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FCPA Blog Daily News

« Petty corruption causes massive misery for the poor | Main | Colloquium on suspension and debarment: towards an integrative approach? »
Monday
Oct012012

Human trafficking compliance means certify, prevent, plan, and report

As reported last week by the FCPA Blog, President Obama signed a groundbreaking Executive Order designed to strengthen protections against trafficking in persons in federal contracting.
 
Among other requirements, the Executive Order requires federal contractors and subcontractors to take the following actions:

  • Certifications. File formal annual certifications confirming that neither they nor their employees engaged in any trafficking-related activities, and, if violations were identified, that they took appropriate remedial and referral action.
  • Prevention. Take steps to ensure that their employees do not engage in trafficking-related activities.
  • Compliance Plans. Develop and maintain detailed compliance plans if they have contracts exceeding $500 million and involving services to be performed abroad.
  • Self-Reporting. Self-report any activities that are “inconsistent with” the Executive Order.

The Federal Acquisition Regulatory (FAR) Council, in coordination with various agencies, now has 180 days from September 25, 2012 to promulgate rules to prohibit all government contractors, subcontractors and their employees from engaging in trafficking-related activities.
 
Highlighted prohibited activities include:

  • Engaging in misleading or fraudulent recruitment practices, such as by making material misrepresentations regarding the key terms and conditions of employment (including wages and fringe benefits, the location of work, living conditions and housing).
  • Charging employees recruitment fees.
  • Destroying, concealing or confiscating employee identity documents, such as passports or driver’s licenses.
  • Failing to pay certain return transportation costs upon the end of employment outside the United States.

For contracts involving services or supplies exceeding $500,000 that are to be performed abroad, federal contractors and subcontractors must agree to maintain “compliance plans” that are appropriate for the nature and scope of the activities performed.
 
Such plans (1) “shall be provided to the contracting officer upon request,” (2) must be posted on the contractor’s or subcontractor’s website, and (3) must, “at a minimum,” include:

  • Specific procedures to prevent subcontractors at any tier from engaging in trafficking in persons.
  • An employee “awareness program.”
  • Explicit policies aimed at ensuring that employees do not engage in trafficking-related conduct.
  • Processes allowing employees to report trafficking violations without fear of retaliation.
  • Recruitment and wage plans restricting the use of recruitment companies to those having “trained employees.”
  • Housing plans ensuring compliance with local housing and safety standards.

Government contracts must now include contractor and subcontractor assurances that they will provide “full cooperation” and “reasonable access” to contract and enforcement agencies conducting audits or investigations.
 
In addition, contracting officers must notify, as appropriate, the agency inspector general, the debarment officer or law enforcement of any trafficking-related activities that are illegal, violate regulations or are otherwise “inconsistent with” the Executive Order.
 
Finally, all government contractors and subcontractor must certify that:

  • Neither the contractor nor any subcontractors have engaged in any trafficking-related activities.
  • Any identified abuses resulted in appropriate remedial and/or referral actions.

“We’re making clear that American tax dollars must never, ever be used to support the trafficking of human beings,” President Obama, referring to the Executive Order, said at last week's Clinton Global Initiative. “We will have zero tolerance. We mean what we say. We will enforce it.”

Although there may be differences in opinion over the efficacy of these new requirements, there can be little doubt that they will have an immediate and significant impact on the over 300,000 companies and organizations doing business (and who want to continue doing business) with the U.S. government.

___________________________
 
T. Markus Funk, pictured above, is a Perkins Coie Partner. He's the co-author of the book Child Exploitation and Trafficking:  Examining the Global Challenges and U.S. Responses (2012, co-authored with Chicago U.S. District Judge Virginia M. Kendall), and represents Joel Esquenazi in the federal appeal of his conviction and longest-ever FCPA sentence. He also currently serves on the ABA’s Presidential Anti-Trafficking Task Force and Co-Chairs the ABA’s Corporate Social Responsibility and Forced Labor Task Force. From 2000-2010, Markus was a federal prosecutor in Chicago; from 2004-06, he lived in Pristina, Kosovo, where he led USDOJ and State Department efforts to combat trafficking in Kosovo and the region.
 
This article is an adaptation of his September 27, 2012, Client Update (pdf).

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