[Federal Register: November 14, 2008 (Volume 73, Number 221)]
[Rules and Regulations]
[Page 67651-67705]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14no08-30]
[[Page 67651]]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 2, 22, and 52
[FAC 2005-29; FAR Case 2007-013; Docket 2008-0001; Sequence 1]
RIN 9000-AK91
Federal Acquisition Regulation; FAR Case 2007-013, Employment
Eligibility Verification
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Final rule.
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SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council (Councils) have agreed on a final rule
amending the Federal Acquisition Regulation (FAR) to require certain
contractors and subcontractors to use the E-Verify system administered
by the Department of Homeland Security, U.S. Citizenship and
Immigration Services, as the means of verifying that certain of their
employees are eligible to work in the United States.
DATES: Effective Date: January 15, 2009.
Applicability Date: Contracting Officers should modify, on a
bilateral basis, existing indefinite-delivery/ indefinite-quantity
contracts in accordance with FAR 1.108(d)(3) to include the clause for
future orders if the remaining period of performance extends at least
six months after the final rule effective date, and the amount of work
or number of orders expected under the remaining performance period is
substantial.
FOR FURTHER INFORMATION CONTACT: Ms. Meredith Murphy, Procurement
Analyst, at (202) 208-6925 for clarification of content. For
information pertaining to status or publication schedules, contact the
FAR Secretariat at (202) 501-4755. Please cite FAC 2005-29, FAR case
2007-013.
SUPPLEMENTARY INFORMATION:
A. Background and Purpose
Employment Eligibility Verification Requirements
As explained more fully in the proposed rule, the Federal Property
and Administrative Services Act of 1949 (FPASA), authorizes the
President to ``prescribe policies and directives'' governing
procurement policy ``that the President considers necessary to carry
out'' that Act and that are ``consistent'' with the Act's purpose of
``provid[ing] the Federal Government with an economical and efficient''
procurement system. 40 U.S.C. 101, 121. On June 6, 2008, the President
exercised this authority and the authority vested in him under section
301 of Title 3 of the United States Code in issuing Executive Order
13465 ``Economy and Efficiency in Government Procurement through
Compliance with Certain Immigration and Nationality Act Provisions and
the Use of an Electronic Employment Eligibility Verification System.''
73 FR 33285, Jun. 11, 2008, amending Executive Order 12989 (signed
February 13, 1996, published February 15, 1996 at 61 FR 6091),
previously amended by Executive Order 13286 (signed February 28, 2003,
published March 5, 2003 at 68 FR 10619). As amended, Executive Order
12989 now provides, at Section 5.(a), that ``Executive departments and
agencies that enter into contracts shall require, as a condition of
each contract, that the contractor agree to use an electronic
employment eligibility verification system designated by the Secretary
of Homeland Security to verify the employment of: (i) All persons hired
during the contract term by the contractor to perform employment duties
within the United States; and (ii) all persons assigned by the
contractor to perform work within the United States on the Federal
contract.'' The Executive Order also requires, at Section 5.(c), that
the Secretary of Defense, the Administrator of General Services and the
Administrator of the National Aeronautics and Space Administration
``amend the Federal Acquisition Regulation to the extent necessary and
appropriate to implement the * * * employment eligibility verification
responsibility * * * assigned to heads of departments and agencies
under this order.''
On June 9, 2008, the Secretary of Homeland Security designated the
``E-Verify system, modified as necessary and appropriate to accommodate
the policy set forth in the Executive Order * * * as the electronic
employment eligibility verification system to be used by Federal
contractors.'' (See 73 FR 33837, Jun. 13, 2008.)
This final rule responds to these requirements, and the Secretary's
designation, by amending the FAR to require certain Federal contractors
and subcontractors to use the E-Verify system (E-Verify) administered
by the Department of Homeland Security (DHS), U.S. Citizenship and
Immigration Services (USCIS) as the means of verifying that certain of
their employees are authorized to work in the United States.
E-Verify Program
The E-Verify system, formerly known as the Basic Pilot/Employment
Eligibility Verification Program, is an Internet-based system operated
by DHS USCIS, in partnership with the Social Security Administration
(SSA) that allows participating employers to electronically verify the
employment eligibility of their newly hired employees. E-Verify
represents the best means currently available for employers to verify
the work authorization of their employees.
Before an employer can use the E-Verify system, the employer must
enroll in the program and agree to the E-Verify Memorandum of
Understanding (MOU) required for program participants. The terms of the
MOU are established by USCIS and are not negotiated with each
participant. In consenting to the MOU, employers agree to abide by
current legal hiring procedures and to ensure that no employee will be
unfairly discriminated against in the use of the E-Verify program.
Violation of the terms of the MOU by the employer is grounds for
termination of the employer's participation in the E-Verify program.
Current law (8 U.S.C. 1324a(b)) requires all employers in the
United States to complete an Employment Eligibility Verification Form
(Form I-9) for each newly hired employee to verify each employee's
identity and employment eligibility. Under this final rule, Federal
contractors will additionally enter the worker's identity and
employment eligibility information into the E-Verify system, which
checks that information against information contained in SSA, USCIS and
other Government databases.
SSA first verifies that the name, social security number (SSN), and
date of birth are correct and, if the employee has stated that he or
she is a U.S. citizen, confirms U.S. citizen status through its
databases. If the system confirms identity and U.S. citizenship, and
there are no other indicators that the information is not correct, SSA
confirms employment-eligibility. USCIS also verifies through database
checks that any non-U.S. citizen employee is in an employment-
authorized immigration status.
If the information provided by the worker matches the information
in the SSA and USCIS records, no further action will be required. E-
Verify procedures require only that the employer record on the Form I-9
the
[[Page 67652]]
verification identification number and the result obtained from the E-
Verify query or print a copy of the transaction record and retain it
with the Form I-9.
If SSA is unable to verify information presented by the worker, the
employer will receive an ``SSA Tentative Nonconfirmation'' notice.
Similarly, if USCIS is unable to verify information presented by the
worker, the employer will receive a ``DHS Tentative Nonconfirmation''
notice. Employers can receive a tentative nonconfirmation notice for a
variety of reasons, including inaccurate entry of information by the
employer into the E-Verify Web site, and changes in the worker's name
or immigration status that the worker has not updated in the SSA
database searched by the E-Verify system. If the individual's
information does not match the SSA or USCIS records, the employer must
provide the worker with a written notice generated by the E-Verify
system, called a ``Notice to Employee of Tentative Nonconfirmation''.
The worker must then indicate on the notice whether he or she contests
or does not contest the finding reflected in the tentative
nonconfirmation that he or she appears unauthorized to work, and both
the worker and the employer must sign the notice.
If the worker chooses to contest the tentative nonconfirmation, the
employer must print a second notice generated by the E-Verify system,
called a ``Referral Letter,'' which contains information about
resolving the tentative nonconfirmation, as well as the contact
information for SSA or USCIS, depending on which agency was the source
of the tentative nonconfirmation. The worker then has eight Federal
Government workdays to visit an SSA office or call USCIS to try to
resolve the discrepancy. Under the E-Verify MOU, if the worker contests
the tentative nonconfirmation, the employer is prohibited from
terminating or otherwise taking adverse action against the worker while
he or she awaits a final resolution from the Federal Government agency.
If the worker fails to contest the tentative nonconfirmation, or if SSA
or USCIS is unable to resolve the discrepancy, the employer will
receive a notice of final nonconfirmation and the worker's employment
may be terminated.
Participation in E-Verify does not exempt the employer from the
responsibility to complete, retain, and make available for inspection
Forms I-9 that relate to its employees, or from other requirements of
applicable regulations or laws. However, the following modified
requirements apply by reason of the employer's participation in E-
Verify: (1) Identity documents used for verification purposes must have
photos (except as discussed below with respect to accommodations); (2)
if an employer obtains confirmation of the identity and employment
eligibility of an individual in compliance with the terms and
conditions of E-Verify, a rebuttable presumption is established that
the employer has not violated section 274A(a)(1)(A) of the Immigration
and Nationality Act (INA) with respect to the hiring of the individual;
(3) the employer must notify DHS if it continues to employ any employee
for whom the employer has received a final nonconfirmation, and the
employer is subject to a civil money penalty between $500 and $1,000
for each failure to notify DHS of continued employment following a
final nonconfirmation; (4) if an employer continues to employ an
employee after receiving a final nonconfirmation and that employee is
subsequently found to be an unauthorized alien, the employer is subject
to a rebuttable presumption that it has knowingly employed an
unauthorized alien in violation of Immigration and Nationality Act
(INA) section 274A(a); and (5) no person or entity participating in E-
Verify is civilly or criminally liable under any law for any action
taken in good faith reliance on information provided through the
confirmation system.
Further information on registration for and use of E-Verify can be
obtained via the Internet at http://www.dhs.gov/E-Verify.
E-Verify Basis and Development
1. Legislative History
Laws pertaining to the control of illegal immigration have received
serious attention from Congress and the Executive Branch since at least
the early 1950s. Chief among the legislative approaches to these
problems has been the proposed establishment of penalties for the
employment of undocumented aliens and related laws requiring the
verification of employment authorization. See INA Section 274(a),
codified at 8 U.S.C. 1324(a). The House of Representatives Report filed
with the Immigration Reform and Control Act of 1986 (IRCA), found at
1986 U.S. Code Cong. and Adm. News, p. 5649, clearly describes the
basis for that legislation:
This legislation seeks to close the back door on illegal
immigration so that the front door on legal immigration may remain
open. The principal means of closing the back door, or curtailing
future illegal immigration, is through employer sanctions. The bill
would prohibit the employment of aliens who are unauthorized to work
in the United States because they either entered the country
illegally, or are in an immigration status which does not permit
employment. U.S. employers who violate this prohibition would be
subject to civil and criminal penalties. Employment is the magnet
that attracts aliens here illegally or, in the case of
nonimmigrants, leads them to accept employment in violation of their
status. Employers will be deterred by the penalties in this
legislation from hiring unauthorized aliens and this, in turn, will
deter aliens from entering illegally or violating their status in
search of employment. The logic of this approach has been recognized
and backed by the past four administrations * * *. Now, as in the
past, the Committee remains convinced that legislation containing
employer sanctions is the most humane, credible and effective way to
respond to the large-scale influx of undocumented aliens. While
there is no doubt that many who enter illegally do so for the best
of motives--to seek a better life for themselves and their
families--immigration must proceed in a legal, orderly and regulated
fashion. As a sovereign nation, we must secure our borders.
H.R. Rep. No. 99-682(I), 99th Cong., 1st Sess. 46 (1986), 1986 U.S.
Code Cong. & Admin. News, p. 5649. INA Section 274A, as established by
IRCA, thus prohibits any ``person or other entity'' from knowingly
hiring, or knowingly continuing to employ, any unauthorized alien. INA
section 274A(b) provides for an ``Employment Verification System,''
which requires that employers attest, after examination of
documentation presented by the employee, that the person being hired,
recruited or referred for employment is not an unauthorized alien. INA
section 274A also provides for the assessment of civil monetary
penalties and cease and desist orders against any employer that has
knowingly hired or continued to employ an unauthorized alien, or that
has failed to comply with the employment verification system mandated
by INA section 274A(b). 8 U.S.C. 1324a(e)(4)-(e)(5).
