Contractor Whistleblower Protections Pilot Program: Improvements Needed to Ensure Effective Implementation
Released: 2017-03-02T00:00:00

Letter

Background

Federal Employee Whistleblower Protections

Federal employees have had protections against whistleblower reprisal— also known in some cases as adverse consequences or retaliation—for several decades. The Civil Service Reform Act of 1978 and the Whistleblower Protection Act of 1989 both provided federal employees with certain rights against reprisal for disclosing certain wrongdoing and created avenues of investigation of complaints. More recently, the Whistleblower Protection Enhancement Act of 2012 expanded and clarified protections for federal employee whistleblowers, including adding clarity that federal employees are protected even if the disclosures are identified as part of their existing job duties, such as for auditors and safety inspectors.

Contractor Employee Whistleblower Protections

Disclosure: An allegation to certain bodies and individuals made by an employee who believes he or she has witnessed certain wrongdoing, such as gross mismanagement or gross waste.

Reprisal Complaint: Following a disclosure, a complaint that an employee has experienced reprisal as a result of the disclosure, such as demotion or discharge.

In 1986, whistleblower reprisal protections were extended to employees of defense contractors. The National Defense Authorization Act for Fiscal Year 1987 provided protections for employees of defense contractors, who were prohibited from discharging, demoting, or otherwise discriminating against an employee for disclosing certain wrongdoing. Similar protections were expanded to other executive agencies in 1994, when legislation provided certain rights for contractor employees at civilian executive agencies. For example, one right is to have the OIG of the executive agency conduct an investigation into reprisal complaints when the contractor employee believes reprisal has occurred as a result of disclosing certain information to authorized persons or bodies, such as a member of Congress. In 2013, after the passage of the NDAA for Fiscal Year 2013, the pilot program went into effect and further expanded protections to also include employees of subcontractors and grantees and directs the agency head to make the determination on whether a contractor employee had been reprised against.

Requirements under the Pilot Program

In 2013, the pilot program went into effect and, among other enhancements, limited the OIG investigation of complaints to 180 days, whereas previously there was no time limitation on the investigation. Further, under the pilot program, contractor, subcontractor, and grantee employees are protected from reprisal if they disclose to certain persons or bodies information they reasonably believe 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 or grant. Moreover, in addition to protections under the previous statute for disclosing certain information to a Member of Congress or an authorized official of an executive agency or the Department of Justice, employees are now protected when disclosing information related to certain wrongdoing to a broader range of authorized persons or bodies, such as a management official at the contractor, or to a law enforcement agency.

Under the pilot program, both the OIG at each executive agency as well as certain agency officials are responsible for executing provisions of the pilot program. The pilot program not only enhances agency responsibility to help ensure contractor employees are aware of their rights, but clearly identifies which office within the agency has responsibility for handling reprisal complaints. Figure 1 depicts the disclosure process and the complaint process.

Changes in Disclosure Process. Under the pilot program, the number of persons and bodies to whom a contractor employee may disclose protected information has expanded. Under the prior statute, a contractor employee was only covered if he or she disclosed certain wrongdoing to a Member of Congress, an authorized official of an executive agency, or the Department of Justice. Figure 1 above describes the disclosure process under the pilot program.

Agencies’ OIG Responsibilities. Upon receiving a reprisal complaint, OIGs must evaluate whether a reprisal complaint is covered under the pilot program. OIGs might not investigate for a variety of reasons, such as in cases where the complaint is already under investigation by another authority such as another OIG, or otherwise does not allege a violation of the law, such as if the claim was made prior to July 1, 2013. If the OIG determines the case is not covered under the pilot program, it may then notify the complainant that no further action will be taken on the reprisal complaint.

If the reprisal complaint is covered, the OIG must investigate the complaint and submit a report of its findings to the agency head, the complainant, the head of the contracting activity, and the contractor. OIGs may make a preliminary determination of whether reprisal occurred based on the investigation; however, the final determination of reprisal must be made by the agency head. As described in figure 1 above, the report provided by the OIG to the agency head must be sent within 180 days from receipt of the reprisal complaint. If the OIG determines it needs more time to investigate, OIGs are able to seek an extension of this timeline by getting permission from the complainant to do so.

Federal Acquisition Regulation 52.203-17 Contractor Employee Whistleblower Rights and Requirement to Inform Employees of Whistleblower Rights (a) This contract and employees working on this contract will be subject to the whistleblower rights and remedies in the pilot program on Contractor employee whistleblower protections established at 41 U.S.C. 4712 by section 828 of the National Defense Authorization Act for Fiscal Year 2013 (Pub. L. 112-239) and FAR 3.908. (b) The Contractor shall inform its employees in writing, in the predominant language of the workforce, of employee whistleblower rights and protections under 41 U.S.C. 4712, as described in section 3.908 of the Federal Acquisition Regulation. (c) The Contractor shall insert the substance of this clause, including this paragraph (c), in all subcontracts over the simplified acquisition threshold.

Agencies’ Responsibilities. Once the investigation findings are forwarded from the OIG, the agency head must determine whether there is a sufficient basis to conclude that a contractor employee was reprised against, and must either issue an order that the contractor take some form of remedial action or issue an order denying relief. During the 30-day period after the agency head receives the OIG report, the agency head may ask the OIG for additional investigative work. In addition, the complainant and the contractor must be afforded an opportunity to submit a written response to the OIG report during the same 30-day period.

