Federal Acquisition Regulation; Whistleblower Protections for Contractor Employees (Ethics)

DEPARTMENT OF DEFENSE

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 3

[FAC 90-30; FAR Case 94-803; Item III]

RIN 9000-AG16

Federal Acquisition Regulation; Whistleblower Protections for

Contractor Employees (Ethics)

AGENCIES: Department of Defense (DOD), General Services Administration

(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: This final rule is issued pursuant to the Federal Acquisition

Streamlining Act of 1994, Public Law 103-355 (the Act). The Federal

Acquisition Regulatory Council is amending the Federal Acquisition

Regulation (FAR) as a result of the enactment of Sections 6005 and 6006

of the Act. This regulatory action was subject to Office of Management

and Budget review under Executive Order 12866, dated September 30,

1993.

[[Page 37775]]

EFFECTIVE DATE: September 19, 1995.

FOR FURTHER INFORMATION CONTACT:

Mr. Julius Rothlein, Ethics Team Leader, at (703) 697-4349 in reference

to this FAR case. For general information, contact the FAR Secretariat,

Room 4037, GS Building, Washington, DC 20405 (202) 501-4755. Please

cite FAC 90-30, FAR case 94-803.

SUPPLEMENTARY INFORMATION:

A. Background

The Federal Acquisition Streamlining Act (FASA) of 1994, Pub. L.

103-355, provides authorities that streamline the acquisition process

and minimize burdensome Government-unique requirements. Major changes

in the acquisition process as a result of Federal Acquisition

Streamlining Act implementation include changes in the areas of

Commercial Item Acquisition, Simplified Acquisition Procedures, the

Truth in Negotiations Act, and introduction of the Federal Acquisition

Computer Network (FACNET).

This rule, FAR case 94-803, implements Sections 6005 and 6006 of

the Federal Acquisition Streamlining Act, whistleblower protections for

contractor employees. These protections are now virtually identical for

contractors employed by both DOD and civilian agencies.

A new subpart is being added to FAR Part 3 which states that these

protections apply to contractor employees on all Government contracts.

In implementing these sections, guidance found at page 222 of (DOD)

Conference Report 103-712 was considered which states: ``The conferees

direct that the regulations implementing this provision should

establish procedures and standards that are as similar as practicable

to the procedures and standards already established in Department of

Defense regulations.'' However, unlike DOD FAR Supplement (DFARS)

subpart 203.71 (which implemented the former, and now repealed 10

U.S.C. 2409a), a clause which must be included in all contracts is not

being mandated. It is noted that, unlike 10 U.S.C. 2409a, neither

Section 6005 nor 6006 contains any language which mandates the

inclusion of a specific clause in contracts to enforce the prohibitions

of the law. Enforcement of this law, like so many other laws, is not

dependent on the presence of a clause in the contract. Furthermore, by

not prescribing a clause for all contracts, the physical size of the

contract document can be reduced and thereby further the acquisition

streamlining effort.

B. Regulatory Flexibility Act

The Department of Defense, the General Services Administration, and

the National Aeronautics and Space Administration certify that this

final rule will not have a significant economic impact on a substantial

number of small entities under the Regulatory Flexibility Act, 5 U.S.C.

601, et seq., because during the past four years under 10 U.S.C. 2409a,

DOD processed less than 70 cases, half against large contractors.

Contractor employee whistleblower actions are not expected to increase

significantly as a result of the enactment of Sections 6005 and 6006 of

Pub. L. 103-355.

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the changes to

the FAR do not impose recordkeeping or information collection

requirements, or collections of information from offerors, contractors,

or members of the public which require the approval of the Office of

Management and Budget under 44 U.S.C. 3501, et seq.

D. Public Comments

Forty-one substantive comments were received from 14 commenters in

response to the proposed rule published in the Federal Register on

December 1, 1994 (59 FR 61738). The Federal Acquisition Streamlining

Act Implementation Team fully considered all comments received, and the

most significant are discussed below. The team's analysis and

disposition of the comments may be obtained from the FAR Secretariat.

