U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

1 

59–010 

" ! SENATE 

114TH CONGRESS

2d Session 

REPORT

2016

114–270 

Calendar No. 506 

TO ENHANCE WHISTLEBLOWER 

PROTECTION FOR CONTRACTOR AND 

GRANTEE EMPLOYEES 

R E P O R T 

OF THE

COMMITTEE ON HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

TO ACCOMPANY

S. 795 

JUNE 7, 2016.—Ordered to be printed 


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(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

RON JOHNSON, Wisconsin, Chairman 

JOHN MCCAIN, Arizona 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

JAMES LANKFORD, Oklahoma 

MICHAEL B. ENZI, Wyoming 

KELLY AYOTTE, New Hampshire 

JONI ERNST, Iowa 

BEN SASSE, Nebraska 

THOMAS R. CARPER, Delaware 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

TAMMY BALDWIN, Wisconsin 

HEIDI HEITKAMP, North Dakota 

CORY A. BOOKER, New Jersey 

GARY C. PETERS, Michigan 

CHRISTOPHER R. HIXON, Staff Director 

GABRIELLE D’ADAMO SINGER, Chief Counsel 

PATRICK J. BAILEY, Chief Counsel for Governmental Affairs 

GABRIELLE A. BATKIN, Minority Staff Director 

JOHN P. KILVINGTON, Minority Deputy Staff Director 

MARY BETH SCHULTZ, Minority Chief Counsel 

KATHERINE C. SYBENGA, Minority Chief Counsel for Governmental Affairs 

LAURA W. KILBRIDE, Chief Clerk 


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Calendar No. 506 

114TH CONGRESS SENATE REPORT " ! 2d Session 114–270 

TO ENHANCE WHISTLEBLOWER PROTECTION FOR 

CONTRACTOR AND GRANTEE EMPLOYEES 

JUNE 7, 2016.—Ordered to be printed 

Mr. JOHNSON, from the Committee on Homeland Security and 

Governmental Affairs, submitted the following 

R E P O R T 

[To accompany S. 795] 

The Committee on Homeland Security and Governmental Affairs, 

to which was referred the bill (S. 795) to enhance the whistleblower 

protection for contractor and grantee employees, reports favorably 

thereon with an amendment in the nature of a substitute and recommends that the bill, as amended, do pass. 

CONTENTS 

Page 

I. Purpose and Summary .................................................................................. 1 

II. Background and Need for the Legislation ................................................... 2 

III. Legislative History ......................................................................................... 5 

IV. Section-by-Section Analysis .......................................................................... 6 

V. Evaluation of Regulatory Impact .................................................................. 6 

VI. Congressional Budget Office Cost Estimate ................................................ 6 

VII. Changes in Existing Law Made by the Bill, as Reported ........................... 7 

I. PURPOSE AND SUMMARY

The purpose of S. 795 is to improve the whistleblower rights of 

Federal contractors working on Federal contracts, grants and other 

programs. The bill would put whistleblowing protections related to 

individuals working on Federal civilian contracts and grants on par 

with those already existing related to individuals working on Federal defense contracts and grants by making the temporary civilian 

whistleblowing program permanent and extending these protections to subgrantees. It would also extend these protections to personal services contractors working on both defense and civilian 

grant programs. 


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1See, e.g., Blowing the Whistle on Retaliation: Accounts of Current and Former Federal Agency 

Whistleblowers: Hearing Before the Comm. on Homeland Security & Governmental Affairs, 114th 

Cong. (2015), available at http://www.hsgac.senate.gov/hearings/blowing-the-whistle-on-retaliation-accounts-of-current-and-former-federal-agency-whistleblowers; Improving VA Accountability: 

Examining First-Hand Accounts of Department of Veterans Affairs Whistleblowers: Hearing Before the Comm. on Homeland Security & Governmental Affairs, 114th Cong. (2015), available 

at http://www.hsgac.senate.gov/hearings/improving-va-accountability-examining-first-hand-accounts-of-department-of-veterans-affairs-whistleblowers; Pub. L. No. 112–199 (112th Cong.) 

