Federal contractors who require employees to sign confidentiality agreements—including those selling only commercial products or in small quantities—need to examine their agreements closely.
For the last two years, the government has sought to prohibit confidentiality agreements that restrict employees’ ability to report fraud, waste, or abuse to “designated investigative or law enforcement representative[s]” for federal agencies authorized to receive that information.”
Most recently, the Department of Defense issued a new class deviation on November 14, 2016 prohibiting DoD from using funds from recent appropriations to contract with companies using overbroad confidentiality agreements. While these restrictions may not be new, the deviation’s broad application and significant consequences mean that contractors should give close scrutiny to ensure any agreements with employees comply with the prohibition.
Specifics of the Latest Class Deviation
DoD’s recent class deviation prohibits DoD agencies from using any money appropriated by the Continuing Appropriations Act of 2017 (or other FY 2017 dollars authorized by future continuing resolutions) to contract with an entity whose confidentiality agreement prevents employees from reporting fraud, waste, or abuse.