FAR 52.203-18—Prohibition on Contracting with Entities that Require Certain Internal Confidentiality Agreements or Statements-Representation.
Plain-English Summary
FAR 52.203-18 is a solicitation provision that requires an offeror to make a representation about its internal confidentiality practices before award. It addresses the prohibition on using appropriated funds to contract with entities that require employees or subcontractors to sign internal confidentiality agreements or statements that bar or restrict lawful reporting of waste, fraud, or abuse to authorized Federal investigative or law enforcement officials. The provision also defines key terms by cross-reference to FAR 52.203-19, and it clarifies that the prohibition does not interfere with lawful nondisclosure requirements for classified information, including Standard Form 312, Form 4414, or other agency-issued classified information nondisclosure forms. In practice, this provision is meant to protect whistleblower communications and ensure contractors do not silence personnel who report misconduct related to Government contracts. For contracting officers, it is a pre-award compliance check tied to appropriations restrictions; for offerors, it is a certification-like representation that their internal policies and agreements must not unlawfully gag reporting. The provision is important because a false representation or a prohibited internal agreement can create award risk, compliance issues, and potential contract administration problems.
Key Rules
Offeror must make a representation
By submitting an offer, the offeror represents that it will not require employees or subcontractors to sign or comply with prohibited internal confidentiality agreements or statements. This is a pre-award commitment tied to the solicitation and becomes part of the offeror’s compliance posture.
No gag rules on lawful reporting
The prohibited agreements are those that bar or otherwise restrict employees or subcontractors from lawfully reporting waste, fraud, or abuse to an authorized Federal investigative or law enforcement representative, such as an agency Inspector General. The rule focuses on preserving lawful whistleblower reporting related to Government contract performance.
Applies to employees and subcontractors
The restriction covers both the contractor’s own employees and its subcontractors. Contractors must therefore review not only their direct employment agreements but also subcontract terms and flowdown practices.
Definitions come from FAR 52.203-19
The terms internal confidentiality agreement or statement, subcontract, and subcontractor are defined in the companion clause at FAR 52.203-19. Users must read the two provisions together to understand the full scope of the restriction.
Classified information is excepted
The prohibition does not override lawful nondisclosure obligations for classified information, including Standard Form 312, Form 4414, or other agency forms governing classified information. Contractors may still use valid classified-information nondisclosure agreements so long as they do not unlawfully restrict protected reporting of waste, fraud, or abuse.
Funding restriction drives the rule
The provision implements an appropriations restriction found in section 743 of Division E, Title VII, of the Consolidated and Further Continuing Appropriations Act, 2015, and successor appropriations acts and continuing resolutions. In practice, agencies may not use covered funds for contracts with entities that impose the prohibited agreements.
Responsibilities
Contracting Officer
Include the provision when prescribed by FAR 3.909-3(a), evaluate the offeror’s representation, and ensure the solicitation and award process reflect the appropriations-based prohibition. The contracting officer should also coordinate with legal or policy staff if there is concern that an offeror’s internal agreements may conflict with the rule.
Offeror/Contractor
Review internal confidentiality agreements, employee handbooks, subcontract templates, and related statements to ensure they do not prohibit or restrict lawful reporting of waste, fraud, or abuse to authorized Federal officials. The offeror must make the required representation by submitting its offer and must maintain compliant practices after award.
Subcontractors
Comply with any lawful confidentiality or nondisclosure obligations that do not interfere with protected reporting, and avoid using internal agreements that gag lawful whistleblower disclosures. Subcontractors are indirectly affected because the prime contractor’s representation covers them as well.
Agency
Use appropriated funds only in a manner consistent with the statutory restriction and ensure acquisition personnel apply the provision where required. Agencies should also provide appropriate channels, such as Inspector General contacts, for lawful reporting of waste, fraud, or abuse.
Inspector General or Authorized Investigative/Law Enforcement Representative
Serve as the lawful recipient of reports of waste, fraud, or abuse when employees or subcontractors choose to disclose such information. These officials are the protected reporting channels referenced by the provision.
Practical Implications
Contractors should audit all confidentiality language, not just formal NDAs, because handbooks, onboarding forms, severance agreements, and subcontract clauses can create compliance problems if they chill protected reporting.
The biggest pitfall is overbroad language that says employees may not disclose any company information without approval; even if intended to protect trade secrets, it can be unlawful if it also restricts reporting to the Government.
This provision does not eliminate legitimate classified-information nondisclosure requirements, so contractors working with classified programs must preserve SF 312, SCI agreements, and similar forms while still avoiding gag provisions on fraud reporting.
Because the representation is made by submitting an offer, a contractor can create award risk if its internal policies are noncompliant at the time of proposal submission.
Contracting officers should treat this as a compliance representation with real consequences, especially where there are indications that the offeror uses restrictive confidentiality language in employment or subcontract documents.
Official Regulatory Text
As prescribed in 3.909-3 (a) , insert the following provision: Prohibition on Contracting with Entities that Require Certain Internal Confidentiality Agreements or Statements-Representation (Jan 2017) (a) Definition . As used in this provision- Internal confidentiality agreement or statement, subcontract, and subcontractor , are defined in the clause at 52.203-19 , Prohibition on Requiring Certain Internal Confidentiality Agreements or Statements. (b) In accordance with section 743 of Division E, Title VII, of the Consolidated and Further Continuing Appropriations Act, 2015 (Pub. L. 113-235) and its successor provisions in subsequent appropriations acts (and as extended in continuing resolutions), Government agencies are not permitted to use funds appropriated (or otherwise made available) for contracts with an entity that requires employees or subcontractors of such entity seeking to report waste, fraud, or abuse to sign internal confidentiality agreements or statements prohibiting or otherwise restricting such employees or subcontractors from lawfully reporting such waste, fraud, or abuse to a designated investigative or law enforcement representative of a Federal department or agency authorized to receive such information. (c) The prohibition in paragraph (b) of this provision does not contravene requirements applicable to Standard Form 312, (Classified Information Nondisclosure Agreement), Form 4414 (Sensitive Compartmented Information Nondisclosure Agreement), or any other form issued by a Federal department or agency governing the nondisclosure of classified information. (d) Representation . By submission of its offer, the Offeror represents that it will not require its employees or subcontractors to sign or comply with internal confidentiality agreements or statements prohibiting or otherwise restricting such employees or subcontractors from lawfully reporting waste, fraud, or abuse related to the performance of a Government contract to a designated investigative or law enforcement representative of a Federal department or agency authorized to receive such information (e.g., agency Office of the Inspector General). (End of provision)