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DoD Restricts Use of Mandatory Arbitration Agreements

A Department of Defense interim rule amends the Defense Federal Acquisition Regulation Supplement, and its companion resource, Procedures, Guidance and Information, to restrict the use of mandatory arbitration agreements between defense contractors and their employees and independent contractors. The rule, which adds new DFARS Subpart 222.74, implements Section 8116 of the DoD Appropriations Act for Fiscal Year 2010 (PL 111-118). The policy statement at newly added DFARS 222.7401 and the new contract clause at DFARS 252.222-7006 prohibit the use of funds appropriated or otherwise made available by the FY 2010 Act for any contract that exceeds $1 million, if the contractor limits its employees to arbitration for claims under Title VII of the Civil Rights Act of 1964, or a tort arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention. Pursuant to DFARS 222.7402, this rule does not apply to the acquisition of commercial items, including commercially available off-the-shelf items. Also, new DFARS 222.7403 allows the Secretary of Defense to waive applicability to a particular contractor or subcontractor, if determined necessary to avoid harm to national security, while new PGI 222.7403 explains the information that must be provided in a waiver determination. Section 8116(b) requires contractors to certify subcontractor compliance by June 17, 2010. In addition to the new subpart and contract clause, this interim rule makes corresponding technical changes at DFARS 212.503 and DFARS 212.504 regarding the applicability of laws to contracts and subcontracts for the acquisition of commercial items. The effective date of the interim rule is May 19, 2010. Comments on the rule, identified by DFARS Case 2010-D004, are due by July 19, 2010. For the text of the rule, see 70,016.566.




(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )


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