Under the pilot program, contracting officers are also responsible for inserting Federal Acquisition Regulation clause 52.203-17 (FAR clause) into applicable contracts and agency heads are responsible for ensuring that contractors communicate to their employees their rights under the pilot program. This FAR clause lays out the responsibility of contractors to communicate to their employees their rights under the pilot program, which requires these protections to be communicated to contractor, subcontractor, and grantee employees in writing and in their predominant language. Applicable contracts that require the FAR clause include all contracts over the simplified acquisition threshold awarded on or after September 30, 2013, according to the FAR interim rule. The pilot program also requires agencies to make best efforts to include the clause in contracts awarded before July 1, 2013, that have undergone major contract modifications; the terms “best efforts” and “major modifications,” are not defined in the statute.

Our Recent Work on Whistleblower Protections

In 2015 and 2016, we reported on whistleblower protection issues, including issues related to the general public and federal employees, as illustrated below: In October 2015, we reported on whistleblower protections for any individual, including the general public, reporting tax fraud to the Internal Revenue Service Whistleblower Office. We found that whistleblowers may not have adequate protections against employer retaliation when filing disclosures. We made 10 recommendations to the Internal Revenue Service including tracking dates, strengthening and documenting procedures for award payments and whistleblower protections, and improving external communications. The Internal Revenue Service agreed with our recommendations.

In July 2016, we reported on the whistleblower process at Homeland Security for a specific regulation on Chemical Facility Anti-Terrorism Standards and found that the Department did not have documented procedures for investigating disclosures made by whistleblowers and their website provided only limited guidance. We recommended that Homeland Security develop a documented process and procedures to address whistleblower retaliation reports, and provide additional guidance on the Homeland Security whistleblower website and telephone tip line. Homeland Security agreed with our recommendations.

In September 2016, we testified before a House subcommittee on the status of DOD’s implementation of whistleblower protections and reported that of the 18 recommendations we had previously made, DOD had implemented 15, including that DOD ensure that investigations are conducted by someone outside of the complainant’s chain of command. DOD also had implemented our recommendations to improve and track investigation timeliness and strengthen oversight of the military services’ investigations, and was considering steps to implement the remaining three recommendations regarding standardized investigations and reporting to Congress.

In November 2016, we reported on the status of implementing the Whistleblower Protection Enhancement Act, which strengthens protections for federal employees. We reported that the Merit Systems Protection Board has taken steps to collect and report whistleblower appeals data, but we found a number of weaknesses in Merit Systems Protection Board’s data collection. We recommended that the Merit Systems Protection Board help ensure the accuracy of its reporting on whistleblower appeals received and closed by (1) updating its data entry user guide to include additional guidance and procedures and (2) adding a quality check in its data analysis and reporting process to better identify discrepancies. The Merit Systems Protection Board agreed with these recommendations.

In 2016, we also reported on aspects of the Department of Energy’s (Energy) whistleblower program and its contractor-run facilities, including its implementation of the 2013 pilot program. In our July 2016 report, we reported that Energy had taken limited to no action to hold responsible contractors that had created a chilled work environment, or an environment that may not respond favorably to whistleblower disclosures. We recommended that Energy revise existing guidance to clarify what constitutes a chilled work environment and define appropriate steps the Department can take to hold contractors accountable. Energy agreed with this recommendation.

All 14 Executive Departments Surveyed Varied in the Number of Reprisal Complaints Received and How They Implemented the Pilot

As the pilot program was being implemented, the number of reprisal complaints received varied across the 14 executive departments, according to the OIGs’ responses to our survey. According to the OIGs, of the estimated 1,560 reprisal complaints received from July 1, 2013, to December 31, 2015, the OIGs investigated about one-third of the total 127 complaints submitted by contractors, subcontractors, and grantee employees covered under the pilot program. All remaining reprisal complaints were disposed of for various reasons, but none of the pilot program investigations completed thus far resulted in findings that substantiated reprisal. In addition, the 14 OIGs reported using multiple mechanisms to implement the pilot program, including incorporating a new contract clause to notify contractors of their responsibilities.

Reprisal Complaints Received Varied across the 14 Executive Departments

The number of reprisal complaints received varied across the 14 executive departments we surveyed. OIGs at the 14 executive departments reported receiving an estimated 1,560 whistleblower reprisal complaints from July 1, 2013, through December 31, 2015. The 1,560 reprisal complaints consisted of each department receiving a range of complaints, from approximately 3 to 600 based on survey responses. The 1,560 reprisal complaints included complaints from employees of contractors, subcontractors, and grantees as well as groups not covered by the pilot program, such as federal employees and the general public.

Of the estimated 1,560 reprisal complaints received from July 1, 2013, through December 31, 2015, OIGs from the 14 departments reported that 127 were submitted by employees of contractors, subcontractors, and grantees under the pilot program. However, the OIGs reported varying levels of insight into whether federal, contractor, subcontractor, or grantee employees had submitted the reprisal complaints. For example, 2 departments reported actual counts for all categories while 4 departments provided a mix of actual counts and estimates. Two of the 14 departments could not separate the number of reprisal complaints by category, and did not track how many they had received from federal, contractor, subcontractor, or grantee employees. At these 2 departments, OIG officials said that their case management systems, the electronic systems they use to track complaints, could not provide this level of detail on the source of the complaint. As a result, the officials at these 2 departments said that they reviewed individual cases to determine if the reprisal complaints filed were relevant to the pilot program.

