Type: Law Bulletins
Date: 03/01/2010

Update on Franken Amendment and restrictions on use of arbitration by government contractors

 On February 17, 2010, the Department of Defense issued a class deviation to implement Section 8116 of the Department of Defense Appropriations Act for Fiscal Year 2010 (Deviation 2010-O0004). While this action was required under the Act, it already reflects deep concerns expressed by various industry groups to the DOD in the last two months.

  • This deviation requires contracting officers to add the clause, "Additional Requirements and Responsibilities Restricting the Use of Mandatory Arbitration Agreements (Deviation) (FEB 2010)." 
  • The clause prohibits contracting officers from using Fiscal Year 2010 funds for any contract, task order, delivery order or bilateral modification in excess of $1 million that is awarded after February 17, 2010 unless the contractor agrees not to enter into any agreement or 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 any claim under Title VII of the Civil Rights Act of 1964 or any tort relating 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.
  • The clause also requires that after June 17, 2010, no Fiscal Year 2010 funds may be expended unless the prime contractor certifies that it requires each covered subcontractor to agree to the terms of the clause.  
  • The deviation does not apply to the acquisition of commercial items or commercially available off-the-shelf items. 
  • The Prohibition does not apply to contracts funded with other than FY 2010 monies.  

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