The Trump Administration has declared this month National Slavery and Human Trafficking Prevention Month, calling on industry associations, law enforcement, private businesses, and others to work toward ending modern slavery and human trafficking. This proclamation follows the Administration’s efforts to combat human trafficking, which we have previously discussed here, and comes on the heels of an OMB memorandum released last fall aimed at “enhanc[ing] the effectiveness of anti-trafficking requirements in Federal acquisition while helping contractors manage and reduce the burden associated with meeting these responsibilities.”

The OMB memorandum directs executive agencies to conduct a review of contract spending to ensure appropriate safeguards are in place to prevent trafficking in high-risk areas. These safeguards include potentially incorporating additional obligations in solicitations (such as code of conduct requirements) and documenting trafficking issues that arise during contract performance through the past performance process. The OPM memorandum also directs executive agencies to appoint a trafficking in persons expert and a procurement trafficking in persons contact for purposes of coordinating and implementing anti-trafficking requirements.

Additionally, the OMB memorandum seeks to respond to a host of questions that contractors have raised since the FAR’s anti-trafficking requirements were revised in 2015. To that end, the OMB memorandum provides a list of “best practices” that a contractor may implement as part of its anti-trafficking compliance program. These best practices generally fall within two categories:

  • Internal Steps: Compliance Policies and Accountability Official – The OMB memorandum notes that the FAR anti-trafficking rule does not technically require compliance policies or an accountability official, but the memorandum identifies such measures as important steps in ensuring compliance. According to the OMB memorandum, compliance policies (including a compliance plan, when required) should take into account recruitment practices, disciplinary action, and host country housing and employment requirements. The compliance policies should also regularly be assessed and updated to account for developing best practices and lessons learned. The OMB memorandum further explains that an official within the company should be responsible for implementing anti-trafficking policies and have the authority to assess supply chain compliance.
  • External Steps: Monitoring High-Risk Portions of the Supply Chain – The OMB memorandum’s guidance for external steps focuses largely on supply chain due diligence that prioritizes high-risk areas and assessing subcontractor compliance. For instance, it explains that contractors should maintain auditing processes to ensure subcontractor compliance with anti-trafficking requirements, including methods for assessing the use of recruiters and the sufficiency of reporting mechanisms. The OMB memorandum also recommends confirming that corrective action measures are in place to ensure appropriate remedial action (including contract termination) and follow-up monitoring when subcontractors engage in violations of anti-trafficking rules.

Notably, the OMB memorandum explains that contracting officers may use these best practices in assessing a contractor’s anti-trafficking compliance program, and notes that such assessments should be performed periodically, such as when a contractor reports a human trafficking incident, as part of a procurement involving a high-risk area, or in connection with a past performance review. When trafficking issues arise, the OMB memorandum advises contracting officers to consider a range of mitigating factors, including:

  • whether the contractor identified the issue as the result of effective monitoring and reporting programs,
  • how quickly the contractor notified the government of the incident,
  • the contractor’s cooperation with the resulting investigation,
  • the complexity of the contractor’s supply chain,
  • the contractor’s experience as a federal contractor, and
  • the presence of systemic violations.

Finally, the OMB memorandum seeks to provide further guidance to contractors’ most frequently asked questions regarding anti-trafficking compliance. Of particular note, the OMB memorandum acknowledges that contractors have struggled to determine the threshold for reporting “credible information” and notes that the term is not defined in the FAR. Although the OMB memorandum attempts to provide some guidance by explaining that the term “refers to believable information received from any source,” the memorandum’s guidance still leaves contractors without any particular direction for determining if an allegation is “believable” or “credible.” In addition, the OMB memorandum addresses a common question concerning whether to develop a company-wide or contract-specific compliance plan, explaining that multiple plans may be impractical and instead encouraging contractors to develop a company-wide compliance plan, which is subsequently tailored to specific contracts.

Given the increased emphasis on anti-trafficking requirements and the need for contractors to certify compliance with such requirements, contractors would be well served by assuring that their compliance structures meet government expectations, including confirming that work performed outside the United States is covered by an adequate compliance plan, if required, and that appropriate diligence and monitoring procedures are in place to address potential human trafficking risk in supply chains.