(2012); S. 2127, the Dr. Chris Kirkpatrick Whistleblower Protection Act of 2015 (114th Cong.). 2Overview of Awards by FY 2008–2015 (last visited Mar. 7, 2016) (online at: https:// 

www.usaspending.gov/Pages/TextView.aspx?data=OverviewOfAwardsByFiscalYearTextView). 

the $438 billion in contracts and $614 billion in grants provided by the Federal Government 

in fiscal year (FY) 2015 alone. 3Pub. L. No. 111–5 (111th Cong.) (2009). 

4Whistleblower Protections for Government Contractors, Hearing Before the S. Homeland Sec. 

& Governmental Affairs Subcomm. On Contracting Oversight 6, 112th Cong. (2011) [hereinafter 

Whistleblower Protections] (testimony of the Honorable Peggy Gustafson, Inspector General, U.S. 

Small Business Administration/Chair of the Legislation Committee of CIGIE), available at 

https://www.gpo.gov/fdsys/pkg/CHRG–112shrg72560/pdf/CHRG–112shrg72560.pdf. 

II. BACKGROUND AND THE NEED FOR LEGISLATION

This Committee has made it a priority to examine the root and 

contributing causes of whistleblower retaliation through investigations, hearings, and other oversight, and to identify ways in which 

gaps or weaknesses in current law can be addressed through legislation.1

S. 795 addresses current gaps in whistleblower protections for 

the individuals that work on projects funded by the over $1 trillion 

in contract and grant funding provided by the Federal Government 

each year.2 Much of this contract and grant funding flows through 

the prime contractors and grantees to subcontractors and subgrantees, but employees of these subcontractors and subgrantees 

do not enjoy the same whistleblower protections that those working 

for the prime contractors do. 

Section 1553 of The American Recovery and Reinvestment Act of 

2009 (ARRA) established whistleblower protections for all recipients of stimulus funds, including all state and local government 

employees and all contractors, including within the intelligence 

community (IC).3 During a December 6, 2011, hearing before the 

Senate Committee on Homeland Security and Governmental Affairs Subcommittee on Contracting Oversight, the Chair of the Legislation Committee of the Council of Inspectors General on Integrity and Efficiency (CIGIE) testified that: 

. . . investigations and reviews of the whistleblower complaints had resulted in recovery of approximately $1.85 

million as of April [2011]. One of the key provisions of 

ARRA is Section 1553 that gives the authority of [Offices 

of Inspectors General (OIGs)] to investigate reprisal complaints from non-Federal employee whistleblowers. Of the 

surveyed [Inspectors General (IGs)], 8 of the OIGs had received a total of 18 reprisal complaints, and 11 of those 

had been accepted for investigation. The majority of IGs 

that had received these complaints had not experienced 

any problems or concerns with implementing Section 1553 

or in responding to the complainants’ request to access the 

completed investigation file.4

The ARRA whistleblower provision, while significant, only extended to contracts funded by stimulus funds, which make up only 

a small portion of Federal Government contracts. During the 2011 


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5Whistleblower Protections 68–69 (statement of Angela Cantebury, Director of Public Policy, 

Project on Government Oversight). 6 Id. at 3 (opening statement of Senator Rob Portman). 7 Id. at 2 (opening statement of Senator Claire McCaskill). 8 Id. at 19 (testimony of Dr. Walter Tamosaitis). 9S. 241, the Non-Federal Employee Whistleblower Protection Act of 2012 (112th Cong.). 

subcommittee hearing, the Director of Public Policy at the Project 

On Government Oversight (POGO) testified on the need for extending whistleblower coverage to all Federal contractors: 

According to USAspending.gov, out of nearly $3.8 trillion 

in the federal budget in fiscal year 2011, roughly half was 

spent on prime awards to contractors, grantees, states and 

localities, and others. A recent POGO report illustrates the 

imperative of protecting whistleblowers in this growing 

workforce of federal contractors. In fact, in some federal offices contractor employees outnumber federal employees. 

