Proposed Rule2022-13369
Defense Federal Acquisition Regulation Supplement: Prohibition on Award to Contractors That Require Certain Nondisclosure Agreements (DFARS Case 2021-D018)
Primary source
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Published
June 23, 2022
Issuing agencies
Defense DepartmentDefense Acquisition Regulations System
Abstract
DoD is proposing to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to implement a section of the National Defense Authorization Act for Fiscal Year 2021 that prohibits the award of any DoD contracts to an entity that requires its employees to sign internal confidentiality agreements or statements that would prohibit or otherwise restrict its employees from lawfully reporting waste, fraud, or abuse related to the performance of a DoD contract to a designated investigative or law enforcement representative of DoD authorized to receive such information.
Full Text
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<title>Federal Register, Volume 87 Issue 120 (Thursday, June 23, 2022)</title>
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[Federal Register Volume 87, Number 120 (Thursday, June 23, 2022)]
[Proposed Rules]
[Pages 37470-37473]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-13369]
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DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 203 and 212
[Docket DARS-2022-0013]
RIN 0750-AL36
Defense Federal Acquisition Regulation Supplement: Prohibition on
Award to Contractors That Require Certain Nondisclosure Agreements
(DFARS Case 2021-D018)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Proposed rule.
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SUMMARY: DoD is proposing to amend the Defense Federal Acquisition
Regulation Supplement (DFARS) to implement a section of the National
Defense Authorization Act for Fiscal Year 2021 that prohibits the award
of any DoD contracts to an entity that requires its employees to sign
internal confidentiality agreements or statements that would prohibit
or otherwise restrict its employees from lawfully reporting waste,
fraud, or abuse related to the performance of a DoD contract to a
designated investigative or law enforcement representative of DoD
authorized to receive such information.
DATES: Comments on the proposed rule should be submitted in writing to
the address shown below on or before August 22, 2022, to be considered
in the formation of the final rule.
ADDRESSES: Submit comments identified by DFARS Case 2021-D018, using
any of the following methods:
[cir] Federal eRulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
Search for ``DFARS Case 2021-D018.'' Select ``Comment'' and follow the
instructions to submit a comment. Please include your name, company
name (if any), and ``DFARS Case 2021-D018'' on any attached document.
[cir] Email: <a href="/cdn-cgi/l/email-protection#b2ddc1d69cd6d4d3c0c1f2dfd3dbde9cdfdbde"><span class="__cf_email__" data-cfemail="f9968a9dd79d9f988b8ab994989095d7949095">[email protected]</span></a>. Include DFARS Case 2021-D018 in
the subject line of the message.
Comments received generally will be posted without change to
<a href="https://www.regulations.gov">https://www.regulations.gov</a>, including any personal information
provided. To confirm receipt of your comment(s), please check <a href="https://www.regulations.gov">https://www.regulations.gov</a>, approximately two to three days after submission
to verify posting.
FOR FURTHER INFORMATION CONTACT: Ms. Kimberly R. Ziegler, telephone
703-901-3176.
SUPPLEMENTARY INFORMATION:
I. Background
DoD is proposing to amend DFARS subpart 203.9 to implement section
883 of the National Defense Authorization Act (NDAA) for Fiscal Year
(FY) 2021 (Pub. L. 116-283). Section 883 prohibits the award of a DoD
contract to an entity that requires its employees to sign internal
confidentiality agreements or statements that would prohibit or
otherwise restrict such employees from lawfully reporting waste, fraud,
or abuse related to the performance of a DoD contract to a designated
investigative or law enforcement representative within DoD authorized
to receive such information. The statute also requires entities to
inform their employees of the limitations on confidentiality agreements
or other statements. Offerors are required to represent compliance with
the statutory restrictions prior to submitting an offer or quote.
The requirements of section 883 closely resemble those provided in
section 743 of Division E, Title VII, of the Consolidated and Further
Continuing Appropriations Act, 2015 (Pub. L. 113-235), which was
implemented at Federal Acquisition Regulation (FAR) 3.909, Prohibition
on providing funds to an entity that requires certain internal
confidentiality agreements or statements (82 FR 4717, dated January 13,
2017).
Differences between the statutory requirements are negligible; the
most notable is that section 743 applies the prohibition to entities
who require their employees or contractors to sign the internal
confidentiality agreements or statements. Section 883, however, applies
the prohibition to entities who require their employees to sign them.
Since the prohibition at section 743 applies Governmentwide, DoD is
currently complying with section 883 based on the FAR application of
section 743 to employees and contractors.
