DOD Implements Restrictions On Employee/Contractor Agreements Requiring Arbitration

With a broad exclusion for commercial items contracts, on May 19, 2010, DoD issued an interim rule, effective immediately, implementing section 8116 of the FY2010 Defense Appropriations Act, prohibiting the use of appropriated funds for contracts, task/delivery orders, or bilateral modifications in excess of $1 million unless the contractor agrees not to enforce or enter into agreements with employees or independent contractors that require arbitration of certain civil rights claims or numerous tort actions arising out of or relating to sexual harassment. Effective as of June 17, 2010, no appropriated funds may be expended unless the contractor certifies that it requires each covered subcontractor to meet the same conditions with respect to any employee/contractor performing work on the subcontract.