The Department of Defense has proposed to mandate display of DoD hotline posters even where the contractor has its own available hotline mechanism and posters. Under current regulation, contractors implementing a business ethics and compliance program that includes a reporting mechanism, such as hotline posters, are exempt from posting DoD’s agency hotline posters, other than any required by the Department of Homeland Security. See DFARS 203.1004 and FAR 52.203-14 (c). A March 11, 2011 proposed rule eliminates this exemption, claiming it “has the potential to make the DoD hotline program less effective” and may “diminish[] the means by which fraud, waste, and abuse can be reported under the protection of Federal whistleblower protection laws.” 76 Fed. Reg. 13328.

  Under the proposed rule, in addition to displaying DoD hotline posters in common work areas within business units performing government work, contractors must also post an electronic version of the poster(s) at the contractor’s Web site if that site is used as a method of providing information to employees. The proposed rule applies to DoD contractors and subcontractors with contracts that exceed $5 million, but does not apply to commercial item contracts or contracts that will be performed entirely outside the United States.

Copies of current hotline posters can be found at DoD IG’s website at: The content of these posters will soon change to inform employees of their Federal whistleblower protections. 76 Fed. Reg. 13328.

Should the proposed rule go into effect, contractors that previously relied on their own internal hotline process will not only need to display DoD hotline posters, but will also need to review language in their compliance program to stress the importance of reporting potential misconduct internally, the gravity and seriousness with which such reports will be handled, and the benefits and protections afforded under an internal reporting mechanism. The proposed rule can be seen as an unfortunate effort by DoD to discourage contractors and their employees from implementing and using rigorous internal mechanisms for dealing with compliance concerns in lieu of reporting them in the first instance to DoD.

Public comments on the rule are due on or before May 10, 2011.