Starting this week, coffee drinkers and water cooler gossips at companies like Lockheed Martin will have something new to read on those lunch room bulletin boards. The Department of Defense (DoD) issued a final rule requiring its contractors to display fraud hotline posters, like the one pictured here, in all common work areas and on their websites.
There was concern that the old rule, which allowed contractors to post notices about their own fraud hotlines in lieu of the DoD posters, was undermining the DoD Inspector General hotline program, under which contractor employee disclosures of fraud, waste, and abuse are protected by federal whistleblower laws. According to the DoD IG’s website, the hotline received almost 17,000 contacts in the past year and has helped the government recover over $425 million since its inception. It has also resulted in safer products and equipment for our military personnel and DoD employees.
The new rule contains several glaring exceptions: It does not apply to contracts or subcontracts that have a value of less than $5 million, involve the purchase of commercial items, or are performed outside the United States. POGO has long been critical of the commercial item exception, a contractor oversight loophole through which you can literally fly an aircraft. As for the exception for contracts performed outside the U.S., you might remember the controversy several years ago when this exception mysteriously appeared in an early draft of the contractor mandatory reporting rule. People understandably get upset when the rules are bent for KBR, Blackwater/Xe, and other large companies that derive a significant portion of their contracting income–and commit a significant amount of contract-related misconduct–in foreign countries.
Fortunately, the White House had a change of heart and dropped both the outside-the-U.S and commercial item exceptions from the mandatory reporting rule, which went into effect in December 2008 and, based on what little we’ve heard about it since then, seems to have a positive impact on contractor accountability. Contractors take the reporting requirement seriously and (we assume) have been able to nip in the bud contract-related problems before they became full-blown fraud/waste/abuse scandals.
Some contractors will not be displaying those retro ‘70s-looking DoD IG hotline posters on their cluttered break room bulletin boards. We hope continued implementation and enforcement of the mandatory reporting requirement makes up for that. Still, all defense contractor employees should be made aware there is a government channel through which they can report misconduct.