The 14 departments differed in the number of reprisal complaints received under the pilot program. For example, 2 departments reported receiving as few as 1 complaint apiece while 1 department received 35 complaints. Three departments accounted for almost 60 percent of the pilot program complaints received from employees of contractors, subcontractors, and grantees between July 1, 2013, and December 31, 2015. Almost all of the 127 reprisal complaints were reported directly to the department’s OIG. For the remaining reprisal complaints, 4 were referrals from within the respective department, 1 was a referral from Congress, and 1 was filed by an advocacy group on the behalf of a complainant.

OIGs Investigated About One-Third of the 127 Reprisal Complaints Identified Under the Pilot Program

Of the 127 reprisal complaints submitted by employees of contractors, subcontractors, and grantees under the pilot program, 44 were investigated by the OIG and none of the investigations completed thus far resulted in findings that substantiated reprisal. See figure 2 for more information about the disposition of reprisal complaints covered in the pilot program.

According to OIG responses to our survey, they had completed investigations for 27 of the 44 investigated reprisal complaints. As required under the pilot program, OIGs reported forwarding their investigation findings to the agency head in 12 of the 27 completed investigations. The remaining 15 investigations were completed by 1 OIG that reported it did not forward its findings to the agency head. This is not consistent with a provision of the pilot program and is discussed later in this report.

Of the 32 reprisal complaints submitted but not investigated, OIGs determined that the cases were one of the following: frivolous, previously decided by another federal or state judicial proceeding, to be referred to another investigative body, or to receive an “other disposition.” In cases that received other dispositions, OIGs reported that these cases could not proceed because the complainants did not respond to requests for information or declined to waive confidentiality, which they stated were necessary to conduct an investigation.

Of the 51 reprisal complaints submitted for which it was determined that the complaints were not covered by the pilot program, the OIGs at the respective departments—10 in total—did not take any further actions to investigate. In these cases, the OIGs determined that the initial disclosure was related to conduct that did not, for example, allege gross mismanagement covered under the pilot, and therefore, these reprisal complaints were not covered by the pilot program.

OIGs Reported Using Multiple Mechanisms to Implement the Pilot Program

All 14 OIGs reported using a combination of mechanisms to implement the pilot program, including existing efforts to manage whistleblower disclosures and new efforts to handle reprisal complaints filed under the pilot program. Some of these mechanisms were extensions of existing efforts, such as using existing whistleblower hotlines to accept reprisal complaints related to the pilot program. Several OIGs also noted that they developed education programs for contractors, subcontractors, and grantees, such as adding information about the pilot program to their whistleblower websites. In addition to these efforts, a few OIGs reported developing efforts specifically for the pilot program. For example, one OIG reported using a monthly report to provide a snapshot for the status of complaints and when the 180-day investigative period would end for each complaint—a specific time frame that is part of the pilot program’s enhancements to whistleblower protections. See table 1 for various methods used by OIGs to implement the pilot program.

Under the pilot program as implemented, contracting officers are also required to include a FAR clause—which instructs contractors to communicate to their employees, in writing and in their predominant language, their protections under the pilot program—in new contracts (contracts awarded after September 30, 2013) that exceeded the simplified acquisition threshold, generally over $150,000. All 14 departments reported in the survey that they had required insertion of the FAR clause 52.203-17 into new contracts as a means of ensuring that contractor employees are informed of their rights under the pilot program. In addition to the clause, 2 departments reported taking additional steps to ensure contractors are informing their employees of their rights. One department reported developing new guidance that will require their contracting staff to obtain email confirmation from contractors that they have notified employees of their rights. Also, during a roundtable discussion we conducted with senior procurement officials, another department official said that they had conducted forums with contractors to inform them about the importance of the pilot program and to gather feedback about challenges.

Despite using various mechanisms to implement the pilot program, most of the 14 OIGs identified ambiguities and some challenges with the pilot program. For example, over half of the OIGs identified at least one of each of the following as a challenge that they experienced while implementing the pilot:

Ambiguities in the pilot program (10 of 14 departments)—for example, the OIGs reported that there is a lack of guidance regarding the definition of a “frivolous” allegation.

Personnel or funding (9 of 14 departments)—for example, the OIGs reported that these are complex cases where the investigation can be extensive and consume significant investigative manpower.

Timeliness requirements for investigating reprisal complaints (8 of 14 departments)—for example, the OIGs reported that it is difficult to determine how much time it will take to complete an investigation because they have little formal control over non-government entities.

Two whistleblower advocacy groups we spoke with echoed these concerns, noting that contractor employees’ reprisal complaints can take a backseat to other issues because OIGs may have limited resources or other priorities, such as investigating federal employee complaints. Given these limited resources, one of the groups said that they had started to offer training on whistleblower protections during the implementation of the pilot program to help OIGs better understand issues such as what is considered a covered disclosure or personnel actions that may constitute reprisal to the detriment of the contractor.

