[Federal Register Volume 78, Number 189 (Monday, September 30, 2013)]
[Rules and Regulations]
[Pages 59851-59854]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-23768]



[[Page 59851]]

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 203 and 252

RIN 0750-AH97


Defense Federal Acquisition Regulation Supplement: Enhancement of 
Contractor Employee Whistleblower Protections (DFARS Case 2013-D010)

AGENCY: Defense Acquisition Regulations System, Department of Defense 
(DoD).

ACTION: Interim rule.

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SUMMARY: DoD is issuing an interim rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to implement statutory 
amendments to whistleblower protections for contractor and 
subcontractor employees.

DATES: Effective date: September 30, 2013. In accordance with FAR 
1.108(d)(3), contracting officers are encouraged to include the changes 
in these rules in major modifications to contracts and orders awarded 
prior to the effective date of this interim rule.
    Comment Date: Comments on the interim rule should be submitted in 
writing to the address shown below on or before November 29, 2013, to 
be considered in the formation of a final rule.

ADDRESSES: Submit comments identified by DFARS Case 2013-D010, using 
any of the following methods:
    [cir] Regulations.gov: http://www.regulations.gov. Submit comments 
via the Federal eRulemaking portal by entering ``DFARS Case 2013-D010'' 
under the heading ``Enter keyword or ID'' and selecting ``Search.'' 
Select the link ``Submit a Comment'' that corresponds with ``DFARS Case 
2013-D010.'' Follow the instructions provided at the ``Submit a 
Comment'' screen. Please include your name, company name (if any), and 
``DFARS Case 2013-D010'' on your attached document.
    [cir] Email: [email protected]. Include DFARS Case 2013-D010 in the 
subject line of the message.
    [cir] Fax: 571-372-6094.
    [cir] Mail: Defense Acquisition Regulations System, Attn: Ms. 
Meredith Murphy, OUSD(AT&L)DPAP/DARS, Room 3B855, 3060 Defense 
Pentagon, Washington, DC 20301-3060.
    Comments received generally will be posted without change to http://www.regulations.gov, including any personal information provided. To 
confirm receipt of your comment(s), please check www.regulations.gov, 
approximately two to three days after submission to verify posting 
(except allow 30 days for posting of comments submitted by mail).

FOR FURTHER INFORMATION CONTACT: Ms. Meredith Murphy, Defense 
Acquisition Regulations System, OUSD(AT&L)DPAP/DARS, Room 3B855, 3060 
Defense Pentagon, Washington, DC 20301-3060. Telephone 571-372-6098; 
facsimile 571-372-6101.''

SUPPLEMENTARY INFORMATION:

I. Background

    This interim rule revises the DFARS to implement section 827 
(except paragraph (g)) of the National Defense Authorization Act (NDAA) 
for Fiscal Year (FY) 2013 (Pub. L. 112-239, enacted January 2, 2013). 
Section 827 (Enhancement of Whistleblower Protections for Contractor 
Employees) made extensive changes to 10 U.S.C. 2409, entitled 
``Contractor employees: Protection from reprisal or disclosure.'' 
Paragraph (g) of section 827, which amended paragraph (k) of 10 U.S.C. 
2324, entitled ``Allowable costs under defense contracts,'' is 
partially addressed under a separate DFARS case, 2013-D022, 
Allowability of Legal Costs for Whistleblower Proceedings.
    Section 827 of the NDAA for FY 2013 created a standalone statute 
for DoD that is not dependent on the Federal Acquisition Regulation 
(FAR) coverage. The DoD contractor whistleblower rules are based on an 
independent statute that applies only to Title 10 agencies. Section 
828, Pilot Program for Enhancement of Contractor Whistleblower 
Protections, of the NDAA for FY 2013 will be implemented in the FAR; 
see FAR Case 2013-015. Section 828 establishes a four-year ``pilot 
program'' to provide enhanced whistleblower protections for employees 
of civilian agency contractors and subcontractors and suspend the use 
of FAR 3.901 through 3.906. The FAR will also incorporate sections 
827(g) and 828(d) of the NDAA for FY 2013 (Pub. L. 112-239).
    Section 827(g) amends 10 U.S.C. 2324(k). In a like manner, section 
828(d) amends 41 U.S.C. 4310 to address legal costs incurred by a 
contractor in connection with a proceeding commenced by a contractor 
employee submitting a complaint under the applicable whistleblower 
section (10 U.S.C. 2409 or 41 U.S.C. 4712, respectively). See FAR Case 
2013-017, entitled Allowability of Legal Costs for Whistleblower 
Proceedings.

