Rule2022-23281
Defense Federal Acquisition Regulation Supplement: Prohibition on Award to Contractors That Require Certain Nondisclosure Agreements (DFARS Case 2021-D018)
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Published
October 28, 2022
Effective
October 28, 2022
Issuing agencies
Defense DepartmentDefense Acquisition Regulations System
Abstract
DoD is issuing a final rule amending 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 208 (Friday, October 28, 2022)</title>
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[Federal Register Volume 87, Number 208 (Friday, October 28, 2022)]
[Rules and Regulations]
[Pages 65510-65512]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-23281]
Federal Register / Vol. 87, No. 208 / Friday, October 28, 2022 /
Rules and Regulations
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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: Final rule.
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SUMMARY: DoD is issuing a final rule amending 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: Effective October 28, 2022.
FOR FURTHER INFORMATION CONTACT: Ms. Kimberly R. Ziegler, telephone
703-901-3176.
SUPPLEMENTARY INFORMATION:
I. Background
DoD published a proposed rule in the Federal Register at 87 FR
37470 on June 23, 2022, 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 its employees
of the limitations on confidentiality agreements or other statements.
Offerors are required to represent compliance with the statutory
restrictions in the System for Award Management 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). 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.
One respondent submitted a comment in response to the proposed
rule.
II. Discussion and Analysis
DoD reviewed the public comment in the development of the final
rule. The respondent provided a comment about the definition of the
term ``entity'' as it pertains to the application of the rule, which is
outside of the scope of this rule. No changes were made in the final
rule.
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold (SAT), for Commercial Products (Including Commercially
Available Off-the-Shelf (COTS) Items), and for Commercial Services
This 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 does apply DFARS clause 252.203-7002,
Requirement to Inform Employees of Whistleblower Rights, to contracts
valued at or below the SAT and for commercial services and products,
including COTS items. The rule, at DFARS 203.909-3, also prescribes use
of Federal Acquisition Regulation (FAR) provision 52.203-18,
Prohibition on Contracting with Entities that Require Certain Internal
Confidentiality Agreements or Statements-Representation, and FAR 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 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 (FAR
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.
B. Applicability to Contracts for the Acquisition of Commercial
Services and Commercial Products, Including COTS Items
10 U.S.C. 2375 (redesignated as 10 U.S.C. 3452) governs the
applicability of laws to DoD contracts and subcontracts for the
acquisition of commercial services and commercial products, including
COTS items, and is intended to limit the applicability of laws to
contracts for the acquisition of commercial services and commercial
products, including COTS items. 10 U.S.C. 2375 provides that if a
provision of law contains criminal or civil penalties, or if the Under
Secretary of Defense for Acquisition and Sustainment (USD(A&S)) makes a
written determination that it is not in the best interest of the
Federal Government to exempt commercial product and commercial service
contracts, the provision of law will apply to contracts for the
acquisition of commercial products and commercial services. Due to
delegations of authority, the Principal Director, DPC is the
appropriate authority to make this determination. DoD intends 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.
C. Determination
DoD intends 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 those
awarded under FAR part 12 procedures 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, and abuse. The statutes only exempt the application to elements
of the intelligence community.
[[Page 65511]]
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 at or below the SAT or to
commercial services and commercial products (including COTS items). An
exception for contracts at or 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. The Office of
Information and Regulatory Affairs has determined that this rule is not
a major rule as defined by 5 U.S.C. 804.
VII. Regulatory Flexibility Act
A final regulatory flexibility analysis has been prepared
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq.
and is summarized as follows:
This rule amends 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.
There were no significant issues raised by the public in response
to the initial regulatory flexibility analysis.
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.
There are no practical alternatives that will accomplish the
objectives of the statute.
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 amended as follows:
0
1. The authority citation for parts 203 and 212 continues to read as
follows:
Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.
PART 203--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF
INTEREST
0
2. Revise section 203.900 to read as follows:
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
[[Page 65512]]
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. Amend section 212.301--
0
a. In paragraph (f)(i), by redesignating paragraphs (f)(i)(C) and (D)
as paragraphs (f)(i)(D) and (E); and
0
b. By adding a new paragraph (f)(i)(C).
The addition reads 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. 2022-23281 Filed 10-27-22; 8:45 am]
BILLING CODE 5001-06-P
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</html>Indexed from Federal Register on October 28, 2022.
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