Legislative Restrictions on Contractor Use of Mandatory Arbitration Agreements Have Had No Reported Impacts on National Security
Gao ID: GAO-11-717R June 13, 2011Section 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.
GAO-11-717R, Legislative Restrictions on Contractor Use of Mandatory Arbitration Agreements Have Had No Reported Impacts on National Security
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GAO-11-717R:
United States Government Accountability Office:
Washington, DC 20548:
June 13, 2011:
Congressional Committees:
Subject: 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.[Footnote 1] These requirements, as well as those
previously included in Section 8116 of the DOD Appropriations Act for
fiscal year 2010,[Footnote 2] 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[Footnote 3] to resolve specified employee claims, such as
those under Title VII of the Civil Rights Act of 1964.[Footnote 4]
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.[Footnote 5]
To address this mandate, we reviewed the DOD appropriations acts for
fiscal years 2010 and 2011, and documentation associated with DOD's
implementation of the restrictions on the use of mandatory
arbitration, including the rulemaking process leading to the adoption
of the Defense Federal Acquisition Regulation Supplement (DFARS) final
rule on December 8, 2010.[Footnote 6] We interviewed officials from
DOD and the military departments, including those with duties related
to awarding contracts over $1 million or determining eligibility for a
waiver to the application of the provisions on mandatory arbitration
agreements. We reviewed information compiled by the Office of Defense
Procurement and Acquisition Policy (DPAP) pertaining to the number of
DOD contracts covered under this provision. We asked about the number
of waivers, if any, that had been requested and processed through May
2011. We also reviewed all public comment letters submitted to DOD as
part of the DFARS rulemaking process. We interviewed the authors of
these letters, which included trade associations representing major
defense contractors, in order to understand the various perspectives
on potential impacts to U.S. national security interests. For our full
scope and methodology, see enclosure I.
We conducted this performance audit from April to June 2011 in
accordance with generally accepted government auditing standards.
These standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.
Summary:
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.
Background:
The DOD Appropriations Act for fiscal year 2010 included a provision
prohibiting DOD's use of appropriated funds on federal contracts
unless contractors agreed to certain conditions related to the use and
enforcement of mandatory arbitration agreements--including making
certifications related to subcontractor use and enforcement of these
agreements. Generally, mandatory arbitration agreements can require
that the employee waive the right to file a lawsuit, and instead
submit disputes to a neutral third party for resolution. The provision
was introduced in response to claims brought by former employees of
DOD contractors, including multiple claims of sexual assault and civil
rights violations allegedly perpetrated by contractor employees in
contractor-managed facilities in Iraq. The alleged victims had
previously agreed to mandatory arbitration as a condition of their
employment. Section 8116 of the act prohibited the use of funds
appropriated by the act for any contract in excess of $1 million
awarded after February 17, 2010, unless the contractor agreed not to
(1) require as a condition of employment that employees or independent
contractors agree to resolve through arbitration any claim under Title
VII of the Civil Rights Act of 1964 or any tort related to or arising
from sexual assault or harassment, including assault and battery,
intentional infliction of emotional distress, false imprisonment, or
negligent hiring, supervision, or retention, and (2) enforce any
existing employment agreement containing such mandatory arbitration
provisions.[Footnote 7] In addition, Section 8116 prohibited the use
of fiscal year 2010 funds on any contract awarded after June 17, 2010,
unless the contractor certified that it required each subcontractor
with a subcontract over $1 million to similarly agree not to enter
into or enforce mandatory arbitration provisions in their respective
employment contracts.[Footnote 8] Section 8116 also allowed for
waivers of the application of these requirements to a particular
contractor or subcontractor on a particular contract or subcontract if
the Secretary of Defense personally determined that the waiver was
necessary to avoid harm to U.S. national security interests, and that
the term of the contract or subcontract was not longer than necessary
to avoid such harm. In such cases, the Secretary of Defense is
required to transmit to Congress and simultaneously make public any
such determination at least 15 business days before the applicable
contract or subcontract may be awarded.
Once the provision took effect, DOD implemented it through a series of
mechanisms. The first of these was a class deviation issued February
17, 2010, which was followed by an interim rule on May 19, 2010, and a
final rule on December 8, 2010.[Footnote 9] In each case, DOD
instructed contracting officers to include a specific clause within
relevant contracts, when using funds made available by the act, that
restrict the contractors' use of mandatory arbitration agreements.