Since 1999, the size of the federal employee workforce has 

remained relatively constant at about 2 million, while the 

contractor workforce has increased radically—from an estimated 4.4 million to 7.6 million 2005. In other words, the 

federal contractor workforce dwarfs the federal employee 

workforce nearly four-fold.5

Senator Rob Portman added that ‘‘whistleblower protections for 

non-Federal employees are nowhere more necessary and appropriate than in Federal contracting. We now spend over half a trillion dollars a year in contracts annually.’’ 6 Similarly, Senator 

Claire McCaskill discussed the need for extending coverage to all 

Federal contractors noting that, ‘‘if we are not including contractors 

in the protection of the whistleblower legislation, then we have a 

huge problem here. If the whistleblowers that work for contractors 

do not have the same protections as Federal employees, we are saying to contractors we do not think wrongdoing by you is that important.’’ 7

Dr. Walter Tamosaitis, a former Department of Energy (DOE) 

government contractor manager in the $13 billion Waste Treatment Plant (WTP) project in Hanford, Washington, testified before 

the subcommittee based on his own experience having been terminated as a result of disclosing extensive government contractor 

waste. Dr. Tamosaitis described the risks of failing to cover Federal 

contractors, stating: 

With no whistleblower protection, the contractors do 

what they want. They actually make more money in DOE 

by not doing it right the first time. They get paid to build 

it, and then they get paid more to fix it, if it will run at 

all. And this cost [sic] the taxpayers billions at a time 

when our country’s budget cannot afford it. The original 

WTP cost was about $4.6 billion, and now it is at over $13 

billion in 10 years.8

To address this gap in law, Senators Claire McCaskill (D–MO), 

Jon Tester (D–MT) and Jim Webb (D–MT) introduced legislation in 

the 112th Congress that would have created permanent whistleblower rights for all Federal Government contractors, subcontractors, and grantees, including those within the IC.9 Although the 

bill was not signed into law, the concept was included in the NaVerDate Sep 11 2014 05:42 Jun 10, 2016 Jkt 059010 PO 00000 Frm 00005 Fmt 6659 Sfmt 6602 E:\HR\OC\SR270.XXX SR270

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10Pub. L. No. 112–239, 828 (112th Cong.) (2013), codified at 41 U.S.C. § 4712. 11 Id. 12 Id. 13 Id. (emphasis supplied). 14Pub. L. No. 99–500 (99th Cong.) (1986). 15Pub. L. No. 110–181 (110th Cong.) (2008). 16Pub. L. No. 112–239 (113th Cong.) (2013). 17Pub. L. No. 113–291 (113th Cong.) (2014), codified at 10 USC § 2409. 18 Briefing by Government Accountability Project to Comm. staff (March 2016). 19Letter from the U.S. Office of Special Counsel to Mr. Leonard Y. Cooper (Mar. 21, 2014) 

(on file with Comm. staff). 

tional Defense Authorization Act for Fiscal Year 2013, but as a 

four-year pilot program that excluded IC contractors.10 In sum, the 

pilot program prohibits employees of a ‘‘contractor, subcontractor, 

or grantee’’ from being retaliated against for blowing the whistle on 

waste, mismanagement, and abuse occurring in relation to a Federal contract or grant, and provides employees with a mechanism 

for submitting complaints of such conduct to the inspector general 

of the relevant agency.11 The pilot program is set to expire in 

2017.12

Importantly, Congress extended the whistleblower protections 

only to the extent the private individual is making a disclosure 

that is related to ‘‘gross mismanagement’’ ‘‘an abuse of authority,’’ 

‘‘a substantial and specific danger to public health or safety,’’ ‘‘or 

a violation of law, rule, or regulation’’ that is ‘‘related to a Federal 

contract or grant’’ or ‘‘a gross waste of Federal funds.’’ 13 A private 

individual blowing the whistle on conduct occurring in relation to 

a private company that is not related to a Federal project must 

seek the protection of other laws that apply to private citizens. 

