After extensive delay, the Obama Administration has adopted the Bush Administration’s regulation imposing the e-Verify system on government contractors. The FAR change will now be effective as of September 8, 2009. The final rule of November 14, 2008 (73 Fed. Reg. 67651) remains unchanged. The only change to my blog entry of December 15, 2008 (below) is the new effective date.
Continuing a decades long practice of using government contracts to implement every conceivable social or policy program, usually having nothing remotely to do with the efficiency or integrity of the public contracting process, the administration has just issued a new regulation that requires government contractors to use the Homeland Security Department’s e-Verify system to verify the eligibility of their employees to work in the United States. The FAR already requires contractors to label ozone-depleting substances, to reduce waste and encourage recycling, to not participate in the international trafficking in persons, and to comply with prohibitions on the importation of goods manufactured with child labor. Preferences for small businesses and small disadvantaged businesses are so embedded in the procurement system that we no longer think of them as implementing social policies. So it should not be surprising that the administration wants government contractors to assist in enforcing the immigration laws.
E-Verify is a free, Internet based system operated by the Department of Homeland Security that allows participating employers to electronically verify the employment eligibility of their newly hired employees. Based on the information provided by the employee on the Form I-9, E-Verify checks this information electronically against records contained in DHS and Social Security Administration (SSA) databases.
The new regulation, which is effective on January 15, 2009, adds a new Subpart 22.18 to the FAR. Agencies are required to include a new contract clause entitled Employment Eligibility Verification, found at FAR 52.222-54, in contracts that are:
1. Over $100,000,
2. Include work within the United States,
3. Have a period of performance of 120 days or more, and
4. Include items or services that are not “commercially available off-the-shelf” as defined by the regulation (FAR 22.1803(c)).
The clause requires a contract to do the following:
1. Enroll as a federal contractor in the e-Verify program within 30 days of contract award, if not already enrolled. The includes signing the e-Verify program MOU (which is not negotiable).
2. Verify employees “assigned to the contract” as that is defined by the clause within 90 days after enrollment in the program, 90 days of contract award, or 30 days of assignment of the employee to the contract, whichever is later.
3. Beginning within 90 calendar days after enrollment in the e-Verify program or the date of award, whichever is later, verify all new employees whether or not they are assigned to the contract within 3 business days after the date of hire.
Contractors have the option of verifying all employees hired after November 6, 1986. Individuals with active security clearances or who have had background checks and credentials HSPD-12 do not have to be verified. Information on the e-Verify program can be found at http://www.dhs.gov/E-Verify.
An employee is not considered to be directly performing work under a contract if the employee:
(1) Normally performs support work, such as indirect or overhead functions; and
(2) Does not perform any substantial duties applicable to the contract.
Employees subsequently assigned to the contract must be verified within 30 days of being assigned to the contract.
Check out my compliance time line on JD Supra listed on the RSS feed on the right side here.
The recent flap regarding the private security services provided to the State Department by Blackwater has obscured a very important reality about the Iraq war. Since 2000, the number of Defense Department contracts has nearly doubled. Presently the number of civilian contractor employees in Iraq exceeds the number of military personnel there. As more and more services within the military are outsourced, reliance on civilian contractors to support overseas active military operations has increased significantly. As a result, civilian contractor employees face risks once handled entirely by military personnel. In places like Iraq and Afghanistan (and many other places in an increasingly dangerous world), civilian contractor employees face the very real possibility of injury, kidnapping and death. For the sake of these employees and their families, these risks must be addressed by appropriate insurance coverage, something for which Congress has in fact provided.
Federal Workmen’s Compensation Law: Federal law requires all U.S. government contractors and subcontractors to secure workers’ compensation insurance for their employees working overseas. The related statutes include the Defense Base Act, 42 U.S.C. §§ 1651-54 and the Longshore and Harbor Workers’ Compensation Act, 33 U.S.C. §§ 901-50.
The Defense Base Act covers these contractor activities:
• Work on U.S. military bases outside of the United States
• Public work contracts with any U.S. government agency, including construction and service contracts, in connection with national defense or with war activities outside the United States;
• Work funded under the Foreign Assistance Act, if the contract is performed outside of the United States;
• Providing welfare or similar services outside of the United States for the benefit of the Armed Forces, e.g. the USO.
If any one of the above criteria is met, all employees engaged in such employment, regardless of nationality, are covered under the Act. Additionally, the prime contractor is responsible for assuring coverage of subcontractor employees. Three major insurance carriers currently providing Defense Base Act insurance coverage are ACE-USA, AIG, and CAN. A number of companies self-insure.
One problem contractors have faced is that the appropriate clause is often not incorporated in government contracts. Without the contracting officer’s acknowledgement that the Defense Base Act applies, it may be a challenge to get the cost of the insurance recognized in the contract price. Without the clause in the contract, the contractor may be unaware that the statutorily mandated workmen’s compensation insurance should be obtained.
The War Hazards Compensation Act. The WHCA provides benefits to persons covered by the DBA who are injured or killed due to an “armed conflict” in the foreign country where the claimant is working; or who are detained or taken prison by hostile forces. The WHCA provides coverage to employees who would not otherwise be covered because the injuries or deaths were caused by hostile action.
Risk Management: In addition to providing insurance for employees, the contractor needs to take into account the dangerous environment into which it is placing its employees by seeing that the employees, on-site managers and executives are educated as to the risks and the steps that can be taken to minimize those risks. Employees need to know what to expect both physically and mentally and what steps to take in advance, what situations to avoid, what defensive steps can be taken to minimize the danger involved in working in a dangerous environment and what to do if the worst happens. Managers and executive need to know what preventative action to take and what steps need to be taken in the event of an employee’s injury, abduction or death.
Education of this type needs to be provided by individuals and organizations that have on-the-ground, recent experience in these kinds of situations and that can provide practical, timely guidance for employees and for the organization. To get a gritty feel for what is required, see “Staging Security in a Theater of War” by Scott Ast in the Security Management Online Archive (http://www.securitymanagment.com/library/001728.html).
Conclusion: Putting one’s employees into a war zone is a complicated, expensive and stressful activity. Issues are raised with which U.S. businessmen and most government contractors may not be comfortable. Nevertheless, these issues need to be addressed before employees are sent into harm’s way.