The final rule amending the Federal Acquisition Regulation (FAR) to require certain federal agency contracts and sub-contracts that are performed within the United States to include a provision mandating the use of the E-Verify program will become effective on September 8, 2009. This final regulation was initially released on November 14, 2008 but its implementation was postponed numerous times due to litigation. However, the litigation was recently dismissed by a district court and it is assumed that the court will not stay the implementation of the regulation while the decision is appealed.

After the dismissal of the litigation, the Department of Homeland Security (DHS) issued a press release reminding certain federal contractors and sub-contractors that they will be required to use the E-Verify system to verify their employees’ eligibility to work in the United States effective September 8, 2009. However, this press release is inaccurate. Only certain federal contractors and subcontractors who are awarded contracts on or after this date that contain the E-Verify requirement will be required to verify their new employees’ and certain existing employees’ eligibility to work in the United States. The rule requires all federal solicitations and contracts over $100,000 lasting for a period of 120 days or more to include a provision that the contractors:

  1. Enroll in E-Verify (if not already enrolled).
  2. Use E-Verify for all new hires in the United States, regardless whether they perform services on the contract. Institutions of higher education, state or local government, the government of a federally recognized Indian tribe or a surety performing under a takeover agreement entered into with a federal agency pursuant to a performance bond may choose to verify only new hires assigned to the contract instead of all new hires.
  3. Use E-Verify for all workers assigned to the contract who are directly performing work under the contract. Employees are not considered to be assigned to the contract if they normally provide support work (such as indirect or overhead functions) and do not perform any substantial duties applicable to the contract. Contractors are also not required to re-verify workers who have been previously verified by the contractor using E-Verify; workers with active security clearance of “confidential,” “secret” or “top-secret;” or workers for whom background investigations have been completed and have been issued credentials pursuant to the Homeland Security Presidential Directive (HSPD-12). 
  4. Include a provision in sub-contracts for commercial or non-commercial services and construction that are over $3,000 and last for a period of more than 30 days requiring the use of E-Verify by the subcontractors.  

Contractors and sub-contractors covered by the regulation may also opt to re-verify all existing workers hired after November 6, 1986 whether or not they are assigned to the contract. This provision only applies to contractors and sub-contractors who are subject to the provisions of the regulation. If a contractor or sub-contractor elects this option, it must notify DHS and initiate verification within 180 days of the notice to DHS or enrollment in E-Verify.  

Certain federal contracts are exempt from the requirement, including those for  

  1. Commercially available off-the-shelf (COTS) items.
  2. Items that (but for minor modifications) would be COTS items.
  3. Agricultural products shipped as bulk cargo that would otherwise been categorized as COTS.
  4. Commercial services that are part of the purchase of a COTS item, performed by the COTS provider and normally provided for that COTS item.  

The contracting officer will determine if a contract qualifies for one of the exemptions. The following is a chart of the timeframes for enrollment in and use of E-Verify by federal contractors and subcontractors that are not exempt from the E-Verify requirement:

Contractors and Sub-contractors Not Enrolled in E-Verify at Time of Contract Award

Contractors and Sub-contractors Enrolled in E-Verify at Time of Contract Award

All Contractors

The DHS or the Social Security Administration (SSA) can terminate a federal contractor or sub-contractor from the E-Verify system if the contractor violates the terms of the Memorandum of Understanding (MOU) that it is required to sign in order to use the E-Verify program as a federal contractor or sub-contractor. This MOU differs significantly from the MOU for employers that are not subject to this rule and who elect to use the E-Verify program. For example, one of the major differences involves the fact that federal contractors and sub-contractors are required to E-Verify current workers assigned to the contract whereas E-Verify employers who are not subject to this rule can not use E-Verify to confirm the employment eligibility of current workers. The MOU for federal contractors subject to this rule outlines the procedure to verify existing workers assigned to the contract and it appears that most employers will have to complete a new Form I-9 process for these workers prior to completing the E-Verify process to verify that the information/documentation that the employer has received meets all of the E-Verify requirements. If DHS and/or SSA terminate an effective federal contractor from the E-Verify system for violating the terms of the MOU, the agency must refer the contractor to a suspension or debarment official for possible suspension or debarment from the federal contracting program.  

Finally, DHS has reminded employers that the use of the E-Verify system by any employer does not prevent DHS from conducting Form I-9 compliance inspections or from conducting any other enforcement activity.