Legislative Restrictions on Contractor Use of Mandatory Arbitration Agreements Have Had No Reported Impacts on National Security

Section 8102 of the Department of Defense (DOD) and Full-Year Continuing Appropriations Act for fiscal year 2011 directed us to evaluate the effect on national security resulting from the section's requirements. These requirements, as well as those previously included in Section 8116 of the DOD Appropriations Act for fiscal year 2010, prohibit DOD's use of funds appropriated by the respective acts for any contract over $1 million unless the contractor agrees not to use or enforce mandatory arbitration agreements to resolve specified employee claims, such as those under Title VII of the Civil Rights Act of 1964. These statutes also provide that the Secretary of Defense can waive the application of these restrictions on mandatory arbitration to avoid harm to U.S. national security interests.

None of the DOD officials, trade association representatives, or others we contacted identified any specific national security impacts as a result of DOD's implementation of the legislative requirements regarding the use of mandatory arbitration agreements. As of May 2011, DOD had not issued any waivers and had not received any waiver requests. DOD officials stated, however, that administrative challenges in including the contract clause restricting mandatory arbitration hindered implementation across applicable contracts. Finally, some trade association representatives and others we contacted stated there are aspects of the regulation, such as the waiver process, that remain unclear.