II. Discussion and Analysis
The proposed rule implements section 883 of the NDAA for FY 2021 by
utilizing the existing Governmentwide prohibition at FAR subpart 3.9
and clarifies the applicability of Governmentwide statutory guidance at
DFARS 203.900. Section 883 provides
[[Page 37471]]
DoD-specific statutory guidance that is almost identical to section
743, as implemented Governmentwide in FAR 3.909. Both statutes prohibit
the award of a contract using appropriated funds to an entity that
requires certain confidentiality agreements or statements. Given that
the differences in the prohibitions are negligible and the FAR
prohibition already applies to DoD contracts, a separate implementation
of section 883 in the DFARS is unnecessary. As a result, the proposed
rule will add the statutory citation for section 883 in DFARS 203.900
and update the language needed to ensure contracting officers comply
with the applicable sections in FAR subpart 3.9.
FAR 3.909-2(a) provides the representation in the System for Award
Management required by section 883(a)(1). The representation refers to
Government contracts and Federal departments or agencies, which
includes DoD. FAR 3.909-2(b) provides direction to the contracting
officer regarding reliance on an offeror's representation, as required
in section 883(b).
FAR 3.909-3 prescribes the use of the solicitation provision at
52.203-18, Prohibition on Contracting with Entities That Require
Certain Internal Confidentiality Agreements or Statements-
Representation, and the contract clause at 52.203-19, Prohibition on
Requiring Certain Internal Confidentiality Agreements or Statements, in
all solicitations and contracts except those for a personal services
contract with an individual. The contract clause at 52.203-19 requires
the contractor to notify its current employees and subcontractors of
these prohibitions and restrictions, fulfilling the requirement at
section 883(a)(2).
The proposed rule revises the scope of DFARS subpart 203.9 to
reconcile with FAR 3.900. The clause prescription at 203.970 is revised
to clarify that DFARS 252.203-7002, Requirement to Inform Employees of
Whistleblower Rights, which implements 10 U.S.C. 2409 (redesignated as
10 U.S.C. 4701), is applicable to solicitations and contracts using FAR
part 12 procedures for the acquisition of commercial items. The rule
makes a conforming change to DFARS 212.301, Solicitation provisions and
contract clauses for the acquisition of commercial items. While the
clause was always applicable to all solicitations and contracts, the
proposed revision is intended to reduce the risk of noncompliance.
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold (SAT) and for Commercial Services and Commercial Products,
Including Commercially Available Off-the-Shelf (COTS) Items
This proposed rule implements section 883 of the NDAA for FY 2021
(Pub. L. 116-283) but does not create any new solicitation provisions
or contract clauses. The rule revises the prescription for DFARS clause
252.203-7002, Requirement to Inform Employees of Whistleblower Rights,
which implements 10 U.S.C. 2409, to require use of the clause in
contracts valued at or below the simplified acquisition threshold and
to acquisitions of commercial services and commercial products,
including COTS items. Therefore, DoD intends to apply the rule to
contracts at or below the SAT, and DoD intends to apply the rule to
contracts for the acquisition of commercial products including COTS
items and for the acquisition of commercial services.
The proposed rule, at DFARS 203.909-3, also prescribes use of FAR
solicitation provision 52.203-18, Prohibition on Contracting with
Entities that Require Certain Internal Confidentiality Agreements or
Statements-Representation, and FAR contract clause 52.203-19,
Prohibition on Requiring Certain Internal Confidentiality Agreements or
Statements. The FAR clause and provision, except for personal services
contracts, are already prescribed for use in acquisitions valued at or
below the SAT; and the FAR clause 52.203-19 is also prescribed for use
in commercial acquisitions.
A. Applicability to Contracts at or Below the SAT
41 U.S.C 1905 governs the applicability of laws to contracts or
subcontracts in amounts not greater than the SAT. It is intended to
limit the applicability of laws to such contracts or subcontracts. 41
U.S.C. 1905 provides that if a provision of law contains criminal or
civil penalties, or if the Federal Acquisition Regulatory Council makes
a determination that it is not in the best interest of the Federal
Government to exempt contracts or subcontracts at or below the SAT, the
law will apply to them. The Principal Director, Defense Pricing and
Contracting (DPC), is the appropriate authority to make comparable
determinations for regulations to be published in the DFARS, which is
part of the FAR system of regulations. DoD does intend to make that
determination. Therefore, this rule will apply at or below the SAT.
B. Applicability to Contracts for the Acquisition of Commercial
Services and Commercial Products, Including COTS Items
10 U.S.C. 3452 (previously 10 U.S.C. 2375) exempts contracts and
subcontracts for the acquisition of commercial products, including COTS
items, and commercial services from provisions of law enacted after
October 13, 1994, unless the Under Secretary of Defense for Acquisition
and Sustainment (USD (A&S)) makes a written determination that it would
not be in the best interest of DoD to exempt contracts for the
procurement of commercial products and commercial services from the
applicability of the provision or contract requirement, except for a
provision of law that--
<bullet> Provides for criminal or civil penalties;
<bullet> Requires that certain articles be bought from American
sources pursuant to 10 U.S.C. 4862 (previously 10 U.S.C. 2533c), or
that strategic materials critical to national security be bought from
American sources pursuant to 10 U.S.C. 4863 (previously 10 U.S.C.