Employers who engage in a ``pattern or practice'' of violating the
prohibition against illegal employment of unauthorized workers may face
criminal sanctions. INA section 274A(f), 8 U.S.C. 1324a(f). DHS U.S.
Immigration and Customs Enforcement (ICE) investigates complaints of
potential violations of INA section 274A by inspecting employment
eligibility verification forms maintained by employers with respect to
their current and former employees, and compelling the production of
evidence or the attendance of witnesses by subpoena. 8 U.S.C.
1324a(e)(2); 8 CFR 274a.2(b)(2).
[[Page 67653]]
Development of E-Verify
E-Verify provides a modern means of verifying employment
authorization information in addition to the traditional I-9 process.
When Congress established the paper-based employment verification
system in 8 U.S.C. 1324a(b), it directed the President to evaluate that
system's security and efficacy and implement necessary changes, subject
to congressional oversight. 8 U.S.C. 1324a(d). Congress also authorized
the President to establish demonstration projects designed to
strengthen the employment verification system. 8 U.S.C. 1324a(d)(4).
The first demonstration project, in 1992, included the Telephone
Verification System (TVS) pilot program--a predecessor to the E-Verify
system. 69 Interpreter Releases 702 (June 8, 1992); 515 (Apr. 27,
1992). In 1996, Congress established the Basic Pilot program--now
called E-Verify--as part of the Illegal Immigration Reform and
Immigrant Responsibility Act (IIRIRA). Public Law 104-208, Sections
401-405, 110 Stat. 3009-655-3009-666 (1996) (8 U.S.C. 1324a note).
On August 10, 2007, the Acting Director of the Office of Management
and Budget instructed agencies to encourage their existing and future
contractors to use E-Verify and attached a letter that DHS had sent to
its major contractors encouraging their use of E-Verify and emphasizing
E-Verify's ability to help contractors comply with immigration law. See
``Memorandum for the Heads of Departments and Agencies M-07-21,''
Stephen S. McMillin, Acting Director, Office of Management and Budget
(August 10, 2007) (http://www.whitehouse.gov/omb/memoranda/fy2007/m07-
21.pdf) attaching ``Letter from Paul A. Schneider, Under Secretary for
Management'' (Aug. 10, 2007). The OMB Memorandum also announced that
the Federal Acquisition Regulatory Council was developing appropriate
Governmentwide regulatory coverage to apply E-Verify to Federal
contractors. It also indicated that by October 1, 2007, all Federal
departments and agencies should begin verifying their new hires through
E-Verify.
Compliance Requirements for Federal Contractors
The Executive branch has long recognized that the instability and
lack of dependability that afflicts contractors that employ
unauthorized workers undermines overall efficiency and economy in
Government contracting. The first formal expression of this policy is
found in Executive Order 12989, signed by President Clinton in February
1996. (See 61 FR 6091, Feb. 15, 1996.) That Order, which pre-dated
Congress's enactment of IIRIRA authorizing what is now the E-Verify
program, found that the presence of unauthorized aliens on a
contractor's workforce rendered that contractor's workforce less stable
and reliable than the workforces of contractors who do not employ
unauthorized aliens:
Stability and dependability are important elements of economy
and efficiency. A contractor whose work force is less stable will be
less likely to produce goods and services economically and
efficiently than a contractor whose work force is more stable. It
remains the policy of this Administration to enforce the immigration
laws to the fullest extent, including the detection and deportation
of illegal aliens. In these circumstances, contractors cannot rely
on the continuing availability and service of illegal aliens, and
contractors that choose to employ unauthorized aliens inevitably
will have a less stable and less dependable work force than
contractors that do not employ such persons. Because of this
Administration's vigorous enforcement policy, contractors that
employ unauthorized alien workers are necessarily less stable and
dependable procurement sources than contractors that do not hire
such persons. I find, therefore, that adherence to the general
policy of not contracting with providers that knowingly employ
unauthorized alien workers will promote economy and efficiency in
Federal procurement.
Executive Order 12989 (preamble), 61 FR 6091. This finding is as
applicable today as it was in 1996. The Government is aware, in
particular, of recent instances where Federal Government contracts have
been disrupted when the contractor's employees were identified as
unauthorized workers. See, e.g., Tami Abdollah, ``2 Sentenced for
Hiring Illegal Migrants; Golden State Fence Executives Get Probation
and Fines, and the Company is Ordered to Forfeit $4.7 Million in
Profits,'' Los Angeles Times, March 29, 2007, (detailing the criminal
prosecution of two Federal Contractor company executives for hiring
illegal workers that resulted in a guilty plea; judgment of probation
and combined $300,000 in fines for the two individuals in addition to
the forfeiture of $4.7 million in company profits the company reaped by
employing unauthorized immigrant workers); Karen Lee Ziner, ``3 at
Bianco Plant Indicted on Immigration Charges,'' Providence Journal
Bulletin, August 4, 2007, at A3 (reporting the indictment of company
president along with two managers for ``conspiring to harbor and hire
illegal immigrants'' to work on Government contracts valued over $200
million); Mark Bowes, ``U.S. Immigration Agents Arrest 33: Workers at
Richmond Site of New Federal Courthouse Alleged to be Here Illegally,''
Richmond Times Dispatch, May 8, 2008, at B3 (reporting the arrest of 33
alleged illegal immigrant workers employed by a Federal contractor
during a raid by immigration authorities at the construction site of a
future Federal courthouse in Richmond, Virginia); Giovanna Dell'Orto,
``Illegal Immigrants Arrested at Military Bases,'' Press-Register,
January 20, 2007, at B12 (publishing an article on the arrest of
roughly 40 illegal immigrant workers over a three day period that were
hired by Federal contractors to work at three different military bases
including Fort Benning in Georgia and the Marine Corp Base Quantico in
Virginia); Rob Bell, ``Mills Manufacturing Corporation Raided by ICE,''
Western Carolina Business Journal, August 15, 2008 (reporting that
immigration officials raided a Federal defense contractor and arrested
57 illegal immigrant workers).
Consistent with the President's authority under FPASA, and to
``ensure the economical and efficient administration and completion of
Federal Government contracts,'' Executive Order 12989 instructed the
Attorney General of the Department of Justice to investigate to
determine whether a contractor or an organizational unit thereof is not
in compliance with the INA employment provisions, transmit that
determination to the contracting agency and have the head of the
contracting agency pursue debarment or other such action as may be
appropriate under the FAR. (See Executive Order 12989, Sections 3 and
4.) With the establishment of the DHS, the Attorney General's
investigative authority transferred to the Secretary of Homeland
Security. See Executive Order 13286, Sec. 19, (Feb. 28, 2003), 68 FR
10623. Thus, as early as 1996, agencies were instructed to use
provisions within the FAR to support economical and efficient Federal
Government contracting by avoiding doing business with contractors that
employ unauthorized workers.
On June 6, 2008, President Bush issued Executive Order 13465,
amending Executive Order 12989 by adding an electronic employment
eligibility verification requirement to strengthen the long-standing
Executive branch policy of furthering economical and efficient
contracting through only contracting with Federal contractors who
employ persons in the United States who are authorized to work in the
United States. Executive Order 13465 echoes the findings and
conclusions stated in Executive Order 12989 and
[[Page 67654]]
builds upon the ``economy and efficiency'' justifications for the 1996
Executive Order in light of the significant advances in the technology
for employment eligibility verification that have been made since the
issuance of Executive Order 12989. As amended, Executive Order 12989
now states:
It is the policy of the Executive branch to use an electronic
employment verification system because, among other reasons, it
provides the best available means to confirm the identity and work
eligibility of all employees that join the Federal workforce. * * *
I find, therefore, that adherence to the general policy of
contracting only with providers that do not knowingly employ
unauthorized alien workers and that have agreed to utilize an
electronic employment verification system designated by the
Secretary of Homeland Security to confirm employment eligibility of
their workforce will promote economy and efficiency in Federal
procurement.
Executive Order 12989, as amended by Executive Order 13465, 73 FR
33285.
Executive Order 12989, as amended, further specifically directs the
agency heads of DoD, GSA and NASA to implement this policy through
amendments to the FAR. Executive Order 13465 at Section 3, 73 FR 33286.
Accordingly, the Councils amend the FAR in this final rule in
accordance with the President's direction, pursuant to his authority
under FPASA to ``prescribe policies and directives'' governing Federal
procurement that are consistent with the Act's aim of providing the
Federal Government with an economical and efficient procurement system.
40 U.S.C. 101, 121.
B. Final Rule
Summary of the Elements of the Proposed Rule That Are Retained in the
Final Rule
This final rule inserts a clause into Federal contracts committing
Government contractors to use the USCIS E-Verify System to verify that
all of the contractors' new hires, and all employees (existing and new)
directly performing work under Federal contracts, are authorized to
work in the United States. Consistent with the requirements first set
forth in the proposed rule, the final rule--
1. Exempts contracts that are for--
Commercially available off-the-shelf (COTS) items; and
Items that would be COTS items but for minor
modifications.
2. Requires inclusion of the clause in subcontracts over $3,000 for
services or for construction.
3. Requires contractors and subcontractors to use E-Verify to
confirm the employment eligibility of all existing employees who are
directly performing work under the covered contract.
4. Applies to solicitations issued and contracts awarded after the
effective date of the final rule in accordance with FAR 1.108(d). Under
the final rule, Departments and agencies should, in accordance with FAR
1.108(d)(3), amend--on a bilateral basis--existing indefinite-delivery/
indefinite-quantity contracts to include the clause for future orders
if the remaining period of performance extends at least six months
after the effective date of the final rule.
5. In exceptional circumstances, allows a head of the contracting
activity to waive the requirement to include the clause. This authority
is not delegable.
The rule is written to apply the above requirements in a manner
that will ensure effective compliance by the contractor community, and
is reasonably limited in certain circumstances to minimize the burden
on participants in the Federal procurement process.
Changes Adopted in the Final Rule
Below is a summary of changes made to the final rule:
1. Significantly Extended Timelines--The final rule amends the
proposed rule to permit Federal contractors participating in the E-
Verify program for the first time a longer period--90 calendar days
from enrollment instead of 30 days as initially proposed--to begin
using the system for new and existing employees. The final rule also
provides a longer period after this initial enrollment period--30
calendar days instead of 3 business days--for contractors to initiate
verification of existing employees who have not previously gone through
the E-Verify system when they are newly assigned to a covered Federal
contract. Contractors already enrolled and using the program as Federal
contractors will have the same extended timeframe to initiate
verification of employees assigned to the contract, but the time limits
will be measured from contract award date instead of from the
contractor's E-Verify enrollment date. With regard to verification of
new hires, a contractor that has already been enrolled as a Federal
contractor for 90 calendar days or more will have the standard 3
business days from the date of hire to initiate verification of new
hires. Those contractors that have been enrolled in the program for
less than 90 calendar days will have 90 calendar days from the date of
enrollment as a Federal contractor to initiate verification of new
hires.
