Thousands of HUD Contractor Employees Need Better Whistleblower Protections, Watchdog Says

Thousands of employees of contractors who receive funds from the Housing and Urban Development Department lack protections against retaliation from blowing the whistle on wrongdoing, the department’s watchdog said on Wednesday. 

Based on recent investigations, the HUD inspector general believes that many HUD contracts entered into before July 1, 2013––when an anti-retaliation law for contractors that was part of the fiscal 20213 National Defense Authorization Act initially took effect––haven’t been modified to include the protections. 

“Uncertainty over whether whistleblower protections apply dissuades contractor employees from reporting wrongdoing to HUD, Congress and the OIG, and potentially emboldens employers to retaliate against employees if they know Section 4712 anti-retaliation prohibitions do not apply to them,” a management advisory from HUD IG Rae Oliver Davis stated. “This is likely to have a chilling effect on whistleblowers who will be hesitant to step forward due to uncertainty about whether HUD has modified decade-old contracts to incorporate Section 4712 protections.” 

The IG found this problem with Housing Assistance Program contracts, but said it could be an issue in other HUD contracts. It could be years before the affected contracts need to be renewed and thus updated to include the anti-retaliation provisions, the IG said. Therefore, the watchdog made a series of recommendations for HUD to include the provisions in contracts by voluntary cooperation, when a major modification to the contract is made or through authority that HUD would need to seek from Congress. 

Adrianne Todman, HUD deputy secretary, wrote in a response to the IG that the department is “committed to protecting individuals who expose waste, fraud, abuse and mismanagement, which can help enhance the integrity, efficiency and effectiveness of HUD and its contractors and grantees.” 

The law “requires agencies to make their ‘best effort to include in the contract’ these provisions at the ‘time of any major modification’ of a contract,” Todman wrote. “In light of that language from the governing statute, we respectfully disagree with any assumption that HUD has the legal authority to unilaterally incorporate the relevant contract clauses into Housing Assistance Payment contracts agreed to or renewed prior to July 1, 2013.” 

Todman outlined the actions HUD is taking to address the recommendations, which the watchdog said “do not go far enough.” 

For example, HUD didn't respond to the IG’s recommendation on seeking legislative authority to expedite the process to include the whistleblower protections in contracts. This would eliminate the legal hurdle HUD thinks it has when imposing the protections on contractor employees. 

HUD is not the only department to be cited for this issue. 

The Justice Department IG released a management advisory memo in February 2021 alerting the department about concerns related to its compliance with laws, regulations and policies on whistleblower rights and protections for contract employees.