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State Department OIG Issues Report on the Use of Confidentiality Agreements

April 6, 2015

Co-Authors: Jason M. Crawford and Andy Liu.

On March 30, 2015, the Office of the Inspector General for the State Department issued a report on the use of confidentiality agreements by the thirty highest-grossing State Department contractors.  While none of the companies had policies that were “overly restrictive,” the OIG found that that 13 of the contractors had policies that contained provisions that could have a “chilling effect on employees who wish to report fraud, waste, or abuse to a Federal official.”  The OIG report identified, as an example, provisions requiring employees to notify company officials if they were contacted by a government auditor or if they received a subpoena or other administrative demand.  In addition, the report noted that at least five contractors had a non-disparagement agreement or policy.

The OIG report encouraged companies to adopt best practices for encouraging the reporting of suspected wrongdoing by employees, including establishing a hotline for anonymous complaints, displaying hotline posters, encouraging employees to report potential fraud and abuse, and informing employees of their anti-retaliation rights and their rights to contact the government.

The report was prompted by a 2014 Washington Post series on the use of confidentiality and nondisclosure agreements by government contractors.  As we discussed last Thursday, the OIG report comes at a time of increased scrutiny of confidentiality agreements.

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Jason M. Crawford
Counsel – Washington, D.C.
Phone: +1 202.624.2562
Email: jcrawford@crowell.com