On January 19, 2017, a new Federal Acquisition Regulation (“FAR”) went into effect prohibiting the government from contracting with companies that utilize confidentiality agreements that restrict employees or subcontractors from lawfully reporting waste, fraud, or abuse to a federal agency’s Office of Inspector General.

The FAR applies to all solicitations and contracts, including contracts for Commercial Off-the-Shelf items, using funds from fiscal year 2015 or after. In connection with new contract bids or maintenance of existing contracts, contractors will be required to affirmatively represent that they do not have and will not enter into any non-compliant confidentiality agreements. A contractor with non-compliant agreements will not be eligible for a new contract. Confidentiality agreements arising out of civil litigation (such as those commonly included in settlement agreements) or that are federally mandated, are exempted.

If you contract with the government, now is the time to review any confidentiality agreements that you have with employees and subcontractors and take steps to cancel or rescind any non-compliant agreements.