Four respondents submitted public comments on the class deviation, and
four commented on the interim rule. (See enclosure III for a list of
these entities and a summary of their comments.) In implementing the
law, DOD added DFARS Subpart 222.74 on May 19, 2010, which describes
the scope and application of the restrictions on mandatory
arbitration, and outlines the process through which the Secretary of
Defense may waive the application of those restrictions to a
particular contract or subcontract.[Footnote 10] Section 8102 of the
Department of Defense and Full-Year Continuing Appropriations Act,
2011, signed into law April 15, 2011, reiterated the prohibitions
described in the 2010 Act--now applicable to fiscal year 2011 funds--
with no substantive changes.[Footnote 11] Section 8102 also required
this report. On May 6, 2011, DOD issued another class deviation to
inform contracting officers that the restrictions on the use of
mandatory arbitration agreements applies to funds appropriated or
otherwise made available by the DOD Appropriations Act for fiscal year
2011. This class deviation will be incorporated into DFARS.
No Identified National Security Impacts from the Restrictions on
Mandatory Arbitration Agreements, though Implementation Has Been Slow
and Is Only Recently Under Way:
None of the DOD officials or others with whom we spoke, as of May
2011, identified any impact to national security as a consequence of
the restrictions on the use of mandatory arbitration agreements.
However, DOD officials stated that challenges with including the
contract clause restricting mandatory arbitration hindered
implementation across applicable contracts. For the DOD contracting
entities that responded to a November 2010 DPAP request for
information, the clause had been implemented in only 14 percent of
applicable contracts, as of March 2011.
No Reported Impacts to National Security:
DOD officials stated that, as of May 2011, they had not identified any
adverse impacts to national security. Additionally, DOD had not issued
any waivers to the restrictions on mandatory arbitration, and no
contractors had requested any waivers. Trade associations we spoke
with also stated that their member companies had neither requested
waivers nor identified any specific impacts to national security from
the provision. Further, according to the associations we spoke with,
many of the contractors they represent did not use mandatory
arbitration agreements prior to the DOD restrictions. One association
and one law firm, both of which submitted public comments to DOD,
mentioned a hypothetical scenario in which open court proceedings, as
opposed to arbitration, could potentially increase the risk of
inadvertent disclosure of national security information. However, none
of the DOD, military service, or other association officials we spoke
with identified this as a concern.
Implementation Challenges Identified:
According to DOD, as of early 2011, the implementation rate of
including the clause restricting mandatory arbitration in relevant
contracts was low. Despite the fact that the DFARS class deviation was
issued on February 17, 2010, not all covered contracts immediately
included the specified clause restricting the use of mandatory
arbitration agreements. To understand the number of covered contracts
containing the clause and whether waivers were issued, among other
items, since the effective date of the legislation through the end of
fiscal year 2010, DPAP issued a request for information from DOD
contracting entities in November 2010. According to DPAP, of those
that responded as of March 1, 2011, approximately 14 percent of 11,504
covered contracts included the clause.[Footnote 12] Thirteen of 20
respondents to the DPAP request for information reported that they had
experienced challenges in incorporating the clause into all relevant
contracts. For example, contracting representatives within both the
Army and Air Force told us that their automated contract writing
systems did not readily highlight the clause restricting arbitration
as a required clause. Consequently, the clause was included in a given
contract only if the contracting officer recognized the need to
include it and manually selected the clause for inclusion. Air Force
officials told us that they have since resolved this issue by updating
the contract writing systems. An Army official told us that they plan
to resolve this by issuing updated policy guidance to contracting
officers. Data provided by DPAP indicated that the Navy and Missile
Defense Agency, among others, will also modify some contracts to
ensure the clause is included in all of their covered contracts.
Groups representing defense contractors expressed concerns about the
difficulty of ensuring subcontractor compliance, and also the lack of
clarity with how the waiver process would work. Regarding compliance,
trade associations noted the difficulty in ensuring the clause is
appropriately incorporated into subcontracts that are several tiers
removed from the prime contractor. Further, one association noted that
prime contractors cannot be certain of compliance by all
subcontractors because they normally have no visibility into the
business practices of their lower-tier subcontractors.[Footnote 13]
Finally, representatives we spoke with expressed concerns that the
waiver process was not clearly defined. For example, one
representative had questions about what information a waiver request
should contain and under what conditions it would be granted.
Concluding Observations:
We found no evidence that the legislative requirement restricting the
use of mandatory arbitration agreements has had any impact on national
security. Officials at DOD are currently taking steps to identify and
address the administrative challenges to implementing the requirement
and expect that all covered contracts will include the new clause.
