PGMP · Question #390
A Project Manager has been working on quality process of a project at a major electronics manufacturer. This manufacturer is involved with various government and defense contracts as well. The…
The correct answer is A. Report this to the company. An employee is selling declared-scrap materials for personal profit at a company with defense contracts, which may constitute fraud or theft. The PM should report this to the company first.
Question
A Project Manager has been working on quality process of a project at a major electronics manufacturer. This manufacturer is involved with various government and defense contracts as well. The Project Manager discovers that an employee has been reselling some repair material that he has declared as scrap material because they were discontinued, at a small profit on the internet. The item is very costly. What should the Project Manager do?
Options
- AReport this to the company
- BReport this to Homeland Security
- CReport this to General Accounting Office (GAO)
- DReport the employee to the local authority
How the community answered
(25 responses)- A80% (20)
- B12% (3)
- C4% (1)
- D4% (1)
Why each option
An employee is selling declared-scrap materials for personal profit at a company with defense contracts, which may constitute fraud or theft. The PM should report this to the company first.
Reporting the misconduct to the company is the correct first step because the company - particularly given its government and defense contracts - has internal compliance and legal processes designed to investigate and address such violations properly. The company's management has the authority and obligation to investigate potential fraud, inventory misappropriation, or regulatory violations. Internal reporting ensures the proper chain of authority is engaged before any external reporting to government agencies.
Reporting directly to Homeland Security bypasses the company's internal compliance process and would be appropriate only if the company fails to act or if there is evidence of a direct national security threat.
The GAO audits government programs but is not the first point of contact for reporting internal employee misconduct at a defense contractor.
Reporting to local law enforcement before engaging the company's internal compliance team skips the required internal escalation and may fall outside local jurisdiction.
Concept tested: Internal reporting of employee misconduct at defense contractors
Source: https://www.pmi.org/about/ethics/code
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