Comment: A commenter stated that the rule (3.905) raises

significant due process concerns as it does not allow the contractor to

present or cross-examine witnesses.

Response: Disagree. While it is true that the regulation does not

provide for the cross examination of witnesses, administrative due

process does not include the right to cross examine witnesses.

Administrative due process only provides for notice and the opportunity

to be heard. The regulation provides both for notice and the

opportunity to be heard by the head of an agency prior to the making of

a decision. Comment not accepted.

Comment: A commenter recommended that the rule's reference to ``a

substantial'' violation of law be changed to ``any'' violation,

thereby, including minor violations of law in the rule's coverage.

Response: Disagree. The Federal Acquisition Streamlining Act

specifically states that the disclosure which is the subject of the

reprisal must be ``a substantial violation of law.'' Consequently,

disclosure of minor violations of law which lead to some reprisal are

not covered by Sections 6005 and 6006 of the Act. Comment not accepted.

Comment: Commenters were concerned that 3.904(b) created an

unnecessary jurisdictional issue when it indicated that complaints had

to be filed within 180 days of discovery of the reprisal.

Response: Agree. Federal Acquisition Streamlining Act does not

contain a 180-day filing period. It was proposed to help ensure that

the Inspector General (IG) received complaints in a timely fashion so

that they could conduct a thorough investigation. The proposed language

may have been used to argue that an employee's complaint filed on the

181st day was late and could not be investigated. Again, Sections 6005

and 6006 of the Act do not contain this statute of limitation and the

final rule will be changed by deleting 3.904(b) and redesigning

3.904(c) as 3.904(b). Comment accepted.

Comment: A commenter believes that the 30 days provided for the

contractor to submit a written response to the IG's report may be too

restrictive. Since the statute does not fix a period of time for the

contractor's response, the commenter recommended that 3.905(d) provide

authority for the IG to set a reasonable period of time for the

response appropriate to the nature and complexity of the issues and the

facts.

Response: Disagree in part. contractor's written response is made

to the head of the agency, not the IG. Agree that there is some need to

express how the parties may request an extension of time to file a

written response. FAR 3.905(d) will be amended by adding the sentence:

``Extensions of time to file a written response may be granted by the

head of the agency or designee.''

Finally, in 3.905 (b), (c), (d), (e) and 3.906 (a), (b) and (c),

the words ``or designee'' were added after the reference to the ``head

of the agency'' to clarify that the head of the agency may delegate

duties under Sections 6005 and 6006.

List of Subjects in 48 CFR Part 3

Government procurement.

Dated: July 17, 1995.

Capt. Barry L. Cohen, SC, USN,

Project manager for the Implementation of the Federal Acquisition

Streamlining Act of 1994.

Therefore, 48 CFR Part 3 is amended as set forth below:

[[Page 37776]]

PART 3--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF

INTEREST

1. The authority citation for 48 CFR Part 3 continues to read as

follows:

Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42

U.S.C. 2473(c).

2. Subpart 3.9, consisting of sections 3.900 through 3.906, is

added to read as follows:

Subpart 3.9--Whistleblower Protections for Contractor Employees

3.900 Scope of subpart.

3.901 Definitions.

3.902 Applicability.

3.903 Policy.

3.904 Procedures for filing complaints.

3.905 Procedures for investigating complaints.

3.906 Remedies.

3.900 Scope of subpart.

This subpart implements 10 U.S.C. 2409 and 41 U.S.C. 251, et seq.,

as amended by Sections 6005 and 6006 of the Federal Acquisition

Streamlining Act of 1994 (Pub. L. 103-355).

3.901 Definitions.

Authorized official of an agency means an officer or employee

responsible for contracting, program management, audit, inspection,

investigation, or enforcement of any law or regulation relating to

Government procurement or the subject matter of the contract.