2533b); or
<bullet> Specifically refers to 10 U.S.C. 3452 and states that it
shall apply to contracts and subcontracts for the acquisition of
commercial products (including COTS items) and commercial services; or
<bullet> USD (A&S) determines in writing that it would not be in
the best interest of the Government to exempt contracts or subcontracts
for the acquisition of commercial products or commercial services from
the applicability of the provision or contract clause requirement.
The statutes implemented in this rule do not impose criminal or
civil penalties, do not require purchase pursuant to 10 U.S.C. 4862 or
4863, and do not refer to 10 U.S.C. 3452. Therefore, 10 U.S.C. 2409
will not apply to the acquisition of commercial services or commercial
products including COTS items unless a written determination is made.
Due to delegations of authority, the Principal Director, DPC is the
appropriate authority to make this determination. DoD intends to make a
determination to apply this rule and the corresponding statutes (10
U.S.C. 2409 and section 883 of the NDAA for FY 2021) to acquisitions at
or below the SAT and for commercial services and commercial products,
including COTS items.
[[Page 37472]]
C. Determination
DoD is proposing to apply the requirements of 10 U.S.C. 2409 and
section 883 of the NDAA for FY 2021 to contracts at or below the SAT
and to the acquisition of commercial services and commercial products,
including COTS items, because the statutory protections are intended to
apply to any employee of a contractor or subcontractor who discloses or
may be restricted from disclosing evidence of waste, fraud, or abuse.
The statutes only exempt the application to elements of the
intelligence community.
10 U.S.C. 2409 provides contractor employees protection from
reprisal for disclosure of waste, fraud, and abuse to designated
persons and bodies identified in the statute. An employee of a
contractor or subcontractor may not be discharged, demoted, or
otherwise discriminated against as a reprisal for such a disclosure.
The statute does not apply to elements of the intelligence committee.
Section 883 prohibits the award of any DoD contract to an entity
that requires its employees to sign internal confidentiality agreements
or statements that would prohibit or otherwise restrict its employees
from lawfully reporting waste, fraud, or abuse related to the
performance of a DoD contract to a designated investigative or law
enforcement representative of DoD authorized to receive such
information.
It is not in the best interest of the Federal Government to exempt
application of this rule to actions below the SAT or to commercial
services and commercial products, including COTS items. An exception
for contracts below the SAT and those for commercial services and
commercial products, including COTS items, would exclude the majority
of the contracts and individuals intended to be protected under the
laws, thereby undermining the overarching public policy purpose of the
laws.
IV. Expected Impact of the Rule
This proposed rule is not expected to have a significant impact on
the public or Government agencies, because the requirements of section
883 have already been implemented Governmentwide at FAR 3.909. DoD-
specific implementation of section 883 would duplicate the previous
implementation of section 743 of Division E, Title VII, of the
Consolidated and Further Continuing Appropriations Act, 2015 (Pub. L.
113-235) as implemented Governmentwide in the FAR.
V. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). E.O.
13563 emphasizes the importance of quantifying both costs and benefits,
of reducing costs, of harmonizing rules, and of promoting flexibility.
This is not a significant regulatory action and, therefore, was not
subject to review under section 6(b) of E.O. 12866, Regulatory Planning
and Review, dated September 30, 1993.
VI. Congressional Review Act
As required by the Congressional Review Act (5 U.S.C. 801-808)
before an interim or final rule takes effect, DoD will submit a copy of
the interim or final rule with the form, Submission of Federal Rules
Under the Congressional Review Act, to the U.S. Senate, the U.S. House
of Representatives, and the Comptroller General of the United States. A
major rule under the Congressional Review Act cannot take effect until
60 days after it is published in the Federal Register. This rule is not
anticipated to be a major rule under 5 U.S.C. 804.
VII. Regulatory Flexibility Act
DoD does not expect this rule to have a significant economic impact
on a substantial number of small entities within the meaning of the
Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because this rule
does not implement new requirements on any entities beyond those
already published in the FAR. However, an initial regulatory
flexibility analysis has been performed and is summarized as follows:
This rule proposes to amend the DFARS to implement section 883 of
the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2021
(Pub. L. 116-283). Section 883 prohibits the award of a DoD contract to
an entity that requires its employees to sign internal confidentiality
agreements or statements that would prohibit or otherwise restrict such
employees from lawfully reporting waste, fraud, or abuse related to the
performance of a DoD contract to a designated investigative or law
enforcement representative within DoD authorized to receive such
information.
The objective of the rule is to implement the DoD-specific statute
that removes restrictions on the ability of employees to report waste,
fraud, or abuse to the appropriate DoD authorities. The legal basis of
the rule is section 883 of the NDAA for FY 2021.
