The Federal Acquisition Regulation (FAR) Council published a revised interim rule for Combating Trafficking in Persons, effective August 17, 2007 (72 Fed. Reg. 46335). The revised rule (FAR subpart 22.17) comes in response to lengthy comments submitted by industry representatives after an earlier rule published in April 2006.

The Trafficking Victims Protection Reauthorization Act of 2003 requires government contracts, grants, and cooperative agreements to include a clause allowing termination of the contract if the contractor or subcontractor, including its employees, engages in human trafficking or procures a “commercial sex act.” The April 2006 FAR rule and corresponding DFAR (defense supplement) rule took an expansive view of contractors’ responsibilities under the statute and prescribed numerous compliance requirements. The new rule better tracks the statute by simplifying the contractor’s procedures for compliance. However, in a surprise to industry officials, the FAR Council expanded the types of contracts to which such procedures will apply.

Whereas the earlier rule applied only to contracts for services and excepted commercial service contracts covered under FAR Part 12, the revised rule and associated clause (52.222-50) apply to all contracts. Contracts for supplies and services including contracts for commercial items as defined at FAR 2.101 are now covered by the rule. The rule writers determined that the statutory language at 22 U.S.C. 7104(g) contained no exemptions or limitations with regard to its application to federal contracts.

Under the revised rule, all contractors and subcontractors holding or seeking commercial item contracts with the federal government will be subject to human trafficking provisions that are far from customary in the commercial marketplace, potentially discouraging contractors from bidding or undertaking federal work. This broad expansion of contracts covered under the revised rule is arguably inconsistent with the spirit of the Federal Acquisition Streamlining Act (FASA) which aimed to reduce impediments to the procurement of commercial goods and services. However, FASA provides that if a provision of law contains civil or criminal penalties then it may be applied to contracts for commercial items. The Human Trafficking statutes provide for such penalties for severe forms of trafficking in persons or for forced labor, and the FAR Council cited this provision to draw all commercial item contracts under the rule.

In terms of compliance mechanisms, the rule writers softened the procedures required of contractors. The earlier rule required contractors to establish a human trafficking awareness program, “monitor” all employees, obtain written compliance agreements from employees, and familiarize employees with host country laws and regulations on human trafficking, commercial sex acts, and forced labor. These duties have been replaced with a requirement to “notify” employees of the U.S. government’s zero tolerance policy, specify actions that will be taken against employees that violate the policy, and take appropriate actions against employees when necessary. Interestingly, the FAR Council noted that contractor employees “represent” the government even after work hours. Thus, while the rule still applies to actions of an employee during the employee’s personal time (i.e., after work hours), the contractor is not required to “monitor” the employees after they leave work.

The rule writers rejected suggestions that the rule should only apply to illegal commercial sex acts. The FAR Council construed a congressional intent to reduce the demand for commercial sex acts regardless of legality in a particular jurisdiction. For example, in countries where some form of prostitution is legal, under the current revised rule, the obtaining of a prostitute by an employee, even on the employee’s vacation time, still could place the prime contractor in violation of the rule and in jeopardy of termination.

Further revisions were made to the definition of “employee.” Whereas the earlier rule was read to potentially include any employee of the contractor working under any government contract, the new definition will apply only to the specific contract during the period of performance: “Employee means an employee of the contractor directly engaged in performance of work under the contract who has other than a minimal impact or involvement in contract performance.” At the behest of academic and research institutions, the revised FAR rule eliminates the prohibition on “supporting” or “promoting” trafficking, noting that the restriction would interfere with scholarly social and behavioral research on such topics as the prevalence of sexually transmitted diseases. Some federal agencies, such as the Centers for Disease Control and Prevention (CDC) and U.S. Agency for International Development (USAID), have incorporated separate anti-trafficking provisions in research grants and cooperative agreements.

Finally, consistent with the earlier rule, the revised rule retains the government’s remedies for contractor noncompliance: 

  • Required removal of a contractor employee from the contract;
  • Required subcontractor termination; 
  • Suspension of contract payments; 
  • Loss of award fee for the period of noncompliance; 
  • Termination for default or cause; or 
  • Suspension or debarment

The substance of the FAR clause must flow down to subcontractors, and prime contractors must take “appropriate action” against subcontractors that violate the policy.

Written comments on the revised rule must be submitted by October 16, 2007. The government is expected to issue a final contract clause shortly thereafter.

In light of the inconsistencies between the revised FAR rule and the current DFAR interim rule, the DFAR rule is expected to be revised or deleted.