2. Covered Prime Contract Value Threshold--The final rule requires
the insertion of the E-Verify clause for prime contracts above the
simplified acquisition threshold ($100,000) instead of the micro-
purchase threshold ($3,000).
3. Contract Term--The final rule clarifies that the E-Verify clause
need not be inserted into prime contracts with performance terms of
less than 120 days.
4. Institutions of Higher Education--The final rule modifies the
contract clause so that institutions of higher education need only
verify employees assigned to a covered Federal contract.
5. State and Local Governments and Federally Recognized Indian
Tribes--Similarly, under the final rule, State and local governments
and Federally recognized Indian tribes need only verify employees
assigned to a covered Federal contract.
6. Sureties--Under the final rule, sureties performing under a
takeover agreement entered into with a Federal agency pursuant to a
performance bond need only verify employees assigned to the covered
Federal contract.
7. Security Clearances and HSPD-12 credentials--The final rule
exempts employees who hold an active security clearance of
confidential, secret or top secret from verification requirements. The
rule also exempts employees for which background investigations have
been completed and credentials issued pursuant to the Homeland Security
Presidential Directive (HSPD)-12, ``Policy for a Common Identification
Standard for Federal Employees and Contractors,'' which the President
issued on August 27, 2004.
8. All Existing Employees Option--The final rule provides
contractors the option of verifying all employees of the contractor,
including any existing employees not currently assigned to a Government
contract. A contractor that chooses to exercise this option must notify
DHS and must initiate verifications for the contractor's entire
workforce within 180 days of such notice to DHS.
9. Expanded COTS-related exemptions for:
Bulk cargo--The rule will not apply to prime contracts for
agricultural products shipped as bulk cargo that would otherwise have
been categorized as COTS; and
Certain services associated with the provision of COTS
items or items that would be COTS items but for minor modifications.
10. Allows the Head of the Contracting Activity to waive E-Verify
requirements after contract award,
[[Page 67655]]
either temporarily or for the period of performance.
11. Definitions:
Employee assigned to the contract--The final rule
clarifies that employees who normally perform support work, such as
general company administration or indirect or overhead functions, and
that do not perform any substantial duties applicable to an individual
contract, are not considered to be directly performing work under the
contract.
Subcontract and subcontractor--Adds definitions derived
from FAR 44.101.
B. Response to Comments Received on the Notice of Proposed Rulemaking
Docket
The Department of Defense (DoD), General Services Administration
(GSA) and National Aeronautics and Space Administration (NASA)
published a notice of proposed rulemaking (NPRM) in this action on June
12, 2008. (See 73 FR 33374.) The NPRM directed the submission of
comments to the Federal eRulemaking portal, http://www.regulations.gov,
as well as by facsimile and by mail to the FAR Secretariat, with
reference to FAR Case 2007-013, Docket 2008-0001; Sequence 1, on or
before August 11, 2008. The agencies received more than 1,600 public
comments on the proposed rulemaking from individuals, organizations,
corporations, trade associations, chambers of commerce and Government
entities.
Comments submitted to the docket for this rulemaking were
distributed relatively evenly among various issues, with concerns about
the Government's authority to promulgate the rule and questions about
the DHS's and SSA's collective ability to administer the rule receiving
the greatest number of comments. Eleven commenters stated that the 60-
day public comment period was inadequate to evaluate, research, and
prepare responses to a complex proposed rule. Those commenters asked
the Councils to extend the comment period to allow more time to
research and respond to the proposed rule.
The Councils declined to extend the public comment period after
concluding that the period was adequate. The current web-based E-Verify
system, which has been active and available to employers since 2004,
has been the subject of significant public scrutiny, including in
public hearings before Congress. This has, over time, disseminated
considerable information about the program to the public. As a result,
most commenters did not request additional time to gather information
and submit comments, and those that did request additional time failed
to raise novel or difficult issues that could have justified an
extension. Moreover, the comments received more than adequately
provided substantial information on which the Councils could make a
final decision. Accordingly, the Councils do not believe that there is
a basis for extending the comment period related to this rule.
Support for the Rule
Comment: More than 600 commenters wrote in support of the proposed
rule and strongly urged its adoption. One commenter noted that it has
been illegal for more than 20 years, i.e., since 1986, to hire an
individual who is not authorized to work in the United States. Another
commenter, who identified himself as a 30-year Human Resources
professional, stated that this E-Verify system is not too burdensome
for employers. A third commenter said that the ``E-Verify program
WORKS!'' and that he has found it to work accurately 100 percent of the
time.
The majority of these commenters expressed overall support for the
Executive Order's instruction for Federal agencies to contract with
employers that use E-Verify to check the employment eligibility of all
persons performing work on Federal contracts and of all persons hired
by the contractor. Some commenters applauded E-Verify because it will
establish a level playing field and prevent some employers from
obtaining a competitive advantage by exploiting unauthorized workers
for lower pay. Many commenters noted that--for 22 years--it has been
against the law to hire workers who are not authorized to work in the
U.S. This is not a new requirement, they say; it merely puts some teeth
into the existing law. Other commenters observed that E-Verify will
help stem the problem of identity theft by requiring employers to check
photo identification.
Response: The Councils appreciate these supportive comments for use
of E-Verify in the Federal Government procurement system, but note that
application of the system in this context is not meant to regulate
immigration, but to provide the Federal Government with stable and
dependable contractors which, ultimately, results in a more economical
and efficient procurement system.
Requests for a More Comprehensive Solution
Comment: A number of commenters suggested that merely requiring the
use of the E-Verify system by Federal contractors was not a
comprehensive solution. They strongly advocate ``fixing'' the
``broken'' immigration system. Some commenters see the solution as
giving people a path to legal status, others see it as providing
``tangible solutions for the over 7 million undocumented workers in our
economy,'' some see it as enabling swifter and earlier access to work
permits, and still other commenters advocate improved ICE auditing
teams. One commenter claims that, ``[w]hile employer sanctions and a
mandatory employment document verification system may be an appropriate
part of an effective immigration reform package, standing alone they
only exacerbate the problems they are ostensibly designed to address.''
Response: Comprehensive immigration reform is beyond the scope of
this rulemaking and was not the purpose of Executive Order 12989, as
amended. The mandate given to the FAR Councils was to implement the
President's Executive Order of June 6, 2008, as a means of creating a
more economical and efficient Federal Government procurement system.
The employment of persons unauthorized to work in the U.S. has been
against the law for 22 years. Completion of the Form I-9 is still
required of all employers and this rule does not change that
requirement. This rule merely provides a more convenient, faster, and
more consistent means of determining whether an individual is, or is
not, authorized to work in the U.S. to establish greater stability and
dependability among the Federal contractor workforce.
Authority
1. Immigration Statutes
a. Voluntary Participation in E-Verify
1. Comment. Many commenters challenge the Councils' authority to
promulgate the Rule, arguing that the insertion of a clause into
Federal contracts that commits Federal contractors to use E-Verify
conflicts with the congressional intent expressed in the IIRIRA that
participation in E-Verify be ``voluntary.'' Some commenters further
argue that the E-Verify program is de facto mandatory because
contractors who elect not to enter into Federal contracts on account of
E-Verify will go out of business.
Response: The Councils disagree. Section 402(a) of IIRIRA states,
in relevant part, that ``the Secretary of Homeland Security may not
require any person or other entity to participate in a pilot program.''
8 U.S.C. 1324a note,
[[Page 67656]]
Section 402(a). On its face, this statutory limitation applies only to
the Secretary of Homeland Security and does not apply to the President
or the Councils. Because the requirement to insert the contract clause
set forth in this rule comes from a presidential action, Executive
Order 12989, as amended, and from this rulemaking undertaken by the
Councils, it is not a requirement imposed by the Secretary of Homeland
Security and therefore does not run afoul of section 402(a) of IIRIRA.
Moreover, acceptance of a Federal procurement contract is, by
definition, a voluntary act. The rule sets forth a performance
requirement to be included as a contract clause in contracts entered
into or negotiated anew after the effective date of the rule. In AFL-
CIO v. Kahn, the D.C. Circuit Court of Appeals, sitting en banc,
rejected the claim that the Carter Administration's insistence that
Federal contractors agree to comply with wage and price controls
rendered those controls ``mandatory'' in violation of the Council on
Wage and Price Stability Act (COWPSA). 618 F.2d 784 (D.C. Cir. 1979).
The Kahn Court analogized the procurement requirement at issue to
``those Federal programs that offer funds to State and local
governments on certain conditions. The Supreme Court has upheld such
conditional grants, observing on one occasion through Justice Cardozo
that `to hold that motive or temptation is equivalent to coercion is to
plunge the law in endless difficulties.' '' AFL-CIO v. Kahn, 618 F.2d
at 794 (quoting Steward Machine Co. v. Davis, 301 U.S. 548, 589-590
(1937)). According to the D.C. Circuit:
Any alleged mandatory character of the procurement program is
belied by the principle that no one has a right to a Government
contract. As the Supreme Court ruled in Perkins v. Lukens Steel Co.,
``[The] Government enjoys the unrestricted power * * * to determine
those with whom it will deal, and to fix the terms and conditions
upon which it will make needed purchases.'' Those wishing to do
business with the Government must meet the Government's terms;
others need not.
AFL-CIO v. Kahn, 618 F.2d at 794. If a contractor chooses to do
business with the Federal Government, then the Federal Government can,
and routinely does, impose contract performance requirements. Where, as
with this rule, such requirements are imposed through contract terms
included in contracts, a contractor's agreement to abide by those terms
of the agreement is not ``involuntary.''
2. Comment: Many commenters suggested that IIRIRA and the INA limit
the types of employers which can be required to participate in the
Basic Pilot Program. These commenters asserted that the proposed rule's
promulgation of a contract clause committing Federal contractors to use
E-Verify violates the congressional intent behind IIRIRA, because
Federal contractors are not one of the classes of employers which can
be required to participate in Basic Pilot. Some commenters suggested
that Congress consciously chose to exclude Government contractors from
the subset of employers for which participation in Basic Pilot would be
mandatory. Many commenters also asserted that, because of this alleged
violation of congressional intent, the Administration lacks the
constitutional authority to promulgate this policy through Executive
Order or through this rulemaking.
