RGCI-Is Your Company Familiar with the Whistleblower Laws

Whistleblower claims are on the rise with alleged violations of health and safety laws as well as fraud and abuse under the CARES Act due to the pandemic. Employers need to ensure they are familiar with the whistleblower laws and their responsibilities under government contracts.

The Department of Justice (DOJ) Inspector General (IG) memo to DOJ contracting activities disclosed several IG audits have found DOJ contracts have not complied with the FAR requirements – specifically ensuring the whistleblower clauses were in the solicitation and/or contract, the contractor disseminated the whistleblower rights and protections in writing to employees and included the required information in non-disclosure/confidentiality statements to employees/subcontractors. We would not be surprised to see the DoD IG pick up on this area and review DoD contractors.  

NDAA 2021 also addresses this area by prohibiting DoD from awarding a contract to a contractor that requires its employees to sign a confidentiality agreement that would prohibit or otherwise restrict employees from lawfully reporting waste, fraud, or abuse related to the performance of a DoD contract.

What does the law require?

The whistleblower protection laws protect federal employees and contractor employees from reprisal from their employer for disclosing information that the employee reasonably believes is evidence of:

  • Gross mismanagement of a Federal contract.
  • Gross waste of Federal Funds.
  • Abuse of authority relating to a Federal contract.
  • Substantial and specific danger to public health or safety.
  • Violation of a law, rule, or regulation related to a Federal contract.

The law covers individuals performing work on a government contract or grant, including personal services contractors and employees of a contractor, subcontractor, grantee or subgrantee.

What are the Federal Acquisition Regulation (FAR) Requirements?

FAR clause 52.203-17, Contractor Employee Whistleblower Rights and Requirement to Inform Employees of Whistleblower Rights, is included in all solicitations and contracts that exceed the Simplified Acquisition Threshold (SAT) $250,000.

Additionally, there are two other contract clauses on confidentially agreements for employees or subcontractors (FAR 52.203-18 Prohibition on Contracting with Entities that Require Certain Internal Confidentiality Agreements or Statements-Representation and FAR 52.203-19 Prohibition on Requiring Certain Internal Confidentiality Agreements or Statements). Contractors cannot prohibit or restrict employees or subcontractors who sign non-disclosure or confidentiality agreements from reporting waste, fraud, or abuse related to the performance of a government contract.

What do Contractors need to do?

Contractors are required to inform employees in writing of employee whistleblower rights and protections under the laws. The notification should be made in the predominant language of the workforce. That being said, contractors should make sure they have a formal written policy on how employees and contract workers will be informed of the whistleblower rights and protections, and how to document that this has occurred. Contractors should review any internal confidentiality, non-disclosure, or confidentiality agreements with subcontractors or contract workers and make sure there are no prohibitions or restrictions on reporting waste, fraud, or abuse and consider modifying any agreements that do contain a restriction.

Whistleblower statutes contain strong protections against retaliation and punishing of whistleblowers by firing or taking adverse actions against them. Contractors should also prevent harassment or discrimination against whistleblowers. Some potential remedies for whistleblowers include but are not limited to reinstatement, back pay, uncapped compensatory damages (emotional distress damages), and attorneys’ fees and costs.

Redstone GCI is available to assist contractor’s in assessing their current policies and practices to ensure they meet the FAR whistleblower requirements. Redstone GCI assists contractors throughout the U.S. and internationally with understanding the Government’s expectations in applying FAR requirements. 

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Written by Lynne Nalley, CPA

Lynne Nalley, CPA Lynne is a Director with Redstone Government Consulting, Inc. providing government contract consulting services to our clients primarily related to Commercial Item Determinations and support, Cost Accounting Standards, DFARS Business System Audits, Proposals, and Incurred Cost. Prior to joining Redstone Government Consulting, Lynne served in several capacities with DCAA and DCMA for over 35 years. Professional Experience Lynne began her career working with DCAA in the Honeywell Resident Office, Clearwater, FL in 1984. Lynne’s experience included various positions which involved conducting or reviewing forward proposals or rate audits, financial capability audits, progress payments, accounting and estimating systems, cost accounting standards, claims and disclosure statement reviews. She is an expert in FAR, DFARS, CAS and testified as an expert witness. Lynne assisted in drafting the commercial item guidance for DCAA Headquarters. Lynne was assigned as a Regional Technical Specialist where she provided guidance to 20 field offices on highly complex or technical issues relative to forward pricing, financial capability or progress payment issues. As an Assistant for Quality, she was involved in reviewing and ensuring audit reports were in compliance with policy and GAGAS as well as made NASBA certified presentations to the staff including but not limited to billing reviews, CAS, unallowable cost and progress payments. To enhance her experience in government contracting, Lynne accepted a position with DCMA in 2015 as part of the newly organized DCMA Cadre of Experts in the Commercial Item Group. This included performing reviews of prime contractor’s assertions and/or commercial item determinations as well as performing price analyses. Lynne was a project lead and later became a lead analyst where she engaged with the buying commands on requests and reviewed price analysis reviews performed by a team of 5 analysts. She also assisted the DCMA CPSR team relative to commercial items and co-instructed the Commercial Item Training presented to DCMA. Education Lynne earned a Bachelor of Science Degree in Accounting from the University of Central Florida. Certifications State of Florida Certified Public Accountant State of Alabama Certified Public Accountant Defense Acquisition Workforce Improvement Act (DAWIA) Level III- Auditing DAWIA Level III – Contracting

About Redstone GCI

Redstone Government Consultants are a team of the most senior industry veterans and the brightest new talent in the industry. Many have held senior government positions including leadership roles in the DCAA. Our new talents bring significant accounting and software experience along with fresh perspectives, inspiration and energy to our team. Through our leadership and combined experience, we provide a unique perspective, bringing both government and contractor proficiencies to bear and ensuring rock-solid government compliance for our clients.

Topics: DOD IG, DFARS Business Systems, Human Resources, Contractor Purchasing System Review (CPSR)