Dr. J.P. (Jack) London, CACI Chairman, President and CEO

Ethics in the Workplace

Good morning. It's a pleasure to be here. Thank you Dr. Alan Merten for the introduction. I know the Century Club plays an important role, creating partnerships between this fine university and local businesses. Companies like mine rely on schools like George Mason for a supply of highly educated and trained people. We are looking for people that can help make CACI a success. And we hope that, in turn, our experiences will benefit your students and faculty as well.

It's also an honor to be making this presentation today before so many friends and distinguished colleagues. So let's talk a bit about Ethics and Ethics Leadership in the marketplace.

Ladies and gentlemen, a year ago you couldn't pick up a newspaper without finding an article about scandal in public corporations in America. The news was, sadly, full of stories about fraud and abuse, lost livelihoods and retirement dreams and a decline in investor confidence in the public companies of America.

Well, some things have changed. You don't see so many daily headlines on corporate misconduct - they are getting more rare, and progress has been made in bringing the wrongdoers to justice. Some of the major players - at companies like Enron, WorldCom and Tyco - have been indicted, charged and, in some cases, convicted. And in August of this year President Bush's Corporate Fraud Task Force was able to celebrate its first anniversary with a solid record of accomplishment, including

• 250 convictions for corporate fraud
• 354 defendants charged with fraud crimes, and
• more than $85M collected in fines and restitution

So the good news is that the abuses and crimes are being addressed. But problems from these scandals remain. The loss of investor confidence and faith in American business has permeated our society and our economy - and the damage is felt from Wall Street to Main Street. And the importance of business ethics remains, which is what brings us, of course, all here today. In fact, investor confidence is more important than ever, with 58% of American adults having investments in the stock market!

Ladies and gentlemen, I'm a businessman. I run a company. Soon to be a billion-dollar company! To me, ethics is not just a concept. It's not an abstract debate about principles or viewpoints. And it doesn't just pertain to public corporations as such. Ethical behavior is a standard for any organization. As the Chairman and CEO of a NYSE public corporation, to me, ethics is about leading a well run operation, where employees obey the law and comply with applicable rules and regulations… and at the same time are producing quality products and services and creating value for our shareholders.

I'm sorry that the misdeeds, at just a handful of companies, have held public attention for so long. The vast majority of American corporations - thousands upon thousands of them - have just gone about their business, doing their jobs and helping make America the economic leader of the free world. But these companies don't make the headlines. Now, do they?! And, while reform efforts like the Sarbanes-Oxley legislation, out of Congress in 2002, are important, I would like to add a word of caution: Ladies and gentlemen, people who commit corporate crimes are aware of the law. They just think they can break the law and get away with it. That's what crooks and criminals do! Break the law!

I'm concerned that, on the other hand, in our drive to make sure that these crimes don't happen again, we'll create laws that won't deter the hardened criminals and crooks out there, but will hinder millions of honest business people in their daily work. So some caution and care is needed. William H. Donaldson, Director of the Securities and Exchange Commission (the SEC), stated recently that, "Companies must look beyond just conforming to the letter of the new laws…" because "a 'check-the-box' approach to… corporate governance will not inspire a true sense of ethical obligation. It could merely lead to an array of inhibiting, 'politically correct' dictates." If such an inflexible approach were taken, he warned, (companies) "would lose the freedom to make (the) innovative decisions that an ethically sound entrepreneurial culture requires."

Ladies and gentlemen, in my opinion, enforcement is the key and not reform alone. If we want to wipe out corporate fraud in America we should throw the book at those who have broken the law and make them pay for their crimes. However, for many companies - including those represented here today - the "renewed" interest in ethics is not all that new. For many of us ethics are really business as usual. At CACI we've known all along the important and fundamental role that sound ethics, values and integrity plays in a company's operations.

Why do we care so much about ethics? Because ethics are what make an organization run smoothly. Employees doing their jobs with integrity and high standards... treating their customers and coworkers with respect… ensure a smooth, effective operation. Customers know the products and services are first rate, and investors are confident that their money will bring a good return. Ethics build trust and inspire leadership within the organization. At the same time, they create and maintain customer confidence.

Furthermore, contrary to those in the business community who believe that ethics are just a "cost" of doing business, I submit that - ethics are not only good business practice, they have a positive influence and impact on the bottom line. A recent study conducted by the New York-based management consultants of Burson Marsteller, for example, showed that a CEO's reputation for ethical practices enhanced a company's ability to attract investment capital, recruit the best employees and increase shareholder value.

In another recent study companies that had ethics programs in place ranked an average of 50 places higher on the Business Week 500 list.

I could go on and on, but the point is that the most ethical companies are also the best run companies, and this again translates into well satisfied customers, high caliber recruits, investor confidence and increased shareholder value. Further, ethics and leadership go hand in hand. Without a vision, a sense of integrity and a commitment to quality you cannot lead in business… at least for very long. As the leader, you set the ethical tone for your company. More than anyone else, the culture of the company derives from your convictions, your principles and your behavior.