II. Discussion and Analysis

    The current FAR addresses this subject at subpart 3.9, and the DoD-
unique rules are contained in DFARS subpart 203.9, entitled 
``Whistleblower Protections for Contractor Employees.'' DFARS subpart 
203.9 implements 10 U.S.C. 2409, as amended. The subpart covers the 
policy, procedures for filing and investigating complaints, remedies, 
and the prescription for the clause at DFARS 252.203-7002, entitled 
``Requirement to Inform Employees of Whistleblower Rights.''

A. Section 827 Changes to 10 U.S.C. 2409

    Section 827 revised 10 U.S.C. 2409 as follows:
    (a)(1): Amended grounds for disclosure.
    (a)(2): Amended persons and bodies to whom disclosure may be made 
and for which reprisal is prohibited.
    (a)(3)(A): Provided a definition of who is deemed to have made a 
disclosure, see 203.903(3).
    (a)(3)(B): Added prohibition against reprisal even if undertaken at 
the request of a DoD or Administration official.
    (b)(1): Provided an additional basis on which the Inspector General 
may determine not to investigate.
    (b)(2)(B): Provided a reporting timeframe for any additional period 
for investigation.
    (b)(3): Provided specific exemptions to the prohibition against 
disclosure of information from or about any person alleging the 
reprisal.
    (b)(4): Added a three-year time limit for bringing a complaint.
    (c)(1)(B): Modified the types of damages that may be ordered.
    (c)(2): Created a two-year time limit for bringing an action if 
remedies have been denied or after remedies are deemed to have been 
exhausted.
    (c)(4): Expanded on the types of relief that may be granted when a 
person fails to comply with an order for relief.
    (c)(5): Clarified that filing an appeal generally may not be 
grounds for staying enforcement of the order.
    (c)(6): Stated the legal burden of proof to be used.
    (c)(7): Prohibited any waiver of the rights and remedies in the 
statute.
    (d): Added a new requirement to notify employees of their rights 
and remedies.
    (e): Created an exemption for elements of the intelligence 
community.
    (g)(6): Added a definition of ``abuse of authority.''

B. Changes to DFARS

    The statutory changes to 10 U.S.C. 2409 made by section 827 are

[[Page 59852]]

implemented in DFARS subpart 203.9. The statutory changes to 10 U.S.C. 
2324(k) made by section 827 are being implemented separately.
    The interim rule amends DFARS 203.900, Scope of subpart, to add a 
reference to section 827 and implement the exclusion of the 
intelligence community from applicability of the subpart. The 
definition of ``abuse of authority'' is added to DFARS 203.901, 
Definition.
    Amendments are made to DFARS 203.903, Policy. The applicability of 
the subpart is expanded to include violations of rule or regulation and 
abuse of authority relating to a DoD contract. The entities covered are 
expanded to include other law enforcement agencies, a court or grand 
jury, and certain contractor or subcontractor management officials or 
employees. In addition, the changes to this section include a 
clarification of what constitutes a ``disclosure.''
    DFARS 203.904 is revised to add the specific procedures for filing 
complaints from FAR 3.904. DFARS 203.905 is amended to address specific 
reasons for which the DoD Inspector General would be justified in not 
investigating a complaint of discrimination or reprisal, add timelines, 
and clarify the narrow circumstances under which the DoD Inspector 
General could respond to any inquiry or disclose information about 
alleged reprisal.
    The remedies at DFARS 203.906 are amended to prohibit reprisal, add 
a time limit for bringing an action, and state that the rights and 
remedies provided in DFARS subpart 203.9 cannot be waived. Paragraph 
(h) of section 827 provides that nothing in the new law may be 
construed to provide any rights to disclose classified information not 
otherwise provided by law. This important caveat is included in a new 
section 203.907, entitled ``Classified information.''
    The clause prescribed at DFARS 203.970 is 252.203-7002, Requirement 
to Inform Employees of Whistleblower Rights. The interim rule amends 
the clause to apply to subcontractors the specific requirement to 
inform employees in writing of their whistleblower rights. In addition, 
the written notification of employee whistleblower rights and 
protections is required in the predominant native language of the 
workforce.

III. 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 a significant regulatory action and, therefore, was subject to 
review under section 6(b) of E.O. 12866, Regulatory Planning and 
Review, dated September 30, 1993. This rule is not a major rule under 5 
U.S.C. 804.