This rule will apply to all small entities that are eligible to
receive DoD contracts; however, the requirements of section 883 are
already met through the Governmentwide implementation of a previously
published prohibition at FAR 3.909 and in the System for Award
Management (SAM) representations and certifications. As a result, the
361,000 unique small entities registered in SAM as of January 12, 2021,
are already compliant with these requirements and will not be required
to take any additional action to comply with the DoD-specific
prohibition in section 883.
The rule does not impose any new reporting, recordkeeping, or
compliance requirements.
The rule does not duplicate, overlap, or conflict with any other
Federal rules.
There are no practical alternatives that will accomplish the
objectives of the statute.
DoD invites comments from small business concerns and other
interested parties on the expected impact of this rule on small
entities.
DoD will also consider comments from small entities concerning the
existing regulations in subparts affected by the rule in accordance
with 5 U.S.C. 610. Interested parties must submit such comments
separately and should cite 5 U.S.C 610 (DFARS Case 2021-D018), in
correspondence.
VIII. Paperwork Reduction Act
This rule does not contain any information collection requirements
that require the approval of the Office of Management and Budget (OMB)
under the Paperwork Reduction Act (44 U.S.C. chapter 35).
List of Subjects in 48 CFR Parts 203 and 212
Government Procurement.
Jennifer D. Johnson,
Editor/Publisher, Defense Acquisition Regulations System.
Therefore, 48 CFR parts 203 and 212 are proposed to be amended as
follows:
PART 203--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF
INTEREST
0
1. The authority citation for part 203 is revised to read as follows:
Authority: 41 U.S.C 1303 and 48 CFR chapter 1.
0
2. Revise section 203.900 to read as follows:
[[Page 37473]]
203.900 Scope of subpart.
This subpart implements 10 U.S.C. 2409 and section 883 of the
National Defense Authorization Act for Fiscal Year 2021 (Pub. L. 116-
283).
(a)(i) 10 U.S.C. 2409 provides DoD whistleblower protection
policies and procedures for contractor employees. Use sections 203.901
through 203.906 of this subpart in lieu of FAR sections 3.901 through
3.906 to implement 10 U.S.C. 2409.
(ii) 10 U.S.C. 2409 does not apply to any element of the
intelligence community, as defined in 50 U.S.C. 3003(4). Sections
203.901 through 203.906 do not apply to any disclosure made by an
employee of a contractor or subcontractor of an element of the
intelligence community if such disclosure--
(A) Relates to an activity or an element of the intelligence
community; or
(B) Was discovered during contract or subcontract services provided
to an element of the intelligence community.
(c) Section 883 of the National Defense Authorization Act for
Fiscal Year 2021 (Pub. L. 116-283) prohibits the award of a DoD
contract to contractors that require their employees to sign internal
confidentiality agreements or statements that would prohibit or
otherwise restrict such employees from lawfully reporting waste, fraud,
or abuse related to the performance of a DoD contract to a designated
investigative or law enforcement representative within DoD authorized
to receive such information.
0
3. Add sections 203.909 and 203.909-3 to read as follows:
203.909 Prohibition on providing funds to an entity that requires
certain internal confidentiality agreements or statements.
203.909-3 Solicitation provision and contract clause.
Use the provision at FAR 52.203-18, Prohibition on Contracting with
Entities That Require Certain Internal Confidentiality Agreements or
Statements--Representation, and the clause at FAR 52.203-19,
Prohibition on Requiring Certain Internal Confidentiality Agreements or
Statements, prescribed at FAR 3.909-3 to implement section 883 of the
National Defense Authorization Act for Fiscal Year 2021.
0
4. Revise section 203.970 to read as follows:
203.970 Contract clause.
Use the clause at 252.203-7002, Requirement to Inform Employees of
Whistleblower Rights, in all solicitations and contracts, including
solicitations and contracts using FAR part 12 procedures for the
acquisition of commercial items.
PART 212--ACQUISITION OF COMMERCIAL ITEMS
0
5. The authority citation for part 212 continues to read as follows:
Authority: 41 U.S.C 1303 and 48 CFR chapter 1.
0
6. Amend section 212.301 by--
0
a. Redesignating paragraphs (f)(i)(C) and (D) as paragraphs (f)(i)(D)
and (E); and
0
b. Adding a new paragraph (f)(i)(C) to read as follows:
212.301 Solicitation provisions and contract clauses for the
acquisition of commercial items.
* * * * *
(f) * * *
(i) * * *
(C) Use the clause at 252.203-7002, Requirement to Inform Employees
of Whistleblower Rights, as prescribed in 203.970, to comply with 10
U.S.C. 2409.
* * * * *
[FR Doc. 2022-13369 Filed 6-22-22; 8:45 am]
BILLING CODE 5001-06-P
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