Compliance

On January 30, 2024, the Federal Acquisition Regulatory Council (“FAR Council”) proposed a new “Pay Equity and Transparency in Federal Contracting” rule for government contractors.  The proposed rule intends to increase race and gender equity for employees of federal prime contractors and subcontractors by prohibiting them from requesting and relying on certain information about job applicants’ compensation history and requiring contractors to disclose compensation rates in job announcements for certain positions.  These requirements would apply to all prime contracts and subcontracts – including for commercial products and services – where the principal place of performance is within the United States, regardless of dollar amount or tier.  The proposed rule is the latest in a number of steps the Biden Administration has taken to address discriminatory pay practices in federal procurement and contracting since announcing an Executive Order on Advancing Economy, Efficiency, and Effectiveness in Federal Contracting by Promoting Pay Equity and Transparency in March 2022. 

The proposed rule’s potential impact and implications for contractors — as well as opportunities to submit comments on the issue — are discussed below.Continue Reading New Proposed Rule on Pay Equity and Transparency in Federal Contracting

(This article was originally published in Law360 and has been modified for this blog.)

On Jan. 21, 2019, Ellen Lord, the Under Secretary of Defense for Acquisition and Sustainment, issued a memorandum focused on assessing contractor compliance with the DFARS cyber clause via audits of a Contractor’s purchasing system.[1]  One intent of this guidance is to have the Defense Contract Management Agency, or DCMA, “validate, for contracts for which they provide contract administration and oversight, contractor compliance with the requirements of DFARS clause 252.204-7012.”[2]

This would be done as part of a review of a contractor’s purchasing system in accordance with DFARS 252.244-7001.  Pursuant to this DFARS clause, contractors are required to provide adequate security on their internal networks to protect Covered Defense Information (CDI) and are required to flow DFARS clause 252.204-7012 “Safeguarding Covered Defense Information and Cyber Incident Reporting” to subcontractors without alteration.Continue Reading Keeping Up With DoD Cybersecurity Compliance Demands

The U.S. District Court for the District of Columbia recently issued the latest ruling in a long-running Freedom of Information Act (“FOIA”) dispute involving materials related to a government-mandated monitorship of the compliance and corporate governance systems of Siemens Aktiengesellschaft (“Siemens”), the German multinational conglomerate.  See 100Reporters LLC v. U.S. Dep’t of Justice, 2018 WL 2976007 (D.D.C. June 13, 2018).  The remarkably detailed opinion reinforces that documents prepared by a monitor, including a monitor’s plans and work product, may be subject to disclosure under FOIA and sheds light on precautions that can be taken to ensure monitorship documents remain protected to the fullest extent possible.
Continue Reading Monitoring The Monitor: Recent Ruling Sheds Light on Applicability of FOIA to Monitorship Documents

In a span of two days, two separate agencies took action against contractor policies and agreements that may discourage whistleblowers.  On March 30, 2015, the U.S. Department of State Office of Inspector General (“State OIG”) issued a report contending that certain contractor policies and agreements have a “chilling effect” on whistleblowers.  On April 1, 2015, the Securities and Exchange Commission (“SEC”) imposed a fine of $130,000 on a contractor for requiring confidentiality agreements that allegedly impede individuals from disclosing securities law violations.   Given recent scrutiny, contractors should consider reviewing policies, procedures, forms, agreements, or practices that may impede employees’ ability to report instances of fraud, waste, and abuse.

As we discussed recently, the SEC’s April 1 order was based on a violation of SEC Rule 21F-17, which prohibits “imped[ing] an individual from communicating directly with [the SEC] about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement. . . .”  The contractor that received the fine required employees to sign a confidentiality agreement after discussions in internal investigations.  Specifically, the confidentiality agreement prohibited employees from “discussing any particulars regarding this interview and the subject matter discussed during the interview, without the prior authorization of the Law Department.”  The SEC found that this provision, coupled with a statement that such impermissible disclosures may be grounds for termination, violated Rule 21F-17, even though it was not aware of any evidence that the provision had been enforced.

State OIG similarly took issue with certain contractor confidentiality agreements and policies.  State OIG, in analyzing the practices of the 30 largest State Department contractors, faulted 13 contractors for having policies that have “a chilling effect on employees who wish to report fraud, waste, or abuse. . . .”  Specifically, State OIG criticized policies instructing employees to “consult with the Legal Department” or their supervisor before answering government investigators’ questions or handing over documents, or requiring consultants receiving subpoenas or other judicial demands for contractor confidential information to provide “prompt written notice” to the contractor in order to permit the contractor from seeking a protective order.  State OIG also flagged separation and employment agreements that may have the same “chilling effect”—citing agreements prohibiting statements that could be “derogatory or detrimental to the good name or business reputation” of a contractor.Continue Reading SEC and State OIG Allege that Contractors’ Policies, Procedures, and Agreements Suppress Whistleblowing

Over the past year, we have been tracking the uptick in executive and regulatory actions affecting the labor and employment practices of government contractors.  Last Friday, the D.C. Circuit upheld one of those regulations.  The decision concludes the first skirmish in what promises to be a lengthy and high-stakes legal battle involving industry, Congress, and the Administration.
Continue Reading D.C. Circuit Upholds Employment Regulations