No DoD Contracts for Companies that Restrict Employee Whistleblowers From Reporting Fraud, Waste or Abuse
1st December 2015
On October 29, 2015, the Department of Defense (“DoD”) renewed the Defense Federal Acquisition Regulation Supplement (“DFARS”) class deviation or policy implemented in February 2015 which prohibits the DoD from contracting with firms that require their employees or subcontractors to sign or abide by internal confidentiality agreements that would restrict or otherwise prohibit these employees and contractors from reporting waste, fraud, or abuse to various investigative authorities authorized to receive such information.
The new representation, DFARS 252.203-7996 - Prohibition on Contracting with Entities that Require Certain Internal Confidentiality Agreements – Representation, provides that by submitting an offer, an offeror is representing to the Government that it does not require employees or subcontractors seeking to report fraud, waste or abuse to sign or comply with internal confidentiality agreements or statements that would restrict and/or prohibit such employees or contractors from reporting such fraud, waste or abuse.
The new contract clause, DFARS 252.203-7997 - Prohibition on Contracting with Entities that Require Certain Internal Confidentiality Agreements, prohibits contractors from requiring employees and subcontractors to sign or comply with internal confidentiality agreements or statements that prohibit or otherwise restrict the lawful reporting of waste, fraud, or abuse. The clause also requires contractors to notify employees that any prohibitions and/or restrictions of any internal confidentiality agreements are no longer in effect. This clause also provides that the Government “may seek any available remedies in the event that the contractor fails to perform in accordance with the terms and conditions of the contract as a result of Government action under this clause.”
Noncompliance with these new requirements could result in the termination of an awarded contract, loss of a contract award in a bid protest and/or potential False Claims Act liability for submitting invoices in violation of the representations made pursuant to the DFARS clauses.
The October 29, 2015 Class Deviation memorandum is available at http://www.acq.osd.mil/dpap/policy/policyvault/USA005618-15-DPAP.pdf.