Authorized official of the Department of Justice means any person

responsible for the investigation, enforcement, or prosecution of any

law or regulation.

Inspector General means an Inspector General appointed under the

Inspector General Act of 1978, as amended. In the Department of Defense

that is the DOD Inspector General. In the case of an executive agency

that does not have an Inspector General, the duties shall be performed

by an official designated by the head of the executive agency.

3.902 Applicability.

This subpart applies to all Government contracts.

3.903 Policy.

Government contractors shall not discharge, demote or otherwise

discriminate against an employee as a reprisal for disclosing

information to a Member of Congress, or an authorized official of an

agency or of the Department of Justice, relating to a substantial

violation of law related to a contract (including the competition for

or negotiation of a contract).

3.904 Procedures for filing complaints.

(a) Any employee of a contractor who believes that he or she has

been discharged, demoted, or otherwise discriminated against contrary

to the policy in 3.903 may file a complaint with the Inspector General

of the agency that awarded the contract.

(b) The complaint shall be signed and shall contain--

(1) The name of the contractor;

(2) The contract number, if known; if not, a description reasonably

sufficient to identify the contract(s) involved;

(3) The substantial violation of law giving rise to the disclosure;

(4) The nature of the disclosure giving rise to the discriminatory

act; and

(5) The specific nature and date of the reprisal.

3.905 Procedures for investigating complaints.

(a) Upon receipt of a complaint, the Inspector General shall

conduct an initial inquiry. If the Inspector General determines that

the complaint is frivolous or for other reasons does not merit further

investigation, the Inspector General shall advise the complainant that

no further action on the complaint will be taken.

(b) If the Inspector General determines that the complaint merits

further investigation, the Inspector General shall notify the

complainant, contractor, and head of the contracting activity. The

Inspector General shall conduct an investigation and provide a written

report of findings to the head of the agency or designee.

(c) Upon completion of the investigation, the head of the agency or

designee shall ensure that the Inspector General provides the report of

findings to--

(1) The complainant and any person acting on the complainant's

behalf;

(2) The contractor alleged to have committed the violation; and

(3) The head of the contracting activity.

(d) The complainant and contractor shall be afforded the

opportunity to submit a written response to the report of findings

within 30 days to the head of the agency or designee. Extensions of

time to file a written response may be granted by the head of the

agency or designee.

(e) At any time, the head of the agency or designee may request

additional investigative work be done on the complaint.

3.906

Remedies.

(a) If the head of the agency or designee determines that a

contractor has subjected one of its employees to a reprisal for

providing information to a Member of Congress, or an authorized

official of an agency or of the Department of Justice, the head of the

agency or designee may take one or more of the following actions:

(1) Order the contractor to take affirmative action to abate the

reprisal.

(2) Order the contractor to reinstate the person to the position

that the person held before the reprisal, together with the

compensation (including back pay), employment benefits, and other terms

and conditions of employment that would apply to the person in that

position if the reprisal had not been taken.

(3) Order the contractor to pay the complainant an amount equal to

the aggregate amount of all costs and expenses (including attorneys'

fees and expert witnesses' fees) that were reasonably incurred by the

complainant for, or in connection with, bringing the complaint

regarding the reprisal.

(b) Whenever a contractor fails to comply with an order, the head

of the agency or designee shall request the Department of Justice to

file an action for enforcement of such order in the United States

district court for a district in which the reprisal was found to have

occurred. In any action brought under this section, the court may grant

appropriate relief, including injunctive relief and compensatory and

exemplary damages.

(c) Any person adversely affected or aggrieved by an order issued

under this section may obtain review of the order's conformance with

the law, and this subpart, in the United States Court of Appeals for a

circuit in which the reprisal is alleged in the order to have occurred.

No petition seeking such review may be filed more than 60 days after

issuance of the order by the head of the agency or designee. Review

shall conform to Chapter 7 of Title 5, United States Code.

[FR Doc. 95-17936 Filed 7-20-95; 8:45 am]

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