DOD Issues Interim Rule with Significant New Protections for Whistleblowers

On September 30, 2013, the Department of Defense (“DoD”) released an Interim Rule that adds robust protections for whistleblower employees of certain federal contractors and subcontractors.  The Interim Rule was passed to implement portions of Section 827 of the National Defense Authorization Act for Fiscal Year 2013 (“NDAA”), which significantly expanded whistleblower protections for employees of DoD contractors and subcontractors.  According to the DoD Inspector General, Section 827 of the NDAA expanded the DoD whistleblower protections for the first time to:

  • Cover employees of subcontractors, not just prime contractor employees;
  • Protect reports of violations of law, rule or regulation (rather than just violations of law) related to a DoD contract or grant;
  • Include reports of abuses of authority that undermine contract performance; and
  • Prohibit reprisals taken at the request of a contracting agency.

Who Is Covered

The Interim Rule will protect all employees of contractors and subcontractors who were awarded contracts or grants with the DoD on or after July 1, 2013.  The Interim Rule, however, does not apply to disclosures by employees of contractors and subcontractors of any element of the intelligence community if the disclosure (1) relates to the intelligence community; or (2) was discovered during contract or subcontract services provided to an element of the intelligence community. 

The intelligence community is broadly defined to include, among others, the Central Intelligence Agency; the National Security Agency; the Defense Intelligence Agency; the National Geospatial-Intelligence Agency; the National Reconnaissance Office; other offices within the DoD for the collection of specialized national intelligence through reconnaissance programs; and the intelligence elements of the Army, the Navy, the Air Force, the Marine Corps, the Coast Guard, the Federal Bureau of Investigation, the Drug Enforcement Administration, and the Department of Energy.

Protected Disclosures

The Interim Rule specifically prohibits DoD contractors and subcontractors from retaliating against employees who disclose what they reasonably believe to be:

  • Gross mismanagement of a DoD contract;
  • Gross waste of DoD funds;
  • An abuse of authority relating to a DoD contract;
  • A substantial and specific danger to public health or safety; or
  • A violation of law, rule or regulation related to a DoD contract (including the competition or negotiation of a DoD contract).

Entities to Whom Disclosures May be Made

The Interim Rule also expands the persons or entities to whom a protected disclosure can be made to include:

  • A Member of Congress or a representative from a committee of Congress;
  • An Inspector General that has oversight or receives funding for a DoD contract;
  • The Government Accountability Office;
  • A DoD employee responsible for contract oversight or management;
  • An authorized official of the Department of Justice or other law enforcement agency;
  • A court or grand jury; or
  • A management official or other employee of the contractor or subcontractor who has the responsibility to investigate, discover, or address the misconduct.

Other Protections

The Interim Rule contains several other protections for employees.  These include:

  • Written Notice of Protections: Contractors and subcontracts must provide a written notice (in the predominate native language of their workforce) informing their employees of their whistleblower rights under the Interim Rule.
  • No Waiver of Protections: Employees cannot waive their whistleblower rights through agreement, policy, or condition of employment, including in a non-disclosure or release agreement.

Statute of Limitations

Whistleblowers seeking to enforce the protections under the Interim Rule will have three years after the date on which the alleged retaliation took place to file their claim.

Remedies

The Interim Rule requires whistleblowers to first seek relief by filing a complaint with the Inspector General of the DoD.  The DoD Inspector General will have thirty days to review the complaint and determine whether to dismiss it or impose certain remedies against the contractor.  The DoD Inspector General’s remedies for violations of the retaliation provisions in the Interim Rule include issuing an order:

  • Requiring the contractor or subcontractor to undertake affirmative action to abate the retaliation;
  • Reinstating the whistleblower to a position he or she held before the retaliation, including any compensatory damages and employment benefits the whistleblower is entitled to;
  • Requiring the contractor or subcontractor to pay all costs and expenses (including attorneys’ fees and expert witness fees) the whistleblower incurred in connection with bringing his or her complaint.

The DoD Inspector General’s order can be appealed to the United States Court of Appeals for the circuit in which the alleged retaliation occurred.  Appeals must be filed within sixty days of issuance of the order.

Effective Date of Interim Rule

The Interim Rule took effect on the date of its publication in the Federal Register, September 30, 2013.  Interested contractors, however, may still submit comments to the Interim Rule by November 29, 2013.

Implications of Interim Rule

The significant expansion of whistleblower protections under the Interim Rule will likely increase the already escalating number of whistleblower claims.  In fact, the Senate Report that preceded Section 827 of the NDAA indicated that the reason for the whistleblower expansions was that many of the complaints the DoD Inspector General received were outside the scope of DoD’s previous whistleblower provisions.  Given that the Interim Rule expands the scope of whistleblower protections, including to employees of DoD subcontractors, contractors can expect to see an uptick in the number of whistleblower claims.  In addition, plaintiffs’ attorneys are more likely to pursue these cases considering that successful whistleblowers will be able to recover attorneys’ fees and legal costs.

Covered contractors and subcontractors should review their whistleblower policies to make sure they provide adequate complaint and investigation procedures in light of the Interim Rule.  In particular, considering that whistleblower employees of subcontractors are now protected, contractors should strongly consider having proper reporting and investigation procedures for complaints from employees of subcontractors. 

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