IV. Regulatory Flexibility Act

    DoD does not expect this interim 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 the rule neither changes the substance of contract or 
solicitation procedures or policies nor creates a whistleblower 
protection for contractor employees. Such protections currently exist, 
and this case only clarifies contractors' rights and the remedies 
available to their employees. However, an initial regulatory 
flexibility analysis has been performed and is summarized as follows:
    DoD is amending the DFARS to implement changes to the existing 
protections for contractor whistleblower employees as a result of 
amendments made by section 827 of the National Defense Authorization 
Act (NDAA) for Fiscal Year (FY) 2013. Section 827 of the NDAA for FY 
2013 amended 10 U.S.C. 2409 and 10 U.S.C. 2324(k). Section 827 changes 
are applicable to DoD, NASA, and the Coast Guard. Each agency will 
amend its Federal Acquisition Regulation supplement to incorporate 
these provisions. This Initial Regulatory Flexibility Analysis pertains 
only to this DFARS interim rule. This rule makes revisions to subpart 
203.9, ``Whistleblower Protections for Contractor Employees.'' The 
subpart covers the policy, procedures for filing and investigating 
complaints, remedies, and the prescription for the clause at DFARS 
252.203-7002, entitled ``Requirement to Inform Employees of 
Whistleblower Rights.''
    The rule applies to all entities, small as well as large, at the 
prime contract and subcontract level. However, not all entities will 
have a situation occur that requires an employee to use the 
whistleblower provisions. Given that a whistleblower employee may work 
for any size business, the impact on small businesses is directly 
associated with the number of whistleblowers it employs. There is no 
way to predict this number in advance. However, a small entity could be 
impacted by a whistleblower employee either as a Government prime 
contractor or subcontractor. In addition, the impact on an entity is 
directly related to the seriousness of the alleged wrongdoing.
    There are no reporting requirements associated with reporting of 
the wrongdoing as stated in the interim rule. A firm accused of 
retaliating against an employee whistleblower is likely to be required 
to furnish human resources documentation to disprove the accusation. 
This documentation, however, would only be required in the course of an 
investigation of the accusation, not as a result of a contract clause.
    The rule does not duplicate, overlap, or conflict with any other 
Federal rules. Because of the terms used in the statute, DoD is unable 
to create alternatives, such as exempting small entities or 
establishing a dollar threshold for coverage. Regardless of the size of 
the business, a whistleblower employee must be protected from 
retaliation by his/her employer.
    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 this 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 2013-D010), in 
correspondence.

V. Paperwork Reduction Act

    The rule does not contain any information collection additional 
requirements that require the approval of the Office of Management and 
Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

VI. Determination To Issue an Interim Rule

    A determination has been made by the Secretary of Defense pursuant 
to 41 U.S.C. 1701(d) that urgent and compelling reasons exist to 
justify promulgating this rule on an interim basis without prior 
opportunity for public comment. This action is necessary for the 
following reasons: First, by operation of law, the revised statute 
became effective on July 1, 2013 (i.e., Congress included language in 
section 827 specifically addressing the effective date of the changes 
to 10 U.S.C. 2409). Second, the revisions impose new responsibilities 
on agencies and create certain new rights for contractor

[[Page 59853]]

employees. Specifically, as of July 1, 2013:
     There are changes and additions in the list of entities to 
whom a whistleblower disclosure makes the whistleblower eligible for 
additional protections against reprisal;
     Agency heads have expanded responsibilities to take 
specific actions with regard to a DoD Inspector General finding of 
reprisal against a contractor whistleblower:
     The law requires that the written notice to employees of 
their whistleblower rights must be provided in the ``predominant native 
language of the workforce;'' and
     For the first time, contractors must flow down to 
subcontractors the requirement to provide written notice to 
subcontractor employees.
    In addition, there is a new exemption for elements of the 
intelligence community that was not available under previous laws.
    The most effective and efficient way to ensure awareness and 
compliance by agencies and contractors with all of these requirements 
is through immediate regulatory change. Delaying promulgation may delay 
the effective date of regulations but will not postpone when the law 
becomes applicable to contractors and subcontractors. Thus, ordinary 
notice and comment procedures would unnecessarily increase the risk of 
confusion and noncompliance, defeating the regulatory objective.
    Moreover, there is little likelihood that the publication of this 
rule without prior comment will increase burden on contractors. This 
interim regulation qualifies as an interpretative rule, as it provides 
basic guidance that agencies and contractors need to comply with the 
statute. Indeed, this regulation prescribes little beyond that which is 
set forth clearly in the statute.
    Nevertheless, pursuant to 41 U.S.C. 1707 and FAR 1.501-3(b), DoD 
will consider public comments received in response to this interim rule 
in the formation of the Department's final rule.