Because these actions are ongoing, we are making no recommendations at
this time.
Agency Comments:
DOD provided technical comments on a draft of this report, which we
incorporated as appropriate.
We are sending copies of this report to the Secretary of Defense; the
Secretaries of the Army, Navy, and Air Force; and the Director of the
Office of Management and Budget. In addition, the correspondence will
be available at no charge on the GAO Web site at [hyperlink,
http://www.gao.gov].
Should you or your staff have questions concerning this report, please
contact me at (202) 512-4841 or woodsw@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. Key contributors to this report are
listed in enclosure IV.
Signed by:
William T. Woods:
Director, Acquisition and Sourcing Management:
Enclosures - 4:
List of Committees:
The Honorable Carl Levin:
Chairman:
The Honorable John McCain:
Ranking Member:
Committee on Armed Services:
United States Senate:
The Honorable Daniel K. Inouye:
Chairman:
The Honorable Thad Cochran:
Ranking Member:
Subcommittee on Defense:
Committee on Appropriations:
United States Senate:
The Honorable Howard P. "Buck" McKeon:
Chairman:
The Honorable Adam Smith:
Ranking Member:
Committee on Armed Services:
House of Representatives:
The Honorable C.W. Bill Young:
Chairman:
The Honorable Norman D. Dicks:
Ranking Member:
Subcommittee on Defense:
Committee on Appropriations:
House of Representatives:
[End of section]
Enclosure I: Details on Audit Scope and Methodology:
Section 8102 of the Department of Defense and Full-Year Continuing
Appropriations Act, 2011, directed us to submit a report evaluating
the effect that the requirements contained in this section have had on
national security, including recommendations, if any, for changes to
these requirements within 60 days after enactment of the act.[Footnote
14]
In order to understand the restrictions imposed by Section 8116 of the
Department of Defense Appropriations Act, 2010, and Section 8102 of
the Department of Defense and Full-Year Continuing Appropriations Act,
2011, we reviewed these pieces of legislation,[Footnote 15] as well as
the legislative history contained in the Congressional Record.
[Footnote 16] Because these legislative provisions are implemented
through Department of Defense (DOD) policies, regulations, and
contract clauses, we also reviewed the 2010 class deviation issued by
DOD on February 17, 2010, and the associated preliminary contract
clause--Defense Federal Acquisition Regulation Supplement (DFARS)
252.222-7999--implementing the 2010 Appropriations Act, and the 2011
class deviation issued on May 6, 2011.[Footnote 17] We also reviewed
the 2010 interim and final rules in the Federal Register.[Footnote 18]
We reviewed the relevant parts of the DFARS regulation, specifically
Subpart 222.74, which implements the requirements, and the clause at
252.222-7006, which is to be included in covered contracts.We obtained
data and interviewed officials from the Office of Defense Procurement
and Acquisition Policy (DPAP) pertaining to the number of DOD
contracts covered under this provision, as well as the number of
waivers (if any) that had been approved as of September 30, 2010. We
did not independently verify the information we obtained from DOD.
However, we asked officials from DPAP, Army, Navy, and Air Force to
explain their processes for collecting this information. The DPAP
official responsible for compiling this information said that while 20
offices responded, it is not representative of all possible DOD
contracting entities, and therefore may not include all contracts
covered by the class deviation and DFARS regulation. However, the
officials stated that it is the most current, available information on
the inclusion of the clause in DOD contracts, task and delivery
orders, and bilateral modifications, and is the best available
information on the extent to which contracting officers have included
the clause in all relevant contracts.
We also interviewed officials with duties relating to awarding
contracts over $1 million, or determining eligibility for a waiver to
the restrictions on mandatory arbitration agreements. The DOD
components and services we spoke with were the following:
* Office of the Under Secretary of Defense for Acquisition, Technology
and Logistics Office of Defense Procurement and Acquisition Policy:
* Defense Acquisition Regulations System Directorate:
* Air Force Acquisition Law and Litigation Directorate:
* Air Force Office of the Deputy Chief, Policy and Implementation
Division, Deputy Assistant Secretary (Contracting), Assistant
Secretary (Acquisition):
* Office of the Deputy Assistant Secretary of the Army (Procurement):
* Office of the Assistant Secretary of the Navy - Research,
Development and Acquisition:
* Office of the Deputy Assistant Secretary of the Navy - Acquisition
and Logistics Management:
To understand industry and other relevant third-party perspectives on
the implementation and impact of the legislative provision and
subsequent regulation, including the impact on U.S. national security
interests, we reviewed all letters submitted to DOD as part of the
public comment periods for the class deviation and rulemaking process
that implemented Section 8116 of the 2010 DOD Appropriations Act,
which resulted in DFARS 222.74, and contacted the authors:
* Aerospace Industries Association:
* American Bar Association Section of Public Contract Law:
* Council of Defense and Space Industry Associations:
* Equal Employment Advisory Council:
* Jenner & Block LLP:
* The Honorable Al Franken, United States Senate:
We also spoke with another trade association that co-signed one of the
letters, the Professional Services Council, and contacted three
additional co-signers, which did not respond by the conclusion of our
review.
