Display of DoD Inspector General Fraud Hotline Posters (DFARS Case 2010-D026)

Summary:

DCN 20110916 includes a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to require contractors to display the DoD fraud hotline poster in common work areas.

Supplementary Information:

I. Background

This final rule implements the recommendations of the DoD Inspector General (IG) by providing a DFARS clause to use in lieu of the FAR clause at 52.203-14, Display of Hotline Poster(s).

Government Accountability Office (GAO) Report GAO-09-591, entitled "Defense Contracting Integrity: Opportunities Exist to Improve DoD's Oversight of Contractor Ethics Programs," recommended that the DoD IG determine the need for defense contractors to display the DoD IG's fraud hotline poster.

The DoD IG determined that DoD contractors, including contractors that have an ethics and compliance program that includes a reporting mechanism such as a hotline poster, need to display DoD fraud hotline posters in a common work area within business segments performing work under the contract and at contract work sites.

FAR 52.203-14(c) states that "(i)f the Contractor has implemented a business ethics and conduct awareness program, including a reporting mechanism, such as a hotline poster, then the Contractor need not display any agency fraud hotline posters, other than any required DHS posters." The DoD IG determined that this exemption has the potential to make the DoD hotline program less effective by ultimately reducing contractor exposure to DoD IG fraud hotline posters and diminishing the means by which fraud, waste, and abuse can be reported under the protection of Federal whistleblower protection laws. According to the DoD IG, some contractors' posters may not be as effective as the DoD poster in advertising the hotline number, which is integral to the fraud program. The DoD IG is also revising the DoD IG fraud hotline poster to inform contractor employees of their Federal whistleblower protections.

Therefore, the prescription for use of the new DFARS clause provides no exception to the use of the DoD hotline poster for contractors that have implemented a business ethics and conduct awareness program, even those that include a reporting mechanism such as a hotline poster.

II. Discussion and Analysis

DoD published a proposed rule at 76 FR 13327 on March 11, 2011, to implement the DoD IG's policy. Nine respondents submitted 25 public comments on the proposed rule. The comments are summarized and discussed here.

Dates:

The Effective Date for this final rule is 16 September 2011.

Click here to read the entire Federal Register notice for this rule.