Four Selected Departments Did Not Fully Implement Provisions of the Mandate

Four selected departments—Commerce, Homeland Security, Interior, and State—used various processes for implementing the pilot program, and some had not yet fully implemented the program. In particular, OIGs of these departments reported they provided internal training on the protections provided by the pilot program. Further, the OIGs reported that they either had existing guidance or developed guidance during the implementation of the pilot program, however we found that the guidance was lacking in certain details. Moreover, the pilot program requires that the departments’ OIGs forward a report of their investigation findings to several entities, but we found two OIGs with completed investigations that did not fully implement these reporting requirements. Additional details of contractor and subcontractor employees’ reprisal complaints submitted to the selected departments and the handling of the complaints are included in appendix III. In addition, within the four departments’ contracting offices, some of the new contracts we reviewed were missing one of the required FAR clauses as required by law, and none of the four departments have policies in place to make best efforts to include a required FAR clause in major contract modifications, as required by the pilot program. Finally, departments have not taken full advantage of opportunities to improve communications between department officials and contractors to help make contractors’ employees aware of their protections from reprisal for disclosing potential wrongdoing.

Selected OIGs Provided Internal Training on the Pilot Program

At the four selected departments we reviewed, the OIGs reported that they provided internal training on the protections provided by the pilot program. For example, an official at State reported having training available not only for OIG staff, but also for contracting officers. Interior officials reported that they had developed detailed training slides that cover several whistleblower laws, including the pilot program protections. Homeland Security officials reported that they had a slide dedicated to the pilot program in whistleblower training slides, but also said additional training would be helpful. Commerce OIG officials reported that the Office of Special Counsel and Department of Justice officials provided training related to whistleblower protections to the OIG staff.

Selected OIGs Have Varying Pilot Program Guidance, but This Guidance Is Lacking in Certain Details

Commerce, Homeland Security, Interior, and State OIGs all reported having guidance in place to implement the pilot program, but that guidance varied and lacked certain details regarding the provisions in the pilot program. Specific details follow:

Commerce OIG officials provided a flow chart and a legal memorandum as the pilot program guidance which detail the OIG and department responsibilities under the pilot program. Commerce OIG also has guidance related to conducting investigations, but not specifically those that fall under the pilot program. Commerce officials we spoke with said that these documents are sufficient as guidance to effectively implement the pilot program. However, we noted that while the flow chart provides a description of the pilot program, it does not include some program details that will facilitate implementing the program, such as identifying to which offices within Commerce a report should be sent following an investigation. For example, it does not identify which office is the “head of the contracting activity” or the designee to where a report should be sent. Further, the investigations guidance may benefit from incorporating some elements of the flow chart specific to the pilot program.

Homeland Security OIG officials provided a directive as the pilot program guidance. The directive outlines OIG responsibilities under the pilot program, including intake and investigation procedures, as well as a process for tracking complaints. Homeland Security officials we spoke with said this directive is thorough. However, we noted the directive does not include the FAR 3.908-5 requirement to send the investigation findings to the head of the contracting activity and believe there may be opportunity to include more guidance. When we asked about the FAR requirement, OIG officials said they believed forwarding findings to the head of the contracting activity is a responsibility of the agency head which had not previously provided the proper contact to the OIG.

Interior OIG officials provided their policy for investigations as the pilot program guidance. However, we noted that Interior’s OIG investigations policy document was not specific to the pilot program processes or protections. Interior OIG officials agreed and reported that if the pilot is made permanent they plan to make changes to the policy for investigations to include the pilot program details.

State OIG officials provided their policy for pilot program investigations as the pilot program guidance. The policy includes instructions on obtaining evidence for pilot program investigations, on the reporting process when an investigation is complete, as well as identifies levels of review. The policy instructs State officials to share investigation findings with the agency head; however, we found it does not specify how that information should be communicated. A State OIG official said that the report of findings is communicated to the agency head through a system that allows memoranda to be submitted as either an action memorandum or information memorandum. State OIG officials reported that initially, they had submitted information memoranda because action memoranda traditionally have a one page limit, which is insufficient to communicate the findings of an investigation. However, according to State OIG officials, in 2016, the Office of the Executive Secretariat (which handles executive communication) requested that OIG put its whistleblower reports in the form of an action memorandum, but this change has not been put into guidance. An action memorandum signals that action by the agency head is required, while an information memorandum does not. Although a determination by the agency head is required by law, we noted that the OIG guidance does not specify that the action memoranda should be sent to the agency head, signaling action is to be taken.

According to federal internal control standards, management should internally communicate the necessary information to achieve the entity’s objectives. This can be achieved through clear guidance or policies. Further, FAR 3.908-5 establishes pilot program requirements, and department guidance should include the requirements laid out in the FAR, such as time frames for determinations by the agency head and who receives copies of the investigation results. Although the four selected OIGs all provided some level of guidance on executing the pilot program, it is possible that some steps in this process may be missed because they do not have detailed guidance that addresses all required elements of the pilot program. Without providing more details in their guidance, these departments may be at risk of not fully implementing all the provisions of the pilot program.

Two OIGs with Completed Investigations Did Not Fully Implement Pilot Program Reporting Requirements

The pilot program statute and implementing regulations require that the OIG forward a report of its investigation findings to several entities, including the agency head, the complainant, and the contractor. Additionally, the FAR requires that the agency’s head of the contracting activity also receive a report of investigation findings. Of our four selected departments, Commerce and Interior reported that they did not have any investigations finalized during our review period. In contrast, Homeland Security and State had investigations with findings that were not forwarded to all appropriate entities to allow the agency head to make a final determination of whether reprisal occurred. Specific details follow:

Homeland Security OIG officials reported that they found the complaints to be unsubstantiated in their two investigative reports and reported forwarding the findings from their two investigations during this period to the contractor and the complainant. However, although OIG officials reported attempting to send the report to the agency head, department officials reported that the reports did not actually go to the appropriate contacts. As a result, the reports were not received by the correct contact in the department, and the agency head did not make the determination in either case, as required by law. Agency officials reported that in one case a report was sent to the Office of General Counsel Labor and Employment division, not the agency head, and in the other case, the report was forwarded to the Secretary’s office, but nothing was done with the report. OIG officials said their implementation of the pilot was an evolving process and that they were not notified that the reports had gone to the wrong person.

