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DoD Finalizes Rule Requiring Display of Fraud Hotline Poster

A final rule issued by the Department of Defense amends the Defense Federal Acquisition Regulation Supplement to require contractors to display the DoD fraud hotline poster in common work areas. The DFARS Case 2010-D026 final rule implements recommendations of the DoD Inspector General by providing a new DFARS clause to use in lieu of the clause at FAR 52.203-14, Display of Hotline Poster(s). Following a Government Accountability Office report ( http://www.gao.gov/new.items/d09591.pdf), the DoD IG determined 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, and that the exemption in FAR 52.203-14 for contractors that have implemented a business ethics and conduct awareness program 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.

Exception Omitted

Therefore, the prescription ( DFARS 203.1004 (b)(2)(ii)) for the new 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. The DoD IG is also revising the DoD IG fraud hotline poster to inform contractor employees of their federal whistleblower protections. The new clause, DFARS 252.203-7004, must be included in contracts that exceed $5 million, but not in contracts for acquisition of a commercial item or contracts that will be performed entirely outside the United States. Also, the clause must be flowed down in subcontracts that exceed $5 million, except when an exception applies. In response to comments on the proposed version of the rule ( 70,020.293), DoD expanded the clause prescription to explain that information regarding the Department of Homeland Security hotline poster is needed only when DHS disaster relief funding is added to the DoD contract. The effective date of the rule is September 16, 2011. For the text of the rule, see 70,016.664.




(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )


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