[Federal Register Volume 76, Number 48 (Friday, March 11, 2011)]
[Proposed Rules]
[Pages 13327-13329]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-5600]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 203 and 252

RIN 0750-AG98


Defense Federal Acquisition Regulation Supplement; Display of DoD 
Inspector General Fraud Hotline Posters (DFARS Case 2010-D026)

AGENCY: Defense Acquisition Regulations System, Department of Defense 
(DoD).

ACTION: Proposed rule.

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SUMMARY: DoD is proposing to issue a rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to require contractors to 
display the DoD fraud hotline poster in common work areas.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before May 10, 2011, to be considered in 
the formation of the final rule.

ADDRESSES: Submit comments identified by DFARS Case 2010-D026, using 
any of the following methods:
     Regulations.gov: http://www.regulations.gov.
    Submit comments via the Federal eRulemaking portal by inputting 
``DFARS Case 2010-D026'' under the heading ``Enter keyword or ID'' and 
selecting ``Search.'' Select the link ``Submit a Comment'' that 
corresponds with ``DFARS Case 2010-D026.'' Follow the instructions 
provided at the ``Submit a Comment'' screen. Please include your name, 
company name (if any), and ``DFARS Case 2010-D026'' on your attached 
document.
     E-mail: [email protected]. Include DFARS Case 2010-D026 in the 
subject line of the message.
     Fax: 703-602-0350.
     Mail: Defense Acquisition Regulations System, Attn: Ms. 
Clare Zebrowski, OUSD (AT&L) DPAP/DARS, Room 3B855, 3060 Defense 
Pentagon, Washington, DC 20301-3060.
    Comments received generally will be posted without change to http://www.regulations.gov, including any personal information provided. To 
confirm receipt of your comment(s), please check www.regulations.gov 
approximately two to three days after submission to verify posting 
(except allow 30 days for posting of comments submitted by mail).

FOR FURTHER INFORMATION CONTACT: Ms. Clare Zebrowski, Defense 
Acquisition Regulations System, OUSD (AT&L) DPAP (DARS), Room 3B855, 
3060 Defense Pentagon, Washington, DC 20301-3060. Telephone 703-602-
0289; facsimile 703-602-0350. Please cite DFARS Case 2010-D026.

SUPPLEMENTARY INFORMATION: 

I. Background

    This rule proposes to implement the recommendations of the DoD 
Inspector General (IG), by providing a DFARS clause to use in lieu of 
the FAR clause 52.203-14, Display of Hotline Poster(s).
    GAO Report GAO-09-591, Regarding the Display of DoD Inspector 
General Fraud Hotline Posters by DoD Contractors, recommended that the 
DoD IG determine the need for defense contractors' display of the DoD 
IG's fraud hotline poster, including directing a contractor to display 
the DoD IG hotline poster in common work areas for performance of DoD 
contracts.

[[Page 13328]]

    The DoD IG determined that DoD contractors, including contractors 
who 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 ``If 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 finds 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. Some contractor's 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.
    The new DFARS clause therefore provides no exception to the use of 
the DoD hotline poster for contractors that have implemented a business 
ethics and conduct awareness program, including a reporting mechanism 
such as a hotline poster. The clause also provides for display of any 
applicable Department of Homeland Security hotline poster identified by 
the contracting officer.

II. Executive Order 12866

    This rule was not subject to Office of Management and Budget review 
under Executive Order 12866, dated September 30, 1993. This rule is not 
a major rule under 5 U.S.C. 804.

III. Executive Order 13563

    In accordance with Executive Order 13563, Improving Regulation and 
Regulatory Review, dated January 18, 2011, DoD has determined that this 
rule is not excessively burdensome to the public, and is consistent 
with requirements to report fraud, waste, and abuse under the 
protection of Federal whistleblower protection laws.

