The Trafficking Victims Protection Act of 2000 (22 U.S.C. § 7104 ) (TVPA), as amended, requires that each federal grant and cooperative agreement include a clause allowing the agency to terminate the award if the recipient or subrecipient, including its employees, engages in certain prohibited activities related to human trafficking. To implement this statute, the Office of Management and Budget (OMB) recently released, on an interim basis, a government-wide award term for all grants and cooperative agreements. (72 Fed. Reg. 63783). The interim award term became effective on December 13, 2007.
The award term prohibits grantees, subrecipients, and the employees of each from:
1) engaging in “severe forms of trafficking in persons” (as defined in the TVPA) during the period of time that the award is in effect;
2) procuring a “commercial sex act” (as defined in the TVPA) during the period of time that the award is in effect; or
3) using “forced labor” (as defined in the TVPA and the award term) in the performance of an award or a subaward.
The grantee must immediately inform the government of any information it receives from “any source” alleging a violation of these terms. If it is determined that the recipient or subrecipient has violated any of these prohibitions, the agency may terminate the award. The agency also may terminate an award if it finds that the employee of a recipient or subrecipient has engaged in prohibited activities through conduct “associated with performance” under the award.
The new policy distinguishes between private and public entities. The policy applies to all private entities holding a grant or cooperative agreement (including state-controlled institutions of higher education, which are considered private entities under the award term). The new policy applies to public entities (states, local governments, Indian tribes, and foreign governments) only when “funding could be provided under the award to a private entity as a subrecipient.”
The TVPA defines “severe forms of trafficking in persons” as (a) forced labor, or (b) a commercial sex act that is induced by force, fraud, or coercion, or in which the person induced to perform such act has not attained 18 years of age. Both the TVPA and the award term define “forced labor” to include the recruitment, harboring, transportation, provision, or obtaining of a person for labor or services, through the use of force, fraud, or coercion.
The TVPA defines “commercial sex act” as any sex act on account of which anything of value is given to or received by any person.
An “employee” is described in the award term as an individual employed by the grantee or subrecipient and engaged in performance of the project, or another individual engaged in the performance of the project, including unpaid volunteers and other persons whose services are contributed as cost sharing.
This definition of “employee” is broad and it raises some questions. For example, it is not clear whether the definition applies only to an institution’s employees directly engaged in the federal award, or also to employees indirectly supporting the federal award. The degree of relatedness between the prohibited conduct and the award is also unclear. It appears that the employee’s conduct must be “[a]ssociated with performance under [the] award,” but there is no guidance on what it means to be associated with performance. For instance, if the government pays for travel and lodging, are all of an individual’s activities during the trip “associated with performance” under the award? The proposed award term is broad enough to leave this question open.
The term “commercial sex act” also is defined broadly to include any sex act on account of which anything of value is exchanged. Note that the award term prohibits all commercial sex acts, independent of whether they are induced by force, fraud, or coercion, or whether they involve a person under 18 years of age. The award term contains no exception for jurisdictions where certain commercial sex acts are legal. This may be a particular compliance concern for grantees employing foreign nationals on overseas projects in countries that do not prohibit prostitution and other commercial sex acts.
An institution must take any “allegation” of a violation seriously. A mere allegation at the recipient or subrecipient level, regardless of its reasonableness, would trigger the requirement to inform the federal agency immediately of a potential violation.
The awarding agency may “unilaterally” terminate an award “without penalty” upon finding a violation. The award term does not afford the grantee any right to a hearing or other procedure to rebut a claimed violation. It is not clear whether this means that the grantee has no recourse; on the contrary, one would presume that the standard procedures for appealing a termination would be available. The phrase “without penalty” may indicate that the grantee is not entitled to close out costs, but it is unclear whether that was the intent of the language.
The significance of subrecipient conduct also is highlighted in the award term. Not only is the award term a mandatory flowdown to subrecipients, but a violation by a subrecipient or a subrecipient’s employee may be imputed to the prime recipient and may put the prime recipient at risk of termination.
Finally, it is unclear whether the policy would extend to a grantee’s subcontractors (e.g., entities holding commercial contracts with grantee institutions). It is possible that subcontractors could be incorporated under the broad definition of “employee” thereby making the grantee responsible for the conduct of its subcontractors. In any case, research administrators are well aware that it is often difficult to distinguish between a subcontractor and a subrecipient under a grant, and OMB should consider this point when issuing a final award term.
The interim award term and associated guidance is located in 2 CFR part 175.