Response: The Councils disagree. IIRIRA requires participation in
E-Verify by certain employers, including Executive departments and the
legislative branch, as well as employers found to have violated INA
section 274A. There is nothing in the text of IIRIRA that prohibits the
President, acting pursuant to separate statutory authority, from
requiring additional classes of employers to participate in E-Verify as
a condition of contracting with the Federal Government. Nor is there
any indication in the legislative history to suggest that Congress ever
specifically considered and rejected a proposal to include Federal
contractors in the E-Verify program. Here, the President has acted
within his authority under FPASA and 3 U.S.C. 301 and issued an
Executive Order to improve the dependability and stability of the
Federal contractor workforce by requiring Federal agencies to contract
with businesses that electronically verify the employment eligibility
of their employees. In his Executive Order, the President tasked the
Secretary of Homeland Security with designating an appropriate
electronic verification tool and charged the FAR Councils with the
responsibility to promulgate a rule to implement the requirements of
the Executive Order. The Secretary of Homeland Security and the FAR
Councils have acted in accordance with the President's directive,
issued as an exercise of his authority under FPASA, and in so doing,
neither the Secretary nor the Councils have taken any action in
conflict with IIRIRA. Congress merely prohibited the Secretary of
Homeland Security from requiring participation in E-Verify by other
persons or entities, and this rule does not violate that prohibition,
as described above.
b. Existing Employees
Comment: Many commenters asserted that because IIRIRA created the
Basic Pilot program as a tool to confirm employment eligibility of
newly hired employees, the contractual requirement--announced by
Executive Order and implemented through this rulemaking--that existing
employees assigned to Government contracts be verified (or re-verified)
through E-Verify is contrary to law.
Response: The Councils disagree. Executive Order 12989, as amended,
instructs executive departments and agencies to require, as a condition
of contracting, that the contractor agree to use an electronic
employment eligibility verification system ``to verify the employment
of * * * all persons assigned by the contractor to perform work within
the United States on the Federal contract.'' This Executive Order is
based on the President's exercise of his authority under FPASA to
prescribe policies that promote economy and efficiency in federal
contracting. 40 U.S.C. 101, 121.
The Basic Pilot statute does not prohibit the verification of
existing employees' work eligibility called for by this presidential
directive. The Basic Pilot statute lays out a set of procedures that
employers using the system must follow ``in the case of the hiring (or
recruitment or referral) for employment in the United States. * * *''
IIRIRA section 403(a). The statute also sets out the parameters for the
``employment eligibility confirmation system'' that the Secretary of
Homeland Security must establish. IIRIRA section 404. Nothing in either
of these sections, however--or in any other part of the Basic Pilot
statute--prohibits the use of the confirmation system for existing
employees or prohibits the President, acting pursuant to separate
statutory authority, from requiring federal contractors to use the
confirmation system for existing employees as a condition of
contracting with the federal government.
c. Congressional Notification
Comment: Commenters noted that IRCA requires the Administration to
notify Congress before implementing any changes to the employment
verification system ``established under subsection (b) of [INA section
274A].'' INA section 274A(d)(1), (d)(3). These commenters suggest that
this rulemaking amounts to such a change, and that it may not be
implemented without notice to Congress called for in section
274A(d)(3).
[[Page 67657]]
Response: The Councils disagree. This rule instructs Federal
contracting officers to insert the specified clause into future Federal
contracts, thereby committing Federal contractors to use the E-Verify
system as specified in the rule. It does not, however, constitute a
change to ``the requirements of subsection (b)'' of INA section 274A,
which established the paper-based Form I-9 employment verification
process. The I-9 process that all employers must follow at the time of
hire continues to apply to Federal contractors without any change. This
rule, and the Executive Order on which it is based, promotes economy
and efficiency in Federal contracting by assisting employers to avoid
employment of unauthorized workers and by limiting the risk that
Federal contracts performed in the United States will be staffed by
persons unauthorized to work in the United States.
2. Executive Order Authority
Comment: As noted above, many commenters challenged the President's
authority to issue the Executive Order under FPASA. These commenters
suggested that Executive Order 12989 does not promote ``economy'' and
``efficiency'' in Government contracting, and that the Executive Order
is therefore not supported by FPASA's statement that the President may
enact procurement regulations which further those two ends. Commenters
also contended that the main purpose of the Executive Order is to
advance a social policy--a strengthening of the immigration enforcement
relating to employment in the United States--in a way that is contrary
to congressional intent, and that the President's power recognized by
FPASA cannot be employed by the Executive Branch to advance policies
that conflict with the statutes passed by Congress.
Response: These challenges to the legal authority for Executive
Order 12989 are outside the scope of this rulemaking. The Councils
note, however, that Executive Order 12989 falls well within the
established legal bounds of presidential directives regarding
procurement policy. FPASA authorizes the President to craft and
implement procurement policies that further the Act's statutory goals
of promoting ``economy'' and ``efficiency'' in Federal procurement.
See, e.g., UAW-Labor Employment & Training Corp. v. Chao, 325 F.3d 360,
366 (D.C. Cir. 2003) (affirming authority of the President under FPASA
to require federal contractors, as a condition of contracting, to post
notices informing workers of certain labor law rights); Kahn, 618 F.2d
at 792-793 (upholding an Executive Order implementing procurement wage
and price controls, noting need for a ``nexus'' between those wage and
price controls and procurement economy and efficiency). The fundamental
``economy and efficiency'' principles underlying the Executive Order
were first articulated in the original Executive Order 12989, issued in
February 1996, which concluded that contracting with employers who hire
unauthorized workers in violation of the INA undermines the economy and
efficiency of the Federal procurement system. The 1996 Executive Order
imposed debarment penalties on contractors found to have violated the
immigration laws, and was never found by a court to be inconsistent
with FPASA, the INA, or IRCA. Executive Order 13465 amends Executive
Order 12989 to use new employment verification technology in order to
advance the same goal of ensuring a stable and dependable Federal
contractor workforce and more economical and efficient Federal
Government contracting. See 73 FR 33285 (``This order is designed to
promote economy and efficiency in Federal Government procurement. * * *
I find * * * that adherence to the general policy of contracting only
with providers that do not knowingly employ unauthorized alien workers
and that have agreed to utilize an electronic employment verification
system designated by the Secretary of Homeland Security to confirm the
employment eligibility of their workforce will promote economy and
efficiency in Federal procurement.'') The President has determined that
this rule will produce net economy and efficiency gains in Federal
procurement.
The Councils also disagree with assertions that the proposed rule
is a veiled attempt to modify immigration policy under the guise of
procurement regulation. This rule implicates immigration, but does so
in a permissible manner. The President may, under FPASA, promulgate
procurement policies and directives touching upon policy matters beyond
Government contracting, so long as there is a sufficiently close
``nexus'' between the policy or directive and the promotion of economy
and efficiency in Federal procurement. See Chao, 325 F.3d at 366-67;
Kahn, 618 F.2d at 792; Chamber of Commerce v. Reich, 74 F.3d 1322, 1337
(D.C. Cir. 1996) (``[T]he President, in implementing the Procurement
Act, may * * * draw upon * * * secondary policy views * * * that are
directed beyond the immediate quality and price of goods and services
purchased.''). In this case, the ``nexus'' is explained at some length
in the text of Executive Order 13465. (See 73 FR 33285.)
3. The MOU Requirement
Comment: One commenter specified that ``[t]he inclusion of an MOU
in addition to, or as a supplement to, the contract performance
requirements, is contrary to contract formation law in that it might
create a separately enforceable (and potentially conflicting)
obligation between the parties beyond the scope of the contract and
could create confusion and result in problems with contract
administration and/or lead to the submission of contract claims.''
Response: The Councils do not concur with these comments. The
requirement in this clause for the contractor to comply with the
requirements of a secondary agreement is no different than any other
contract term that requires adherence to a standard or a specification.
The clause merely requires adherence to the conditions of the MOU as
part of the contractor's performance duties. The terms of the E-Verify
MOU are readily available to the public, and were included in the
docket of this rulemaking on the www.regulations.gov Web site so that
commenters on this rule would have the opportunity to review and take
into consideration the proposed terms of that agreement in providing
comments on this rulemaking. Potential contractors have adequate
advance notice of the ancillary agreement with which they must comply.
4. Consistency With Other Federal Regulations
a. FAR Guiding Principles
Comment: Several commenters claim that the proposed rule
contradicts many of the guiding principles used in the creation of the
FAR, including (1) minimizing administrative operating costs, (2)
conducting business with integrity, fairness, and openness, and (3)
promoting competition.
Response: Commenters claim that administrative operating costs can
include start-up, implementation, training, and maintenance costs; and
the Councils agree. All of these costs were included, and evaluated, in
the Regulatory Impact Analysis (RIA) released with the proposed rule.
Some adjustments have been made to the RIA as a result of comments
received in response to the proposed rule, and they are addressed in
the Regulatory Flexibility Analysis section of this rule. Commenters
claim that there are also
[[Page 67658]]
other direct and indirect costs to employers who use E-Verify--
employers may perceive foreign-born workers as more expensive to employ
than native-born workers due to the database inaccuracies. Commenters
claim that resolving tentative nonconfirmations and correcting employee
records costs time and money and affects other resources. In claiming
that the costs associated with the proposed rule do not minimize
administrative costs, however, the commenters overlook the costs
already incurred by contractors as a result of the I-9 process mandated
by the INA, and they overlook the gains in stability and reliability of
the Federal contractor workforce that contractors' use of E-Verify will
produce.
The Councils also disagree with the claim by some commenters that
the proposed rule fails to advance integrity, fairness, and openness in
the way business is conducted. While Government-commissioned reports
have found some employer abuse of the program, discriminatory behavior
and other such prohibited employment practices is not encouraged by the
E-Verify system. Use of E-Verify cannot prevent all such illegal
action, but the record created by use of the system does make it more
difficult for an employer engaged in discrimination to conceal its
unlawful behavior. If any employer engages in discriminatory practices,
such abuses should be reported to the appropriate Federal and State
agencies responsible for enforcement of the anti-discrimination laws.
Commenters claim that the proposed rule does not encourage
competition because the harmful impact on small businesses (many of
which are minority-, immigrant-, or family-owned) is disproportionate
and makes the playing field for small businesses more uneven. The claim
of a disproportionate impact on small businesses is addressed elsewhere
in this rule (see the Regulatory Flexibility Analysis section of this
rule). However, the Councils believe that there is an impact on
competition, and it believes that the impact is positive rather than
negative. Use of the E-Verify system will make it more difficult for
firms to gain a competitive edge by hiring unauthorized workers at
lower pay.
b. DHS Regulations
Comment: One commenter asserted that the proposed rule's
requirement to re-verify certain employees violates existing DHS
regulations.
Response: As the commenter did not identify the specific DHS
regulations allegedly violated, this comment is not susceptible to a
response. Other commenters have made similar assertions that E-Verify
is contrary to law and the Councils have addressed these specific
concerns. The Councils are not aware of any DHS regulation violated by
this final rule.
c. Verification of Federal Employees
Comment: Several commenters noted that OMB has directed all Federal
departments and agencies to use E-Verify on their newly-hired
employees, but not on their existing employees. These commenters
asserted that the proposed rule is inconsistent with that OMB decision,
because the rule requires Federal contractors to use E-Verify on not
only new hires but also on existing employees working on Federal
contracts, and argue that Federal contractors should not be held to a
higher verification standard than is applied to the Executive branch.
