A New Protected Disclosure Venue Suggests Permanence For Demonstration Project Federal Contractor Employees’ Whistleblower Protections

In 2013, Congress enacted 41 U.S.C. § 4712 to provide whistleblower protections to employees of federal contractors who made disclosures concerning alleged “evidence of gross mismanagement of a Federal contract or grant, a gross waste of Federal funds, an abuse of authority relating to a Federal contract or grant, a substantial and specific danger to public health or safety, or a violation of law, rule, or regulation related to a Federal contract (including the competition for or negotiation of a contract) or grant.” 41 U.S.C. § 4712(a)(1). These new whistleblower protections were initially set up as a four year demonstration project, set to expire in 2017. See 41 U.S.C. § 4712(i).

In a sign that the current Administration may intend to make the demonstration project whistleblower protections permanent, the United States Office of Special Counsel (“OSC”) recently published proposed regulations establishing itself as “open for business” to receive federal contractor employees’ whistleblower allegations. 80 Fed. Reg. 3182. Upon receipt of an federal contractor employee’s allegations, OSC will review the allegations to determine if “there is a substantial likelihood that the information discloses a violation of any law, rule or regulation; gross mismanagement; gross waste of funds; abuse of authority; or a substantial and specific danger to public health or safety.” If OSC makes a “substantial likelihood determination,” then it shall prepare a written report and refer the matter to the contracting agency for appropriate action.

OSC has historically performed this ombudsman function by receiving federal employee whistleblower allegations, reviewing them, and forwarding facially meritorious allegations to agency Inspectors General for further action. The new regulations, however, expand OSC’s reach to private sector federal contractors. OSC has no historical experience dealing with private sector employers or employees. OSC’s relative inexperience with the private sector has the potential to result in “false positive” results leading to unnecessary and unwarranted Inspector General investigations of federal contractors.  Contractors should carefully monitor OSC actions and procedures if they become aware of any disclosures by private sector employees. If nothing else, the new proposed OSC regulations suggest that the current Administration intends the whistleblower protections of 41 U.S.C. § 4712 to last longer than a mere four year demonstration project.