On January 22, 2015, the U.S. Office of Special Counsel (“OSC”) published a proposed rule that, if adopted, would extend its existing whistleblower regulations beyond government employees to include certain employees of federal contractors, subcontractors, and grantees. This proposed rule change is designed to provide a parallel mechanism for reporting types of government wrongdoing covered by the National Defense Authorization Act of 2013 (“NDAA”), which itself extended federal employee whistleblower protections to certain employees of federal contractors, subcontractors, and grantees.

In proposing the rule, the OSC recognized that the landscape of the federal workplace has changed significantly since Congress first provided whistleblower protections to federal employees in the Civil Service Reform Act of 1978.  “In the modern workforce, employees of contractors, subcontractors, and grantees  often work alongside Federal employees, having similar if not identical duties.  Thus contractors are similarly situated to observe or experience the same type of wrongdoing as are Federal employees.”

Under the OSC’s existing regulations and proposed rule, the OSC provides an “independent and secure channel” for the reporting of a government agency’s wrongdoing, which is then assessed by the OSC and referred to the relevant agency for investigation if the OSC determines the allegation meets certain standards set out in the regulations.

Under the proposed rule, an employee of a contractor, subcontractor, or grantee may file a disclosure of government wrongdoing at the OSC if he or she alleges retaliation for making a disclosure protected under the NDAA, and he or she works or worked on behalf of a government agency over which the OSC has jurisdiction to accept disclosures.  The proposed rule does not appear to expand upon the types of government wrongdoing that an employee may report directly to an agency Inspector General under existing law.  Nor does it expand upon existing retaliation protections or remedies provided under the NDAA for employees making such reports.  Rather, the extension of the OSC’s regulations provides a separate and independent avenue for these individuals to report government wrongdoing and, if the OSC refers the report to the relevant agency for investigation, provides for ongoing OSC oversight of the agency’s investigation.

Written comments on the proposed rule are due on or before March 23, 2015.

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Photo of Heather Finstuen Heather Finstuen

Heather Finstuen has extensive experience advising clients on cross-border investment and related national security matters, as well as leading internal investigations and responding to U.S. government civil and criminal investigations.

In the national security area, Heather represents domestic and international companies in numerous industries…

Heather Finstuen has extensive experience advising clients on cross-border investment and related national security matters, as well as leading internal investigations and responding to U.S. government civil and criminal investigations.

In the national security area, Heather represents domestic and international companies in numerous industries in securing the approval of the Committee on Foreign Investment in the United States (CFIUS) and provides counseling on negotiating, implementing, and complying with CFIUS national security agreements. She frequently advises clients on national industrial security regulations and engages with the Defense Counterintelligence and Security Agency, the Department of Energy, and other cognizant security agencies on topics including the determination and mitigation of foreign ownership, control, or influence (FOCI). She also counsels defense contractors on National Industrial Security Program Operating Manual (NISPOM) requirements, obtaining and maintaining facility and personnel security clearances, safeguarding requirements, supply chain considerations, and investigating and responding to compliance concerns.

Heather has been involved in many complex CFIUS and FOCI matters, including Nexen Inc. in its $15 billion sale to China National Offshore Oil Corporation, GLOBALFOUNDRIES’ $1 billion acquisition of the IBM Microelectronics Division, Micro Focus on transactions including its $8.8 billion acquisition of HPE’s software business and $2.5 billion sale of its SUSE business, CenturyLink’s $2.2 billion sale of its Savvis data center business, Publicis Groupe’s $3.7 billion acquisition of Sapient, numerous matters for BAE Systems, and multiple transactions for The Carlyle Group.

Heather also represents and counsels government contractors in connection with internal investigations, mandatory disclosures, federal inquiries and investigations, and compliance policies and procedures. Heather has led numerous internal fraud and ethics investigations in various industries (defense, manufacturing, software, banking and finance, healthcare, food) into a range of issues including cyber security, labor charging, billing and claims, sourcing requirements, manufacturing and quality control processes, accounting, compensation structures, and mortgage foreclosure practices.

Before joining the firm, Heather served as a law clerk to the Honorable Carolyn Dineen King of the United States Court of Appeals for the Fifth Circuit.