List of Subjects in 48 CFR Parts 203 and 252

    Government procurement.

Manuel Quinones,
Editor, Defense Acquisition Regulations System.
    Therefore, 48 CFR parts 203 and 252 are amended as follows:

0
1. The authority citation for 48 CFR parts 203 and 252 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. Section 203.900 is revised to read as follows:


203.900  Scope of subpart.

    (a) This subpart implements 10 U.S.C. 2409 as amended by section 
846 of the National Defense Authorization Act for Fiscal Year 2008 
(Pub. L. 110-181), section 842 of the National Defense Authorization 
Act for Fiscal Year 2009 (Pub. L. 110-417), and section 827 of the 
National Defense Authorization Act for Fiscal Year 2013 (Pub. L. 112-
239).
    (b) This subpart does not apply to any element of the intelligence 
community, as defined in 50 U.S.C. 3003(4). This subpart does not apply 
to any disclosure made by an employee of a contractor or subcontractor 
of an element of the intelligence community if such disclosure--
    (1) Relates to an activity or an element of the intelligence 
community; or
    (2) Was discovered during contract or subcontract services provided 
to an element of the intelligence community.

0
3. Section 203.901 is added to read as follows:


203.901  Definition.

    Abuse of authority, as used in this subpart, means an arbitrary and 
capricious exercise of authority that is inconsistent with the mission 
of DoD or the successful performance of a DoD contract.
0
4. Section 203.903 is revised to read as follows:


203.903  Policy.

    (1) Policy. 10 U.S.C. 2409 prohibits contractors or subcontractors 
from discharging, demoting, or otherwise discriminating against an 
employee as a reprisal for disclosing, to any of the entities listed at 
paragraph (2) of this section, information that the employee reasonably 
believes is evidence of gross mismanagement of a DoD contract, a gross 
waste of DoD funds, an abuse of authority relating to a DoD contract, a 
substantial and specific danger to public health or safety, or a 
violation of law, rule, or regulation related to a DoD contract 
(including the competition for or negotiation of a contract). Such 
reprisal is prohibited even if it is undertaken at the request of an 
executive branch official, unless the request takes the form of a non-
discretionary directive and is within the authority of the executive 
branch official making the request.
    (2) Entities to whom disclosure may be made:
    (i) A Member of Congress or a representative of a committee of 
Congress.
    (ii) An Inspector General that receives funding from or has 
oversight over contracts awarded for or on behalf of DoD.
    (iii) The Government Accountability Office.
    (iv) A DoD employee responsible for contract oversight or 
management.
    (v) An authorized official of the Department of Justice or other 
law enforcement agency.
    (vi) A court or grand jury.
    (vii) A management official or other employee of the contractor or 
subcontractor who has the responsibility to investigate, discover, or 
address misconduct.
    (3) Disclosure clarified. An employee who initiates or provides 
evidence of contractor or subcontractor misconduct in any judicial or 
administrative proceeding relating to waste, fraud, or abuse on a DoD 
contract shall be deemed to have made a disclosure.
    (4) Contracting officer actions. A contracting officer who receives 
a complaint of reprisal of the type described in paragraph (1) of this 
section shall forward it to legal counsel or to the appropriate party 
in accordance with agency procedures.

0
5. Section 203.904 is revised to read as follows:


203.904  Procedures for filing complaints.

    (a) Any employee of a contractor or subcontractor who believes that 
he or she has been discharged, demoted, or otherwise discriminated 
against contrary to the policy in 203.903 may file a complaint with the 
Inspector General of the Department of Defense.
    (b) A complaint may not be brought under this section more than 
three years after the date on which the alleged reprisal took place.
    (c) 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 violation of law, rule, or regulation giving rise to the 
disclosure;
    (4) The nature of the disclosure giving rise to the discriminatory 
act, including the party to whom the information was disclosed; and
    (5) The specific nature and date of the reprisal.

