Human Trafficking and Government Procurement: New Requirements for U.S. Federal Contractors

TraffickingOn January 29, the U.S. Government released a final rule establishing new anti-human trafficking requirements for U.S. government contractors. The rule amends the Federal Acquisition Regulation (“FAR”) and seeks to strengthen the FAR’s existing prohibitions and requirements related to trafficking in persons.

The new requirements go into effect on March 2, 2015. The rule’s specific requirements are summarized below and a full client alert is available here.

The final rule is intended to implement Executive Order 13627 (“Strengthening Protections Against Trafficking in Persons in Federal Contracts”) and Title XVII of the National Defense Authorization Act for Fiscal Year 2013 (“Ending Trafficking in Government Contracting”).

Notably, on the day that the final rule was published, the White House hosted a Forum on Combating Human Trafficking in Supply Chains which included industry leaders, government representatives and civil society organizations. Participants discussed the need for collaborative action in eliminating trafficking in both federal contracts and corporate supply chains.

Amendments Applicable to All Contracts

All federal contractors subject to the new requirements should familiarize themselves the aspects of the rule applicable to all contracts, including those for commercially available off-the-shelf items. The final rule prohibits any of the following activities in connection with federal solicitations and contracts:

  • destroying, concealing, confiscating, or otherwise denying access by an employee to his or her identity or immigration documents;
  • using misleading or fraudulent practices during the recruitment of employees or when offering employment;
  • using recruiters that do not comply with local labor laws in the countries in which recruiting takes place;
  • charging employees recruitment fees;
  • providing or arranging housing that fails to meet host country housing and safety standards; or
  • if required by law or contract, failing to provide an employment contract, recruitment agreement or similar work paper in writing in the employee’s native language prior to the employee departing from his or her country of origin.

In addition, the final rule requires all contractors to:

  • provide return transportation, or payment for the cost of return transportation, at the conclusion of an employee’s period of employment for all employees who are not nationals of the country in which work took place and who were brought to the country for the purposes of working on a U.S. Government contract, subcontract, or portion(s) of a contract; or
  • for work performed in the United States, provide return transportation or pay for the cost of return transportation, upon the conclusion of an employee’s period of employment if the payment of such costs is required under existing temporary worker programs or pursuant to a written agreement with the employee.

Amendments Applicable to Contracts Where the Portion Performed Outside the United States Exceeds $500,000

The final rule establishes additional requirements for contracts, including any portion of a contract, for which the estimated value of the supplies acquired, or the services required to be performed, outside the United States exceeds $500,000. These heightened requirements do not apply to contracts or subcontracts for commercially available off-the-shelf items.

For contracts covered by these amendments, contractors must develop a compliance plan applicable to the portions of a contract performed outside the United States. The final rule states that contractor should maintain the compliance plan during the performance of the contract and that the compliance plan should be:

  • appropriate to the size and complexity of the contract;
  • appropriate to the nature and scope of activities to be performed for the U.S. Government, including consideration of:
    • the number of non-U.S. citizens expected to be employed; and
    • the risk that the contract or subcontract will involve services or supplies susceptible to trafficking.

Contractors submit a certification to the Contracting Officer on an annual basis stating that a compliance plan has been implemented. In addition, a covered contractor must certify that that:

  • after having conducted due diligence, to the best of the contractor’s knowledge and belief:
    • neither it nor any of its agents, subcontractors, or their agents is engaged in any trafficking activities; or
    • if abuses related to any prohibited activities have been found, the contractor or subcontractor has taken the appropriate remedial and referral actions.

Compliance Challenges

Companies subject to the new requirements will need to assess existing policies and procedures to determine what additional requirements and processes may be necessary in order to meet the new compliance requirements  They will also need to evaluate the relative risk posed by the nature of their supply chain and ensure that steps are taken to tailor compliance measures to address those risks.

Companies subject to the rule’s certification requirements will need to ensure that they have systems in place to monitor and evaluate the extent to which their suppliers are in compliance with the new requirements. This may require establishing new due diligence procedures as well as engaging with critical suppliers to ensure that they can meet the new standards.

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