State OIG officials reported that the five investigations completed by December 31, 2015, were forwarded to the agency head, and the results of the OIG investigations were communicated to both the complainant and the contractor. During the course of our review, a State OIG official said that he had previously sent the reports to the relevant contracting activity at each Bureau, as designated by the Department of State Acquisition Regulation, in an effort to meet the requirement to provide the investigation results to the head of the contracting activity. However, starting in October 2016 and going forward, officials said the OIG plans to send reports to State’s Procurement Executive, the head of the contracting activity at the State Department, who has since been designated by the agency head during the course of this review to make determination of potential reprisals, as well as provide remedies. For these five cases, a State OIG official reported that the complaints were unsubstantiated and the OIG forwarded all findings as information memoranda to the agency head. The information memoranda include a cover page indicating the investigation’s findings, and that the Secretary should review the report for informational purposes, but there is no indication on the cover page of actions required—including that the agency head has 30 days to make a determination—because a determination had been made by the OIG. However, the pilot program requires that even if the OIG determines the reprisal complaint is unsubstantiated, the agency head must make the final determination. Officials from the agency head at State explained that for the five cases in which information memoranda were provided to report the investigations’ findings, they understood that no action was required, and no action was taken, however the responsibility to make a final determination of whether reprisal occurred under the pilot program remained. As a result, no documentation exists indicating that the agency head agreed with the investigations’ findings. According to the statute, however, the agency head, not the OIG, must make the determination of whether reprisal occurred within 30 days of receiving the report of investigation findings. During our review, and in part as a result of ongoing work, in June 2016, OIG officials said State instructed the OIG to provide the results of its investigations as action memoranda, rather than information memoranda, for both substantiated and unsubstantiated investigation findings of a reprisal complaint in order to indicate action from the agency head is necessary. In addition, the action memorandum now includes the 30-day requirement for the agency head to make a determination as to whether the employee was subjected to a reprisal on the complaint. As a result of these changes, two additional investigation findings from October 2016 were reported to the agency head in the action memorandum format.

Some New Contracts at the Four Departments Were Missing the FAR Clause, and the Departments Lack Processes to Ensure the FAR Clause Is Inserted

In addition to investigating reprisal complaints, the pilot program required a new FAR clause to be inserted into contract actions; this action is to be accomplished by the departments’ contracting officials. As discussed earlier, the FAR clause instructs contractors to communicate to their employees, in writing and in the predominant language of their workforce, their rights under the pilot program. These rights include who an employee may report an initial disclosure or submit a reprisal complaint to, their right to an investigation for covered reprisal complaints, and other rights and remedies. The FAR clause is required to be inserted into new contracts over the simplified acquisition threshold, generally $150,000, for any contracts awarded after September 30, 2013, until the close of the pilot program on July 1, 2017. For commercial item acquisitions, contracting officers must insert an already-required clause, 52.212-4, that now requires compliance with the pilot program statute 41 U.S.C. § 4712.

Commerce, Homeland Security, Interior, and State contracting officials reported that they use the FAR clause to inform contractors of their responsibilities. However, we found that at State, Commerce, and Homeland Security, contract writing systems may not automatically include the clause into contracts that are required, and some required a contracting officer to insert the FAR clause into each contract into which it is required to be included, rather than through an automated system. At Interior, officials said the clause would be automatically inserted into new awards as appropriate, however, we found the clause was not inserted in all contracts that we reviewed. Internal control standards require that an entity should establish monitoring activities and evaluate results. However, we found all four selected departments reported having no department-wide, regular compliance review that would detect whether the required FAR clause is included in required contracts. For example, Commerce officials reported that while they do have a compliance review that checks for the insertion of mandatory clauses, and a review was conducted in 2014 and included contract actions from 2011 through 2013, a review has not been done since; therefore, no department-wide review has been done on the inclusion of the FAR clause required by the pilot program. A contracting official from Homeland Security said that all contracting officers, as part of the review process before a contract is signed, are required to review contract actions to ensure that all applicable clauses are included; however, no department-wide review is done. Contracting officials from Interior said that, while they conduct contracting compliance reviews, they do not include specific clauses in those reviews unless the agency has a specific reason to do so, such as if they determined through risk analysis that the clause may not be included. To date, according to these officials, Interior has not checked compliance of the inclusion of the FAR clause. Officials from State report they rely solely on supervisory review of contract documents and there is no higher-level compliance review to determine whether the FAR clause is inserted into new contracts.

Despite the acknowledgement from all four departments that the required clause was to be included in new contracts, we found that some contracts in our review lacked the required whistleblower protections FAR clause 52.203-17 or 52.212-4 for commercial item contracts. The contracts for Homeland Security, Interior, and State were not commercial item contracts, but the contract for Commerce was. At Commerce, a contract awarded in September 2015 of more than $450,000 for computer hardware and software licenses provided by contractors does not include the required whistleblower protections FAR clause or the commercial item contract clause. Further, at Homeland Security, a contract awarded in September 2015 for over $550,000 for the design and implementation of security software does not include the required whistleblower protections FAR clause. In addition, at Interior, a contract awarded in August 2015 of about $200,000 to perform research and development does not include the required whistleblower protections FAR clause. At State, a contract awarded in September 2015 for project development and design services for over $230,000 also did not include the required whistleblower protections FAR clause. Without a process in place to ensure the required contract clause is inserted into new contracts, these clauses may continue to be excluded. If acquisition officials fail to include the required clauses and fail to take other action that would inform the contractor employees of their rights under the pilot program, contractor employees may not be aware of their rights.

