41 U.S.C. § 4712 — Enhancement of contractor protection

Page 144 TITLE 41—PUBLIC CONTRACTS § 4711 (b) REGULATIONS.—For executive agencies other than the Department of Defense, the Fed- eral Acquisition Regulation shall— (1) require contractors to minimize the ex- cessive use of subcontractors, or of tiers of subcontractors, that add no or negligible value; and (2) ensure that neither a contractor nor a subcontractor receives indirect costs or profit on work performed by a lower-tier subcon- tractor to which the higher-tier contractor or subcontractor adds no or negligible value (but not to limit charges for indirect costs and profit based on the direct costs of managing lower-tier subcontracts). (c) COVERED CONTRACTS.—This section applies to any cost-reimbursement type contract or task or delivery order in an amount greater than the simplified acquisition threshold (as de- fined by section 134 of this title). (d) RULE OF CONSTRUCTION.—Nothing in this section shall be construed as limiting the ability of the Department of Defense to implement more restrictive limitations on the tiering of subcontractors. (e) APPLICABILITY.—The Department of De- fense shall continue to be subject to guidance on limitations on tiering of subcontractors issued by the Department of Defense pursuant to sec- tion 852 of the John Warner National Defense Authorization Act for Fiscal Year 2007 (Public Law 109–364, 10 U.S.C. 2324 note). (Pub. L. 111–350, § 3, Jan. 4, 2011, 124 Stat. 3800.) HISTORICAL AND REVISION NOTES Revised Section Source (U.S. Code) Source (Statutes at Large) 4710 ............ 41:254b note. Pub. L. 110–417, [div. A], title VIII, § 866, Oct. 14, 2008, 122 Stat. 4551. In subsection (b), the words ‘‘Not later than one year after the date of the enactment of this Act’’ are omit- ted because of section 6(f) of the bill. The word ‘‘shall’’ is substituted for the words ‘‘shall be amended’’ to re- flect the permanence of the provision. § 4711. Linking of award and incentive fees to ac- quisition outcomes (a) DEFINITION.—In this section, the term ‘‘ex- ecutive agency’’ has the same meaning given in section 133 of this title. (b) GUIDANCE FOR EXECUTIVE AGENCIES ON LINKING OF AWARD AND INCENTIVE FEES TO AC- QUISITION OUTCOMES.—The Federal Acquisition Regulation shall provide executive agencies other than the Department of Defense with in- structions, including definitions, on the appro- priate use of award and incentive fees in Federal acquisition programs. (c) ELEMENTS.—The regulations under sub- section (b) shall— (1) ensure that all new contracts using award fees link the fees to acquisition outcomes (which shall be defined in terms of program cost, schedule, and performance); (2) establish standards for identifying the appropriate level of officials authorized to ap- prove the use of award and incentive fees in new contracts; (3) provide guidance on the circumstances in which contractor performance may be judged to be ‘‘excellent’’ or ‘‘superior’’ and the per- centage of the available award fee which con- tractors should be paid for the performance; (4) establish standards for determining the percentage of the available award fee, if any, which contractors should be paid for perform- ance that is judged to be ‘‘acceptable’’, ‘‘aver- age’’, ‘‘expected’’, ‘‘good’’, or ‘‘satisfactory’’; (5) ensure that no award fee may be paid for contractor performance that is judged to be below satisfactory performance or perform- ance that does not meet the basic require- ments of the contract; (6) provide specific direction on the cir- cumstances, if any, in which it may be appro- priate to roll over award fees that are not earned in one award fee period to a subsequent award fee period or periods; (7) ensure consistent use of guidelines and definitions relating to award and incentive fees across the Federal Government; (8) ensure that each executive agency— (A) collects relevant data on award and in- centive fees paid to contractors; and (B) has mechanisms in place to evaluate the data on a regular basis; (9) include performance measures to evalu- ate the effectiveness of award and incentive fees as a tool for improving contractor per- formance and achieving desired program out- comes; and (10) provide mechanisms for sharing proven incentive strategies for the acquisition of dif- ferent types of products and services among contracting and program management offi- cials. (d) GUIDANCE FOR DEPARTMENT OF DEFENSE.— The Department of Defense shall continue to be subject to guidance on award and incentive fees issued by the Secretary of Defense pursuant to section 814 of the John Warner National Defense Authorization Act for Fiscal Year 2007 (Public Law 109–364, 10 U.S.C. 2302 note). (Pub. L. 111–350, § 3, Jan. 4, 2011, 124 Stat. 3800.) HISTORICAL AND REVISION NOTES Revised Section Source (U.S. Code) Source (Statutes at Large) 4711 ............ 