FAR 3.1004—Contract clauses.
Plain-English Summary
FAR 3.1004 tells contracting officers when to include two mandatory ethics- and fraud-prevention clauses in solicitations and contracts: FAR 52.203-13, Contractor Code of Business Ethics and Conduct, and FAR 52.203-14, Display of Hotline Poster(s). It sets the dollar and performance-period threshold for the ethics clause, and it sets the conditions for using the hotline poster clause, including important exceptions for commercial products and commercial services and for work performed entirely outside the United States. It also explains how the contracting officer must tailor the hotline poster clause by identifying the applicable posters, adding the correct website links or contact information, and, when an agency has adopted a lower threshold for poster display, substituting that lower amount in the clause. In practice, this section ensures contractors receive notice of ethics, internal control, and fraud-reporting expectations, while giving agencies a mechanism to promote reporting of suspected fraud, waste, and abuse. For contracting officers, it is a clause-selection and clause-customization rule; for contractors, it is a compliance trigger that can affect internal ethics programs, poster display obligations, and contract administration.
Key Rules
Insert ethics clause above threshold
Use FAR 52.203-13, Contractor Code of Business Ethics and Conduct, in solicitations and contracts when the expected contract value exceeds $7.5 million and the performance period is 120 days or more. Both the dollar threshold and the performance-period requirement must be met.
Hotline poster clause conditions
Insert FAR 52.203-14, Display of Hotline Poster(s), unless the contract is for a commercial product, a commercial service, or performance entirely outside the United States. If those exceptions do not apply, the clause is required when the contract exceeds $7.5 million or a lower agency-set amount, and either the agency has a fraud hotline poster or the contract is funded with disaster assistance funds.
Agency may set lower poster threshold
An agency may establish policies and procedures requiring the hotline poster clause at an amount lower than $7.5 million. When that happens, the contracting officer must use the agency’s lower threshold instead of the FAR default.
Customize poster information
In paragraph (b)(3) of FAR 52.203-14, the contracting officer must identify the applicable posters and insert the website link(s) or other contact information for obtaining the agency and/or Department of Homeland Security poster. The clause is not complete until this information is filled in correctly.
Tailor the clause text
In paragraph (d) of FAR 52.203-14, if the agency has a lower threshold policy, the contracting officer must replace '$7.5 million' with the agency’s lower amount. This ensures the clause matches the agency’s actual implementation rules.
Responsibilities
Contracting Officer
Determine whether the contract meets the dollar and performance-period thresholds for FAR 52.203-13 and whether any exceptions apply. Insert FAR 52.203-14 when required, identify the applicable posters, provide the correct website links or contact information, and substitute any agency-established lower threshold in the clause text.
Agency
Decide whether to establish a lower threshold for use of the hotline poster clause and, if so, issue policies and procedures implementing that lower amount. Provide or designate the fraud hotline poster(s) and the information needed to obtain them.
Contractor
Comply with the ethics and conduct requirements triggered by FAR 52.203-13 and, when applicable, display the required hotline poster(s) in accordance with the contract clause and agency instructions. Ensure internal compliance systems and employee awareness support the clause obligations.
Department of Homeland Security
Provide the DHS fraud hotline poster or related contact information when the clause requires access to the DHS poster, so the contracting officer can identify how contractors obtain it.
Practical Implications
These clauses are not automatic in every contract; the contracting officer must check both the contract value and the performance period, and for the poster clause must also check the commercial-item and overseas exceptions.
A common mistake is forgetting that FAR 52.203-13 requires both a value threshold and a minimum performance period of 120 days; a short-duration contract over $7.5 million does not trigger the clause if performance is under 120 days.
For FAR 52.203-14, the contracting officer must do more than insert the clause text—paragraph (b)(3) requires specific poster identification and access information, and paragraph (d) may require changing the dollar threshold to match agency policy.
Contractors should not assume the poster clause applies to commercial acquisitions or overseas-only performance; those are explicit exceptions, but disaster assistance funding can still trigger the clause.
Because agencies may set a lower poster threshold, contractors and contracting personnel should verify agency supplements and internal procedures rather than relying only on the FAR default.
Official Regulatory Text
(a) Insert the clause at FAR 52.203-13 , Contractor Code of Business Ethics and Conduct, in solicitations and contracts if the value of the contract is expected to exceed $7.5 million and the performance period is 120 days or more. (b) (1) Unless the contract is for the acquisition of a commercial product or commercial service or will be performed entirely outside the United States, insert the clause at 52.203-14 , Display of Hotline Poster(s), if– (i) The contract exceeds $7.5 million or a lesser amount established by the agency; and (ii) (A) The agency has a fraud hotline poster; or (B) The contract is funded with disaster assistance funds. (2) In paragraph (b)(3) of the clause, the contracting officer shall– (i) Identify the applicable posters; and (ii) Insert the website link(s) or other contact information for obtaining the agency and/or Department of Homeland Security poster. (3) In paragraph (d) of the clause, if the agency has established policies and procedures for display of the OIG fraud hotline poster at a lesser amount, the contracting officer shall replace "$7.5 million" with the lesser amount that the agency has established.