OSC delivers New Year’s surprise on whistleblower rule

The Office of Special Counsel decided not to go forward with a proposed regulation that would have expanded the rights of contractors' employees to submit compl...

The Office of Special Counsel unexpectedly withdrew a proposed rule to expand the whistleblower rights of federal contractors.

But that may not necessarily be a bad thing, said David Colapinto, the general counsel for the National Whistleblower Center and a partner with the law firm of Kohn, Kohn and Colapinto.

He said OSC’s proposed rule from January 2015 missed the mark for several reasons.

“We were pleased they did withdraw and that they may reconsider,” Colapinto said. “The way the rule was proposed was confusing and potentially could’ve put federal contracting employees who work for contractors that provide services to agencies that are part of the intelligence community at risk of discipline and potentially criminal prosecution because what the OSC was proposing with respect to those employees contradicted to what Congress said in 2012.”

Three years ago, lawmakers removed a major piece of the whistleblower rights for vendors working in the intelligence community.

Colapinto said industry representatives could be prosecuted for disclosing classified information or other information that the intelligence community deemed protected to the wrong place.

“We saw nothing in the law that provided OSC with the authority to allow them to receive this information,” he said.

OSC received 16 comments on the proposal, including from the Transportation Department inspector general, Public Employees for Environmental Responsibility and the National Security Counselors, as well as from Colapinto’s National Whistleblowers Center.

“We have no plans at this time to revisit the issue and have no further comment,” said an OSC spokesman.

Colapinto said he believes OSC’s proposed rule, which it withdrew Dec. 30, was well-intentioned and was trying to fill a gap created by Congress for intelligence community contractor employees.

“OSC was looking at a whole group of federal contractor employees who work in the intelligence community and asking ‘Where can they really go?’” he said. “They were trying to expand places where employees like Edward Snowden could go to report wrongdoing. I think that was one of the intents of the rule.”

Colapinto said one of the reasons why Snowden decided to leak the documents to the press was because he couldn’t go to the intelligence community IG without fearing retaliation or even criminal prosecution because of the 2012 changes in the law.

The National Whistleblowers Center and other groups have tried to encourage Congress to bring back the protections to contractors in the intelligence community.

In October 2014, 49 organizations  wrote to members of Congress asking for support of a provision authored by Sen. Claire McCaskill (D-Mo.) that would restore protections to contractors working in the intelligence community.

McCaskill’s provision didn’t make it into the final version of the fiscal 2015 defense authorization bill. She reintroduced a bill in March to extend protections to contractors in the intelligence community.

The bill never moved out of committee.

Colapinto said Congress must act to overturn the 2012 law and bring back protections to contractors working for the intelligence community.

A secondary concern about OSC’s proposal was the additional requirement given to contractor employees working for civilian agencies that they could submit complaints to the counsel in addition to the current process to file an allegation of waste, fraud and/or abuse.

“For all other contracts, they already have whistleblower protections that are better than anything OSC could provide under this rule,” he said. “The only thing this rule would’ve allowed OSC to do is to receive whistleblower disclosures. They would then look into it. They would send it on to the agency and comment, but really OSC would be powerless to take any corrective action on their own. Under existing law, federal contracting employees can already go to the inspectors general of the various agencies that oversee those contracts and report any problems that they have.”

Colapinto said the False Claims Act is part of the “gold standard” of laws that protect employees of vendors when filing whistleblower complaints.

He said the Obama administration made it easier both in 2009 and again in 2010 for these workers to bring allegations to the surface.

But filing a case still is much easier than actually winning a whistleblower complaint.

The administration has aggressively prosecuted False Claims Act allegations, bringing in $3.5 billion in fiscal 2015, including $1.1 billion from government contractors. This is the fourth year in a row Justice recovered more than $3.5 billion in False Claims Act efforts. Since 2009, DoJ has won more than $26 billion through these lawsuits.

“I think, if anything fraud is being under prosecuted,” Colapinto said. “The reason you get large settlements is not because there was some mistake that was made, but because there was clear evidence of wrongdoing and fraud at the expense of the U.S. taxpayer. These are very difficult cases to prove to get to the point where the government is going to intervene in the case or a court is going to get involved and actually support a whistleblower claim saying that there have been violations of the False Claims Act, there are so many hurdles that the whistleblower has to clear and there are so many safeguards for the employers in those cases, like heightened pleading standards. These are not just mere allegations of mistakes.”

Colapinto said whistleblowers are the main source of information to prove these fraud cases, more so than IG audits or internal compliance programs.

“That has helped strengthen the oversight and make companies more compliant,” he said. “Every time you see a Volkswagen case or you see USIS, the security clearance company that recently had to settle, these are examples that are big red flag warnings and lessons learned for other contractors, and ultimately help improve the way business is done and protect the taxpayer in the future.”

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