Monday, January 16, 2017

Prohibition on Confidentiality Agreements related to Fraud, Waste, and Abuse

The FAR Councils published a final rule last week that prohibits contracting with any company that requires employees (or subcontractors) to sign internal confidentiality agreements that restrict such employees (or subcontractors) from lawfully reporting waste, fraud, or abuse to a designated Government representative authorized to receive such information. This restriction on contracting applies to grants and cooperative agreements as well.

Internal confidentiality agreements (or statements) in this context means a confidentiality agreement or any other written statement that the contractor requires any of its employees or subcontractors to sign regarding nondisclosure of contractor information, except that it does not include confidentiality agreements arising out of civil litigation or confidentiality agreements that contract employees or subcontractors sign at the behest of a Federal agency.

If there are any such confidentiality agreements on file, contractors are required to give notice to current employees and subcontractors that any prohibitions and restrictions of any preexisting confidentiality agreements or statements covered by the new restriction are no longer in effect, to the extent that such prohibitions and restrictions are in conflict with the new provision.

The implementation of this new rule will be done on the honor system. In order to be eligible for contract award, an offeror must represent that it will not require its employees or subcontractors to sign internal confidentiality agreements or statements prohibiting or otherwise restricting such employees or subcontractors from lawfully reporting wase, fraud, or abuse related to the performance of a Government contract to a designated investigative or law enforcement representative of a Federal department or agency authorized to receive such information (e.g. agency Office of the Inspector General). Any offeror that does not so represent is ineligible for award of a contract.

Contracting officers may rely on the offerors' representations unless the contracting officers have reason to question the representation.

The new regulation is effective immediately.

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