Response: The Councils disagree. The rule is consistent with the
policy announced in Executive Order 12989 requiring the Executive
branch to contract with employers that agree to use E-Verify for their
employees who are working on a covered Federal contract. The aim of the
Executive Order is to promote economy and efficiency in Federal
procurement by ensuring stable and dependable Federal contractors.
Furthermore, Federal employees are required to undergo background
checks pursuant to HSPD-12, which mandates that a person must be
suitable (minimum of a national agency check with inquiries (NACI)) in
order to be issued an HSPD-12 card. HSPD-12 requires certain
credentialing standards prior to issuing personal identity verification
cards. These standards include verification of name, date of birth, and
social security number (among other data points) against Federal and
private data sources. The Councils agree that the degree of scrutiny
applied to individuals granted HSPD-12 credentials provides sufficient
confidence that any such person is likely truthful about his or her
authorization to work in the United States that additional
investigation through E-Verify is not necessary.
d. Appropriate Scope of Regulations
Comment: One commenter suggested that the proposed rule's goal was
to ``protect U.S. workers''--one that is beyond the scope of that which
can rightfully be pursued under procurement authorities.
Response: The Councils do not agree with the premise of this
comment. The goal of the proposed rule is not to ``protect U.S.
workers.'' Rather, the goal of the rule is to implement Executive Order
12989, which aims to promote economy and efficiency in the Federal
procurement system by ensuring that the Federal Government does not do
business with contractors that hire or employ unauthorized aliens,
thereby promoting the stability and dependability of contractor
workforces and minimizing the potential for disruption to federal
contracts. The President is well within his authority under FPASA to
require the agencies to promulgate this rule, which has a clear nexus
to promotion of economy and efficiency in Federal contracting, even if
it might also have other impacts. Chao, 325 F.3d at 366 (affirming
authority of the President under FPASA to require federal contractors,
as a condition of contracting, to post notices informing workers of
certain labor law rights.)
Relationship With States
1. States Prohibiting Mandatory Use
Comment: Several commenters requested that the Administration
clarify the effects of the proposed rule on employers conducting
Federal Government contracting business in locations where State and/or
local law prohibits the use of E-Verify. One of these commenters
specifically asked if the requirements of the proposed rule would
function as an affirmative defense in actions brought against employers
which use E-Verify in contravention of State/local law. Two other
commenters suggested that the proposed rule be modified to provide E-
Verify participation waivers to employers located in States prohibiting
E-Verify enrollment, to allow such employers to participate in
Government contracting without violating State law.
Response: The Councils decline to provide an exemption to the E-
Verify term in contracts covered by this rule for employers located in
States that prohibit E-Verify enrollment, because such state and local
laws would be preempted by Executive Order 12989, as amended, and by
these rules implementing the Order. The Councils note that an Illinois
state statute prohibiting use of E-Verify by employers within that
state is currently in litigation, as a result of a lawsuit filed by DHS
arguing that the state statute is preempted by Federal law. The state
has agreed not to enforce its statute pending the final resolution of
the litigation.
2. Other States
Comment: Two commenters noted that they are concerned that the
proposed rule's requirement that certain existing employees undergo E-
Verify
[[Page 67659]]
verification could ``embolden'' States and localities to require the
same type of verification for employees working under State/local
contracts. These commenters fear that such an expansion would
complicate employment verification legal requirements, to the detriment
of both employers and employees.
Response: The commenters concerns are speculative and, in any case,
State and local government action is outside the scope of this case.
E-Verify System
1. E-Verify Procedural Issues
a. Burdensome
Comment: One commenter stated that the E-Verify enrollment process
is cumbersome and difficult and that USCIS support for employers trying
to enroll has been inconsistent and ineffective. Three commenters felt
that tentative nonconfirmations and the subsequent efforts to resolve
them place additional burdens on employers and employees alike. Two
other commenters state that costs associated with E-Verify are
burdensome to employers. One commenter considered that the vast scope
of coverage in the proposed rule is contrary to the ``economy and
efficiency'' argument that justified issuance of the rule, as compared
to other labor requirements attached to procurement.
Response: The Councils have narrowed the coverage to the extent
possible yet still meeting the purpose of the Executive Order. The
Councils are not charged with administration of the E-Verify program
and this process is not within its rulemaking authority or the scope of
this final rule. The Councils have considered the burdens and costs
associated with E-Verify in the RIA and Regulatory Flexibility
Analysis.
The E-Verify registration process is an automated process that uses
a registration wizard to assist employers in determining which access
method will best suit their company needs. Once that is decided, the
individual registering the company is required to enter the company
contact information, including the number of company locations for
which E-Verify will be used and the address of these locations. Within
24 hours, that individual will receive an email from E-Verify that
includes their username and password which they will use to log on to
the system. In mid-FY08, the E-Verify program launched a registration
reengineering effort aimed to streamline the E-Verify registration
process and shift to a profile based registration system. The program
has been working with various stakeholders to determine and address the
biggest concerns with the process, and hopes to conduct focus groups on
ideas for improvement. The program has also undertaken a Plain Language
Initiative, designed to simplify the language associated with the
program and to update the materials associated with the program once
the new verbiage has been finalized. Within this effort, the program
also intends to conduct focus groups to determine the best response to
various word choices.
With regard to the burdens or costs to employers to register and
participate in E-Verify, DHS has informed the Councils of a report
entitled the ``Findings of the Web Basic Pilot Evaluation'' that was
prepared by Westat in September 2007. The report may be found at http:/
/www.uscis.gov/files/article/WebBasicPilotRprtSept2007.pdf. The report
found that 96 percent of long-term users indicated that E-Verify was
not burdensome. The Westat report also stated that approximately 97
percent of long-term users reported that the indirect set-up and system
maintenance costs were either no burden or only a slight burden and
that the majority of employers reported that they spent $100 or less in
initial set-up costs. The Councils recognize that costs to employers
will vary depending on employer characteristics and practices.
b. Data Accuracy
Comment: Numerous commenters focused their concerns primarily on
the reliance of the E-Verify system on DHS and SSA databases that
contain high percentages of errors. Many commenters, in particular,
specifically call out the reported 4.1 percent error rate of the Social
Security Administration's database as a large source of inaccurate
data. Several commenters stated concern that DHS databases are not
updated in real-time.
Many commenters also believe the inaccurate data in the database
leads to the misidentification of workers and to denial of employment
for work-authorized individuals, especially naturalized citizens and
foreign-born authorized workers. Many commenters stated concerns that
naturalized citizens or foreign-born authorized workers are
considerably more likely to receive erroneous tentative
nonconfirmations than native-born U.S. citizens. One commenter
questions the 0.5 percent ``error rate'' claimed by E-Verify when the
system is based on SSA databases with a 4 to 5 percent error rate.
One commenter feels data entry or ``human'' errors on the part of
employers are of concern as well since they cannot be completely
eliminated. Many commenters feel this issue especially affects
employees with nontraditional or complex names.
Response: The improvements made to E-Verify over the last few years
have decreased the incidence of data mismatches, which is referred to
as a ``tentative nonconfirmation'' in the E-Verify program, and often
referred to as the ``error rate'' by the public. DHS and SSA continue
to analyze and implement improvements to reduce data mismatches as part
of ongoing management of the E-Verify program. The majority of
mismatches are with SSA data, since the SSA database is the only source
for citizen data, against which the large majority of E-Verify queries
are run. Instances of data inaccuracies include name changes due to
marriage or divorce not reported to SSA, or, in the case of naturalized
U.S. citizens, unreported changes in citizenship status. Most
citizenship status mismatches that resolve as ``work authorized'' do
involve naturalized citizens who have failed to notify SSA of their
change in citizenship status. To reduce the number of SSA mismatches
due to this situation, USCIS developed an automated check against the
USCIS naturalization database for U.S. citizen new hires and provided
employees who receive an SSA citizenship status mismatch notice the
option of calling DHS directly to resolve it rather than resolving the
mismatch with an in-person visit to an SSA field office. This has
significantly reduced the burden of resolving tentative
nonconfirmations for naturalized citizens. The changes went into effect
in May 2008, and preliminary data show a 30 percent decrease in the
number of SSA tentative nonconfirmation for naturalized citizens.
It is important to clarify that if the E-Verify program issues an
initial mismatch to an employee, the employer cannot fire, prevent from
working, or withhold or delay training or wages for that employee
during the mismatch process. All employees receiving an initial
mismatch are given the opportunity to contest to ensure that every
employee who has a work authorized status is not prevented from
working. All employees must be given the opportunity to contest and
correct their records.
The Government recognizes the concerns over the SSA Office of the
Inspector General Congressional Response Report (2006) estimates that
4.1 percent of their NUMIDENT database may contain discrepancies that
could potentially affect 12.7 million individuals. The E-Verify
program,
[[Page 67660]]
however, provides due process for correcting any errors with SSA, which
will help to reduce the NUMIDENT discrepancies over time and provides
an opportunity for an individual to correct an error they may not have
been aware of otherwise. The E-Verify MOU makes clear that employers
are prohibited from discharging, refusing to hire, or assigning or
refusing to assign to federal contracts employees because they appear
or sound ``foreign'' or have received tentative nonconfirmations. If an
employee elects to challenge a tentative nonconfirmation, the employee
may not be terminated or suffer any adverse employment consequences
based upon the employee's perceived employment eligibility status
(including denying, reducing, or extending work hours, delaying or
preventing training, requiring an employee to work in poorer
conditions, refusing to assign the employee to a Federal contract or
other assignment, or otherwise subjecting an employee to any assumption
that he or she is unauthorized to work) until and unless secondary
verification by SSA or DHS has been completed and a final
nonconfirmation has been issued. Employers are further notified that
any violation of the unfair immigration-related employment practices
provisions in section 274B of the INA could subject the Employer to
civil penalties, back pay awards, and other sanctions, and violations
of Title VII could subject the Employer to back pay awards,
compensatory and punitive damages. Moreover, the MOU states that
violations of either section 274B of the INA or Title VII may also lead
to the termination of its participation in E-Verify. If the Employer
has any questions relating to the anti-discrimination provision, it may
contact the Department of Justice's Office of Special Counsel for
Immigration-Related Unfair Employment Practices (OSC) at 1-800-255-8155
or 1-800-237-2515 (TDD).
The ability to identify and fix any errors will help them maintain
accurate records with SSA, which is beneficial to them in the future,
particularly when applying for SSA benefits. The report also indicates
that the majority of the discrepancies (64 percent) in the Numident are
in the ``Death Indication'' field, which would not affect new hires.
However, the E-Verify program can detect instances in which an
individual is fraudulently using the SSN of a deceased person to gain
unauthorized employment.
In response to data entry error, the independent report by Westat
does state that employee and employer data entry errors cannot be
completely eliminated but the E-Verify program has worked to minimize
and catch those errors before verification query results are returned.
