Time to Review Internal Confidentiality Agreements

Foley & Lardner LLP

There’s not a whole lot of new ground to cover as to why an employer or contractor would want to implement confidentiality agreements. However, forcing them on workers is a whole different story.

Federal government contractors are now prohibited from requiring employees or subcontractors to sign an internal confidentiality agreement that restricts them from lawfully reporting waste, fraud, or abuse to designated investigative or law enforcement representatives of a Federal department or agency authorized to receive such information (e.g., agency Office of the Inspector General). This went into effect January 19, 2017, pursuant to Federal Acquisition Regulation (FAR) clause 52.203-19, Prohibition on Requiring Certain Internal Confidentiality Agreements or Statements. Pursuant to FAR clause 52.203-18, Prohibition on Contracting with Entities that Require Certain Internal Confidentiality Agreements or Statements – Representation, by submitting an offer to the federal government, contractors represent that they are compliant with the requirements of FAR clause 52.203-19.

To comply with these new requirements, all federal government contractors should:

  • Review existing employee and subcontractor confidentiality agreements;
  • If existing confidentiality agreements are found to contain language that is inconsistent with the new rule, prepare an appropriate notification to employees and subcontractors that the prohibitions and restrictions in the confidentiality agreement that are inconsistent with the clause, are no longer in effect; and
  • Revise confidentiality agreement templates and draft future confidentiality agreements to ensure compliance with the new rule.

This new rule, available here, applies to all solicitations and contracts (including contracts for commercially available off-the-shelf (COTS) items) that use fiscal year 2015 funds or subsequent fiscal year funds, that do not already contain a comparable provision/clause. Additionally, higher-tiered contractors must include FAR clause 52.203-19 in all lower-tier subcontracts.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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