IV. Regulatory Flexibility Act

    DoD does not expect this proposed 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 many small business concerns are not impacted at 
all. Nevertheless, an initial regulatory flexibility analysis has been 
performed and is summarized as follows:
    This proposed rule is in response to a study by the General 
Accountability Office (GAO-09-591), which recommended that the DoD IG 
determine the need for defense contractors' display of the DoD IG's 
fraud hotline poster, including directing a contractor to display the 
DoD IG hotline poster in common work areas for performance of DoD 
contracts.
    The DoD IG determined that DoD contractors, including contractors 
who have 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 objective of the proposed rule is to remove this exemption for 
contractors that post their own posters, and require all DoD 
contractors with contracts that exceed $5 million to post the DoD IG 
fraud hotline poster. The DoD IG finds 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. 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. 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 that exceed 
$5 million. Many small businesses are, therefore, not impacted at all. 
The FAR currently provides that ``If 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.'' Therefore, even those contractors with contracts that exceed 
$5 million are not significantly impacted, because they are already 
required to post either their own fraud hotline poster or the DoD fraud 
hotline poster. This rule just removes the exemption for contractors 
that post their own fraud hotline posters.
    There is no information collection requirement associated with this 
proposed rule.
    The rule does not duplicate, overlap, or conflict with any other 
Federal rules.
    There are no known significant alternatives to the rule that would 
achieve the objectives of the rule.
    DoD invites comments from small business concerns and other 
interested parties on the expected impact of this rule on small 
entities.
    DoD will also consider comments from small entities concerning the 
existing regulations in subparts affected by this rule in accordance 
with 5 U.S.C. 610. Interested parties must submit such comments 
separately and should cite 5 U.S.C. 610 (DFARS Case 2010-D026) in 
correspondence.

V. Paperwork Reduction Act

    The rule does not impose any information collection requirements 
that require the approval of the Office of Management and Budget under 
the Paperwork Reduction Act, 44 U.S.C. chapter 35.

List of Subjects in 48 CFR Parts 203 and 252

    Government procurement.

Ynette R. Shelkin,
Editor, Defense Acquisition Regulations System.
    Therefore, DoD proposes to amend 48 CFR parts 203 and 252 as 
follows:

    1. The authority citation for 48 CFR Parts 203 and 252 continues to 
read as follows:

    Authority:  41 U.S.C. 1303 and 48 CFR chapter 1.

PART 203--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF 
INTEREST

    2. In section 203.1004, revise paragraph (b)(2)(ii) to read as 
follows:
* * * * *
    (b) Unless the contract is for the acquisition of a commercial item 
or will be performed entirely outside the United States, if the 
contract exceeds $5 million, use the clause at 252.203-700X, Display of 
Fraud Hotline Poster(s), in lieu of the clause at FAR 52.203-14, 
Display of Hotline Poster(s).

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    3. Add section 252.203-700X to read as follows:

[[Page 13329]]

252.203-700X  Display of Fraud Hotline Poster(s).

    As prescribed in 203.1004(b), use the following clause:

DISPLAY OF FRAUD HOTLINE POSTER(S) (DATE)

    (a) Definition.

United States, as used in this clause, means the 50 States, the 
District of Columbia, and outlying areas.

    (b) Display of fraud hotline poster(s). (1) The Contractor shall 
display prominently in common work areas within business segments 
performing work in the United States under Department of Defense 
(DoD) contracts--
    (i) DoD fraud hotline posters prepared by the DoD Office of the 
Inspector General. DoD fraud hotline posters may be obtained from 
the DoD Inspector General, ATTN: Defense Hotline, 400 Army Navy 
Drive, Washington, DC 22202-2884.
    (ii) Department of Homeland Security (DHS) fraud hotline poster 
identified in paragraph (b)(2) of this clause; and
    (iii) Any DHS fraud hotline poster subsequently identified by 
the Contracting Officer.
    (2) Any required DHS posters may be obtained as follows:

 
              Poster(s)                           Obtain from
 
              _________               _________
 
              _________               _________
 

    (Contracting Officer shall insert--
    (i) Title of applicable Department of Homeland Security fraud 
hotline poster; and
    (ii) The Web site(s) or other contact information for obtaining 
the poster(s).)
    (3) Additionally, if the Contractor maintains a company Web site 
as a method of providing information to employees, the Contractor 
shall display an electronic version of the poster(s) at the Web 
site.
    (c) Subcontracts. The Contractor shall include the substance of 
this clause, including this paragraph (c), in all subcontracts that 
exceed $5 million except when the subcontract--
    (1) Is for the acquisition of a commercial item; or
    (2) Is performed entirely outside the United States.

(End of clause)

[FR Doc. 2011-5600 Filed 3-10-11; 8:45 am]
BILLING CODE 5001-08-P