Similar rights have existed for Department of Defense (DoD) contractors working on DoD Federal grants for decades.14 In the years 

since the protections were first added, Congress expanded the DoD 

whistleblower protections to also cover grants,15 subcontractors,16

and finally, in 2014, grantees and subgrantees.17

Unlike the temporary, four-year program for civilian contracts, 

the rights of whistleblowers working on Federal defense contracts 

are not time-limited. S. 795 would remedy this unbalanced treatment by ensuring that contractors, subcontractors, grantees, and 

subgrantees of civilian Federal contracts and grants have the same 

rights as those working on defense contracts and grants. 

Additionally, S. 795 would add another category of contract employees who would be protected from retaliation against whistleblowing: personal services contractors. Personal services contractors are contractors that contract their services directly with the 

Government, instead of as an employee of a private contracting 

company, but they are not currently covered under defense protections or the civilian pilot program. 

One notable example of the need to include personal services contractors is the story of Mr. Leonard Cooper, a mechanical engineering expert who worked as a personal services contractor on embassy security for the State Department.18 Mr. Cooper alleged to 

the Office of Special Counsel that he believes he was retaliated 

againstafter he disclosed to superiors that the Environmental Safety Protection Systems (ESPS) for embassies worldwide lack the instruments necessary to sense and account for the impact of constantly-changing wind conditions or wind that leaks into the building.19 This creates global vulnerability to exposure by chemical, biVerDate Sep 11 2014 05:42 Jun 10, 2016 Jkt 059010 PO 00000 Frm 00006 Fmt 6659 Sfmt 6602 E:\HR\OC\SR270.XXX SR270

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20 Briefing by Government Accountability Project to Comm. staff (March 2016). 21 Id. 22Letter from the U.S. Office of Special Counsel to Mr. Leonard Y. Cooper (Mar. 21, 2014) 

(on file with Comm. staff). 23 10 U.S.C. § 2324(k), 41 U.S.C. § 4310. 24See 10 U.S.C. § 2324 (note); 41 U.S.C. § 4712 (note). 

ological, and radiological (CBR) attacks.20 Mr. Cooper also disclosed 

that the design of new stand-alone safe haven facilities, called 

Compound Emergency Sanctuaries (CES), in the United States 

Embassy Compound in Tripoli, Libya does not protect occupants 

against arson or fire as a weapon, leading to their guaranteed 

death against that type of attack.21 Although the United States Office of Special Counsel found a substantial likelihood that Mr. Cooper is correct and ordered a State Department investigation, his 

contract was not renewed.22 As a personal services contractor, he 

arguably has no recourse under current law. 

S. 795 would extend to subcontractors the existing laws prohibiting the Federal Government from reimbursing certain litigation 

or defense costs for contractors, including in their defense against 

retaliation claims by whistleblowers.23 Federal taxpayers should 

not foot the legal bills for contractors who retaliate against employees that report waste, fraud and abuse of taxpayer dollars. 

Current law does not require contracts signed before the effective 

date of the National Defense Authorization Act for Fiscal Year 

2013 to be revised so as to include the new whistleblower protections.24 This bill, however, would require companies to use best efforts to include these protections if there is a major modification to 

any contract that is currently grand-fathered in. 

S. 795 would make the rights of civilian contractors permanent 

and make responsible corrections to existing protections for civilian 

and defense contractors to ensure that Federal Government contractors can safely report government waste, fraud, abuse and public health and safety threats. 