[End of enclosure]
Enclosure II: Full Text of Defense Federal Acquisition Regulation
Supplement Subpart 222.74--Restrictions on the Use of Mandatory
Arbitration Agreements:
Subpart 222.74--Restrictions On The Use Of Mandatory Arbitration
Agreements (Revised Dec. 8, 2010):
222.7400 Scope of subpart.
This subpart implements section 8116 of the Defense Appropriations Act
for Fiscal Year 2010 (Pub. L. 111-118).
222.7401 Definition.
"Covered subcontractor," as used in this subpart, is defined in the
clause at 252.222-7006, Restrictions on the Use of Mandatory
Arbitration Agreements.
222.7402 Policy.
(a) Departments and agencies are prohibited from using funds
appropriated or otherwise made available by the Fiscal Year 2010
Defense Appropriations Act (Pub. L. 111-118) for any contract
(including task or delivery orders and bilateral modifications adding
new work) in excess of $1 million, unless the contractor agrees not to:
(1) Enter into any agreement with any of its employees or independent
contractors that requires, as a condition of employment, that the
employee or independent contractor agree to resolve through
arbitration:
(i) Any claim under title VII of the Civil Rights Act of 1964; or:
(ii) Any tort related to or arising out of sexual assault or
harassment, including assault and battery, intentional infliction of
emotional distress, false imprisonment, or negligent hiring,
supervision, or retention; or:
(2) Take any action to enforce any provision of an existing agreement
with an employee or independent contractor that mandates that the
employee or independent contractor resolve through arbitration-:
(i) Any claim under title VII of the Civil Rights Act of 1964; or:
(ii) Any tort related to or arising out of sexual assault or
harassment, including assault and battery, intentional infliction of
emotional distress, false imprisonment, or negligent hiring,
supervision, or retention.
(b) After June 17, 2010, no funds appropriated or otherwise made
available by the Fiscal Year 2010 Defense Appropriations Act (Pub. L.
111-118) may be expended unless the contractor certifies that it
requires each covered subcontractor to agree not to enter into, and
not to take any action to enforce, any provision of any agreement, as
described in paragraph (a) of this section, with respect to any
employee or independent contractor performing work related to such
subcontract.
222.7403 Applicability.
This requirement does not apply to the acquisition of commercial items
(including commercially available off-the-shelf items).
222.7404 Waiver.
(a) The Secretary of Defense may waive, in accordance with paragraphs
(b) through (d) of this section, the applicability of paragraphs (a)
or (b) of 222.7402, to a particular contract or subcontract, if the
Secretary or the Deputy Secretary personally determines that the
waiver is necessary to avoid harm to national security interests of
the United States, and that the term of the contract or subcontract is
not longer than necessary to avoid such harm.
(b) The waiver determination shall set forth the grounds for the
waiver with specificity, stating any alternatives considered, and
explain why each of the alternatives would not avoid harm to national
security interests.
(c) The contracting officer shall submit requests for waivers in
accordance with agency procedures.
(d) The Secretary of Defense will transmit the determination to
Congress and simultaneously publish it in the Federal Register, not
less than 15 business days before the contract or subcontract
addressed in the determination may be awarded.
222.7405 Contract clause.
Use the clause at 252.222-7006, Restrictions on the Use of Mandatory
Arbitration Agreements, in all solicitations and contracts (including
task or delivery orders and bilateral modifications adding new work)
valued in excess of $1 million utilizing funds appropriated or
otherwise made available by the Defense Appropriations Act for Fiscal
Year 2010 (Pub. L. 111-118), except in contracts for the acquisition
of commercial items, including commercially available off-the-shelf
items.