The Four Departments Lack Policies on Making Best Efforts to Include the FAR Clause in Major Contract Modifications

The pilot program requires that executive agencies make a best effort to include the FAR clause in major contract modifications of existing contracts awarded before July 1, 2013. Officials from Commerce reported that they do not include the FAR clause in major modifications, but pointed out that the standard FAR convention for incorporating clauses into existing contracts allows the contracting officer to use discretion. Homeland Security officials also noted that contracting officers are encouraged to include the clause in major modifications to required contracts and task orders. Interior officials reported that it is up to the bureaus within Interior to decide if the clause is inserted into major modifications, and there is no department-wide policy. State officials reported that the clause is added on a case-by-case basis, and contracting officials are responsible for determining whether it is necessary to add the clause. Contracting officials at all four departments said they do not have a policy in place that defines major modification, or any policy or guidance that instructs contracting officials on how to determine if a modification would be considered “major” or what the contracting officer should do to make a best effort to include the FAR clause. Some contracting officials reported that even though there are requirements in the statute regarding making best efforts, they rely on the FAR and generally do not seek out additional counsel on the implementation of the law. However, the requirement to make best efforts to include the FAR clause into existing contracts (those awarded before the effective date of the pilot program) during major modifications of those contracts is not implemented in the FAR. In the FAR interim rule, agencies are only “encouraged” to put the clause in major modifications, but there is no mention of “best efforts” to do so. As a result, some departments’ officials who rely on the FAR guidance and rules may not be aware of the statutory requirement to make a best effort to include the FAR clause in major modifications to contracts awarded before July 1, 2013.

Additionally, some of the contracting officials we spoke with said there may be costs associated with asking a contractor to include the clause during a major modification of an existing contract. However, contractors we spoke with said that adding the FAR clause would be largely administrative and they would be unlikely to ask for additional compensation to do so. Further, one contractor we spoke with pointed out that the company he represents would be hesitant to argue against including the FAR clause because the contractor understood and agreed with the importance of protecting whistleblowers from potential reprisal.

Without a department-wide policy in place to determine whether or not to include the FAR clause into an existing contract during a major modification and to define what is major, it may not be possible for these departments to ensure their contracting officers are making a best effort to include the clause into existing contracts awarded prior to July 1, 2013, as required by the pilot program.

Opportunities Exist to Improve Communications between Department Officials and Contractors

Some contractors we spoke with were unaware of their obligations under the pilot program. These contractors not only have received federal funds from one or more of the four selected departments in our review, but also other federal agencies. They pointed out that they generally have not been contacted by agencies to follow up on what steps or actions they have taken to communicate in writing to employees about their rights against reprisal. However, another contractor pointed out that agencies have followed up and sought confirmation or attestation on other contract clauses, such as clauses designed to address human trafficking. In addition, one whistleblower advocacy group we spoke with noted that contractors’ employees may not be aware of their rights or where to find more information about the pilot program protections. This reinforces the need for agencies to ensure the mechanisms are in place for contractors to communicate these rights to the covered employees.

At the four selected departments, department officials reported taking no additional action beyond inserting the FAR clause to inform contractors about their responsibilities to communicate to their employees—in writing and in the employees’ predominant language—their rights under the pilot program. Some officials noted that contractors are responsible for implementing FAR clauses, and if they do not do so, they are in breach of the contract. Federal internal control standards, under the information and communication standard, note that management should externally communicate necessary information to achieve its objectives. Given that contractors we spoke with stated they were not all aware of the need to communicate to their employees about their rights in this area, opportunities for improvements to communications between the two parties exist. For example, one department in our survey of 14 departments reported conducting external communication beyond including the FAR clause in new contracting actions by developing new guidance that will require its contracting staff to obtain email confirmation from contractors that they have notified their employees of their rights as reported above. Without additional communication about the requirements and protections provided by the whistleblower protections pilot program between the four departments and their contractors, contractors may not fully understand or appreciate the significance of their responsibility to communicate to their employees.

Conclusions

Executive departments have an opportunity to help reduce fraud, waste, abuse, and mismanagement of government funds by leveraging the willingness of contractor, subcontractor, and grantee employees to report such instances. Because whistleblowers risk reprisal, including potential job loss, agencies must ensure those contractor employees are aware of their protections against reprisal. To fully implement the enhancement of contractor employee whistleblower protections pilot program, especially now that it has been made permanent, and to ensure that the review process does not stop short of the agency head review, OIGs must report their investigation findings to the agency head. When reports are not forwarded to the agency head for final determination, the requirement under the statute is not met. Further, the determination of the agency head may differ from that reached by the OIG, possibly affecting the complainant’s recourse. At the four selected departments reviewed, confusion among department officials about the pilot program’s processes and requirements remain, and further guidance may help clarify responsibilities under the pilot program. Further, opportunities exist for these four departments to ensure that the necessary FAR clause is included in all required contracts, and that they make a best effort to include the FAR clause in major modifications to existing contracts. Finally, improving communication with contractors, subcontractors, and grantees to ensure employees are aware of their responsibilities and rights under the pilot program are important steps for the selected executive departments’ contracting officials to take. By fully implementing the pilot program, these departments can encourage contractor personnel to disclose evidence of wrongdoing. Without these critical oversight elements of contracts, contractor employees may be unaware of the protections they have against reprisal, which may ultimately impact their willingness to come forward when witnessing fraud, waste, abuse, and mismanagement.

