On March 2, 2015, the Department of Defense’s Final Rule, "Federal Acquisition Regulation; Ending Trafficking in Person," available here (the Rule), became effective. Pursuant to the Rule, revised FAR 52.222-50, Combatting Trafficking in Persons, must be included in all contracts and solicitations. Although the Rule implements previous mandates, contractors must be aware of notably expanded obligations and consequences of non-compliance. In addition to prohibiting historic trafficking activities, the Rule now prohibits activities that may not seem like "trafficking". For example, a contractor violates the Rule if it provides or arranges for employee housing that fails to meet local safety standards. Likewise, engaging recruiters that fail to comply with local labor laws violates the Rule.
Besides prohibiting activities deemed to constitute or contribute to human trafficking, the Rule imposes increased preventative obligations on contractors and subcontractors. These obligations include requiring a contractor (where the value of a non-COTS contract is estimated to exceed $500,000 and the contract, in whole or in part, is for supplies to be acquired or services to be provided outside of the United States), to certify that it has a compliance plan.
The Rule’s affirmative obligations also include mandatory disclosure in the event of a violation and "full cooperation" in Federal investigations, audits, and other enforcement efforts. While contractors are required to disclose violations, there is no safe harbor for disclosure and a contractor likely will be subject to an investigation as the result of its disclosure. In such an investigation, a contractor must provide "reasonable access to their facilities and staff." The Rule does not define "reasonableness" or limit the scope of "access."
To facilitate compliance efforts and in response to requests for clarification, the Rule defines terms such as "agent", "subcontractor" and "subcontract". However, even with these clarifications, areas of uncertainty remain. For example, the certification must state that a contractor has "conducted due diligence" and that to the best of the contractor’s knowledge and belief, neither it nor its agents or subcontractors has engaged in any prohibited trafficking. What constitutes "due diligence"? Contractors must guess what will be considered adequate – not only when monitoring their own compliance, but also that of their agents and subcontractors. Similarly, the Rule neglects to specify minimum requirements for the mandatory compliance plans; the Government’s position is that a compliance plan must "be appropriate to the size and complexity of the contract and the nature and scope of its activities." In other words, one size does not fit all, but there are no guidelines to assess what will be deemed "appropriate" under any circumstances. The rule also imposes increased liability on a contractor due to the behavior of a subcontractor or the subcontractor’s employees, yet provides no guidance on how a contractor should monitor its subcontractors’ employees.
What is clear is that contractors should examine and update their compliance plans and prevention policies and procedures regarding human trafficking and ensure that these plans, policies and procedures incorporate monitoring of subcontractors. The risks of a violation – including suspension, debarment and Government investigation – warrant investing the time and resources necessary to comply with the revised Rule.
Lara Nochomovitz is responsible for the contents of this Article.
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