[End of enclosure]
Enclosure III: Summary of Public Comments to DOD on DFARS
Implementation of Restrictions on Mandatory Arbitration:
DOD implemented the legislative provision in Section 8116 of the DOD
Appropriations Act for fiscal year 2010 through a series of mechanisms
in DFARS, the first of which was a class deviation issued February 17,
2010, followed by an interim rule on May 19, 2010, and the final rule
on December 8, 2010. Upon issuing the class deviation and interim
rule, DOD provided the opportunity for the public to submit comments.
DOD received four public comments on the class deviation and four
public comments on the interim rule.[Footnote 19] The table below
identifies the parties that commented and summarizes their substantive
issues, requests for clarification, or suggested revisions to the
interim and final rules.[Footnote 20]
Table 1: Summary of Comments on the Interim and Final Rules:
Parties commenting on class deviation: Jenner & Block LLP;
Date submitted: March 2, 2010;
Summary of comments:
* The regulation should not include task and delivery orders and
bilateral modifications for contracts that were in place before the
effective date of the legislation, since the statute applies only to
new contracts awarded after its effective date.
Parties commenting on class deviation: The Honorable Al Franken,
United States Senate;
Date submitted: March 2, 2010;
Summary of comments:
* The regulation should include the information the Secretary of
Defense must provide to justify waivers, including any alternatives
considered, and information on the transmittal of waivers to Congress;
* The regulation should apply to all levels of covered subcontracts;
* With respect to the prime contractor, the regulation should apply to
all employees and independent contractors, not just those performing
work on the contract.[Footnote 21]
Parties commenting on class deviation: Council of Defense and Space
Industry Associations;
Date submitted: March 3, 2010;
Summary of comments:
* The regulation should define the terms contractor, applicable item
or service, and covered subcontractor;
* The regulation should not apply to ongoing arbitration proceedings
or preexisting arbitration awards;
* The regulation should require contracts and modifications to specify
if they are using fiscal year 2010 funds in order to identify covered
subcontracts;
* The regulation should state that implementing the restrictions on
mandatory arbitration in;
bilateral modifications could have associated additional costs;
* Assumes the restriction on mandatory arbitration only flows down to
first-tier subcontractors;
* The regulation should apply to those employees performing work on
the specified contract.
Parties commenting on class deviation: American Bar Association
Section of Public Contract Law;
Date submitted: March 17, 2010;
* The regulation should define the term covered contract;
* The regulation should clarify its applicability to subcontractors;
* The regulation should clarify when prime contractors are required to
certify the compliance of subcontractors.
Parties commenting on interim rule: Equal Employment Advisory Council;
Date submitted: July 12, 2010;
* The regulation should clarify which employees and what types of
arbitration are covered under the provision;
* The regulation should include a detailed explanation of the waiver
request process.
Parties commenting on interim rule: American Bar Association Section
of Public Contract Law;
Date submitted: July 16, 2010;
* The regulation should define the term covered contract;
* The regulation should provide that prime contractors are only
required to certify the compliance of first-tier subcontractors;
* If prime contractors must certify all subcontractor tiers, then the
regulation should require that the clause restricting mandatory
arbitration be included in all subcontracts.
Parties commenting on interim rule: Aerospace Industries Association;
Date submitted: July 19, 2010;
* The regulation should not apply to delivery orders, task orders, or
modifications because they are not "new contracts;"
* The regulation should not define the term subcontract, as that
definition is already contained in the Federal Acquisition Regulation;
* The regulation should not apply to the acquisition of commercial or
commercial off-the-shelf items;
* The regulation should specify the effective dates for applicability.
Parties commenting on interim rule: The Honorable Al Franken, United
States Senate;
Date submitted: July 19, 2010;
* The regulation should define the term contractor more broadly so as
to apply not only to the entity within a corporation that has the
contract with DOD, but to the parent corporation and any subsidiaries
as well;
* The regulation should specify that when granting a waiver, the
Secretary of Defense must transmit to Congress and the public the
grounds for the waiver, alternatives considered, and why the
alternatives would not mitigate harm to national security.
Source: GAO analysis of public comments to DOD:
Note: We used the term regulation in this table to apply to both the
interim and final rules, because the comments included suggested
revisions to one or both rules.Enclosure IV: GAO Contact and Staff
Acknowledgments:
[End of table]
[End of enclosure]
GAO Contact:
William T. Woods, (202) 512-4841 or woodsw@gao.gov:
Staff Acknowledgments:
Key contributors to this report were Brian Mullins, Assistant
Director; Raj C. Chitikila; Stephen V. Marchesani; Sally Williamson;
Laura Greifner; Julia Kennon; and Alyssa B. Weir.