In September 2008 E-Verify instituted a pre-mismatch typographical
error check that asks the employers to double-check the information
they entered into the system with the employee's documents in the case
of a mismatch. Preliminary data show that this enhancement has reduced
SSA mismatches by 30 percent. In response to the issue of employees
with nontraditional or complex names, the system provides guidance to
employers on the system page where the name is entered into the field.
There is a box that appears when an employer scrolls over the name
field and there is also a help button next to the field that opens up a
document that provides detailed guidance on how to enter complex
surnames such as multiple last names or hyphenated names.
c. Technology Issues
Comment: Many commenters stated that the E-Verify system remains a
paper-based system which still requires a contractor to complete the
paper Form I-9 after analyzing up to 25 different documents that an
employee could present and is not an entirely electronic system. One
commenter stated that the system should provide an electronic export or
reporting functionality for Case Verification Numbers. They state that
the transfer of the verification case number to paper or on-line I-9
forms is now a manual, case-by-case ``pen and paper process'' that
would fail under high volume. Another commenter stated concern over the
degree of knowledge the personnel managing the toll free E-Verify phone
number has on the myriad of complex immigration documentation and state
that the USCIS National Customer Service (NCS) lines have been unable
to provide accurate and timely information which can lead to confusion,
multiple calls, and case resolution delay.
Response: Completion of the Form I-9 is required regardless of
whether an employer is a participant in E-Verify. DHS rules permit the
completion and storage of the I-9 electronically rather than on paper.
See e.g., 8 CFR 274a.2(a)(2). E-Verify provides Form I-9 support
materials for employers on the system's website including the Form I-9,
in English and Spanish, and the Handbook for Employers, Instructions
for Completing the Form I-9 (M-274), as well as many immigration-
related materials such as a Guide to Selected Travel Documents. The
Councils and DHS recognize the preference some employers have to
utilize electronic sources for required paperwork, and DHS is
continually working towards more paperless systems, but is still within
that process.
With respect to telephone inquiries, the E-Verify program has a
Tier system when addressing phone calls. While most calls go directly
to the first level, Tier One, for general program information or
employer questions, there is a system in place to escalate calls to
other Tiers depending on the complexity of the case. The program has
subject matter experts on staff to address phone calls that require
further attention. For cases that they are unable to resolve, USCIS has
a Special Case Resolution unit in the Washington, DC Headquarters
office that the cases can be referred to for further review. The
average wait time is less than 20 seconds for a phone call to transfer
from Tier 1 to Tier 2 and calls to the program are currently answered
within 0.2 minutes or 12 seconds on average. The E-Verify program has
substantially increased its customer service and program staff over the
past two years in an effort to work with employers and ensure that
every question or difficulty that arises is addressed.
In any specific case where additional time may be needed to address
an issue or research the case information before a verification query
can be resolved, it is important to note that the employer would
receive a ``case in continuance'' response and cannot take any adverse
action on an employee during this time.
DHS and SSA are constantly exploring ways to make the system more
efficient and effective. However, the suggestion made here, that the
system can be made totally web based so that individuals receiving a
tentative nonconfirmation could prove that some factor generating the
nonconfirmation was in error, is unrealistic. Generally, SSA requires
documented proof of the factors that might be in question, SSN, date of
birth, name, citizenship; and that the documents used be originals. The
documents used to prove these elements (driver's licenses, birth
certificates, etc.) are subject to forgeries, which are much easier to
detect when a human being inspects original documents. Use of
photocopies or fax copies, which would be necessitated by a totally Web
based process, would make the process much more susceptible to fraud.
If an employee believes that s/he has been discriminated against
during the employment eligibility verification process, he or she
should contact OSC at 1-800-255-7688 or 1-800-237-2515 (TDD). Employers
that have questions relating to the anti-discrimination
[[Page 67661]]
provision should contact OSC at 1-800-255-8155 or 1-800-237-2515 (TDD).
d. Photo Identification
Comment: Many commenters stated that there is an estimated 11
percent of the population that does not have a Government-issued photo
identification. Some of those same commenters also stated that studies
have indicated members of minority populations such as African
Americans, Latinos, Women, and Senior Citizens are less likely to have
photo identification as well as many lawfully present immigrants such
as refugees and asylees. These commenters also state that there are
situations where an individual may have the right to work but has not
yet received a physical Employment Authorization Document (EAD) and
that the proposed rule fails to make exceptions for cases where photo
identification has been lost or destroyed due to crime, accidents,
natural disasters, or other causes.
Response: The Councils recognize the concerns of the commenters in
regard to the percentage of the U.S. population that do not have photo
identification, but note that there is no evidence from the extensive
operations of the E-Verify program to date that this has been a
significant problem. There are also cases and studies that find a far
lower percentage of individuals lack a photo identification, at least
in the context of evaluating photo identification requirements for
voting. See Indiana Democratic Party v. Rokita, 458 F.Supp.2d 775, 803
(S.D. Ind. 2007), aff'd sub nom. Crawford v. Marion County Election
Bd., 472 F.3d 949 (7th Cir. 2007), aff'd, 128 S.Ct. 1610, 553 U.S. ---
(2008); see also Voter IDs Are Not the Problem: A Survey of Three
States, American University Center for Democracy and Election
Management, January 9, 2008, found at http://www.american.edu/ia/cdem/
pdfs/VoterIDFinalReport1-9-08.pdf (finding that 1.2% of registered
voters lacked a government issue photo identification). Photographs
serve a unique and essential function and significantly minimize the
opportunities for document fraud, unlike fingerprints, by allowing a
contractor to immediately compare the picture embedded in the document
against the employee. IIRIRA Sec. 403(a)(2)(A)(ii), 8 U.S.C. 1324a
note, thus requires photo identification from employees of employers
participating in the E-Verify program. In order to be consistent with
these standards, the E-Verify MOU requires all employees of Federal
contractors participating in E-Verify to present a photographic
identification document.
Moreover, the documentation requirement is a basic requirement for
the I-9 process that has to be completed regardless whether or not the
employer is in E-Verify. The E-Verify photo identification requirement
does limit the scope of acceptable ``List B'' identification documents
somewhat, but we are not aware of a basis to conclude that the non-
photo identity documentation that is currently permitted for the I-9 is
broadly available to, or used by the referenced populations. In other
words, the effect of limiting the non-photo documents would appear to
be marginal.
USCIS has taken substantial steps to expedite EAD issuance,
especially for refugees and asylees. The non-photo List B documents are
not normally available to aliens who need EADs in any case. Those that
reasonably might be available, especially the driver's license, contain
photographs and thus are acceptable for E-Verify. Thus, this is not
really an E-Verify issue per se; rather, it is a general issue about
the I-9 compliance that employers are responsible for whether or not
they participate in E-Verify.
To address situations of lost or stolen documents, the DHS
regulations permit temporary presentation of a receipt for the
application for a replacement document, and this is permissible for E-
Verify employers as well as those just using the paper I-9.
For the six commenters who assert that employees need to show an
EAD, the Councils note that there is no requirement to states that if
an employee has an EAD card they must provide it for purposes of the
Form I-9. Employees may choose to provide any approved List B document
with a photo for the purpose of verification through E-Verify. It is
true that many aliens who apply for an EAD card would not normally have
List C evidence of work authorization and thus cannot comply with Form
I-9 requirements until they receive the EAD. But this is a concern
generally applicable to Form I-9 compliance and E-Verify participation
would not affect it one way or another.
e. SSN Number
Comment: One commenter noted that the SSN is not required for the
Form I-9.
Response: The Form I-9 (Rev. 06/05/07) states ``[p]roviding the
Social Security number is voluntary, except for employees hired by
employers participating in the USCIS Electronic Employment Eligibility
Verification Program (E-Verify).'' Additionally, providing an SSN to
employers is generally necessary to comply with the IRS statutes and
regulations that already require every employee in the United States to
have an SSN.
f. Privacy
i. System Security
Comment: Several commenters suggested that E-Verify has ongoing
system security problems that jeopardize the privacy and security of
individuals' personal information. These comments focused on (1)
general concerns with DHS, and more generally the U.S. Government, in
the handling of personal information, and (2) general concerns about
the potential for cyber attacks.
Response: The Councils disagree with these comments. Any database
of personal information would be attractive to hackers or cyber
attacks. That is why USCIS has developed a robust security program to
protect the Verification Information System (VIS), the technical system
that supports the E-Verify program, from such attacks. This security
program fully complies with Federal Information Security Management Act
(FISMA) requirements and has been certified and accredited as secure.
The security measures in place include among other things both strong
and limited access controls, transmission encryption, and extensive
audit logging. Accordingly, the Councils have no reason to believe that
these systems are not secure enough to ensure the effectiveness of the
rule.
ii. Privacy Protections
Comment: A number of comments stated that E-Verify does not
adequately protect the privacy of individuals' personal information.
These comments focused on (1) general concerns with E-Verify handling
of personal information, (2) specific concerns about potential for
employer misuse of E-Verify for pre-screening and other misuse, (3)
specific concerns about the potential for misuse of E-Verify by those
falsely claiming to be employers, and (4) specific concerns with E-
Verify relying on external databases.
Response: The Councils disagree in part with these comments.
Several comments addressed non-specific privacy concerns about the
handling of personal information. USCIS fully appreciates the
significant responsibilities of handling this large amount of personal
information. DHS, and specifically the E-Verify program, has developed
a robust privacy program to not only ensure that the privacy of this
information is respected but also to ensure that the public is made
aware of
[[Page 67662]]
how their information is being treated. There is a dedicated staff of
privacy professionals who work at the operational, tactical, and
strategic planning levels and every significant change to E-Verify is
documented in a system of records notice (SORN) or privacy impact
assessment, as appropriate. USCIS continuously seeks to improve
security and privacy protections as the E-Verify program develops.
Several commenters noted that E-Verify could be misused by
employers, either by pre-screening applicants or by treating
differently employees who have received a tentative nonconfirmation.
The Westat report suggests that this indeed does take place.
Unfortunately, some employers do not follow the requirements and
guidelines for participating in E-Verify. Those requirements and
guidelines address these concerns in several ways. First, E-Verify is
educating employees and job applicants about how E-Verify should work
and what their options are to address perceived misuse or abuses of the
program. To this end, the E-Verify MOU requires that E-Verify
informational posters be placed in the work site where employees can
see them. These posters provide employees with a concise statement of
their rights and contact information for submitting complaints
regarding misuse and abuse of the program. In addition, E-Verify
conducts outreach to educate employers and the general public about the
program. Moreover, E-Verify requires user training and testing in
addition to providing users with guidance on the appropriate use of the
E-Verify program. Finally, USCIS has developed a monitoring and
compliance capability to assist in identifying when an employer may be
misusing the E-Verify program.
