Awaiting President Obama’s signature, Sections 827 and 828 of the National Defense Authorization Act for Fiscal Year 2013 (NDAA) would enhance the whistleblower protections of contractor and subcontractor employees for the Department of Defense (DOD) and National Aeronautics and Space Administration (NASA), and establish a 4-year “pilot program” to strengthen whistleblower protections for all other federal executive agency contractors and subcontractors.  The whistleblower provisions conspicuously exempt employees in the intelligence community for apparent purposes of national security.   

Pilot Program

Whistleblower Protections Defined

The NDAA pilot program prohibits retaliation against an employee of a contractor or subcontractor of a federal executive agency – excluding the intelligence community – for disclosing:   “gross mismanagement” of a federal contract or grant; “gross waste” of federal funds; “abuse of authority” relating to a federal contract or grant; violation of law, rule, or regulation related to a federal contract or grant; or substantial and specific danger to public health or safety.

Such disclosures are protected if made to:  a member of Congress or a representative of a committee of Congress; an Inspector General; the Government Accountability Office;  a federal employee responsible for contract oversight or management at the relevant agency; an authorized official of the Department of Justice (DOJ) or other law enforcement agency; a court or grand jury; or a management official or other employee of the contractor or subcontractor who has the responsibility to investigate, discover, or address misconduct.  An employee has made a protected disclosure when he or she initiates or provides evidence of contractor or subcontractor misconduct in any judicial or administrative proceeding relating to waste, fraud or abuse on a federal contract or grant. 

Notably, the NDAA prohibits “reprisals” (presumably a reference to an adverse employment action) even if undertaken at the request of an executive branch official (unless the request takes the form of a non-discretionary directive and is within the authority of the executive official making the request). 

 The rights provided by the pilot program may not be waived or modified by an agreement, policy, form or condition of employment.

 Enforcement and Remedies 

  • Burden-Shifting Structure:  The employee bears the burden of proof to demonstrate that the disclosure was a contributing factor in the adverse action taken against him or her.  The employee may establish his or her burden through circumstantial evidence, including that: the official taking the action knew of the disclosure; and the action occurred within a period of time such that a reasonable person could conclude that the disclosure was a contributing factor.  The contractor or subcontractor may avoid liability by establishing, through clear and convincing evidence, that it would have taken the same action in the absence of such disclosure.
  • Statute of Limitations:  Under the NDAA, an aggrieved person may submit a complaint to the Inspector General (of the executive agency involved) no more than 3 years after the date on which the alleged reprisal took place. 
  • Inspector General Investigation & Report:  Within 180 days after receiving the complaint (unless there is an extension of time), the Inspector General must conduct an investigation and submit a report of the findings (or, in the alternative, make a determination that the complaint:  is frivolous; fails to allege a violation of the NDAA; or has previously been addressed in another judicial or administrative action initiated by the complainant).
  • Agency Determination:  No more than 30 days after receiving the Investigator General Report, the agency either must issue an order denying relief or order the following: abatement of the reprisal; reinstatement, together with compensatory damages (including back pay), employment benefits, and restoration of “other terms and conditions of employment”; and reasonable costs and expenses (including attorneys’ fees and expert witnesses’ fees). 
  • Removal to Federal Court:  With the exception of delay due to bad faith on the part of the complainant, if an agency denies relief or has not issued an order within 210 days after submission of the complaint (or no later than 30 days after the expiration of an extension of time), the complainant may bring a de novo action in federal court seeking compensatory damages and “other relief.”  An action may not be brought more than 2 years after the exhaustion of remedies.  The Inspector General’s determination and an agency order denying relief are admissible evidence in the federal action.  
  • Agency Enforcement:  If the agency determines that a person has failed to comply with its order, it may pursue a federal action seeking injunctive relief, compensatory and exemplary damages, and attorneys’ fees and costs.  The person upon whose behalf the agency issued the order also may file or join in such an action. 
  • Appeal of Agency Determination:  Any person adversely affected or aggrieved by an order issued by the agency may directly petition the federal appellate court where the reprisal allegedly occurred.  The petition must be filed within 60 days after the agency issued the order.  Filing the appeal does not stay the enforcement of the order, unless the court so orders. 
  • Contractor Costs Not Recoverable:  Costs incurred by a contractor in connection with a criminal, civil, or administrative proceeding commenced by the Federal Government, by a State, or by a contractor or grantee employee are not reimbursable if the whistleblower receives relief or the contractor is fined (among other things). 

Notification Requirement 

The head of each executive agency must ensure that contractors, subcontractors, and grantees of the agency inform their employees in writing of the rights and remedies provided in the predominant native language of the workforce. 

