Government Contractors Need to Get Ready for New FAR Confidentiality Rules

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The Federal Acquisition Regulatory Council (“FAR”) has issued a proposed rule which prohibits government contractors from using confidentiality agreements to restrict employees or subcontractors from reporting fraud, waste or abuse to government officials.  That rule can be found here:  FAR Confidentiality Rule.  The Proposed Rule will apply to contracts, including existing contracts, funded by appropriations for Fiscal Year 2015 or subsequent fiscal years.

The proposed rule imposes four obligations on government contractors.

 1. Prospective contractors must include the following affirmative representation of compliance with the rule when the contractor responds to an agency request for bids:

By submission of its offer, the Offeror represents that it does not require employees or subcontractors of such entity seeking to report waste, fraud, or abuse to sign or comply with internal confidentiality agreements or statements prohibiting or otherwise restricting such employees or subcontractors from lawfully reporting such waste, fraud, or abuse to a designated investigative or law enforcement representative of a Federal department or agency authorized to receive such information.

2.  Any contract covered by the Proposed Rule must contain the following clause:

The Contractor shall not require employees or subcontractors of such entity seeking to report waste, fraud, or abuse to sign or comply with internal confidentiality agreements or statements prohibiting or otherwise restricting such employees or subcontractors from lawfully reporting such waste, fraud, or abuse to a designated investigative or law enforcement representative of a Federal department or agency authorized to receive such information.

3. Contractors must notify employees that internal confidentiality agreements covered by the Proposed Rule are no longer effective.

4. Contractors must flow-down the requirements of the proposed rule to subcontractors.

            Interested parties have until March 22, 2016 to submit comments on the proposed rule.  If you are interested, here’s a link with directions on the procedure for comments: Comments