Several commenters noted that E-Verify does not currently screen
employers who register with E-Verify, therefore it is possible that
some may not be actual employers, but rather groups or individuals
seeking to ``phish'' E-Verify to validate personal information for
identity theft purposes. E-Verify does capture information on employers
and, as part of the program's monitoring and compliance activities,
researches on an ad hoc basis whether E-Verify users are actually
employers. E-Verify has sought authority to verify employer
authenticity directly from other Government sources but has not, as of
yet, received that authority. Last year, in particular, the
Administration sought a statutory change to the current prohibition on
Internal Revenue Service sharing of Employer Identification Number data
with other Government agencies, such as USCIS. In advance of such a
statutory change to that prohibition, USCIS is currently undertaking a
robust reengineering of the employer registration process, including
exploring ways of verifying the authenticity of employers registering
for E-Verify.
Finally, commenters noted that E-Verify relies to a large extent on
databases external to DHS. The commenters questioned the integrity of
the data in these external databases and specifically recommended that
they be made to provide full Privacy Act protections without being
exempt from any of the Privacy Act requirements. The SORN and privacy
impact assessments for VIS, the underlying E-Verify system, can be
found at the DHS Privacy Office Web site http://www.dhs.gov/privacy.
The SORN and privacy impact assessments describe more fully what
information is collected and how it is used, protected, and shared. The
particular Privacy Act exemptions and the extent to which the external
source systems apply the Privacy Act vary based on the type of system
and reason for collection. USCIS has asserted no Privacy Act exemptions
and fully embraces the Privacy Act protections for the E-Verify VIS. E-
Verify fully appreciates that because it is making such significant
decisions based on information over which it does not have direct
authority, it must be very careful to ensure that these decisions are
made as accurately as possible. E-Verify will often check more than one
database for verification of a single data element acknowledging that
data may occasionally be wrong. In any event, individual employees are
not deemed unauthorized to work as long as they are contesting a
tentative nonconfirmation from E-Verify.
iii. Identity Theft
1. Comment: Several commenters addressed E-Verify's current ability
to combat identity theft. One commenter stated that there is no
rational relationship between the E-Verify mandate on Federal
contractors and the aim of having more efficient and dependable
procurement sources because E-Verify does not prevent identity theft.
The same commenter also stated a concern that the use of E-Verify would
encourage identity theft. Another commenter stated that E-Verify could
not prevent the hiring of unscrupulous workers because it does not
check identity. A third commenter stated that E-Verify is inadequate
because it does not prevent identity theft.
Response: The Councils disagree. E-Verify has had remarkable
success preventing those from maintaining employment who are not
authorized to work in the United States. When Congress established E-
Verify, one of its goals was to prevent employment of those who are not
authorized to work by detecting document fraud during the hiring
process. Information matching and the photo identification requirement,
while not airtight, are parts of this process. When an individual has
presented fraudulent documents to an employer, the E-Verify program is
more likely to identify that fact than the paper I-9 process and, is
thus an improved process in relation to document fraud.
Criticism has arisen from E-Verify's limited ability to detect
identity theft, i.e., when legitimate documents are presented but have
been stolen from another individual. A concern also has been stated
that identity theft may increase as more employers use the E-Verify
program. The Councils note that E-Verify was not established to prevent
identity theft, but increasingly has the effect of doing so.
First, while document fraud requires some level of ingenuity,
identity theft requires far more ingenuity. E-Verify continually forces
unauthorized workers to resort to more and more difficult methods to
obtain unauthorized employment. USCIS anticipates that this increased
burden and the increased danger of involvement in identity theft
criminality causes a significant number of unauthorized workers not to
seek employment with employers who use E-Verify.
Second, E-Verify introduced a photo screening capability (``photo
tool'') into the verification process in September 2007. When an
employer is presented with an employment authorization card or
permanent residence card during the Form I-9 documentation process, the
employer can match the photo on the documents to the photo which
appears on the computer screen during the E-Verify process because the
two should be the identical photo. Fifteen million photographs are
contained within the USCIS databases. This has led to instances where
employees who have either used photo substituted documents or have
created entirely counterfeit documents have been identified. USCIS is
currently in discussions with the Department of State to add United
States passport and visa photographs to the E-Verify process as well.
It is USCIS's long-term goal that the E-Verify photo screening process
will be able to verify photos on all identity documents that an
employee may present during the Form I-9
[[Page 67663]]
process. The photo tool has identified numerous cases of document and
identity fraud and prevented unauthorized workers from gaining
employment. Accordingly, the Councils consider the E-Verify process
superior to the current I-9 process for identifying and deterring
document fraud and identity theft.
2. Comment: Many commenters stated a concern that E-Verify's
inability to prevent identity theft leaves employers that use E-Verify
vulnerable to sanctions. Additionally, many commenters stated that the
threat of penalties resulting from the use of E-Verify or pressure to
comply with the system would encourage employers to forego hiring
certain workers.
Response: The Councils disagree with these comments. As explained
above, the E-Verify system makes an employer more, not less, able to
prevent document fraud and identity theft. If a Federal contractor
participating in the program obtains confirmation of identity and
employment eligibility in compliance with the terms and conditions of
the program the contractor will have the benefit of establishing a
rebuttable presumption that the contractor has not violated INA
274A(a)(1)(A) with respect to the hiring. See 8 U.S.C. 1324a, note,
Sec. 402(b). Moreover, no Federal contractor participating in the E-
Verify program can be held civilly or criminally liable under any law
for any action taken in good faith reliance on information provided
through the E-Verify system. Id. at 403(d). USCIS and ICE may also use
law enforcement discretion in relation to specific instances of good
faith operation of the program. Accordingly, the Councils do not view
the stated concern over employer sanctions resulting from identity
theft as an impediment to implementing this final rule.
With respect to the comments regarding selective hiring, an
evaluation of the E-Verify program, publicly available on the Internet
at http://www.dhs.gov/E-Verify under ``Program Highlights''/``Findings
of the Web-Based Basic Pilot [E-Verify] Evaluation--September 2007,''
included an analysis of employer's confidence in hiring certain workers
with information collected directly from E-Verify employers. Most
employers who use E-Verify stated that they are neither more nor less
willing to hire immigrants. When use of the program was reported as
impacting employer hiring practices, employers almost always stated
that the provision of an additional means to determine work
authorization through E-Verify resulted in increased confidence and
security in the employee's work status and therefore, made the employer
more likely to hire immigrants.
3. Comment: One commenter stated that DHS needs to reduce the
number of documents acceptable to prove authorization to work to reduce
identity theft and confusion. The same commenter also stated that E-
Verify does not have the ability to determine if an SSN is being run
through its system multiple times.
Response: The number of documents acceptable for demonstrating
authorization to work is governed by the INA and by the regulations on
the Form I-9. The E-Verify program requires documents with a photograph
when the employee presents a ``List B'' document for Form I-9 purposes.
See 8 U.S.C. 1324a note, Sec. 403(a)(2)(A)(ii). The requested change to
further restrict the documents that may be used for the Form I-9 or for
E-Verify would be better directed to DHS than to the Councils, and is
outside of the scope of this rulemaking.
E-Verify is fully capable of detecting multiple uses of SSNs.
Through the USCIS Monitoring and Compliance unit, steps are taken to
identify those instances where suspected fraud has occurred and
corrective action is taken where appropriate. Additional methods to
combat identity theft, including methods to determine if a single SSN
is being used in different geographic locations, are under
investigation with a focus on suspected or clearly identified
fraudulent use of SSNs, based on the number of times and geographic
areas in which a number has been used. The Councils note that an
employee could have more than one job, in different locations.
g. Communications
Comment: A professional association commented that certain
materials should be made available prior to enrollment (e.g., user
manual) and that E-Verify should create a list of items for employers.
Response: Currently, E-Verify does provide many materials on the
program's Web site at http://www.dhs.gov/E-Verify including the E-
Verify Users Manual, a ``How Do I Use E-Verify'' guide, and a copy of
the E-Verify MOU among other informational materials. E-Verify
continues to engage in employer outreach to further educate employers
regarding their responsibilities under the program.
2. User Liaison Organizations and Other Assistance to Contractors
Comment: One industry association requested establishment of a user
liaison organization to solicit, assess, and prioritize with the user
community implementation of needed system enhancements and corrective
actions.
A university requested establishment of an E-Verify Ombudsman to
assist with the expected higher than average error rates for foreign
nationals on college and university campuses.
Another university commented that DHS should provide Federal
funding assistance to employers for initial setup of record retention
capabilities and staff training and initial and ongoing verification of
expenses.
Response: DHS has informed the Councils that it is continually
looking at ways to improve the E-Verify system, and believes that
support is already provided to employers in a consistent and effective
way. E-Verify provides general assistance through information found on
the Web site and trained staff to address questions before or during
the registration process in addition to continued support after an
employer registers as an E-Verify participant. The MOU provides points
of contact. The program also goes beyond this general support to
provide presentations and system demonstrations to individuals or
groups such as employers, Federal, State and local governments,
community-based organizations, and various industry associations. The
E-Verify program has participated in outreach events designed to
provide information to the public and interested stakeholders regarding
the program. The program conducts demonstrations, participates in
conferences and outreach events, hosts webinars for interested parties,
and created public awareness campaigns nationally and on the web and on
radio, print and billboard in the states of Arizona, Georgia,
Mississippi, and the metro Washington, DC area. The E-Verify Outreach
branch has coordinated closely with the Small Business Association
since April 2008 to conduct outreach events to ensure specific concerns
relating to small businesses are heard and addressed.
With regard to the request for financial assistance, the Westat
evaluation reports that the majority of employers reported that they
spent $100 or less for initial setup costs for E-Verify and a similar
amount annually for operating the system. There is no additional record
retention beyond Form I-9 requirements, with the exception of those
employers who are presented with green cards (I-551s) or EADs (I-767)
and need to retain photocopies of these documents for the photo tool as
long as they are retaining the Form I-9.
[[Page 67664]]
3. Staffing
a. SSA and DHS Staffing for E-Verify
Comment: Many commenters raised various concerns over the
overburdening of both SSA and DHS if E-Verify is expanded. Many
commenters commented that the rule would overwhelm DHS and SSA as
neither organization is adequately staffed to deal with the increased
number of tentative nonconfirmations expected. Some of these commenters
wrote that there is a substantial difference between the current number
of E-Verify employers and the number of E-Verify employers that would
use the system as a result of the rule. Those commenters were concerned
with the scalability of staff to handle the increased number of
employers.
Response: The Councils disagree with these comments. DHS (and its
predecessor agencies) and SSA have worked closely for more than a
decade to improve the E-Verify process. Since SSA does not receive
appropriated funding for E-Verify, it is reimbursed by DHS for labor
costs associated with resolving mismatches with SSA field offices.
These costs include salaries and overhead for SSA field office
employees who resolve mismatches in the field, and salaries and
overhead for SSA employees who staff the SSA 1-800 number to answer
calls from employees and employers. DHS has worked hard to decrease E-
Verify related work undertaken by SSA field offices.
