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 Department of Defense Defense Acquisition Regulations System 48 CFR Parts 203 and 252
RIN 0750-AG98
 AGENCY: Defense Acquisition Regulations System, Department of Defense (DoD).
 ACTION: Proposed rule.
 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: dfars@osd.mil.*
                         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.
                    ( print 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: 252.203-700X
  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