Protections for Employees Who Blow the Whistle on Defense Contractors

Some defense contractors’ fraud, waste, and mismanagement cost the government an estimated tens of billions of dollars each year. It is one of the largest categories of fraud in contracting with the federal government. Employees of federal contractors in any industry are in a position to discover and report this fraud and often do so.

To protect such employees from retaliation, the federal False Claims Act (“FCA”) allows an employee to sue for back pay and other compensation. Provisions of the National Defense Authorization Act of 2013 added further protections which extend to whistleblowers outside the defense industry in many situations.

What is the National Defense Authorization act?

The National Defense Authorization Act is an annual budget-related bill that sets conditions for defense spending. In many years, the NDAA makes permanent changes to federal law. The bill Congress passed on January 2, 2013 amended two federal statutes to protect whistleblowers who report mismanagement and a wide range of other misconduct by federal contractors and grant recipients. In contrast to the FCA, the NDAA does not allow such a whistleblower to sue the contractor for its mismanagement, so long as no fraud is involved. The NDAA aims to help contracting government agencies make fully informed contracting decisions and get better value from their contracts.

What laws prohibit defense contractors from retaliating against whistleblowers?

The FCA already prohibits termination and other job-related retaliation against a whistleblower who files an FCA lawsuit based on fraud or other false claims that a contractor makes to 1) win a contract or 2) be paid on a contract.

The 2013 NDAA expanded protections for employees of contractors and subcontractors who report misconduct. One section of the NDAA applies to all industries. A second applies only to companies that contract with the Department of Defense (DOD) and/or the National Aeronautics and Space Administration (NASA).

The NDAA protections go beyond the FCA’s in two important ways. First, the NDAA protects a broader range of misconduct, including “gross mismanagement” of a federal contract or grant, a “gross waste” of federal funds, “a substantial and specific danger to public health or safety,” or a contract-related violation of a law or regulation. Second, multiple modes of reporting the misconduct are protected. A report to any of the following is protected:

• A member of Congress or a representative of a committee of Congress
• An Inspector General of a federal agency
• The Government Accountability Office, Congress’s research and investigatory arm
• A federal employee responsible for contract or grant oversight or management at the relevant agency
• An authorized official of the Department of Justice or other law enforcement agency
• A court or grand jury
• A management official or other employee of the contractor or grantee who has the responsibility to investigate or address misconduct5

Reporting misconduct to one of these entities may entail less involvement than being a plaintiff (also known as a “relator”) in a federal lawsuit under the False Claims Act. And a plaintiff who faces retaliation for one of the protected categories of reporting under the NDAA can bring an NDAA lawsuit without having any FCA claims.

What should I do if I suspect my employer of misconduct that violates the NDAA?

If you suspect waste, fraud, or abuse by a government contractor, you should contact an attorney experienced in FCA litigation and familiar with NDAA’s protections. There may be fraud or overcharging that goes beyond the NDAA’s waste, abuse, and mismanagement reporting provisions.

If you have faced retaliation for reporting waste, abuse, and mismanagement, you should definitely contact an attorney to discuss your situation. As a first step, the NDAA requires that the employee report the retaliation to the Inspector General of the relevant government agency.

The Inspector General is then required to investigate the complaint of retaliation. If the Inspector General determines that there was unlawful retaliation, the agency must order the contractor to reverse the retaliatory action and/or provide back pay. The agency must file its own lawsuit against the contractor in the event of noncompliance. If the agency fails to comply, the employee can file a lawsuit against the contractor. The employee can also join a lawsuit that the government agency has filed.