41:251 note. Pub. L. 110–417, [div. A], title VIII, § 867, Oct. 14, 2008, 122 Stat. 4551. In subsection (b), the words ‘‘Not later than 1 year after the date of the enactment of this Act’’ are omit- ted because of section 6(f) of the bill. The words ‘‘shall provide’’ are substituted for ‘‘shall be amended to pro- vide’’ to reflect the permanence of the provision. § 4712. Enhancement of contractor protection from reprisal for disclosure of certain infor- mation (a) PROHIBITION OF REPRISALS.— (1) IN GENERAL.—An employee of a con- tractor, subcontractor, grantee, subgrantee, or personal services contractor may not be dis- charged, demoted, or otherwise discriminated against as a reprisal for disclosing to a person or body described in paragraph (2) information that the employee reasonably believes is evi- dence of gross mismanagement of a Federal contract or grant, a gross waste of Federal Page 145 TITLE 41—PUBLIC CONTRACTS § 4712 funds, an abuse of authority relating to a Fed- eral contract or grant, a substantial and spe- cific danger to public health or safety, or a violation of law, rule, or regulation related to a Federal contract (including the competition for or negotiation of a contract) or grant. (2) PERSONS AND BODIES COVERED.—The per- sons and bodies described in this paragraph are the persons and bodies as follows: (A) A Member of Congress or a representa- tive of a committee of Congress. (B) An Inspector General. (C) The Government Accountability Office. (D) A Federal employee responsible for contract or grant oversight or management at the relevant agency. (E) An authorized official of the Depart- ment of Justice or other law enforcement agency. (F) A court or grand jury. (G) A management official or other em- ployee of the contractor, subcontractor, grantee, subgrantee, or personal services contractor who has the responsibility to in- vestigate, discover, or address misconduct. (3) RULES OF CONSTRUCTION.—For the pur- poses of paragraph (1)— (A) an employee who initiates or provides evidence of contractor, subcontractor, grantee, subgrantee, or personal services contractor misconduct in any judicial or ad- ministrative proceeding relating to waste, fraud, or abuse on a Federal contract or grant shall be deemed to have made a disclo- sure covered by such paragraph; and (B) a reprisal described in paragraph (1) is prohibited even if it is undertaken at the re- quest of an executive branch official, unless the request takes the form of a non-discre- tionary directive and is within the authority of the executive branch official making the request. (b) INVESTIGATION OF COMPLAINTS.— (1) SUBMISSION OF COMPLAINT.—A person who believes that the person has been subjected to a reprisal prohibited by subsection (a) may submit a complaint to the Inspector General of the executive agency involved. Unless the Inspector General determines that the com- plaint is frivolous, fails to allege a violation of the prohibition in subsection (a), or has pre- viously been addressed in another Federal or State judicial or administrative proceeding initiated by the complainant, the Inspector General shall investigate the complaint and, upon completion of such investigation, submit a report of the findings of the investigation to the person, the contractor, subcontractor, grantee, subgrantee, or personal services con- tractor concerned, and the head of the agency. (2) INSPECTOR GENERAL ACTION.— (A) DETERMINATION OR SUBMISSION OF RE- PORT ON FINDINGS.—Except as provided under subparagraph (B), the Inspector General shall make a determination that a com- plaint is frivolous, fails to allege a violation of the prohibition in subsection (a), or has previously been addressed in another Fed- eral or State judicial or administrative pro- ceeding initiated by the complainant or sub- mit a report under paragraph (1) within 180 days after receiving the complaint. (B) EXTENSION OF TIME.—If the Inspector General is unable to complete an investiga- tion in time to submit a report within the 180-day period specified in subparagraph (A) and the person submitting the complaint agrees to an extension of time, the Inspector General shall submit a report under para- graph (1) within such additional period of time, up to 180 days, as shall be agreed upon between the Inspector General and the per- son submitting the complaint. (3) PROHIBITION ON DISCLOSURE.—The Inspec- tor General may not respond to any inquiry or disclose any information from or about any person alleging the reprisal, except to the ex- tent that such response or disclosure is— (A) made with the consent of the person al- leging the reprisal; (B) made in accordance with the provisions of section 552a of title 5 or as required by any other applicable Federal law; or (C) necessary to conduct an investigation of the alleged reprisal. (4) TIME LIMITATION.