DoD Proposes DFARS Rule Prohibiting Employee Confidentiality Agreements That Restrict Waste, Fraud, Or Abuse Reporting

On June 23, 2022, the U.S. Department of Defense (DoD) issued a Proposed Rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) in order to implement Section 883 of the National Defense Authorization Act for Fiscal Year 2021 (NDAA 2021).  Section 883 prohibits DoD agencies from making contract awards to entities that request that their employees sign confidentiality agreements that prohibit or restrict them from reporting waste, fraud, or abuse to a designated DoD representative authorized to receive this information.  Comments to the Proposed Rule are due August 22, 2022.

The Federal Acquisition Regulation (FAR) at 3.909-1 already prohibits the federal government from contracting with entities that require employees or subcontractors to sign confidentiality agreements restricting them from 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.  Moreover, FAR clauses 52.203-18 and 52.203-19 incorporate this prohibition.

The Proposed Rule amends DFARS 203.900 to include a citation to the Section 883 prohibitions.  Since the differences between the prohibition currently in FAR and the prohibition under Section 883 are negligible, the Proposed Rule amends DFARS 203.909-3 to require insertion of FAR clauses 52.203-18 and 52.203-19 in DoD solicitations and contracts.

According to DoD, since FAR 3.909 applies government-wide, DoD was already implementing the largely duplicative DoD-specific requirements that are mandated by Section 883 of NDAA 2021.  Notwithstanding the redundancy, the Proposed Rule may serve as a reminder to federal government contractors to review their confidentiality agreements and nondisclosure agreements to ensure they are compliant under the existing FAR rule and under the proposed DFARS rule.