III. LEGISLATIVE HISTORY

Senator Claire McCaskill (D–MO.) introduced S. 795 on March 

18, 2015. The bill was referred to the Committee on Homeland Security and Governmental Affairs. Senator Ron Johnson (R–WI.) 

joined as a cosponsor on February 9, 2016. 

The Committee considered S. 795 at a business meeting on February 10, 2016. During the business meeting, a substitute amendment was offered by Senator McCaskill. The bill, as amended by 

the McCaskill substitute amendment, was ordered reported favorably by voice vote en bloc. Senators Johnson, McCain, Portman, 

Paul, Lankford, Ayotte, Ernst, Sasse, Carper, McCaskill, Tester, 

Baldwin, Heitkamp, Booker, and Peters were present for the vote. 

Consistent with the Committee’s order on technical and conforming changes at the meeting, the Committee reports the bill 

with a technical amendment by mutual agreement of the full Committee majority and minority staff. 


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IV. SECTION-BY-SECTION ANALYSIS OF THE BILL, AS REPORTED

Section 1. Enhancement of whistleblower protection for contractor 

and grantee employees 

Subsection (a) adds ‘‘personal services contractor’’ to the list of 

protected individuals working on defense contracts or grants for the 

Federal Government. It also makes permanent the four-year pilot 

program that provides whistleblower protections to certain individuals working on civilian contracts, and adds ‘‘personal services contractor’’ and ‘‘subgrantee’’ to the list of those protected individuals. 

Subsection (b) prohibits reimbursement of legal fees accrued by 

a contractor, subcontractor, or personal services contractor in defense of reprisal claims brought by the Federal Government, a 

state, or by a contractor or grantee employee arising under the authority of the Federal whistleblower protections established for civilian and defense contracts. 

Subsection (c) requires the head of each contracting agency to, at 

the time of any major contract modification, make best efforts to 

include the protections established under this bill and the National 

Defense Authorization Act for Fiscal Year 2013 in any contract 

awarded prior to the date of enactment of this bill. 

V. EVALUATION OF REGULATORY IMPACT

Pursuant to the requirements of paragraph 11(b) of rule XXVI of 

the Standing Rules of the Senate, the Committee has considered 

the regulatory impact of this bill and determined that the bill will 

have no regulatory impact within the meaning of the rules. The 

Committee agrees with the Congressional Budget Office’s statement that the bill contains no intergovernmental or private-sector 

mandates as defined in the Unfunded Mandates Reform Act 

(UMRA) and would impose no costs on state, local, or tribal governments. 

VI. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

MAY 27, 2016. 

Hon. RON JOHNSON, Chairman, 

Committee on Homeland Security and Governmental Affairs, 

U.S. Senate, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for S. 795, a bill to enhance whistleblower protection for contractor and grantee employees. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Matthew Pickford. 

Sincerely, 

KEITH HALL. 

Enclosure. 

S. 795—A bill to enhance whistleblower protection for contractor 

and grantee employees 

S. 795 would amend federal law to permanently extend legal protections to certain nonfederal employees (contractors, subcontractors, grantees, and others employed by entities that receive federal 

funds) who report waste, fraud, or abuse involving federal funds. 

Specifically, under the bill, anyone who reports the misuse of fedVerDate Sep 11 2014 05:42 Jun 10, 2016 Jkt 059010 PO 00000 Frm 00008 Fmt 6659 Sfmt 6602 E:\HR\OC\SR270.XXX SR270

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eral funds could not be demoted, discharged, or discriminated 

against because of the disclosure. The current four-year pilot program that extends those same protections ends in December 2016. 

