Rules Enhance FAR and DFARS Whistleblower Protections

The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council have published a series of interim rules addressing statutory amendments that enhance whistleblower protections for federal government contractor and subcontractor employees. Four interim rules amend the Federal Acquisition Regulation and the Department of Defense FAR Supplement to implement sections of the National Defense Authorization Act for Fiscal Year 2013 (PL 112-239, enacted January 2, 2013). The NDAA contained separate, but parallel, sections requiring Title 10 agencies (DoD, NASA, and Coast Guard) and Title 41 agencies (those subject to the FAR) to revise their respective acquisition regulations addressing whistleblower protections and the associated cost principle on the allowability of legal costs for whistleblower proceedings. Though parallel, the FAR and DFARS rules are independent because the Title 41 statute implemented only a pilot program and because of some minor differences in the operations of the underlying statutes.

FAR Pilot Program. The FAR Case 2013-015 interim rule in Federal Acquisition Circular 2005-70 implements at FAR Subpart 3.9 a mandate from the NDAA to create a 4-year pilot program to enhance existing whistleblower protections for contractor employees. Section 828(a) of the NDAA added a new section at 41 USC 4712 that contains the elements of the pilot program, which is effective through January 1, 2017. Section 828(c) suspends the pre-existing whistleblower protections in 41 USC 4705 while 41 USC 4712 is in effect. Accordingly, the interim rule created a new FAR 3.908 to implement 41 USC 4712. The rule leaves intact FAR 3.901 through FAR 3.906, which implement the pre-existing whistleblower protections in 41 USC 4705, but suspends their applicability during the period when the pilot program is in effect.

Amendments. The interim rule sets out the policy behind 41 USC 4712 in new FAR 3.908-3, which prohibits contractors and subcontractors from discharging, demoting, or discriminating against an employee as a reprisal for disclosing—to any of the entities listed at FAR 3.908-3(b)—information that the employee reasonably believes is evidence of gross mismanagement of a government contract, a gross waste of federal funds, an abuse of authority relating to a contract, a substantial and specific danger to public health or safety, or a violation of law, rule, or regulation related to a contract. FAR 3.908-4 and FAR 3.908-5 include procedures for filing complaints and for the Inspector General to investigate complaints. The interim rule addresses remedies at FAR 3.908-6. 41 USC 4712(h) provides that nothing in the law may be construed to provide any rights to disclose classified information not otherwise provided by law, and this caveat appears in FAR 3.908-8. A new contract clause, FAR 52.203-17, Contractor Employee Whistleblower Rights and Requirement to Inform Employees of Whistleblower Rights, is required in solicitations and contracts that exceed the simplified acquisition threshold (generally $150,000). The clause specifies that the contract and employees working on the contract are subject to the whistleblower rights and remedies in the pilot program on contractor employee whistleblower protections established at 41 USC 4712, and requires contractors to inform employees in writing, in the predominant language of the workforce, of their employee whistleblower rights and protections.

DFARS Implementation. The FAR interim rule also clarifies that the pilot authority applies to Title 41 agencies and not to Title 10 agencies. Under Section 827 of the NDAA, Title 10 agencies are subject to permanent requirements very similar to the temporary requirements of the pilot program. The Section 827 requirements are addressed by the DFARS Case 2013-D010 interim rule, which amends the current coverage at DFARS Subpart 203.9. These amendments mirror the FAR changes and set forth the statutory policy at DFARS 203.903, and the procedures for filing and investigating complaints at DFARS 203.903 and DFARS 203.904. The remedies are set forth at DFARS 203.906. As with the FAR’s pilot program, nothing in the revised DFARS coverage provides any rights to disclose classified information not authorized by law (DFARS 203.907). In addition, the rule amends the existing contract clause, DFARS 252.203-7002, Requirement to Inform Employees of Whistleblower Rights, to require contractors to inform employees in writing, in the predominant native language of the workforce, of employee whistleblower rights and protections under 10 USC 2409. The revised clause also adds a mandate for prime contractors to flow down the substance of the clause in all subcontracts.

Cost Implications. Two other interim rules, FAR Case 2013-017 and DFARS Case 2013-D022, implement the parts of Sections 828 and 827 of the NDAA relating to the allowability of legal costs for whistleblower proceedings. Section 828(d) amended 41 USC 4310 to address the allowability of legal costs incurred by a contractor or subcontractor in connection with a whistleblower proceeding commenced by an employee submitting a complaint of reprisal under the applicable whistleblower statute and pilot program. Accordingly, the FAR rule amends the cost principle at FAR 31.205-47 to prohibit the allowability of these legal costs if the contractor is found liable for fraud or similar misconduct in the whistleblower proceeding, or if an agency head orders the contractor or subcontractor to take corrective action. The DFARS rule imposes similar restrictions by adding a new contract clause at DFARS 252.216-7009, Allowability of Legal Costs Incurred in Connection with a Whistleblower Proceeding, stating FAR 31.205-47(b) also applies to any proceeding brought by a contractor employee submitting a complaint under the whistleblower provisions of 10 USC 2409.

Applicability. Comments on the interim rules, identified by their respective case numbers, are due by November 29, 2013, to be considered for formulation of a final rule. The rules all carry a September 30, 2013, effective date, but in accordance with FAR 1.108(d)(3), contracting officers are encouraged to include the changes in these rules in major modifications to contracts and orders awarded prior to the effective date.

About George Gullo

George Gullo is an attorney editor in the Government Contracts group at Wolters Kluwer Legal & Regulatory U.S. George serves as the principal editor of Cost Accounting Standards Guide and supports all of the group’s print and electronic publications, as well as legal research tools, including the Government Contracts Reporter, Board of Contract Appeals Decisions, and the FAR and DFARS Matrix Smart Charts. With more than 25 years experience in the legal publishing industry, including more than 15 years in the government contracts area, George also has a background in legal and business transactions. He is a graduate of DePaul University College of Law and a licensed Illinois attorney.
This entry was posted in Compliance, Cost Principles, General, Regulations and tagged , , , , , , . Bookmark the permalink.

Leave a Reply

Your email address will not be published.