—A complaint may not be brought under this subsection more than three years after the date on which the alleged reprisal took place. (c) REMEDY AND ENFORCEMENT AUTHORITY.— (1) IN GENERAL.—Not later than 30 days after receiving an Inspector General report pursu- ant to subsection (b), the head of the executive agency concerned shall determine whether there is sufficient basis to conclude that the contractor, subcontractor, grantee, sub- grantee, or personal services contractor con- cerned has subjected the complainant to a re- prisal prohibited by subsection (a) and shall either issue an order denying relief or shall take one or more of the following actions: (A) Order the contractor, subcontractor, grantee, subgrantee, or personal services contractor to take affirmative action to abate the reprisal. (B) Order the contractor, subcontractor, grantee, subgrantee, or personal services contractor to reinstate the person to the po- sition that the person held before the re- prisal, together with compensatory damages (including back pay), employment benefits, and other terms and conditions of employ- ment that would apply to the person in that position if the reprisal had not been taken. (C) Order the contractor, subcontractor, grantee, subgrantee, or personal services contractor to pay the complainant an amount equal to the aggregate amount of all costs and expenses (including attorneys’ fees and expert witnesses’ fees) that were reason- ably incurred by the complainant for, or in connection with, bringing the complaint re- garding the reprisal, as determined by the head of the executive agency. (D) Consider disciplinary or corrective ac- tion against any official of the executive agency, if appropriate. (2) EXHAUSTION OF REMEDIES.—If the head of an executive agency issues an order denying Page 146 TITLE 41—PUBLIC CONTRACTS § 4712 1 So in original. relief under paragraph (1) or has not issued an order within 210 days after the submission of a complaint under subsection (b), or in the case of an extension of time under paragraph (b)(2)(B), not later than 30 days after the expi- ration of the extension of time, and there is no showing that such delay is due to the bad faith of the complainant, the complainant shall be deemed to have exhausted all administrative remedies with respect to the complaint, and the complainant may bring a de novo action at law or equity against the contractor, sub- contractor, grantee, subgrantee, or personal services contractor to seek compensatory damages and other relief available under this section in the appropriate district court of the United States, which shall have jurisdiction over such an action without regard to the amount in controversy. Such an action shall, at the request of either party to the action, be tried by the court with a jury. An action under this paragraph may not be brought more than two years after the date on which remedies are deemed to have been exhausted. (3) ADMISSIBILITY OF EVIDENCE.—An Inspec- tor General determination and an agency head order denying relief under paragraph (2) shall be admissible in evidence in any de novo ac- tion at law or equity brought pursuant to this subsection. (4) ENFORCEMENT OF ORDERS.—Whenever a person fails to comply with an order issued under paragraph (1), the head of the executive agency concerned shall file an action for en- forcement of such order in the United States district court for a district in which the re- prisal was found to have occurred. In any ac- tion brought under this paragraph, the court may grant appropriate relief, including injunc- tive relief, compensatory and exemplary dam- ages, and attorney fees and costs. The person upon whose behalf an order was issued may also file such an action or join in an action filed by the head of the executive agency. (5) JUDICIAL REVIEW.—Any person adversely affected or aggrieved by an order issued under paragraph (1) may obtain review of the order’s conformance with this subsection, and any regulations issued to carry out this section, in the United States court of appeals for a circuit in which the reprisal is alleged in the order to have occurred. No petition seeking such re- view may be filed more than 60 days after issuance of the order by the head of the execu- tive agency. Review shall conform to chapter 7 of title 5. Filing such an appeal shall not act to stay the enforcement of the order of the head of an executive agency, unless a stay is specifically entered by the court. (6) BURDENS OF PROOF.—The legal burdens of proof specified in section 1221(e) of title 5 shall be controlling for the purposes of any inves- tigation conducted by an Inspector General, decision by the head of an executive agency, or judicial or administrative proceeding to de- termine whether discrimination prohibited under this section has occurred. (7) RIGHTS AND REMEDIES NOT WAIVABLE.