The cost to implement S. 795 would depend on the number of 

whistleblower claims made by those nonfederal employees. Evidence from the pilot program that currently protects certain nonfederal employees from such discrimination suggests that the number of such claims brought by nonfederal employees has totaled less 

than 20 for each of the 26 major federal agencies. CBO estimates 

that implementing S. 795 would cost about $3,000 to investigate 

each claim, or about $5 million over the 2017–2021 period. Any 

such spending would be subject to the availability of appropriated 

funds. Enacting the bill could affect direct spending by agencies not 

funded through annual appropriations; therefore, pay-as-you-go 

procedures apply. CBO estimates, however, that any net increase 

in spending by those agencies would be negligible. Enacting S. 795 

would not affect revenues. 

CBO estimates that enacting S. 795 would not increase net direct 

spending or on-budget deficits in any of the four consecutive 10- 

year periods beginning in 2027. 

S. 795 contains no intergovernmental or private-sector mandates 

as defined in the Unfunded Mandates Reform Act and would not 

affect the budgets of state, local, or tribal governments. 

The CBO staff contact for this estimate is Matthew Pickford. The 

estimate was approved by H. Samuel Papenfuss, Deputy Assistant 

Director for Budget Analysis. 

VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with paragraph 12 of rule XXVI of the Standing 

Rules of the Senate, changes in existing law made by the bill, as 

reported, are shown as follows: (existing law proposed to be omitted 

is enclosed in brackets, new matter is printed in italic, and existing 

law in which no change is proposed is shown in roman): 

UNITED STATES CODE 

* * * * * * * 

TITLE 10—ARMED FORCES 

* * * * * * * 

PART IV—SERVICE, SUPPLY, AND 

PROCUREMENT 

* * * * * * * 

CHAPTER 137—PROCUREMENT GENERALLY 

* * * * * * * 

SEC. 2324. ALLOWABLE COSTS UNDER DEFENSE CONTRACTS 

(a) * * * 

* * * * * * * 


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(k) PROCEEDING COSTS NOT ALLOWABLE. 

(1) Except as otherwise provided in this subsection, costs incurred by a contractor, subcontractor, or personal services contractor in connection with any criminal, civil, or administrative 

proceeding commenced by the United States, by a State, or by 

a contractor, subcontractor, or personal services contractor employee submitting a complaint under section 2409 of this title 

are not allowable as reimbursable costs under a covered contract, subcontract, or personal services contract if the proceeding 

(A) relates to a violation of, or failure to comply with, a 

Federal or State statute or regulation or to any other activity described in subparagraphs (A) through (C) of section 

2409(a)(1) of this title, and 

(B) results in a disposition described in paragraph (2). 

(2) A disposition referred to in paragraph (1)(B) is any of the 

following: 

(A) In the case of a criminal proceeding, a conviction (including a conviction pursuant to a plea of nolo contendere) 

by reason of the violation or failure referred to in paragraph (1). 

(B) In the case of a civil or administrative proceeding involving an allegation of fraud or similar misconduct, a determination of contractor, subcontractor, or personal services contractor liability on the basis of the violation or failure referred to in paragraph (1). 

(C) In the case of any civil or administrative proceeding, 

the imposition of a monetary penalty or an order to take 

corrective action under section 2409 of this title by reason 

of the violation or failure referred to in paragraph (1). 

(D) A final decision— 

(i) to debar or suspend the contractor, subcontractor, 

or personal services contractor; 

(ii) to rescind or void the contract, subcontract, or 

personal services contract; or 

(iii) to terminate the contract, subcontract, or personal services contract for default; 

* * * * * * * 

CHAPTER 141—MISCELLANEOUS PROCUREMENT 

PROVISIONS 

* * * * * * * 

SEC. 2409. CONTRACTOR EMPLOYEES: PROTECTION FROM REPRISAL 

FOR DISCLOSURE OF CERTAIN INFORMATION 

(a) PROHIBITION OF REPRISALS. 

