December 10, 2015 - Compliance, Defense

Confidentiality Policies Cannot Prohibit Employees From Disclosing Contractor Fraud, Waste, and Abuse

ComplianceThe Department of Defense (DoD) has amended the Defense Federal Acquisition Regulation Supplement (DFARS) to make clear that contractors cannot require their employees or subcontractors to sign confidentiality agreements that would restrict the employees or subcontractors from reporting fraud, waste, or abuse, or cooperating with law enforcement investigations of such allegations. Under the new regulation, contractors must notify their employees and subcontractors that any such prior restrictions are invalid. Moreover, in submitting an offer for a solicitation with a DoD agency, prospective contractors must represent that they do not require their employees or contractors to sign or comply with a prohibited confidentiality agreement. A contractor’s failure to comply with these provisions could make it ineligible to receive any contract funded by fiscal year 2015 and 2016 appropriations.

Contractors should review and revise their employee confidentiality agreements and policies to remove any language that could be construed as restricting an employee’s ability to report fraud, waste, or abuse to the government. In addition, contractors should notify their employees that the prohibitions and restrictions of any internal confidentiality agreements covered by this new rule are no longer valid.

The new implementing DFARS clauses are 252.203-7996, Prohibition on Contracting with Entities that Require Certain Internal Confidentiality Agreements—Representation; and 252.203-7997, Prohibition on Contracting with Entities that Require Certain Internal Confidentiality Agreements. The clauses will be included in all new solicitations and contracts, including those involving commercial items. Contracting officers also must modify existing contracts awarded on or after October 1, 2015 to include this prohibition.

The new DFARS provisions and implementing memorandum are available here: