All happy New Year 2006.
My new year started with troubles. I would appreciate if any one can help/direct me how to proceed on this.

I live in virginia.
I’m a software programmer, working in the same place for 2 years.
I work as a contractor for US GOV organization. Here the way contracts works is a company X won the 5 year contract for our project & my tech lead managed to get a sub contract to his own company & he asked me to join his company & he said in this way I’ll have my job secured. To keep my job I dint have any option. So I joined his company as sub contractor.

From that day he started harassing me. He put his own rules like I’m not supposed to move my monitor on my desk from one side to another.
I have to come in time every day & if once in a while, If I come late to work, I cannot compensate by staying late after 6 & if I stay after 6, it will be overtime, which will not be approved.
I’m not supposed to talk at work, BTW I’m less talkative & I hardly talk to people, except work.

I don’t mind following these rules but this is not the same with other team members.

Once he threatened me that if he gets rid of me, he can get people from other project for lot less & by this way he can earn more money.

Here at our work we can move from one team to another & I want to change the team and he’s not allowing me to & I’m stuck with this guy. If I quit this job, he’ll not give me a good reference.
If I need a job I have to work under him.
I cannot work whole hartedly.

Can any one help me how to proceed on this?

None of what you've described constitutes illegal harassment, which is based on person's gender, national origin, race, and so on. You seem to be working for a micromanager, but it's not illegal for someone to be one.

Government contracts do have the potential to turn over every five years or whenever the contract ends. People can move with the contract or look for something new. That's the nature of the beast. If you don't like it, then you need to work in another environment.