As prescribed in 203.570-5, use the following clause:
SPECIAL PROHIBITION ON EMPLOYMENT (JUN 1997)
(a) Definitions. As used in this clause-
(1) "Arising out of a contract with the DoD" means any act in connection with-
(i) Attempting to obtain,
(ii) Obtaining, or
(iii) Performing a contract or first-tier subcontract of any agency, department, or component of the Department of Defense (DoD).
(2) "Conviction of fraud or any other felony" means any conviction for fraud or a felony in violation of state or Federal criminal statutes, whether entered on a verdict or plea, including a plea of nolo contendere, for which sentence has been imposed.
(3) "Date of conviction" means the date judgment was entered against the individual.
(b) 10 U.S.C. 2408 provides that any individual who is convicted after September 29, 1988, of fraud or any other felony arising out of a contract with the DoD is prohibited from:
(1) Working in a management or supervisory capacity on any DoD contract or first-tier subcontract;
(2) Serving on the board of directors of any DoD contractor or first-tier subcontractor; or
(3) Serving as a consultant to any DoD contractor or first-tier subcontractor.
(c) Unless waived, the prohibition in paragraph (b) applies for five years from the date of conviction.
(d) 10 U.S.C. 2408 further provides that a defense contractor or first-tier subcontractor shall be subject to a criminal penalty of not more than $500,000 if convicted of knowingly-
(1) Employing a person under a prohibition specified in paragraph (b) of this clause; or
(2) Allowing such a person to serve on the board of directors of the contractor or first-tier subcontractor.
(e) In addition to the criminal penalties contained in 10 U.S.C. 2408, the Government may consider other available remedies, such as-
(1) Suspension or debarment;
(2) Cancellation of the contract at no cost to the Government; or
(3) Termination of the contract for default.
(f) The Contractor may submit written requests for waiver of the prohibitions in paragraph (b) of this clause to the Contracting Officer. Requests shall clearly identify-
(1) The person involved;
(2) The nature of the conviction and resultant sentence or punishment imposed;
(3) The reasons for the requested waiver; and,
(4) An explanation of why a waiver is in the interest of national security.
(g) The Contractor agrees to include the substance of this clause, appropriately modified to reflect the identity and relationship of the parties, in all first-tier subcontracts exceeding the simplified acquisition threshold in Part 2 of the Federal Acquisition Regulation, except those for commercial items or components.
(h) Pursuant to 10 U.S.C. 2408(c), defense contractors and subcontractors may obtain information as to whether a particular person has been convicted of fraud or any other felony arising out of a contract with the DoD by contacting The Office of Justice Programs, The Denial of Benefits Office, U.S. Department of Justice, telephone (202) 616-3507.
(End of clause)
As prescribed in 203.7002, use the following clause:
DISPLAY OF DOD HOTLINE POSTER (DEC 1991)
(a) The Contractor shall display prominently in common work areas within business segments performing work under Department of Defense (DoD) contracts, DoD Hotline Posters prepared by the DoD Office of the Inspector General.
(b) DoD Hotline Posters may be obtained from the DoD Inspector General, ATTN: Defense Hotline, 400 Army Navy Drive, Washington, DC 22202-2884.
(c) The Contractor need not comply with paragraph (a) of this clause if it has established a mechanism, such as a hotline, by which employees may report suspected instances of improper conduct, and instructions that encourage employees to make such reports.
(End of clause)