0
6. Section 203.905 is amended by--
0
a. Removing the introductory text;
0
b. Revising paragraphs (1) and (3); and
0
c. Adding paragraphs (4) and (5).
    The revision and addition read as follows:

[[Page 59854]]

203.905  Procedures for investigating complaints.

    (1) Unless the DoD Inspector General makes a determination that the 
complaint is frivolous, fails to allege a violation of the prohibition 
in 203.903, or has been previously addressed in another Federal or 
State judicial or administrative proceeding initiated by the 
complainant, the DoD Inspector General will investigate the complaint.
* * * * *
    (3) Upon completion of the investigation, the DoD Inspector 
General--
    (i) Either will determine that the complaint is frivolous, fails to 
allege a violation of the prohibition in 203.903, or has been 
previously addressed in another Federal or State judicial or 
administrative proceeding initiated by the complainant, or will submit 
the report addressed in paragraph (2) of this section within 180 days 
after receiving the complaint; and
    (ii) If unable to submit a report within 180 days, will submit the 
report within the additional time period, up to 180 days, as agreed to 
by the person submitting the complaint.
    (4) The DoD Inspector General may not respond to any inquiry or 
disclose any information from or about any person alleging the 
reprisal, except to the extent that such response or disclosure is--
    (i) Made with the consent of the person alleging reprisal;
    (ii) Made in accordance with 5 U.S.C. 552a (the Freedom of 
Information Act) or as required by any other applicable Federal law; or
    (iii) Necessary to conduct an investigation of the alleged 
reprisal.
    (5) The legal burden of proof specified at paragraph (e) of 5 
U.S.C. 1221 (Individual Right of Action in Certain Reprisal Cases) 
shall be controlling for the purposes of an investigation conducted by 
the DoD Inspector General, decision by the head of an agency, or 
judicial or administrative proceeding to determine whether prohibited 
discrimination has occurred.

0
7. Section 203.906 is amended by--
0
a. Revising paragraph (1);
0
b. Amending paragraph (2)(ii) by adding a sentence at the end of the 
paragraph; and
0
c. By adding paragraphs (4), (5), and (6).
    The revision and additions read as follows:


203.906  Remedies.

    (1) Not later than 30 days after receiving a DoD Inspector General 
report in accordance with 203.905, the head of the agency shall 
determine whether sufficient basis exists to conclude that the 
contractor has subjected the complainant to a reprisal as prohibited by 
203.903; and shall either issue an order denying relief or shall take 
one or more of the following actions:
    (i) Order the contractor to take affirmative action to abate the 
reprisal.
    (ii) Order the contractor to reinstate the person to the position 
that the person held before the reprisal, together with compensatory 
damages (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.
    (iii) 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, as determined by the head of the agency.
    (2) * * *
    (ii) * * * An action under this authority may not be brought more 
than two years after the date on which remedies are deemed to have been 
exhausted.
* * * * *
    (4) Whenever a contractor fails to comply with an order issued by 
the head of agency in accordance with 10 U.S.C. 2409, 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 paragraph, the court may grant 
appropriate relief, including injunctive relief, compensatory and 
exemplary damages, and reasonable attorney fees and costs. The person 
upon whose behalf an order was issued may also file such an action or 
join in an action filed by the head of the agency.
    (5) Any person adversely affected or aggrieved by an order issued 
by the head of the agency in accordance with 10 U.S.C. 2409 may obtain 
judicial review of the order's conformance with the law, and the 
implementing regulation, 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, Unites States Code. Filing such 
an appeal shall not act to stay the enforcement of the order by the 
head of an agency, unless a stay is specifically entered by the court.
    (6) The rights and remedies provided for in this subpart may not be 
waived by any agreement, policy, form, or condition of employment.

0
8. Section 203.907 is added to read as follows.


203.907  Classified information.

    As provided in section 827(h) of the National Defense Authorization 
Act for Fiscal Year 2013, nothing in this coverage provides any rights 
to disclose classified information not otherwise provided by law.

252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
9. Section 252.203-7002 is amended by--
0
a. Amending the clause date by removing ``(JAN 2009)'' and adding in 
its place ``(SEP 2013)'';
0
b. Designating the clause text as paragraph (a);
0
c. Revising the newly designated paragraph (a); and
0
d. Adding a new paragraph (b).
    The revision and addition read as follows:


252.203-7002  Requirement to Inform Employees of Whistleblower Rights.

* * * * *
    (a) The Contractor shall inform its employees in writing, in the 
predominant native language of the workforce, of contractor employee 
whistleblower rights and protections under 10 U.S.C. 2409, as 
described in subpart 203.9 of the Defense Federal Acquisition 
Regulation Supplement.
    (b) The Contractor shall include the substance of this clause, 
including this paragraph (b), in all subcontracts.
    (End of clause)

[FR Doc. 2013-23768 Filed 9-27-13; 8:45 am]
BILLING CODE 5001-06-P