A recent study conducted by the Ethics Resource Center found that 90% of employees value leaders with integrity as highly as they value company income (profits) - and that when executives demonstrate integrity, employees will follow suit. As the person at the top you are the one who is most accountable. When things go well you get to take credit, and when things don't go so well you take the blame. But that goes with the job, because as CEO, you're building a company, not just a product.

Again, I quote SEC Chairman William H. Donaldson. He said: "In particular, we must all remember that honest and dedicated chief executives must have the freedom to run the corporation… and do so in a way that permits leadership, entrepreneurship and the taking and management of risks that have been characteristic of American business."

How do we demonstrate the ethical standards that are in place at CACI? At CACI, ethics is embedded in our culture - it's instilled in every aspect of what we do, from the way we follow the rules to the way we interact with each other. You can see our ethics at work in our everyday operations, and in

• The way we adhere strictly to all government accounting and contracting regulations.
• The quality we put into our products, shown in our prestigious ratings from the International Organization for Standardization.
• The way we honor all of our obligations in dealing with sensitive and classified work for the U.S. government.

How do we instill ethics in the workplace at CACI? We've found that a simple approach using the three Rs lets us achieve this goal. Our three Rs of ethics are

• Recognition,
• Rewards, and
• Redress

I'll start with Recognition. Our record of success in over 42 years in business derives from recognizing one simple principle: Integrity and honesty above all else. Our values are clearly laid out in several of our corporate documents, including our Code of Ethics, our Business Conduct Standards and our Operational Philosophy.

All new CACI employees are thoroughly trained in our ethics policies, and learn exactly what is expected of them. Further, all employees sign a Certification of Understanding and Compliance every year. But, as Barry Gibbons, business writer and former CEO of Burger King, observes: "the only missions, values and ethics that count in your company are those that manifest themselves in the behavior of all the people, all the time."

So at CACI, each employee's annual performance appraisal includes an evaluation of his or her commitment to ethics. Just as we evaluate our employees' technical competence, we also evaluate their commitment to our Credo, to acting responsibly, and to treating their coworkers and customers with dignity and respect. We also include frequent discussions of the importance of ethics in the "Chairman's Notes" that I write and prepare, and that are broadcast company-wide over our company intranet.

But recognition of ethical behavior is not just lip service - we also Reward ethical behavior. For example, we will present CACI's Ethos Award to individuals who exhibit the highest standards in integrity, honesty and respect for others. This quarterly award consists of a modest gift and, more importantly, recognition from their peers at an awards banquet. We also use the company intranet to publicize kudos for jobs done with high standards and added value, especially with comments of appreciation we receive from our clients.

And, finally, Redress. When problems arise we address them immediately. We understand that no one is perfect and that people do make mistakes. So we have procedures in place to correct mistakes, resolve disputes and, if necessary, punish wrongdoing. We foster an environment of open communication - employees know they can report problems or suspected wrongdoing without fear of reprisal. And we offer several venues for such an eventuality, including a toll-free hotline, an Ombudsman and an Internal Audit Department.

In concluding, I'd like to share some experiences we've had. I'd like to share with you two of our biggest success stories in instilling ethical behavior in our workplace. The first concerns our integration of some 3000 employees who have joined the CACI team since 1997, as a result of our mergers and acquisitions program. Since they came from different cultures, it was critical that we successfully unite all of them under one value system. During a two-day orientation all new employees are instructed in our Code of Ethics and our Business Conduct Standards, and their responsibilities in supporting the compliance program that we've outlined.

Today, a full half of our workforce of nearly 7000 people has come from some 23 other companies that we have acquired over the last decade. Despite this diversity of background, our operations are running smoothly, our business is growing and I am proud to say that we have never had a major violation or breach of security in any of the sensitive material we handle. So trouble free M&A integration is a result.

My second success story involves the way we ensure the highest quality support for our clients. CACI has developed a program that we call Project Excellence+, which we use to measure customer satisfaction. In this highly successful program we combine self assessments, customer surveys and third-party evaluations to obtain candid feedback from all of our clients, partners, subcontractors and vendors. If we find any areas that do not meet the customer's desired standard we pledge to fix the problem within 90 days. In reality, problems are usually corrected within 30 days. This program has been in place at CACI for many, many years and is a true winner for us. And believe me, we are not about to change this terrific program. So consistent, high quality, trouble free projects are a result.

Ladies and gentlemen, we live in a new era - one where ethics and accountability are as important a measure of performance as the bottom line. As he signed the Sarbanes-Oxley bill into law President Bush said: "Tougher laws and stricter requirements will help… Yet ultimately the ethics of American business depend on the conscience of America's business leaders."

Ladies and gentlemen, I believe this is our mandate: To establish a bottom line where ethics and profits converge and to help America's business regain its rightful place as the leader, and the example, to all the free world.

Thank you.