[End of enclosure]
Footnotes:
[1] Pub. L. No. 112-10, § 8102(e).
[2] Pub. L. No. 111-118, § 8116 (2009).
[3] Some employers have adopted internal alternative dispute
resolution (ADR) approaches to resolve employee complaints in order to
reduce the costs--in time and money--associated with litigating these
complaints in court. Arbitration is an example of an ADR approach
where disputes are submitted to a neutral third person--an arbitrator--
for resolution. Some employers require all employees to agree to
mandatory, binding arbitration of complaints as a condition of their
employment.
[4] Among other things, Title VII prohibits employment discrimination
based on race, color, religion, sex, and national origin. Pub. L. No.
88-352 (codified as amended at 42 U.S.C. § 2000e et seq.).
[5] Pub. L. No. 111-118, § 8116(d) (2009); Pub. L. No. 112-10, §
8102(d).
[6] The final rule was updated to DFARS at Subpart 222.74, effective
December 8, 2010. 75 Fed. Reg. 76.295. For the full text of the
regulation, see enclosure II.
[7] Pub. L. No.111-118 was signed on December 19, 2009, and Section
8116(a) applied to DOD expenditure of funds on all federal contracts
over $1 million awarded 60 days after the effective date of the act;
therefore, the requirements applied to the expenditure of funds on
covered contracts awarded on or after February 17, 2010.
[8] Pub. L. No. 111-118, § 8116(b) applies to DOD expenditure of funds
on all federal contracts over $1 million awarded 180 days after the
effective date of the act (Dec. 19, 2009); therefore, the requirements
applied to the expenditure of funds on covered contracts awarded on or
after June 17, 2010.
[9] Class deviations are deviations from the Federal Acquisition
Regulation (FAR) or DFARS that affect more than one contract action.
See FAR 1.401, 1.404.
[10] DFARS 252.222-7006 contains the specific contract clause text
that contracting officers are required to include in all applicable
contracts.
[11] Pub. L. No. 112-10, § 8102. This Act did not include 60 and 180
day delayed effectiveness dates. The requirements of this Act were
effective immediately. Previously, on January 19, 2011, DOD issued a
memorandum to contracting officers informing them that during the
period of continuing resolutions, the restriction on mandatory
arbitration agreements was effectively extended.
[12] The period covered by the data request for those contracts, task
orders, delivery orders, and modifications adding new work was from
February 27, 2010, through September 30, 2010. According to DOD, the
total number of contracts and the rate of implementation are not
representative of all DOD contracting entities, as the information
given was only provided by 20 DOD entities, and not all recipients of
the data request responded. Further, one official stated that the
number of contracts reported as covered by the act may have been
overstated by some contracting entities.
[13] Our prior work has discussed the need for improved visibility
over the tiers of subcontracting used in many DOD contracts. See GAO,
Defense Acquisitions: Additional Guidance Needed to Improve Visibility
into the Structure and Management of Major Weapon System
Subcontractors, [hyperlink, http://www.gao.gov/products/GAO-11-61R]
(Washington, D.C.: Oct. 28, 2010).
[14] Pub. L. No. 112-10, § 8102(e).
[15] Pub. L. No. 111-118 (2009) and Pub. L. No. 112-10, respectively.
[16] 155 Cong. Rec. S10028 (daily ed. Oct. 1, 2009) and 155 Cong. Rec.
S10146-S10150 (daily ed. Oct. 6, 2009).
[17] Class deviations are deviations from the Federal Acquisition
Regulation (FAR) or DFARS that affect more than one contract action.
See FAR 1.401, 1.404. The final rule was updated to DFARS at Subpart
222.74, also on December 8, 2010. For the full text of the regulation,
see enclosure II.
[18] 75 Fed. Reg. 27,946 (May 19, 2010); 75 Fed. Reg. 76,295 (Dec. 8,
2010).
[19] A total of six organizations or individuals commented overall,
with two commenting at both opportunities.
[20] Several of the letters included comments that were more technical
in nature, such as on DOD's process for publicizing the regulation in
the Federal Register. We did not include those comments in this table.
[21] Senator Franken‘s letter was addressed to DOD, but some of these
comments responded to issues raised in a letter to DOD from the
Council of Defense and Space Industry Associations that was published
prior to the formal DOD rulemaking process.
[End of section]
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