Recommendations for Executive Action

We recommend that the Inspectors General of Commerce, Homeland Security, Interior, and State develop or clarify existing guidance on the implementation of the pilot program. For example, the guidance should identify specific pilot program processes such as levels of review during an investigation, and where the findings of investigations are to be reported.

We also recommend that the Secretaries of Commerce, Homeland Security, Interior, and State develop policies and processes to help ensure that the FAR clause 52.203-17 is inserted in new contracts and major modifications as appropriate, contracting officials can determine whether a modification is major and the applicability of the FAR clause, and whether they are making their best efforts to include the clause into existing contracts during major modifications, and contracting officials communicate with contractors and subcontractors to help ensure employees are informed about the requirements and protections provided by the whistleblower protection pilot program.

Agency Comments and Our Evaluation

We provided a draft of this product to the Departments of Commerce, Homeland Security, Interior, and State for comment. All four departments concurred with the recommendations. The agencies’ comments are summarized below and written comments from Commerce, Homeland Security, and State are reproduced in appendices IV, V, and VI respectively. Interior agreed with the recommendations in an email. We also received technical comments from Commerce, Homeland Security, and State which we incorporated, as appropriate.

In Commerce’s written comments, the Department said the differences between the statute and the FAR regulations need to be addressed, and agreed to encourage contractors to communicate with their subcontractors about the requirements and protections of the pilot program. Commerce OIG agreed to incorporate some of the guidance in their policy manual into their flowchart guidance, and revise their investigative policy manual as necessary.

In Homeland Security’s written comments, the Department agreed to review processes to ensure the FAR clause is inserted into new contracts, develop policies and procedures to ensure contracting officers have clear guidance on when to incorporate the FAR clause, and will communicate broadly with those who do business with the Department to remind them of their contractual obligation under the pilot. The Homeland Security OIG has updated their directive in accordance with our recommendation.

In an email, Interior noted that the Department plans to develop supplemental guidance in fiscal year 2017 to assist contracting officers in appropriately applying the FAR clause and remind them of their responsibility to communicate the requirements of the clause to their contractors and subcontractors where possible.

In State’s written comments, the Department agreed to ensure that the FAR clause is inserted in new contracts and major modifications, assist contracting officers to determine whether a modification is major and whether they are making best efforts to include it, and assist contracting officials with communicating to contractors and subcontractors to help ensure contractor employees are informed about the requirements under the pilot program. The State OIG has updated policies to include the 30- day deadline for agency head determination in whistleblower reports, accommodate the agency head’s specifications for sending the report, and specify that the Procurement Executive is the Secretary of State’s designee for whistleblower investigations.

We are sending copies of this report to the appropriate congressional committees, the Secretaries of Commerce, Interior, Homeland Security, and State, and to other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact me at (202) 512-4841 or makm@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix VII.

Appendix I: Survey

Appendix II: Objectives, Scope, and Methodology

The National Defense Authorization Act for Fiscal Year 2013 contained a provision for us to evaluate and report on the implementation of the Pilot Program for the Enhancement of Contractor Employee Whistleblower Protections (pilot program). In December 2016, Congress enacted legislation making the pilot program permanent. Our report: (1) describes the results of the whistleblower pilot program between July 1, 2013, and December 31, 2015, across 14 executive departments; and (2) assesses the extent to which four selected departments implemented the pilot program.

To describe the results of the whistleblower pilot program, we surveyed the Office of Inspector General (OIG) at the 14 executive departments covered by the legislation on the reprisal complaints received between July 1, 2013, and December 31, 2015. In this report, we use the terms “agency” and “agency head” when referring to provisions of the whistleblower protections pilot program legislation in general because the legislation uses these terms. We use the term “departments” when we refer to the 14 executive departments defined by statute and covered by the whistleblower protections pilot program that were the focus of this review. Specifically, we surveyed the OIGs at the Departments of Agriculture, Commerce, Education, Energy, Health and Human Services, Homeland Security, Housing and Urban Development, Interior, Justice, Labor, State, Transportation, Treasury, and Veterans Affairs. We sent the survey questionnaire—by e-mail in an attached Microsoft Word form that respondents could return electronically after completing it—to 14 executive departments on June 15, 2016, and received responses from the OIGs at all 14 departments. We coordinated survey responses through each department’s OIG, which consulted with their cognizant department officials to respond to questions on an as-needed basis.

Among other things, the survey collected information about the number of disclosures of waste, fraud, abuse, and mismanagement as well as reprisal complaints and mechanisms used by executive departments to implement provisions of the pilot program. For each department, we asked officials to provide information about activities and data related to whistleblower complaints, including data on complaints that were not subject to the pilot program. For pilot program-related information, we requested data on contractor, subcontractor, and grantee employees, such as the number of complaints received from each group and how many of the complaints were investigated by the OIG. When necessary, we performed limited follow-up with all 14 departments to clarify answers and request relevant documentation; this follow-up took place from July 26, 2016, to December 8, 2016. We did not independently verify information obtained through the survey, including data describing the case numbers the departments provided; however, to determine the information was reliable for our purposes we asked the departments to describe the source(s) of information used and steps taken to determine these numbers. We believe these data are reliable for our purposes. The survey used for this study is reprinted in appendix I.

