Screening Proposed for Government Contractor Employees
On June 12, 2008, the FAR Councils issued a proposed rule (FAR Case 2007-013) intended to implement an Executive Order dated June 9th, 2008, which amends Executive Order 12989. The proposed rule amends the Federal Acquisition Regulation (FAR) by implementing a new contract clause that will require government contractors and subcontractors to use the U.S. Citizenship and Immigration Services' (USCIS) E-Verify System maintained by the Department of Homeland Security (DHS) to verify that their employees are eligible to work in the U.S.
The new contract clause will apply to all new contracts above the micro-purchase threshold (generally $2,500 for services and $3,000 for supplies), except contracts for "commercial off the shelf items." It may also be made applicable to indefinite-delivery indefinite quantity (IDIQ) contracts by modification for future orders. The clause requires contractors and subcontractors to enroll in the E-Verify System within 30 calendar days of contract award and use it to (1) verify the employment eligibility of all employees assigned to the contract, and (2) verify the employment eligibility of all new employees of the contractor hired after the date of enrollment in the program. The verification must occur within 3 days of assignment to a government contract for current employees and within 3 days of hire for all new employees. The verification requirement applies broadly to employees working in the U.S. The clause must be flowed down to subcontractors providing services in the U.S. under subcontracts exceeding $3,000.
The potential impact of the new FAR clause on certain federal contractors and subcontractors could be dramatic in terms of cost and compliance. The scope of the clause is very broad. It imposes the new screening obligations on contractors and subcontractors for all new hires if the clause is in a government contract or subcontract, not just those employees engaged in federal government business activities. The clause does not exempt commercial item contractors, but instead exempts COTS products, which is defined to include a subset of commercial items. As a result, many large companies, and particularly large commercial item companies with limited federal government business, could face significant performance obligations, compliance risks and costs if they accept a contract or subcontract with the new clause.
This rule may also bring to the forefront a long-standing ambiguity regarding which suppliers and service providers are actually federal government subcontractors. Many large companies take an expansive view for purposes of determining when to flow down clauses to suppliers and services providers. Many companies that do not normally consider themselves federal government subcontractors could inadvertently agree to the new clause and be required to implement broad changes in their hiring processes for new employees.
Companies that wish to provide comments regarding the proposed rule must do so by August 11, 2008.
If you have questions or concerns regarding the impact of this rule on your business, you may contact the Robinette Group at 703-887-2036 or at firstname.lastname@example.org.