[Federal Register Volume 60, Number 140 (Friday, July 21, 1995)]
[Rules and Regulations]
[Pages 37774-37776]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-17936]



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DEPARTMENT OF DEFENSE
DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 3

[FAC 90-30; FAR Case 94-803; Item III]
RIN 9000-AG16


Federal Acquisition Regulation; Whistleblower Protections for 
Contractor Employees (Ethics)

AGENCIES: Department of Defense (DOD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: This final rule is issued pursuant to the Federal Acquisition 
Streamlining Act of 1994, Public Law 103-355 (the Act). The Federal 
Acquisition Regulatory Council is amending the Federal Acquisition 
Regulation (FAR) as a result of the enactment of Sections 6005 and 6006 
of the Act. This regulatory action was subject to Office of Management 
and Budget review under Executive Order 12866, dated September 30, 
1993.


[[Page 37775]]

EFFECTIVE DATE: September 19, 1995.

FOR FURTHER INFORMATION CONTACT:
Mr. Julius Rothlein, Ethics Team Leader, at (703) 697-4349 in reference 
to this FAR case. For general information, contact the FAR Secretariat, 
Room 4037, GS Building, Washington, DC 20405 (202) 501-4755. Please 
cite FAC 90-30, FAR case 94-803.

SUPPLEMENTARY INFORMATION: 

A. Background

    The Federal Acquisition Streamlining Act (FASA) of 1994, Pub. L. 
103-355, provides authorities that streamline the acquisition process 
and minimize burdensome Government-unique requirements. Major changes 
in the acquisition process as a result of Federal Acquisition 
Streamlining Act implementation include changes in the areas of 
Commercial Item Acquisition, Simplified Acquisition Procedures, the 
Truth in Negotiations Act, and introduction of the Federal Acquisition 
Computer Network (FACNET).
    This rule, FAR case 94-803, implements Sections 6005 and 6006 of 
the Federal Acquisition Streamlining Act, whistleblower protections for 
contractor employees. These protections are now virtually identical for 
contractors employed by both DOD and civilian agencies.
    A new subpart is being added to FAR Part 3 which states that these 
protections apply to contractor employees on all Government contracts. 
In implementing these sections, guidance found at page 222 of (DOD) 
Conference Report 103-712 was considered which states: ``The conferees 
direct that the regulations implementing this provision should 
establish procedures and standards that are as similar as practicable 
to the procedures and standards already established in Department of 
Defense regulations.'' However, unlike DOD FAR Supplement (DFARS) 
subpart 203.71 (which implemented the former, and now repealed 10 
U.S.C. 2409a), a clause which must be included in all contracts is not 
being mandated. It is noted that, unlike 10 U.S.C. 2409a, neither 
Section 6005 nor 6006 contains any language which mandates the 
inclusion of a specific clause in contracts to enforce the prohibitions 
of the law. Enforcement of this law, like so many other laws, is not 
dependent on the presence of a clause in the contract. Furthermore, by 
not prescribing a clause for all contracts, the physical size of the 
contract document can be reduced and thereby further the acquisition 
streamlining effort.

B. Regulatory Flexibility Act

    The Department of Defense, the General Services Administration, and 
the National Aeronautics and Space Administration certify that this 
final rule will not have a significant economic impact on a substantial 
number of small entities under the Regulatory Flexibility Act, 5 U.S.C. 
601, et seq., because during the past four years under 10 U.S.C. 2409a, 
DOD processed less than 70 cases, half against large contractors. 
Contractor employee whistleblower actions are not expected to increase 
significantly as a result of the enactment of Sections 6005 and 6006 of 
Pub. L. 103-355.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the changes to 
the FAR do not impose recordkeeping or information collection 
requirements, or collections of information from offerors, contractors, 
or members of the public which require the approval of the Office of 
Management and Budget under 44 U.S.C. 3501, et seq.