Since this was not a sample survey, it has no sampling errors. However, the practical difficulties of conducting any survey may introduce errors, commonly referred to as nonsampling errors. For example, difficulties in interpreting a particular question, sources of information available to respondents, or entering data into a database or analyzing them can introduce unwanted variability into the survey results. We took steps in developing the survey, collecting the data, and analyzing them to minimize such nonsampling error. We conducted three telephone pretests of the survey instrument with officials at three departments to ensure that questions were clear, comprehensive, and unbiased, and to minimize the burden the questionnaire placed on respondents. An independent reviewer within GAO also reviewed a draft of the questionnaire prior to administration of the survey. We made changes to the content and format of the questions based on feedback from the pretests and independent review. In addition to pretesting the survey, we coordinated with the Council of the Inspectors General on Integrity and Efficiency (CIGIE) to hold a question and answer session after releasing the survey.

To assess the extent to which departments implemented the pilot program, we selected four departments based primarily on the dollar value of their fiscal year 2015 contract funds awarded, the most recent year available at the time we began our review. To obtain a range of experience level with contracting at departments, we included two departments with higher contract funds awarded (Homeland Security, State) and two departments with lower contract funds awarded (Commerce, Interior). To identify these departments, we ranked department contract funds awarded from highest to lowest, and selected two departments from the top half of the 14 departments, and two from the bottom half. Our secondary criteria included the proportion of contract funds awarded to overall obligations in fiscal year 2015 and whether the departments’ OIG website included mention of the pilot program. At each department, we focused on the department’s handling of reprisal complaints filed by contractor and subcontractor employees. We interviewed or obtained written answers from department OIG officials, the office of the agency head, and contracting officials about their processes and practices for the agency duties outlined in the mandate. Where applicable, we reviewed documentation such as relevant policies, guidance, and internal reports. Findings based on information collected from the four departments cannot be generalized to all departments.

To identify whether a Federal Acquisition Regulation (FAR) clause was included in contracts as required, we reviewed a non-generalizable sample from each of the four case study departments. To identify an example of a contract without the clause, we reviewed documentation for a random selection of at least 50 contracts at each of the four departments. We used the Federal Procurement Data System–Next Generation (FPDS-NG) to generate a sample of contract actions over $150,000 that were awarded by the four departments included in our review in the fourth quarter of fiscal year 2015. The sample also included orders awarded in the fourth quarter of fiscal year 2015, regardless of the award date of the associated contract. To avoid selecting contracts where the underlying base contract was awarded by another department, we excluded interagency contracts. We asked for contract actions awarded in the fourth quarter of fiscal year 2015 to ensure we were sampling contracts that are required to have the clause and would be reasonably accessible by the departments (e.g., they would likely not be archived). To avoid selecting contracts where the underlying base contract was awarded by another department, we excluded interagency contracts. We also excluded task or delivery orders awarded using blanket purchase agreements because we could not consistently determine which department awarded the underlying base contract based on FPDS-NG data. For Homeland Security, we excluded contracts awarded by the Coast Guard because the Coast Guard is not covered under the pilot program and its contracts would not be required to contain this clause. We excluded personal services contracts because they are not specifically included in the pilot program statute.

We conducted data reliability checks on the FPDS-NG dataset by comparing it to contract documentation obtained from contract files and determined it was sufficiently reliable for our purposes.

Finally, in order to learn about challenges experienced during the implementation of the pilot program, we also conducted interviews with contractors and whistleblower advocacy groups. We contacted five large and eight small business contractors based on their contract obligations from fiscal year 2013 through fiscal year 2015, as reported in FPDS-NG. For large contractors, we contacted firms that were listed on FPDS-NG’s “Top 100 Contractors” list for at least two of the four selected departments and in at least two of the fiscal years since 2013, when the pilot program went into effect. For small business contractors, we contacted firms that received among the largest amount of contract obligations at each of the four selected departments in at least two separate years since 2013. We ultimately interviewed or obtained written answers from seven contractors. While information collected from the contractors is not generalizable to all contractors, they provide important perspectives on challenges experienced by both large and small contractors. Lastly, we spoke with two advocacy groups for whistleblowers.

We conducted this performance audit from February 2016 to March 2017 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Appendix III: A Summary of Selected Departments’ Reprisal Complaints and the Handling of Those Complaints

This appendix provides additional information on reprisal complaints for the four selected departments—Commerce, Homeland Security, Interior, and State—under the Pilot Program for Enhancement of Contractor Employee Whistleblower Protections (pilot program).

Table 2 provides a summary of the data collected regarding reprisal complaints received at each department and the Office of Inspector General officials’ disposition of each complaint.

Appendix IV: Comments from the Department of Commerce

Appendix V: Comments from the Department of Homeland Security

Appendix VI: Comments from the Department of State

Appendix VII: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the contact names above, Penny Berrier (Assistant Director), Mary Diop, Meghan Perez, and Jocelyn Yin were principal contributors to this report. In addition, the following people made key contributions to this report: James Ashley, Lorraine Ettaro, Stephanie Gustafson, Kurt Gurka, Julia Kennon, John Krump, Kate Lenane, Sylvia Schatz, and Roxanna Sun.