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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: September 21, 2000

FROM: Barry McVay, CPCM

SUBJECT: Environmental Protection Agency Acquisition Regulation (EPAAR); Display of Inspector General Hotline Posters

SOURCE: Federal Register, September 21, 2000, Vol. 65, No. 184, page 57101

AGENCIES: Environmental Protection Agency (EPA)

ACTION: Interim Rule

SYNOPSIS: EPA is amending the EPAAR to require contractors with contracts exceeding $1,000,000 to display EPA Office of the Inspector General Hotline posters within contractor work areas unless the contractor has its own internal reporting mechanism and program, such as a hotline.

EDITOR'S NOTE: The EPAAR is Chapter 15 of Title 48 of the Code of Federal Regulations, Federal Acquisition Regulations System. It is available at http://www.epa.gov/oamrfp12/ptod/epaar.pdf.

For more on the proposed rule, see the May 4, 2000, FEDERAL CONTRACTS DISPATCH "Environmental Protection Agency Acquisition Regulation (EPAAR); Display of Inspector General Hotline Posters."

EFFECTIVE DATE: November 20, 2000.

FOR FURTHER INFORMATION CONTACT: Larry Wyborski, U.S. Environmental Protection Agency, Office of Acquisition Management (3802R), 1200 Pennsylvania Avenue, NW, Washington DC 20460; 202-564-4369; e-mail: wyborski.larry@epamail.epa.gov.

SUPPLEMENTAL INFORMATION: On May 4, 2000, EPA proposed amending the EPAAR to require that contractors provide their employees with access to information for contacting the EPA's Office of Inspector General (OIG) should they wish to report waste, fraud or abuse under an EPA contract. The information would be available on an EPA OIG Hotline poster. It was proposed that the EPAAR be amended to add EPAAR Subpart 1503.5, Other Improper Business Practices, which would consist of EPAAR 1503.500-70, Display of EPA Office of Inspector General Hotline Poster. EPAAR 1503.500-70 would require the contracting officer to insert new EPAAR clause 1552.203-71, Display of EPA Office of Inspector General Hotline Poster, in all contracts exceeding $1,000,000 (including all contract options).

Based on comments received on the proposed rule, EPA has decided to revise EPAAR Subpart 1503.5 and EPAAR 1552.203-71 to require contractors with contracts over $1,000,000 to display the EPA OIG Hotline poster "unless the contractor has established an internal reporting mechanism and program." Essentially, EPAAR Subpart 1503.5 will duplicate Defense Federal Acquisition Regulation Supplement (DFARS) Subpart 203.70, Contractor Standards of Conduct, and EPAAR 1552.203-71 will duplicate DFARS 252.203-7002, Display of DOD [Department of Defense] Hotline Poster (except that the DFARS requires the contractors with contracts over $5,000,000 display its hotline poster).

To avoid displaying the EPA OIG Hotline poster, new EPAAR 1503.500-71, Procedures, requires that a contractor have a "system of management controls" which should provide for:

"(1) A written code of business ethics and conduct and an ethics training program for all employees;

"(2) Periodic reviews of company business practices, procedures, policies and internal controls for compliance with standards of conduct and the special requirements of government contracting;

"(3) A mechanism, such as a hotline, by which employees may support suspected instances of improper conduct, and instructions that encourage employees to make such reports;

"(4) Internal and/or external audits, as appropriate;

"(5) Disciplinary action for improper conduct;

"(6) Timely reporting to appropriate Government officials of any suspected or possible violation of law in connection with Government contracts or any other irregularities in connection with such contracts; and

"(7) Full cooperation with any Government agencies responsible for either investigation or corrective actions."

Proposed EPAAR 1552.203-71 is likewise revised to state that a contractor need not display the EPA OIG Hotline poster if it "has established a mechanism, such as a hotline, by which employees may report suspected instances of improper conduct, and provided instructions that encourage employees to make such reports."

The other changes made to the proposed rule as it is finalized are that proposed EPAAR 1503.500-70 has been redesignated as EPAAR 1503.500-72, and EPAAR 1503.500-70, Policy, is added, which states that "government contractors must conduct themselves with the highest degree of integrity and honesty..."

EDITOR'S NOTE: There were comments expressing concern about how contractors' employees might be confused by the proliferation of agency OIG Hotlines posters. Besides the DOD and EPA hotlines, the Department of Veterans Affairs requires display of its OIG Hotline poster, and the National Aeronautics and Space Administration (NASA) has proposed requiring the display of its own OIG Hotline poster (see the May 22, 2000, FEDERAL CONTRACTS DISPATCH "National Aeronautics and Space Administration Federal Acquisition Regulation Supplement (NFS); Inspector General Hotline Posters"). EPA responded as follows:

"In an attempt to avoid having multiple agency hotline posters, representatives responsible for drafting the Federal Acquisition Regulation recently met but were unable to reach a consensus on the contents of a Government-wide Office of Inspector General Hotline clause. Different agencies have different requirements for such a clause."

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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