— The rights and remedies provided for in this section may not be waived by any agreement, policy, form, or condition of employment. (d) NOTIFICATION OF EMPLOYEES.—The head of each executive agency shall ensure that contrac- tors, subcontractors, grantees, subgrantees, and personal services contractors of the agency in- form their employees in writing of the rights and remedies provided under this section, in the predominant native language of the workforce. (e) CONSTRUCTION.—Nothing in this section may be construed to authorize the discharge of, demotion of, or discrimination against an em- ployee for a disclosure other than a disclosure protected by subsection (a) or to modify or dero- gate from a right or remedy otherwise available to the employee. (f) EXCEPTIONS.—(1) This section shall not apply to any element of the intelligence commu- nity, as defined in section 3(4) of the National Security Act of 1947 (50 U.S.C. 401a(4)). (2) This section shall not apply to any disclo- sure made by an employee of a contractor, sub- contractor, grantee, subgrantee, or personal services contractor of an element of the intel- ligence community if such disclosure— (A) relates to an activity of an element of the intelligence community; or (B) was discovered during contract, sub- contract, grantee, subgrantee, or personal services contractor services provided to an ele- ment of the intelligence community. (g) DEFINITIONS.—In this section: (1) The term ‘‘abuse of authority’’ means an arbitrary and capricious exercise of authority that is inconsistent with the mission of the ex- ecutive agency concerned or the successful performance of a contract or grant of such agency. (2) The term ‘‘Inspector General’’ means an Inspector General appointed under chapter 4 of title 5 and any Inspector General that receives funding from, or has oversight over contracts or grants awarded for or on behalf of, the exec- utive agency concerned. (h) CONSTRUCTION.—Nothing in this section, or the amendments made by this section,1 shall be construed to provide any rights to disclose clas- sified information not otherwise provided by law. (Added Pub. L. 112–239, div. A, title VIII, § 828(a)(1), Jan. 2, 2013, 126 Stat. 1837; amended Pub. L. 113–66, div. A, title X, § 1091(e), Dec. 26, 2013, 127 Stat. 876; Pub. L. 114–261, § 1(a)(2), (3)(A), Dec. 14, 2016, 130 Stat. 1362; Pub. L. 116–260, div. U, title VIII, § 801, Dec. 27, 2020, 134 Stat. 2297; Pub. L. 117–263, div. A, title VIII, § 807(b), Dec. 23, 2022, 136 Stat. 2704; Pub. L. 117–286, § 4(b)(74), Dec. 27, 2022, 136 Stat. 4351.) Editorial Notes AMENDMENTS 2022—Subsec. (a)(1). Pub. L. 117–263, § 807(b)(1)(A), sub- stituted ‘‘subgrantee,’’ for ‘‘or subgrantee’’. Subsec. (a)(2)(G). Pub. L. 117–263, § 807(b)(1)(B), sub- stituted ‘‘subgrantee, or personal services contractor’’ for ‘‘or subgrantee’’. Subsec. (a)(3)(A). Pub. L. 117–263, § 807(b)(1)(C), sub- stituted ‘‘subgrantee, or personal services contractor’’ for ‘‘or subgrantee’’. Page 147 TITLE 41—PUBLIC CONTRACTS § 4713 Subsec. (b)(1). Pub. L. 117–263, § 807(b)(2), substituted ‘‘subgrantee, or personal services contractor con- cerned’’ for ‘‘or subgrantee concerned’’. Subsec. (c)(1). Pub. L. 117–263, § 807(b)(3)(A)(i), sub- stituted ‘‘subgrantee, or personal services contractor concerned’’ for ‘‘or subgrantee concerned’’ in introduc- tory provisions. Subsec. (c)(1)(A). Pub. L. 117–263, § 807(b)(3)(A)(ii), sub- stituted ‘‘subgrantee, or personal services contractor’’ for ‘‘or subgrantee’’. Subsec. (c)(1)(B). Pub. L. 117–263, § 807(b)(3)(A)(iii), substituted ‘‘subgrantee, or personal services con- tractor’’ for ‘‘or subgrantee’’. Subsec. (c)(1)(C). Pub. L. 117–263, § 807(b)(3)(A)(iv), sub- stituted ‘‘subgrantee, or personal services contractor’’ for ‘‘or subgrantee’’. Subsec. (c)(1)(D). Pub. L. 117–263, § 807(b)(3)(A)(v), added subpar. (D). Subsec. (c)(2). Pub. L. 117–263, § 807(b)(3)(B), sub- stituted ‘‘subgrantee, or personal services contractor’’ for ‘‘or subgrantee’’. Subsec. (d). Pub. L. 117–263, § 807(b)(4), substituted ‘‘subgrantees, and personal services contractors’’ for ‘‘and subgrantees’’. Subsec. (f)(2). Pub. L. 117–263, § 807(b)(5), substituted ‘‘subgrantee, or personal services contractor’’ for ‘‘or subgrantee’’ in two places. Subsec. (g)(2). Pub. L. 117–286 substituted ‘‘chapter 4 of title 5’’ for ‘‘the Inspector General Act of 1978’’. 2020—Subsec. (a)(2)(G). Pub. L. 116–260, § 801(1), sub- stituted ‘‘grantee, or subgrantee’’ for ‘‘or grantee’’. Subsec. (a)(3)(A). Pub. L. 116–260, § 801(2), substituted ‘‘contractor, subcontractor, grantee, or subgrantee’’ for ‘‘contractor, subcontractor, or grantee’’. Subsec. (b)(1). Pub. L. 116–260, § 801(3), substituted ‘‘contractor, subcontractor, grantee, or subgrantee’’ for ‘‘contractor or grantee’’. Subsec. (c). Pub. L. 116–260, § 801(4), substituted ‘‘con- tractor, subcontractor, grantee, or subgrantee’’ for ‘‘contractor or grantee’’ wherever appearing. Subsec. (d). Pub. L. 116–260, § 801(5), substituted ‘‘grantees, and subgrantees’’ for ‘‘and grantees’’. Subsec. (f). Pub. L. 116–260, § 801(6), substituted ‘‘grantee, or subgrantee’’ for ‘‘or grantee’’ in two places. 