(1) An employee of a contractor, subcontractor, grantee, or 

subgrantee or personal services contractor may not be discharged, demoted, or otherwise discriminated against as a reprisal for disclosing to a person or body described in paragraph 

(2) information that the employee reasonably believes is evidence of the following: 

* * * * * * * 


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TITLE 41—PUBLIC CONTRACTS 

* * * * * * * 

Subtitle I—Federal Procurement Policy 

* * * * * * * 

DIVISION C—PROCUREMENT 

* * * * * * * 

TITLE 41—PUBLIC CONTRACTS 

* * * * * * * 

Subtitle I—Federal Procurement Policy 

* * * * * * * 

DIVISION C—PROCUREMENT 

* * * * * * * 

CHAPTER 43—ALLOWABLE COSTS 

* * * * * * * 

SEC. 4304. SPECIFIC COSTS NOT ALLOWABLE 

(a) SPECIFIC COSTS.—The following costs are not allowable under 

a covered contract: 

(1) * * * 

* * * * * * * 

(15) Costs incurred by a contractor, subcontractor, or personal services contractor in connection with any criminal, civil, 

or administrative proceeding commenced by the Federal Government or a State, to the extent provided in section 4310 of 

this title. 

* * * * * * * 

SEC. 4310. PROCEEDING COSTS NOT ALLOWABLE 

(a) DEFINITIONS.— 

(1) COSTS.—The term ‘‘costs’’, with respect to a proceeding, 

means all costs incurred by a contractor, subcontractor, or personal services contractor, whether before or after the commencement of the proceeding, including— 

(A) administrative and clerical expenses; 

(B) the cost of legal services, including legal services performed by an employee of the contractor, subcontractor, or 

personal services contractor; 

(C) the cost of the services of accountants and consultants retained by the contractor, subcontractor, or personal 

services contractor; and 

(D) the pay of directors, officers, and employees of the 

contractor, subcontractor, or personal services contractor 


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for time devoted by those directors, officers, and employees 

to the proceeding. 

(2) PENALTY.—The term ‘‘penalty’’ does not include restitution, reimbursement, or compensatory damages. 

(3) PROCEEDING.—The term ‘‘proceeding’’ includes an investigation. 

(b) IN GENERAL.—Except as otherwise provided in this section, 

costs incurred by a contractor, subcontractor, or personal services 

contractor in connection with a criminal, civil, or administrative 

proceeding commenced by the Federal Government, by a State, or 

by a contractor, subcontractor, or personal services contractor or 

grantee employee submitting a complaint under section 4712 of 

this title are not allowable as reimbursable costs under a covered 

contract, subcontract, or personal services contract if the proceeding— 

(1) relates to a violation of, or failure to comply with, a Federal or State statute or regulation or to any other activity described in section 4712(a)(1) of this title; and 

(2) results in a disposition described in subsection (c). 

(c) COVERED DISPOSITIONS.—A disposition referred to in subsection (b)(2) is any of the following: 

(1) In a criminal proceeding, a conviction (including a conviction pursuant to a plea of nolo contendere) by reason of the violation or failure referred to in subsection (b). 

(2) In a civil or administrative proceeding involving an allegation of fraud or similar misconduct, a determination of contractor, subcontractor, or personal services contractor liability 

on the basis of the violation or failure referred to in subsection 

(b). 

(3) In any civil or administrative proceeding, the imposition 

of a monetary penalty or an order to take corrective action 

under section 4712 of this title by reason of the violation or 

failure referred to in subsection (b). 

(4) A final decision to do any of the following, by reason of 

the violation or failure referred to in subsection (b): 

(A) Debar or suspend the contractor, subcontractor, or 

personal services contractor. 

(B) Rescind or void the contract, subcontract, or personal 

services contract. 

(C) Terminate the contract, subcontract, or personal services contract for default. 

(5) A disposition of the proceeding by consent or compromise 

if the disposition could have resulted in a disposition described 

in paragraph (1), (2), (3), or (4). 