D. Public Comments

    Forty-one substantive comments were received from 14 commenters in 
response to the proposed rule published in the Federal Register on 
December 1, 1994 (59 FR 61738). The Federal Acquisition Streamlining 
Act Implementation Team fully considered all comments received, and the 
most significant are discussed below. The team's analysis and 
disposition of the comments may be obtained from the FAR Secretariat.
    Comment: A commenter stated that the rule (3.905) raises 
significant due process concerns as it does not allow the contractor to 
present or cross-examine witnesses.
    Response: Disagree. While it is true that the regulation does not 
provide for the cross examination of witnesses, administrative due 
process does not include the right to cross examine witnesses. 
Administrative due process only provides for notice and the opportunity 
to be heard. The regulation provides both for notice and the 
opportunity to be heard by the head of an agency prior to the making of 
a decision. Comment not accepted.
    Comment: A commenter recommended that the rule's reference to ``a 
substantial'' violation of law be changed to ``any'' violation, 
thereby, including minor violations of law in the rule's coverage.
    Response: Disagree. The Federal Acquisition Streamlining Act 
specifically states that the disclosure which is the subject of the 
reprisal must be ``a substantial violation of law.'' Consequently, 
disclosure of minor violations of law which lead to some reprisal are 
not covered by Sections 6005 and 6006 of the Act. Comment not accepted.
    Comment: Commenters were concerned that 3.904(b) created an 
unnecessary jurisdictional issue when it indicated that complaints had 
to be filed within 180 days of discovery of the reprisal.
    Response: Agree. Federal Acquisition Streamlining Act does not 
contain a 180-day filing period. It was proposed to help ensure that 
the Inspector General (IG) received complaints in a timely fashion so 
that they could conduct a thorough investigation. The proposed language 
may have been used to argue that an employee's complaint filed on the 
181st day was late and could not be investigated. Again, Sections 6005 
and 6006 of the Act do not contain this statute of limitation and the 
final rule will be changed by deleting 3.904(b) and redesigning 
3.904(c) as 3.904(b). Comment accepted.
    Comment: A commenter believes that the 30 days provided for the 
contractor to submit a written response to the IG's report may be too 
restrictive. Since the statute does not fix a period of time for the 
contractor's response, the commenter recommended that 3.905(d) provide 
authority for the IG to set a reasonable period of time for the 
response appropriate to the nature and complexity of the issues and the 
facts.
    Response: Disagree in part. contractor's written response is made 
to the head of the agency, not the IG. Agree that there is some need to 
express how the parties may request an extension of time to file a 
written response. FAR 3.905(d) will be amended by adding the sentence: 
``Extensions of time to file a written response may be granted by the 
head of the agency or designee.''
    Finally, in 3.905 (b), (c), (d), (e) and 3.906 (a), (b) and (c), 
the words ``or designee'' were added after the reference to the ``head 
of the agency'' to clarify that the head of the agency may delegate 
duties under Sections 6005 and 6006.

List of Subjects in 48 CFR Part 3

    Government procurement.

    Dated: July 17, 1995.
Capt. Barry L. Cohen, SC, USN,
Project manager for the Implementation of the Federal Acquisition 
Streamlining Act of 1994.
    Therefore, 48 CFR Part 3 is amended as set forth below:
    
[[Page 37776]]


PART 3--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF 
INTEREST

    1. The authority citation for 48 CFR Part 3 continues to read as 
follows:

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).
    2. Subpart 3.9, consisting of sections 3.900 through 3.906, is 
added to read as follows:

Subpart 3.9--Whistleblower Protections for Contractor Employees

3.900  Scope of subpart.
3.901  Definitions.
3.902  Applicability.
3.903  Policy.
3.904  Procedures for filing complaints.
3.905  Procedures for investigating complaints.
3.906  Remedies.


3.900  Scope of subpart.

    This subpart implements 10 U.S.C. 2409 and 41 U.S.C. 251, et seq., 
as amended by Sections 6005 and 6006 of the Federal Acquisition 
Streamlining Act of 1994 (Pub. L. 103-355).


