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Government Contractor Compliance & Regulatory Update

Interim Rules on Whistleblower Protection for Contractor Employees Issued by DOD, GSA and NASA

Posted in Employment Law, Federal Acquisitions, Security, Whistleblower

On September 27, 2013, the Department of Defense, General Services Administration, and National Aeronautics and Space Administration announced interim rules in the Federal Acquisition Regulations (“FAR”) and Defense Federal Acquisition Regulations Supplement (“DFAR”) outlining enhancements to whistleblower protections for contractor employees (the “Program”).  The interim rules implement Section 828 of the National Defense Authorization Act (“NDAA”) for Fiscal Year 2013, which went into effect on July 1, 2013.  The interim rules create a four-year pilot program for executive agencies subject to the Public Contracts section of the United States Code (“Title 41 agencies”) and make extensive changes to whistleblower protection for agencies subject to the Armed Forces section of the United States Code (“Title 10 agencies”).  The interim rules also create a whistleblower exemption for portions of the intelligence community subject to the National Security Act of 1947 (“Title 50 agencies.”)

The interim rules impose an affirmative obligation on contractors to provide written notification to employees of their whistleblower rights and protections in the predominant native language of the workforce.  Although the interim rules become effective on September 30, 2013, interested parties may submit their comments on or before November 29, 2013 for consideration in the formulation of the final rule.

Pilot Program for Enhancement of Contractor Employee Whistleblower Protections

The interim rule, FAR 3.908, implements the four-year pilot program and suspends the application of the current whistleblower protection regulations of FAR 3.901-06. FAR 3.908 applies to all contracts with Title 41 agencies, subject to two exceptions.  First, the interim rule specifically exempts those contracts issued under the American Recovery and Investment Act of 2009.   Second, the interim rule does not apply to contracts with executive agencies subject to Title 50.  Significantly, the interim rule applies to contracts for commercially available off-the-shelf items.  The pilot program protects contractor and subcontractor personnel against reprisal for disclosing to specifically listed entities:

  • Evidence of gross mismanagement of a Federal contract;
  • Gross waste of Federal funds;
  • Abuse of authority relating to a Federal contract;
  • Substantial and specific danger to public health or safety; or
  • Violations of any law, rule, or regulation related to a federal contract.

The interim rules do not authorize the disclosure of classified information not otherwise protected by law.

A contractor or subcontractor employee may, within three years of the date of the alleged reprisal, submit a complaint to the agency inspector general.  Upon receipt of the inspector general’s investigative report, the agency head shall determine whether the contractor or subcontractor subjected the complainant to a reprisal.  If the agency head concludes the complainant set forth an insufficient basis, the agency head may issue an order denying relief.  If, however, the agency head determines a sufficient basis exists, the interim rule mandates ordering one or more of the following remedies:

  • Order the contractor or subcontractor to abate the reprisal;
  • Order the contractor or subcontractor to reinstate the complainant and pay compensatory damages (including back pay), employment benefits, and other terms and conditions of employment that would apply to the person in that position if the reprisal had not been taken;
  • Order the contractor or subcontractor to pay the complainant all costs and expenses (including attorneys and expert witnesses’ fees) incurred in connection with the complaint regarding the reprisal.

If a contractor fails to comply with an order of an agency head, the interim rules require the agency head to file an action in federal district court to enforce the order.  The interim rule also allows the complainant to bring an action against the contractor after exhausting their administrative remedies.  Contractor and subcontractor employees may not waive these rights by agreement or condition of employment.

Enhanced Protection From Reprisal or Disclosure for Contractor Employees of Title 10 Agencies

The interim rule implements Section 828 of the NDAA for Title 10 agencies.  Codified at DFARS Subpart 203.9, the interim rule enhances the current statutory whistleblower protections for contractor and subcontractor employees in a manner similar to FAR 3.908.  In so doing, the interim rule amends the procedures for filing and investigating complaints, sets forth statutory remedies and adds the affirmative duty to inform employees of their whistleblower and disclosure rights.  The interim rule specifically exempts disclosures made by employees of contractors or subcontractors working for Title 50 intelligence community (“IC”) agencies if the disclosure relates to an IC activity or was discovered during contract or subcontract services provided to the IC.

Implications for Government Contractors

  • Federal contractors and subcontractors should consider assessing and revising their whistleblower protection compliance obligations in light of the interim rules.
  • The interim rules highlight the need to conduct a baseline assessment of the current state of the contractor’s current measures designed to prevent and detect retaliatory actions.
  • Proskauer will keep a close watch on the reaction of agency heads and their inspector generals to see how the interim rules are implemented.