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GAO-11-717R 1 (2011-06-13)

handle is hein.gao/gaobaanyl0001 and id is 1 raw text is: i G AO Accountabilty I Integrity * Reliability 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.' These requirements, as well as those previously included in Section 8116 of the DOD Appropriations Act for fiscal year 2010,2 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 agreements3 to resolve specified employee claims, such as those under Title VII of the Civil Rights Act of 1964.4 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. 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, 2010.6 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 'Pub. L. No. 112-10, § 8102(e). 'Pub. L. No. 111-118, § 8116 (2009). 3Some 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. 4Among 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.). 5Pub. L. No. 111-118, § 8116(d) (2009); Pub. L. No. 112-10, § 8102(d). '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. GAO-I 1-717R Mandatory Arbitration Page I

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