IV. Regulatory Flexibility Act

DoD does not expect this final rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the requirement to display posters has minimal economic impact and the rule only applies to contracts and subcontracts that exceed $5 million in value, so few small business concerns are impacted. However, a final regulatory flexibility analysis has been performed and is summarized as follows:

This rule was initiated in response to a Government Accountability Office (GAO-09-591) recommendation that the DoD IG should determine the need for defense contractors to display the DoD IG's fraud hotline poster. The DoD IG subsequently determined that DoD contractors, including contractors with an ethics and compliance program that includes a reporting mechanism such as a hotline poster (currently exempt), 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.

The final rule does not include an exemption for DoD contractors to post their own company posters instead of the DoD IG hotline poster and requires all DoD contractors with contracts that exceed $5 million to post the DoD IG fraud hotline poster. The DoD IG determined that this FAR exemption to the posting of an agency's fraud hotline poster had the potential to make the DoD IG 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. The DOD IG further determined that some contractors' posters may not be as effective as the DoD poster in advertising the hotline number, which is integral to the DoD fraud program. The legal basis for the rule is 41 U.S.C. 1303 and 48 CFR chapter 1.

The rule applies to all contractors with DoD contracts with a value that exceeds $5 million. Many small businesses, therefore, are not impacted.

Paragraph (c) of the clause at FAR 52.203-14 provides that a contractor need not display any agency fraud hotline posters (other than required DHS posters) if the contractor has implemented a business ethics and conduct awareness program that includes a reporting mechanism such as a hotline poster. The DFARS rule differs only in that it removes this FAR exemption.

There is no reporting or recordkeeping requirement established by this rule. The rule does not duplicate, overlap, or conflict with any other Federal rules. There are no alternatives that would achieve the objectives of the final rule. No comments were received on the small business impact in response to the initial regulatory flexibility analysis.

Interested parties may obtain a copy of the final regulatory flexibility analysis (FRFA) from the point of contact named herein. A copy of the FRFA has been submitted to the Chief Counsel for Advocacy of the Small Business Administration.