Federal Acquisition Regulation Strengthens Anti-Human Trafficking Regulations: Federal Contractors and Subcontractors Take Note

Recent human trafficking studies and Congressional testimony have recognized a need for additional measures to halt human trafficking associated with governmental contracting. Effective March, 2, 2015, the U.S. Government released a final rule delineating updated anti-human trafficking requirements for U.S. government contractors.[1] This rule amends the Federal Acquisition Regulation ("FAR"), namely FAR Part 22, and endeavors to strengthen the FAR's existing prohibitions and requirements related to human trafficking.[2]

The final rule is designed to implement Executive Order 13627 (E.O. 13627), entitled "Strengthening Protections Against Trafficking in Persons in Federal Contracts," as well as title XVII of the National Defense Authorization Act for Fiscal Year 2013.[3]

It is crucial that contractors who successfully bid on federal contracts, and subcontractors alike, be mindful of these new regulations. Importantly, the final rule puts "parties on notice that the Government may impose remedies, including termination [of contract] for failure to comply with the requirements." Pursuant to the new regulations, contractors and subcontractors are expressly prohibited from engaging in the following trafficking-related activities:

• Destroying, concealing, removing, confiscating, or otherwise denying access to the employee's identity or immigration documents;
• Failing to provide return transportation for an employee from a country outside the U.S. to the country from which the employee was recruited upon the end of employment unless the contractor is exempted from the requirement or the employee is a victim of human trafficking and is seeking redress in the country of employment or a witness in a human trafficking enforcement action;
• Soliciting a person for the purposes of employment, or offering employment by means of materially false or fraudulent pretenses, representations, or promises regarding that employment;
• Charging recruited employees unreasonable placement or recruitment fees such as fees equal to or greater than the employee's monthly salary, or recruitment fees that violate the laws of the country from which an employee is recruited; or
• Providing or arranging housing that fails to meet the host country housing and safety standards.

While the above requirements apply to certain contracts, regardless of contract type or value,[4] the new rule also provides specific policies for contracts that exceed $500,000 in value and that are performed outside the U.S., or are for supplies acquired outside the U.S., including requiring contractors and subcontractors to be responsible for implementing a compliance plan and certification to prevent prohibited human trafficking.

Given the strict mandate, but convoluted guidelines regarding execution of the new requirements, one foreseeable obstacle for contractors may be determining what constitutes "adequate" due diligence and, for contracts that require compliance plans, assessing whether theirs is "appropriate" for the "size and complexity" of the project. Although the Obama Administration assures that the "level of due diligence required depends on the particular circumstance" and "[t]his is a business decision, requiring judgment by the contractor," these reassurances lack specifics and illustrative guidance.

Contractors and subcontractors should be wary. All new bids, contracts, and solicitations for contracts dated March 2, 2015 or later must include the new requirements.[5] Considering the Administration's focus on the human trafficking problem and the vigor with which it has implemented these requirements, contractors should cautiously review their current policies and procedures. By way of example, changes to employment handbooks, among other things, may be necessary to comply with the new requirements.

As the final rule mandates the requirements discussed above as well as numerous others, contractors and subcontractors should consult their labor and employment, construction, or government procurement attorney to evaluate their contract labor policies and compliance plans. For more information, please contact Bret Wacker at bwacker@clarkhill.com | (202) 272.0906 or Jane Luxton at jluxton@clarkhill.com | (202) 572.8674. 

[1] 80 Fed. Reg. 4967 (Jan. 29, 2015).

[2] Pre-existing FAR clauses prohibit engaging in trafficking of persons, procuring commercial sex acts, and using forced labor in the performance of a contract.

[3] 22 U.S.C. §§ 7101 et. seq.

[4] Previously, the human trafficking regulations applied only to contracts exceeding the Simplified Acquisition Threshold ("SAT"). Importantly, the FAR requirements now apply to contracts regardless of contract amount. The Defense Federal Acquisition Regulation ("DFAR") regulations continue to apply only to contracts exceeding the SAT.

[5] Contracting officers are also required to modify, on a bilateral basis, existing indefinite-delivery/indefinite-quantity contracts to include the clause for future orders, if additional orders are anticipated.