Following highly publicized sex trafficking allegations in the late 1990s against contractor personnel supporting U.S. operations in the Balkans, Congress enacted a 2003 amendment to the Trafficking Victims Protection Act of 2000 (22 U.S.C. §§ 7101 et seq.). The Trafficking Victims Protection Reauthorization Act of 2003 requires government contracts, grants, and cooperative agreements to include a clause allowing the agency to terminate the contract if the contractor or subcontractor, including its employees, engages in human trafficking or procures a commercial sex act. Although the Act has been in force for some time, the federal government has taken concrete action only recently to implement its requirements through government contracts.

Specifically, two contract clauses – in the Federal Acquisition Regulation (FAR) and in the Defense supplement (DFARS) – now set out detailed requirements, taking a broad view of contractors’ responsibilities under the statute. Pending the issuance of a final contract clause, all service contractors are bound by the clause published as an interim rule in the Federal Register (FAR clause at 71 Fed. Reg. 20,301, dated April 19, 2006), and all defense contractors doing business overseas are bound by the DFARS clause published as an interim rule at 71 Fed. Reg. 62,560, dated October 26, 2006. The FAR clause does not apply to FAR Part 12 commercial services, but the DFARS clause makes no similar exception.

Under the interim contract clauses, contractors must establish policies and procedures to ensure that employees do not engage in human trafficking or procure a commercial sex act. The definition of “human trafficking” set forth in the clauses includes any form of labor induced by force, fraud, or coercion, or the “transportation, provision, or obtaining of a person for the purposes of a commercial sex act.” The definition of “commercial sex act” is quite broad. It is defined as “any sex act on account of which anything of value is given to or received by any person.” At a minimum, the contractor must:

  • Publish statements notifying employees of a “zero tolerance policy” on human trafficking and commercial sex acts 
  • Obtain written agreements from employees that certify adherence to the policy 
  • Specify actions to be taken against employees for violation of the policy 
  • Establish an awareness program to teach employees about the policy
  • Familiarize employees with host-country laws and regulations on human trafficking, commercial sex acts, and forced labor
  • Flow down the clause to subcontractors at all tiers and monitor a subcontractor’s adherence through periodic reviews 
  • Take action against employees or subcontractors that violate the policy 
  • Report to the contracting officer “any information [the contractor] receives from any source that alleges” that a contractor or subcontractor employee violated the zero tolerance policy (emphasis added)

Failure to comply with the above requirements is grounds for contract termination.

The broad prohibition of “commercial sex acts” coupled with the far-reaching employee oversight requirements combine to extend application of the clause to an employee’s personal time. Thus, for example, in countries where some form of prostitution is legal, the obtaining of a prostitute by a subcontractor’s employee, even on the employee’s vacation time, could potentially place the prime contractor in violation of the FAR or DFARS clause and in jeopardy of termination.

The requirements of the interim contract clauses increase the administrative burdens on contractors and require increased vigilance in selecting and managing employees and subcontractors working overseas. Therefore, contractors must be mindful of their new obligations under the clauses and of the strong policy interest against human trafficking.

Several interest groups and industry associations have filed comments on the interim clauses, and some have even urged rescission of the DFARS clause, which is broader and more restrictive than the FAR clause. The government is expected to issue a final contract clause in mid-2007. Some agencies such as USAID and CDC have issued anti-trafficking clauses for inclusion in grants and cooperative agreements, but these clauses are not as broad as the FAR and DFARS clause.