Beware of Consequences for Government Contractors with Confidentiality AgreementsGovernment contractors that have the employee sign confidentiality agreements that limit the employee’s ability to report procurement fraud, waste, and abuse;  or any level of nondisclosure must beware of the disastrous and painful consequences of bidding on federal government contracts. Companies should have their attorneys review the existing agreements for compliance with FAR regulations.

Also, Department of Defense (DOD) issued a recent class deviation on November 14, 2016, which prohibits DoD from using appropriated to contract with businesses that use overbroad confidentiality agreements.

  • Contractors open themselves to suspension and debarment if they do not follow these rules
  • Simply by submitting a government bid, small businesses and large DOD contractors represent that they comply with the rule.
  • If you submit a government bid and still have confidentiality agreements for employees and subcontractors, you expose your company to the disastrous grasp of the False Claims Act.

Under the rules of the Federal Acquisition Regulation, the unchecked standard language in contractor confidentiality agreements have a substantial chance of leading to suspension or debarment from federal government contracting or Federal False Claims Act liability. The applicable FAR rule includes FAR 52.203-19(c), FAR 3.909-2(a), and FAR 52.203-18.

General contractors also face serious consequences when they direct subcontractors to sign non-disclosure agreements and confidentiality agreements that limit the subcontractor’s ability to report criminal and fraudulent activity.

To Avoid Criminal Liability and Suspension or Debarment, Contractors Must Not Brush this Rule Off.

The new regulations about confidentiality agreements and non disclosure agreements provide for a class deviation that mandate that contracting officers include DFARS 252.203-7994. This rule covers the Prohibition on Contracting with Entities that Require Certain Internal Confidentiality Agreements – Representation) and DFARS 252.203-7995 (DEVIATION 2017-O0001) (NOV 2016) in any contract or solicitation using these appropriated funds.

Contracting officers also have to modify existing contracts to include these provisions.   The mere submission of bid to the government is equivalent to your representation that your company does not require employees or subcontractors to sign confidentiality agreements preventing the employee or subcontractor to report the waste, fraud, or abuse DFARS 252.203-7994 (DEVIATION 2017-O0001) (c).

  • Government contractors must notify employees that any prohibitions and restrictions covered by this clause are no longer in effect. DFARS 252.203-7995 (DEVIATION 2017-O0001) (b).
  • Confidentiality agreements of non disclosure agreements that are required to protect company or government classified information are not covered by these requirements. DFARS 252.203-7994 (DEVIATION 2017-O0001) (b).

Speak to an Attorney & Get a Free Initial Consultation

For help complying with the FAR rules on confidentiality agreements, call Watson & Associates, LLC at 1-866-601-5518.