 2012. A copy of this report shall also be provided to
NVESD.
e. Incorporation by Reference. The undersigned parties agree that the
terms and conditions of the ACA between the Army and the Contactor, in
their entirety, are incorporated by reference into this Attachment.
/s/ Steven R. Loranger /s/ Thomas H. Killion
--------------------------------- -----------------------------------
STEVEN R. LORANGER DR. THOMAS . KILLION
Chairman, President and Deputy Assistant Secretary Official
Chief Executive Officer for Research and Technology,
ITT Corporation Chief Scientist
Department of the Army
10/04/07 24 Sep 2007
--------------------------------- -----------------------------------
DATE DATE
4