Whistleblower Advocacy Group Warns OSC Proposed Rule for Federal Contractors May Cause Harm

In January the U.S. Office of Special Counsel (OSC) proposed a rule that it claims would extend protections under the Civil Service Reform Act and the Whistleblower Protection Act to employees of federal contractors. However, as my previous blog on this proposed rule stated, the unintended consequences of this rule may cause more harm than good for employees of federal contractors.

On Monday, March 23, the National Whistleblower Center (NWC) filed comments on the proposed rule. The submission by the NWC cautioned OSC stating “we believe that part of the proposed rule should be modified to ensure that employees of contractors are aware of their rights under the False Claims Act, and the part pertaining to disclosure of classified information should be withdrawn until further clarification about the use and handling of classified information is provided.”

The first issue NWC has with the rule is that it does not mention that employees of federal contractors have better protection under other federal laws. For example, the False Claims Act (FCA) provides enhanced protection, double back pay and rewards for employees who expose violations of law and misuse of federal monies. The FCA has mandatory reporting requirements that are not reflected in the OSC’s proposed rule. The failure of whistleblowers to follow these rules could disqualify them from enhanced protection under the FCA, and could undermine their ability to collect a reward under the FCA or other qui tam laws. In fact, the OSC proposal does not even mention the more significant rights that federal contracting employees have under the FCA.

The NWC recommends the OSC amend this part of the proposed rule to eliminate confusion and to prevent federal contractor employees from acting in a way that might disqualify them from seeking a qui tam award or seeking other enhanced whistleblower protections under the False Claims Act.

The second issue the NWC has with the propose rule is that employees of federal contractors may be open to criminal prosecution if they follow the procedures under the OSC rule for disclosing information related to services they provide to members of the intelligence community.

NWC warns that there is no authority or assurance provided by OSC within the proposed rule to federal contractor employees that they will not face discipline or even criminal prosecution for making disclosures of classified information to OSC. Employees of federal contractors who provide services to the intelligence community “will be taking an enormous risk and could suffer not only loss of employment but also loss of personal freedom by making a disclosure of any information to OSC.” The NWC comment points to the fact that four individual employees of contractors have been criminally prosecuted as spies, or accused of wrongfully disclosing classified information or improperly handling classified information, instead of the wrongdoers being held accountable.

The NWC recommends that the OSC withdraw the section of the proposed rule on disclosing information about elements of the intelligence community or classified information as the proposed procedure is not authorized by 41 U.S.C. §4712(f), or any other provision of law.

This proposed rule may cause confusion and interfere with other preexisting rights federal contractor employees have under other laws and may cause them to risk their personal freedom. OSC should reconsider whether such a rule is even necessary given that employees of contractors already have stronger whistleblower protections under state and federal law than federal employees.


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