On October 28, 2022, the Department of Defense (DoD) issued a final rule modifying the Federal Defense Acquisition Regulations Supplement prohibiting the award of any DoD contract to entities that require their employees to sign internal confidentiality agreements or statements that would prevent their employees from legally reporting waste, fraud, or abuse related to the performance of a DoD contract to a designated investigator or law enforcement representative authorized to receive such information. This prohibition now applies to contracts with a value equal to or less than the simplified acquisition threshold, as well as contracts for the acquisition of commercial services and products, including commercially available items. If applicable prohibition is as follows:
(1) Prohibition. 10 USC 2409 prohibits contractors and contractors from dismissing, demoting, or otherwise discriminating against an employee in retaliation for disclosing, to any of the entities listed in subsection (3) of this section, information that the employee believes reasonably be evidence of gross mismanagement of a DoD contract, flagrant waste of DoD funds, abuse of authority related to a DoD contract, violation of related law, rule, or regulation to a DoD contract (including competition or contract negotiation), or a substantial and specific danger to public health or safety. Such retaliation is prohibited even if taken at the request of an executive branch official, unless the request takes the form of a non-discretionary directive and is within the authority of the executive branch official. executive making the request.
(2) Confidential information. As provided in Section 827(h) of the National Defense Authorization Act for Fiscal Year 2013, nothing in this subpart grants the right to disclose classified information not otherwise provided by law.
(3) Entities to which disclosure may be made:
(i) A member of Congress or a representative of a committee of Congress.
(ii) An Inspector General who receives funds or oversees contracts awarded for or on behalf of the DoD.
(iii) The Office of Government Accountability.
(iv) A DoD employee responsible for contract oversight or management.
(v) An authorized official of the Department of Justice or other law enforcement agency.
(vi) A court or grand jury.
(vii) A senior manager or other employee of the Contractor or Subcontractor who has the responsibility to investigate, discover or remedy misconduct.
(4) Disclosure Clarified. An employee who initiates or provides evidence of contractor or subcontractor misconduct in any legal or administrative proceeding regarding waste, fraud, or abuse of a DoD contract shall be deemed to have made a disclosure. .
(5) Contracting Officer Actions. A contracting officer who receives a complaint of retaliation of the type described in subsection (1) of this section shall refer it to legal counsel or the appropriate party in accordance with agency procedures.
In addition to the prohibition, the rule implements two additional requirements. First, entities must inform their employees of the limitations of confidentiality agreements or other statements and of their whistleblower rights. Second, offerors must declare that they comply with the statutory restrictions of the Award Management System (SAM) before submitting an offer or quote.
Contractors registered in SAM as of January 12, 2021 are already compliant and likely do not need to take further action. However, other processors may be required to narrow the scope of their confidentiality agreements, include language about the limits of a confidentiality agreement, and create SAM checklists. When a sub-processor’s confidentiality agreement is too broad or lacks language on the limits of confidentiality, or when a sub-processor fails to make appropriate disclosures in SAM, the result could be a missed opportunity to receive a DoD contract.
Contractors may want to review their confidentiality agreements and internal processes to ensure compliance.