Overview
This section prohibits the federal government from funding any entity that uses internal confidentiality agreements or statements to restrict employees or subcontractors from lawfully reporting waste, fraud, or abuse to authorized federal officials. It serves as a regulatory safeguard to ensure that whistleblower protections are not undermined by private nondisclosure agreements.
Key Rules
- Fundamental Prohibition: Agencies cannot use fiscal year 2015 or subsequent funds for contracts with entities that require employees or subcontractors to sign agreements preventing them from reporting waste, fraud, or abuse to designated federal investigative or law enforcement representatives.
- Mandatory Representation: To be eligible for an award, an offeror must represent that it does not—and will not—require prohibited confidentiality restrictions. Failure to provide this representation renders the offeror ineligible.
- Classified Information Exception: These rules do not supersede requirements related to Standard Form 312 (Classified Information Nondisclosure Agreement) or other official forms governing the protection of classified information.
- Applicability & Clauses:
- Provision 52.203-18 must be included in most solicitations to capture the offeror's representation.
- Clause 52.203-19 must be included in all solicitations and contracts (except personal services contracts with individuals).
- Retroactive Requirement: For existing contracts, contracting officers must modify them to include the required clause before obligating any new funds subject to these prohibitions.
Practical Implications
- Contractor Compliance: Companies must review their standard employment and subcontractor nondisclosure agreements (NDAs) to ensure they include "carve-out" language that explicitly allows for the reporting of waste, fraud, or abuse to federal authorities.
- Due Diligence: Failure to update internal policies can lead to immediate disqualification from new awards or a halt in funding on existing contracts if the government identifies non-compliant confidentiality practices.