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FCA Qui Notes
January 15, 2019

"Pilot" Program No More: Proposed FAR Amendment Makes Whistleblower Protections Permanent

Qui Notes: Unlocking the False Claims Act

The Federal Acquisition Regulation (FAR) is being amended to make permanent a "pilot program" of whistleblower protections established in 2013. When announcing this move, the government affirmed its commitment to enhanced whistleblower protection for government contractor employees and clarified existing rules. 83 Fed. Reg. 66223-01 (Dec. 26, 2018).

Whistleblower protections for contractor employees were first added to the FAR as part of reforms mandated by the Federal Acquisition Streamlining Act of 1994. These provisions remained unchanged until September 2013, when an interim rule implemented a four-year pilot program to enhance these protections under contracts with civilian agencies (while temporarily suspending the original provisions). The proposed rule implements Congressional direction to make the pilot program permanent. Pub. L. 114-261 (Dec. 14, 2016). DoD, NASA, and the Coast Guard have their own whistleblower protection system codified in 10 U.S.C. 2409.

Under the pilot program, now being made permanent, a contractor or subcontractor employee who believes he or she was discharged, demoted, or discriminated against for making a covered disclosure may file a complaint with the agency's Inspector General within three years of the alleged reprisal. The initial whistleblower protection regulations had encompassed only disclosures to a Member of Congress, an authorized agency official, or the Department of Justice of information "relating to a substantial violation of law related to a contract." The pilot program expanded the scope of covered disclosures to also include information:

that the employee reasonably believes is evidence of gross mismanagement of a Federal contract, a gross waste of Federal funds, an abuse of authority relating to a Federal contract, a substantial and specific danger to public health or safety, or a violation of law, rule, or regulation related to a Federal contract.

The pilot program also expanded the list of appropriate recipients of such a disclosure to an Inspector General, the Government Accountability Office (GAO), and federal employees responsible for contract oversight or management at the relevant agency, among others. As with the original regime, an agency receiving a retaliation complaint conducts an investigation and may order the contractor employer to halt the discrimination, or to reinstate or pay the employee.

The convoluted regulatory history yielded a complex FAR subsection, which this FAR revision thankfully simplifies by deleting the original whistleblower protection regime (in FAR 3.901 through 3.906), which had been suspended during the pilot program, and renumbering FAR 3.908 (the pilot program), to FAR 3.900 through 3.906. Importantly, the proposed rule does not make any substantive changes to the whistleblower protection scheme established in the pilot program. While the Federal Register notice acknowledges GAO's 2017 report and recommendations on the pilot program,1 no more onerous or different requirements are being proposed.

The proposed rule includes two important clarifications. First, civilian agencies will use the contract clause at FAR 52.203-17 to implement whistleblower protections in both commercial and noncommercial item contracts. Notably, this clause requires contractors to inform their employees in writing of the whistleblower protections, a requirement which the GAO found that many contractors failed to meet during the pilot program. To ensure civilian commercial item contracts require whistleblower protection, this clause will appear in FAR 52.212-5, Contract Terms and Conditions Required to Implement Statutes or Executive Orders – Commercial Items, as a requirement. (Previously, all agencies used FAR 52.203-4(r), requiring compliance with laws unique to government contracts, to implement whistleblower protections; DoD, NASA, and the Coast Guard will continue to do so.)

Second, the proposed rule clarifies that the prohibition on reimbursement for legal costs incurred as a result of a whistleblower retaliation complaint applies to subcontractors as well as contractors. The Federal Register notice explains that while this was always the rule, FAR 31.205-47 is amended to eliminate any confusion on this point.

Interested parties may submit comments on the proposed rule by February 25, 2019.

© Arnold & Porter Kaye Scholer LLP 2019 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.