(d) COSTS ALLOWED BY SETTLEMENT AGREEMENT IN PROCEEDING

COMMENCED BY FEDERAL GOVERNMENT.—In the case of a proceeding referred to in subsection (b) that is commenced by the Federal Government and is resolved by consent or compromise pursuant to an agreement entered into by a contractor, subcontractor, or 

personal services contractor and the Federal Government, the costs 

incurred by the contractor, subcontractor, or personal services contractor in connection with the proceeding that are otherwise not allowable as reimbursable costs under subsection (b) may be allowed 

to the extent specifically provided in that agreement. 


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(e) COSTS SPECIFICALLY AUTHORIZED BY EXECUTIVE AGENCY IN

PROCEEDING COMMENCED BY STATE.—In the case of a proceeding 

referred to in subsection (b) that is commenced by a State, the executive agency that awarded the covered contract, subcontract, or 

personal services contract involved in the proceeding may allow the 

costs incurred by the contractor, subcontractor, or personal services 

contractor in connection with the proceeding as reimbursable costs 

if the executive agency determines, in accordance with the Federal 

Acquisition Regulation, that the costs were incurred as a result 

of— 

(1) a specific term or condition of the contract, subcontract, 

or personal services contract; or 

(2) specific written instructions of the executive agency. 

(f) OTHER ALLOWABLE COSTS.— 

(1) IN GENERAL.—Except as provided in paragraph (3), costs 

incurred by a contractor, subcontractor, or personal services 

contractor in connection with a criminal, civil, or administrative proceeding commenced by the Federal Government or a 

State in connection with a covered contract, subcontract, or 

personal services contract may be allowed as reimbursable costs 

under the contract, subcontract, or personal services contract if 

the costs are not disallowable under subsection (b), but only to 

the extent provided in paragraph (2). 

(2) AMOUNT OF ALLOWABLE COSTS.— 

(A) MAXIMUM AMOUNT ALLOWED.—The amount of the 

costs allowable under paragraph (1) in any case may not 

exceed the amount equal to 80 percent of the amount of 

the costs incurred, to the extent that the costs are determined to be otherwise allowable and allocable under the 

Federal Acquisition Regulation. 

(B) CONTENT OF REGULATIONS.—Regulations issued for 

the purpose of subparagraph (A) shall provide for appropriate consideration of the complexity of procurement litigation, generally accepted principles governing the award 

of legal fees in civil actions involving the Federal Government as a party, and other factors as may be appropriate. 

(3) WHEN OTHERWISE ALLOWABLE COSTS ARE NOT ALLOWABLE.—In the case of a proceeding referred to in paragraph (1), 

contractor, subcontractor, or personal services contractor costs 

otherwise allowable as reimbursable costs under this subsection are not allowable if— 

(A) the proceeding involves the same contractor, subcontractor, or personal services contractor misconduct alleged 

as the basis of another criminal, civil, or administrative 

proceeding; and 

(B) the costs of the other proceeding are not allowable 

under subsection (b). 

* * * * * * * 

CHAPTER 47—MISCELLANEOUS 

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Table of sections 

Sec. 

4701. Determinations and decisions. 

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ø4712. Pilot program for enhancement of contractor protection from reprisal for disclosure of certain information.¿ 

4712. Enhancement of contractor protection from reprisal for disclosure of certain information. 

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SEC. 4712. øPILOT PROGRAM FOR ENHANCEMENT¿ ENHANCEMENT OF 

CONTRACTOR PROTECTION FROM REPRISAL FOR DISCLOSURE OF CERTAIN INFORMATION 

(a) PROHIBITION OF REPRISALS.— (1) IN GENERAL.—An employee of a contractor, subcontractor, 

[or grantee] grantee, or subgrantee or personal services contractor, may not be discharged, demoted, or otherwise discriminated against as a reprisal for disclosing to a person or body 

described in paragraph (2) information that the employee reasonably believes is 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. 

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ø(i) DURATION OF SECTION.—This section shall be in effect for the 

four-year period beginning on the date of that is 180 days after the 

date the enactment of this section.¿ 

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