New Anti-Trafficking Regulations Finalized for Government Contractors

Merle M. DeLancey Jr., Daniel A. Broderick, and Philip E. Beshara

Merle DelanceyDaniel A. BroderickPhilip E. BesharaOn January 29, 2015, the Department of Defense, General Services Administration, and National Aeronautics and Space Administration published a final rule, effective March 2, 2015, implementing extensive new prohibitions and compliance requirements to the Federal Acquisition Regulation (FAR). The changes, mandated by President Obama’s December 2012 Executive Order (E.O. 13627) and the FY 2013 National Defense Authorization Act, raise across-the-board compliance concerns for government contractors—especially those that regularly employ foreign nationals.

New Restrictions and Requirements

The rule, amending FAR Subpart 22.17 and Contract Clause 52.222-50, will prohibit contractors and subcontractors from denying employees identity or immigration documents; using misleading or fraudulent recruitment practices; charging employees recruitment fees; using recruiters that do not comply with local labor laws of the country recruited from; and providing or arranging housing that fails to meet the host country’s housing and safety standards. The regulations also generally require contractors and subcontractors to pay for or provide transportation of foreign workers back to their home country at the end of their employment if they were brought to the work-country for the purpose of working on a U.S. Government contract or subcontract; or if the work-country is the U.S., they are not a U.S. national, and transportation is required under existing temporary worker programs or pursuant to a written agreement with the employee.

If required by law or under the contract, contractors and subcontractors must provide a written work document to employees in a language the employee understands. The rule further requires that the document contain, at minimum, details about work description, wages, the prohibition on recruitment fees, work location(s), living accommodations and associated costs, time off, round-trip transportation arrangements, grievance process, and the content of applicable trafficking laws and regulations.

These provisions must flow down to all subcontractors and agents.

Mandatory Compliance Plan and Annual Certifications

Successful offerors for contracts outside the U.S. with estimated values exceeding $500,000 for services performed, or non-COTS supplies acquired, must provide, pre-award, a certification that the offeror has a trafficking compliance plan, and that neither it nor its subcontractors or its agents has engaged in any of the prohibited trafficking activities, or if so, that it took appropriate remedial and referral actions.

The compliance plan “must be appropriate to the size and complexity of the contract and the nature and scope of its activities, including the number of non-U.S. citizens expected to be employed and the risk that the contract will involve services or supplies susceptible to trafficking in persons.” Although subjective, compliance plans at a minimum must include:

  • Procedures to prevent agents and subcontractors at any tier and at any dollar value from engaging in trafficking in persons or in any of the prohibited activities;
  • Procedures to monitor, detect, and terminate any agents, subcontracts, or subcontractor employees at any tier that have engaged in such activities; and
  • An awareness program, employee reporting process, recruitment and wage plan, and housing plan.

Annually after receiving an award, the contractor must certify that: it has implemented the compliance plan and to the best of its knowledge and belief neither it nor any of its agents, subcontractors, or their agents, is engaged in any such activities, or, if they are engaged in any such activities, the contractor has taken appropriate remedial and referral actions.

For any subcontract outside the U.S. with estimated values exceeding $500,000 for services performed, or non-COTS supplies acquired, the contractor must require the subcontractor to submit a plan before the subcontract is awarded and get subcontractor certification annually thereafter.

Violations and Remedies

Once in effect, the new rules will require all solicitations and contracts to provide suitable remedies, including termination, to be imposed on contractors that fail to comply with the prohibitions and compliance requirements contained in FAR 22.1703(a)-(d). The rule also facilitates the government’s ability to audit and investigate trafficking, requiring contractors and subcontractors to disclose offenses, provide timely and complete responses to government auditors’ and investigators’ requests for documents, cooperate fully in providing reasonable access to facilities and staff, and to protect suspected employee-victims. For example, contractors must inform both the Contracting Officer and the agency Inspector General immediately of “[a]ny credible information it receives from any source (including host country law enforcement) that alleges a Contractor employee, subcontractor, subcontractor employee, or their agent has engaged in conduct” in violation of the clause’s trafficking rules.

Defense Federal Acquisition Regulation Supplement (DFARS)

The Department of Defense also amended its Trafficking in Persons Policy to incorporate new language and electronic posting requirements on hotline posters. Upon submission of an offer, an offeror must submit that it: will not engage in trafficking related activities; has and will comply with hiring and subcontracting policies to protects the rights of its employees and subcontractor employees; and has notified its employees and subcontractors of the responsibility to report trafficking as well as the whistleblowing protections available by law.

Finally, DFARS now requires contractors to post, enforce, and ensure its Armed Forces-supporting employees are aware of certain rights listed in the regulation, such as the right to lunch breaks and, if housing is provided, to live in housing that meets host-country standards.

Takeaways

Because the new FAR provisions take effect March 2, 2015, contractors must quickly evaluate and update their human trafficking compliance programs. This effort is somewhat complicated by the minimal guidance provided for contractors looking to create “appropriate” mandatory compliance plans, which must fit the size and complexity of the contract and the nature and scope of the activities performed. However, the FAR Council indicated in its comment section that contractors could look to other agencies, such as the State Department’s Office to Monitor and Combat Trafficking in Persons, for guidance.

The rule is also unclear regarding the burden of costs which contractors will inevitably incur implementing the requirements. As such, contractors should consider the appropriate cost allocation and recovery methodologies.

The finalized FAR and DFARS rules can be found at 80 Fed. Reg. 4967 (Jan. 29, 2015) and 80 Fed. Reg. 4999 (Jan. 29, 2015), respectively.