2016—Pub. L. 114–261, § 1(a)(3)(A)(i), substituted ‘‘En- hancement’’ for ‘‘Pilot program for enhancement’’ in section catchline. Subsec. (a)(1). Pub. L. 114–261, § 1(a)(2), substituted ‘‘grantee, or subgrantee or personal services con- tractor’’ for ‘‘or grantee’’. Subsec. (i). Pub. L. 114–261, § 1(a)(3)(A)(ii), struck out subsec. (i). Text read as follows: ‘‘This section shall be in effect for the four-year period beginning on the date of that is 180 days after the date the enactment of this section.’’ 2013—Subsec. (i). Pub. L. 113–66 inserted ‘‘that is 180 days after the date’’ before ‘‘the enactment’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2013 AMENDMENT Pub. L. 112–239, div. A, title VIII, § 828(b), Jan. 2, 2013, 126 Stat. 1840, provided that: ‘‘(1) IN GENERAL.—The amendments made by sub- section (a) [enacting this section] shall take effect on the date that is 180 days after the date of the enact- ment of this Act [Jan. 2, 2013], and shall, during the pe- riod section 4712 of title 41, United States Code, as added by such subsection, is in effect, apply to— ‘‘(A) all contracts and grants awarded on or after such date; ‘‘(B) all task orders entered on or after such date pursuant to contracts awarded before, on, or after such date; and ‘‘(C) all contracts awarded before such date that are modified to include a contract clause providing for the applicability of such amendments. ‘‘(2) REVISION OF FEDERAL ACQUISITION REGULATION.— Not later than 180 days after the date of the enactment of this Act, the Federal Acquisition Regulation shall be revised to implement the requirements arising under the amendments made by this section [enacting this section and amending sections 4310 and 4705 of this title]. ‘‘(3) INCLUSION OF CONTRACT CLAUSE IN CONTRACTS AWARDED BEFORE EFFECTIVE DATE.—At the time of any major modification to a contract that was awarded be- fore the date that is 180 days after the date of the en- actment of this Act [Jan. 2, 2013], the head of the con- tracting agency shall make best efforts to include in the contract a contract clause providing for the appli- cability of the amendments made by this section to the contract.’’ § 4713. Authorities relating to mitigating supply chain risks in the procurement of covered ar- ticles (a) AUTHORITY.—Subject to subsection (b), the head of an executive agency may carry out a covered procurement action. (b) DETERMINATION AND NOTIFICATION.—Except as authorized by subsection (c) to address an ur- gent national security interest, the head of an executive agency may exercise the authority provided in subsection (a) only after— (1) obtaining a joint recommendation, in un- classified or classified form, from the chief ac- quisition officer and the chief information of- ficer of the agency, or officials performing similar functions in the case of executive agencies that do not have such officials, which includes a review of any risk assessment made available by the executive agency identified under section 1323(a)(3) of this title, that there is a significant supply chain risk in a covered procurement; (2) providing notice of the joint rec- ommendation described in paragraph (1) to any source named in the joint recommenda- tion advising— (A) that a recommendation is being con- sidered or has been obtained; (B) to the extent consistent with the na- tional security and law enforcement inter- ests, of information that forms the basis for the recommendation; (C) that, within 30 days after receipt of the notice, the source may submit information and argument in opposition to the rec- ommendation; and (D) of the procedures governing the consid- eration of the submission and the possible exercise of the authority provided in sub- section (a); (3) making a determination in writing, in unclassified or classified form, after consid- ering any information submitted by a source under paragraph (2) and in consultation with the chief information security officer of the agency, that— (A) use of the authority under subsection (a) is necessary to protect national security by reducing supply chain risk; (B) less intrusive measures are not reason- ably available to reduce such supply chain risk; and (C) the use of such authorities will apply to a single covered procurement or a class of covered procurements, and otherwise speci- fies the scope of the determination; and (4) providing a classified or unclassified no- tice of the determination made under para-