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In this episode, hosts Jason Crawford and Mana Lombardo speak with Trina Fairley Barlow, a partner in the firm’s Labor and Employment and Government Contracts groups, and Christine Hawes, counsel in the Labor & Employment Group, to discuss the False Claims Act’s retaliation provision and considerations for investigating FCA allegations brought by whistleblowers. “Let’s Talk

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Senator McCaskill’s bill, S.795 “A Bill to Enhance Whistleblower Protection for Contractor and Grantee Employees,” is on President Obama’s desk for signature.  According to the Senate Report, the bill would make permanent the current pilot program, expiring this month, that ensures that employees of civilian contractors are protected from retaliation, namely that “anyone who reports the misuse of federal funds could not be demoted, discharged, or discriminated against because of the disclosure.”

While the pilot program has been in place for several years, the frequency of whistleblower reprisal actions has increased recently.  Whistleblower protections have also been the subject of recent Congressional interest, and the Government Accountability Office is auditing the current pilot program.  Rather than wait for the results of the audit, however, Congress chose to push forward with the current legislation (which has received bipartisan support) in the waning days of the Obama Administration.  Should the bill become law, contractors and grantees might take the opportunity to reexamine their compliance with the pilot program, as well as review how whistleblowers are treated and how their allegations are investigated and documented in order to mitigate the risk of liability in face of rising pressure to sustain allegations.

Whistleblowers (and those who might claim that status following a negative employment action) have many methods of seeking government help to address their concerns, including qui tam lawsuits, wrongful termination litigation, and whistleblower reprisal allegations brought before various government agencies.  Each of these actions invites the government into a contractor or grantee’s operations, as well as records, and increases pressure on the company.
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On July 25, DoD, GSA and NASA issued a final rule implementing a section of the FY 2013 NDAA addressing the allowability of legal costs incurred by a contractor or subcontractor related to whistleblower proceedings. The new rule, which amends the cost principle at FAR 31.205-47 to make costs incurred in connection with any proceeding brought by contractor or subcontractor employees submitting a whistleblower complaint under 41 U.S.C. 4712 or 10 U.S.C. 2409 unallowable if the contractor is found liable for fraud or similar misconduct in the whistleblower proceeding, modifies the proposed rule published on September 30, 2013. Specifically, the final rule adds adding language to FAR 31.205-47(c) to provide for the same treatment of costs for settled whistleblower complaints as is currently provided for settlement of proceedings brought by a third party under the False Claims Act in which the United States does not intervene intervene (i.e., legal defense costs may be allowable if the government determines that there was very little likelihood that the whistleblower would have been successful on the merits).
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At 2:00 p.m. EST on February 27, 2013, Crowell & Moring Attorneys Peter Eyre, Andy Liu, Rebecca Springer, and Jason Lynch will conduct a webinar on the implications of the FY2013 NDAA’s new whistleblower protections for government contractors. The webinar will offer analysis of the expanded protections, define and discuss “retaliation” as defined under the