Effective Date

The effective date of pilot program is 180 days after the date of enactment.  The Act will apply to:  all contracts and grants awarded on or after such date; all task orders entered on or after such date pursuant to contracts awarded before, on, or after such date; and all contracts awarded before such date that are modified to include a contract clause providing for the applicability of such amendments. 

The Government Accountability Office will evaluate the pilot program and submit a report on the results of the study to Congress no later than 4 years after the date of enactment.


The NDAA fits into a trend of recent federal legislation reflecting Congress’ view that employees are, in many circumstances, best equipped to provide the government with insight into unlawful, unethical or otherwise improper conduct.  However, it is noteworthy that Congress is limiting the ability of members of the intelligence community to expose sensitive information through whistleblowing.  Shouldn’t similar protections exist where whistleblowers in a range of other sectors attempt to misappropriate trade secrets and confidential information in the name of whistleblowing?  Moreover, this proposed legislation is ambiguous in material respects.  What constitutes “gross mismanagement” of a contract or grant?  And what exactly is a “gross waste” of funds?  These ambiguities could potentially subject the legislation to constitutional attacks.  They bear a striking resemblance to the protections in Section 1553 of Division A, Title VX of the American Recovery and Reinvestment Act of 2009 (ARRA), which engendered similar concerns.  Unlike the whistleblower provisions in ARRA, though, the NDAA contains an explicit statute of limitations (3 years).  In light of the NDAA’s expansive protections, if signed into law by President Obama, federal executive agency contractors and subcontractors should step up their compliance efforts, conduct whistleblower-specific training, and modernize their whistleblower protection policies.

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Photo of Steven J. Pearlman Steven J. Pearlman

Steven J. Pearlman is a partner in the Labor & Employment Law Department and Co-Head of the Whistleblowing & Retaliation Group and the Restrictive Covenants, Trade Secrets & Unfair Competition Group.

Steven’s practice covers the full spectrum of employment law, with a particular…

Steven J. Pearlman is a partner in the Labor & Employment Law Department and Co-Head of the Whistleblowing & Retaliation Group and the Restrictive Covenants, Trade Secrets & Unfair Competition Group.

Steven’s practice covers the full spectrum of employment law, with a particular focus on defending companies against claims of employment discrimination, retaliation and harassment; whistleblower retaliation; restrictive covenant violations; theft of trade secrets; and wage-and-hour violations. He has successfully tried cases in multiple jurisdictions, and defended one of the largest Illinois-only class actions in the history of the U.S. District Court for the Northern District of Illinois. He also secured one of only a few ex parte seizures orders that have been issued under the Defend Trade Secrets Act, and obtained a world-wide injunction in federal litigation against a high-level executive who jumped ship to a competitor.

Reporting to boards of directors, their audit committees, CEOs and in-house counsel, Steven conducts sensitive investigations and has testified in federal court. His investigations have involved complaints of sexual harassment involving C-suite officers; systemic violations of employment laws and company policies; and fraud, compliance failures and unethical conduct.

Steven was recognized as Lawyer of the Year for Chicago Labor & Employment Litigation in the 2023 edition of The Best Lawyers in America. He is a Fellow of the College of Labor and Employment Lawyers.  Chambers describes Steven as an “outstanding lawyer” who is “very sharp and very responsive,” a “strong advocate,” and an “expert in his field.” Steven was 1 of 12 individuals selected by Compliance Week as a “Top Mind.” Earlier in his career, he was 1 of 5 U.S. lawyers selected by Law360 as a “Rising Star Under 40” in the area of employment law and 1 of “40 Illinois Attorneys Under Forty to Watch” selected by Law Bulletin Publishing Company. Steven is a Burton Award Winner (U.S. Library of Congress) for “Distinguished Legal Writing.”

Steven has served on Law360’s Employment Editorial Advisory Board and is a Contributor to He has appeared on Bloomberg News (television and radio) and Yahoo! Finance, and is regularly quoted in leading publications such as The Wall Street Journal.

The U.S. Chamber of Commerce has engaged Steven to serve as lead counsel on amicus briefs to the U.S. Supreme Court and federal circuit courts of appeal. He was appointed to serve as a Special Assistant Attorney General for the State of Illinois in employment litigation matters. He has presented with the Solicitor of the DOL, the Acting Chair of the EEOC, an EEOC Commissioner, Legal Counsel to the EEOC and heads of the SEC, CFTC and OSHA whistleblower programs. He is also a member of the Sedona Conference, focusing on trade secret matters.