3.901  Definitions.

    Authorized official of an agency means an officer or employee 
responsible for contracting, program management, audit, inspection, 
investigation, or enforcement of any law or regulation relating to 
Government procurement or the subject matter of the contract.
    Authorized official of the Department of Justice means any person 
responsible for the investigation, enforcement, or prosecution of any 
law or regulation.
    Inspector General means an Inspector General appointed under the 
Inspector General Act of 1978, as amended. In the Department of Defense 
that is the DOD Inspector General. In the case of an executive agency 
that does not have an Inspector General, the duties shall be performed 
by an official designated by the head of the executive agency.


3.902  Applicability.

    This subpart applies to all Government contracts.


3.903  Policy.

    Government contractors shall not discharge, demote or otherwise 
discriminate against an employee as a reprisal for disclosing 
information to a Member of Congress, or an authorized official of an 
agency or of the Department of Justice, relating to a substantial 
violation of law related to a contract (including the competition for 
or negotiation of a contract).


3.904  Procedures for filing complaints.

    (a) Any employee of a contractor who believes that he or she has 
been discharged, demoted, or otherwise discriminated against contrary 
to the policy in 3.903 may file a complaint with the Inspector General 
of the agency that awarded the contract.
    (b) The complaint shall be signed and shall contain--
    (1) The name of the contractor;
    (2) The contract number, if known; if not, a description reasonably 
sufficient to identify the contract(s) involved;
    (3) The substantial violation of law giving rise to the disclosure;
    (4) The nature of the disclosure giving rise to the discriminatory 
act; and
    (5) The specific nature and date of the reprisal.


3.905  Procedures for investigating complaints.

    (a) Upon receipt of a complaint, the Inspector General shall 
conduct an initial inquiry. If the Inspector General determines that 
the complaint is frivolous or for other reasons does not merit further 
investigation, the Inspector General shall advise the complainant that 
no further action on the complaint will be taken.
    (b) If the Inspector General determines that the complaint merits 
further investigation, the Inspector General shall notify the 
complainant, contractor, and head of the contracting activity. The 
Inspector General shall conduct an investigation and provide a written 
report of findings to the head of the agency or designee.
    (c) Upon completion of the investigation, the head of the agency or 
designee shall ensure that the Inspector General provides the report of 
findings to--
    (1) The complainant and any person acting on the complainant's 
behalf;

    (2) The contractor alleged to have committed the violation; and

    (3) The head of the contracting activity.

    (d) The complainant and contractor shall be afforded the 
opportunity to submit a written response to the report of findings 
within 30 days to the head of the agency or designee. Extensions of 
time to file a written response may be granted by the head of the 
agency or designee.

    (e) At any time, the head of the agency or designee may request 
additional investigative work be done on the complaint.

3.906

  Remedies.

    (a) If the head of the agency or designee determines that a 
contractor has subjected one of its employees to a reprisal for 
providing information to a Member of Congress, or an authorized 
official of an agency or of the Department of Justice, the head of the 
agency or designee may take one or more of the following actions:

    (1) Order the contractor to take affirmative action to abate the 
reprisal.

    (2) Order the contractor to reinstate the person to the position 
that the person held before the reprisal, together with the 
compensation (including back pay), employment benefits, and other terms 
and conditions of employment that would apply to the person in that 
position if the reprisal had not been taken.

    (3) Order the contractor to pay the complainant an amount equal to 
the aggregate amount of all costs and expenses (including attorneys' 
fees and expert witnesses' fees) that were reasonably incurred by the 
complainant for, or in connection with, bringing the complaint 
regarding the reprisal.

    (b) Whenever a contractor fails to comply with an order, the head 
of the agency or designee shall request the Department of Justice to 
file an action for enforcement of such order in the United States 
district court for a district in which the reprisal was found to have 
occurred. In any action brought under this section, the court may grant 
appropriate relief, including injunctive relief and compensatory and 
exemplary damages.

    (c) Any person adversely affected or aggrieved by an order issued 
under this section may obtain review of the order's conformance with 
the law, and this subpart, in the United States Court of Appeals for a 
circuit in which the reprisal is alleged in the order to have occurred. 
No petition seeking such review may be filed more than 60 days after 
issuance of the order by the head of the agency or designee. Review 
shall conform to Chapter 7 of Title 5, United States Code.

[FR Doc. 95-17936 Filed 7-20-95; 8:45 am]

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