In May 2008, the E-Verify program launched the inclusion of
naturalized citizen data as part of the initial E-Verify check. E-
Verify now automatically performs an initial query to check information
against the USCIS naturalization databases for all U.S. citizen new
hires. In the short time since this new routine was put into place, E-
Verify tentative nonconfirmations for naturalized citizens have
decreased by 30 percent. In the event a naturalized citizen receives a
SSA tentative nonconfirmation due to citizenship status, that
individual now also has the option of calling DHS to reconcile the
citizenship status mismatch rather than physically visiting SSA. DHS's
efforts in this area will further reduce the number of E-Verify
mismatches for naturalized citizens, thus reducing the instances of
``walk-ins'' to SSA offices for naturalized citizens.
Many commenters in addressing this issue did so in terms of a
nationwide mandatory expansion of E-Verify to all employers and cited
statistics that would apply to such an expansion. It is likely that SSA
would need to increase its own workforce to meet the demands of a
nationwide mandatory system that would be used by approximately 7
million employers. However, the SSA reports that the numbers of
employers and the workloads associated with this FAR rule would be far
less than they would be under a nationwide mandatory system. This is
especially true given the recent improvements made to the E-Verify
system and the effect those have had in reducing the numbers of people
contacting SSA.
b. Effect on Other Agency Functions
Comment: Some commenters were specifically concerned with the
effect that the rule would have on SSA's ability to fulfill its primary
mission of administering benefits.
Response: Since E-Verify uses a system separate from other SSA
verification services, increases in E-Verify queries would have no
effect on disability claims. As stated above, SSA and DHS are
sufficiently staffed to handle E-Verify, therefore there should be no
adverse impact on carrying out any of the other core functions of these
agencies.
4. System Technology Issues
Comment: Many commenters suggested that the E-Verify program would
be unable to handle the increased strain on its system, and
specifically on the transactional database. Several of those commenters
stated that the requirement to check all new hires will overwhelm the
current system and lead to an increase in workforce disruption. Several
other commenters argue that E-Verify is ill-equipped to handle a vast
increase in users, queries, transactions, and communications volumes.
Some commenters suggested that the E-Verify program and its system
needs further study of its capabilities and needed functionalities,
that problems with the present technology have not been addressed, that
the requirements of the rule would require major E-Verify system
changes, and that the system is unable at present to handle the
anticipated increases in usage absent the rule. Another commenter was
concerned with the availability of an Internet-based system in the
event of a natural disaster that would inhibit the ability of an
affected company to access a computer and Internet access to use E-
Verify.
Response: The commenters are correct that the FAR rule is expected
to significantly add to the number of queries run through the E-Verify
system. However, many commenters in addressing this issue did so in
terms of a nationwide mandatory expansion of E-Verify to all employers
and cited statistics that would apply to such an expansion. Based upon
their exaggerated projections, the commenters assert that there is a
high probability that disputes will not be resolved in a timely manner.
But the numbers of employers and workloads associated with this FAR
rule would be far less than they would be under a nationwide mandatory
system, and they would not be difficult to absorb. The Councils, in
consultation with DHS and SSA, are confident that the system will be
able to accommodate the required greater volume of enrollments and
queries within the time allotted. The Verification Information System
(VIS), which is the database that supports E-Verify, underwent vigorous
load testing in July 2007 in partnership with the SSA data systems.
Those tests conclusively showed that the existing VIS will scale to
meet even the most demanding current estimate of VIS operation,
considering peak volumes for both queries and registrations. Currently,
VIS is capable of handling 40 million queries annually. The testing
found that the E-Verify system has the capacity to accommodate at least
240 million queries annually, four times the projected 60 million new
hire queries per year that would result from mandatory E-Verify
legislation applicable to all U.S. employers. It is also worth noting
that the employer registration process is automated, and testing
indicates that E-Verify is capable of handling up to 145,500
registrations per day, well over the estimated 4,000 per day that would
occur under a nationwide all U.S. employer use scenario.
As of September 13, 2008, over 85,500 employers representing over
446,000 sites are registered for E-Verify. This calendar year,
approximately 10 percent of all new hires nationwide have been run
through the E-Verify system. In fiscal year 2008 to date, E-Verify has
run over 6.2 million new hires through the program, which is nearly
double the 3.2 million new hires run through the program in all of
fiscal year 2007. Both SSA and DHS agree the current system is more
than adequate to handle the volume increase associated with the FAR
rule.
With respect to comments regarding contingency plans in the event
of a failure of information technology systems in a natural disaster,
the Councils believe that the agencies and the Government generally
have standards and requirements for such circumstances. USCIS and SSA
are required to follow Federal Government policies and procedures
related to
[[Page 67665]]
information technology continuity of operations and emergency planning.
In any event, section 403(a)(3)(B) and the MOU provide for an extension
of the three day period if E-Verify systems are down.
5. Other Impacts on Society
a. Macroeconomic Impact
Comment: Many commenters, notably community organizing groups and
religious societies, an agricultural employer, trade associations, a
human resources society and several individual employers stated that
the rule will have a ``devastating effect'' on the United States
economy, will lead to increased discrimination and an unwillingness to
hire workers who look or sound foreign, and will lead contractors who
need workers to hire them ``off the books.'' One commenter stated that
``the economic impact of this regulation could be devastating to the
point where agriculture in the United States will cease to operate as
it does today.'' In this same vein, several commenters stated that this
is not an appropriate time for this rule, given a recent ``meltdown''
of the American economy, the mortgage crisis, and the resulting
difficulties currently faced by United States employers and employees.
Response: The Councils consider these comments as outside of the
scope of this rulemaking. The Councils are implementing a directive
from Executive Order 12989 that Federal contractors agree to use an
electronic eligibility verification system designated by the Secretary
of Homeland Security to verify the employment eligibility of all
persons hired during a contract term by a contractor to perform
employment duties within the United States and of all persons assigned
by the contractor to perform work within the United States on the
Federal contract. Decisions related to the potential impact of this
directive on the entirety of the United States economy or on individual
sectors within the United States economy are not delegated to or
exercised by the Councils in this rulemaking.
Moreover, these comments obviously assume that the existing Form I-
9 process does not verify employment authorization, and that there will
be a significant change in the number and type of employees found
authorized to work in the United States with the implementation of E-
Verify for Federal contractors. This should not be the case. E-Verify
is merely a better means of verifying the work eligibility of the
Federal contractor workforce. The Councils are not persuaded that
permitting a less effective verification system to continue for the
purpose of maintaining a status quo in which illegal employment is
common is a valid reason not to implement the system as to all Federal
contractors when a more effective system is available that will create
a more stable and dependable cadre of Federal contractors.
As to driving employers to hire more illegal workers ``off the
books,'' the Councils' position is that all Federal contractors are
bound to comply with Federal, State and local laws, and that they
should continue to do so should they wish to continue to contract with
the Federal Government.
b. Religious and Disability Accommodation
Comment: One commenter stated that requirements to access the
Internet violate some religious tenets, making the rule discriminatory.
Other commenters indicated that the requirement that employees present
a photographic identification unduly burdens certain religious beliefs.
Another commenter requested confirmation that the E-Verify system would
accommodate persons with visual disabilities.
Response: While the Councils remain sensitive to the concerns of
different religious groups, they must balance those concerns against
the need to have stable and dependable Government contracting and to
minimize document fraud in the E-Verify program in support of that
goal. In particular, photographs serve a unique and essential function
and significantly minimize the opportunities for document fraud, unlike
fingerprints, by allowing a contractor to immediately compare the
picture embedded in the document against the employee. IIRIRA Section
403(a)(2)(A)(ii), 8 U.S.C. 1324a note, thus requires photo
identification from employees of employers participating in the E-
Verify program. In order to be consistent with these standards, the E-
Verify MOU requires all employees of Federal contractors participating
in E-Verify to present a photographic identification document.
The Councils recognize that there may be occasions where U.S.
citizens assert that religious beliefs preclude their being
photographed and, as a result, they may not be able to present the
required photographic documentation. The E-Verify program complies with
all applicable civil rights laws and will provide accommodations where
appropriate, as required by law, on a case-by-case basis.
DHS is also implementing other processes and procedures to
accommodate religious beliefs and disabilities, as required by law, in
relation to the E-Verify program. These include telephonic means of
verifying employment authorization. These alternative employment
authorization verification methods will permit compliance with E-Verify
while accommodating user religious beliefs and disabilities.
c. Employment Discrimination
1. Comment: One commenter stated that E-Verify creates grave risks
for immigrant women, particularly those who are victims of domestic
violence, human trafficking, sexual assault and other criminal activity
to the extent the program requires employers to enter the name, SSN and
other identifying information of each employee into the E-Verify
database, which is then available to the public. The commenter alleged
that, as such, E-Verify does not adhere to Violence Against Women Act
(VAWA) and Trafficking Victims Protection Act (TVPA) confidentiality
provisions.
Response: The Councils agree that the E-Verify program should be
conducted in compliance with all Federal laws, rules and regulations
related to privacy and confidentiality of personally identifiable
information. USCIS and the SSA do comply with all of those requirements
in the administration of E-Verify program. Contractors are required by
MOU to safeguard confidential information, and means of access to it
(such as PINS and passwords) to ensure that it is not used for any
other purpose and as necessary to protect its confidentiality,
including ensuring that it is not disseminated to any person other than
employees of the employer who are authorized to perform the employer's
responsibilities under the E-Verify MOU. The Councils direct the
commenter to the E-Verify program systems of records notice published
by USCIS in accordance with the Privacy Act for more information
regarding the program's collection and use of personally identifiable
information. 73 FR 10793, Feb. 28, 2008.
2. Comment: A Federal Government agency requested that the Councils
supplement the proposed rule and that USCIS supplement the proposed MOU
to add a specific reference to Title VII of the Civil Rights Act of
1964 (Title VII), 42 U.S.C. Section 2000e (1964), as amended, when
discussing relevant prohibitions against illegal discrimination.
Response: USCIS has supplemented the MOU to add specific reference
to Title VII. The Councils supplement the statements in the preamble to
the NPRM to clarify that Title VII, as well as INA
[[Page 67666]]
Section 274B, 8 U.S.C. 1324b, prohibits unlawful discrimination against
any individual in hiring, firing, or recruitment or referral practices
because of his or her national origin. Such illegal practices can
include selective verification or use of E-Verify in a manner not
provided for in paragraph 16 of the MOU; discharging, refusing to hire,
or assigning or refusing to assign to Federal contracts qualified
employment eligible employees because they appear or sound ``foreign'';
and premature termination of employees based on tentative
nonconfirmations. As such, Title VII applies to all employment actions
not otherwise protected by IIRIRA Section 403(d), 8 U.S.C. 1324a note,
or precluded by other law.
3. Comment: Several commenters expressed concern that the photo
identification requirements in the proposed rule will result in
lawfully present immigrants and U.S. citizens being terminated from or
denied employment because they cannot present photo identification.
Response: The Councils disagree with the premise of this comment.
There is no requirement that an employer terminate an employee who
cannot present photo identification. The MOU will be amended to
instruct contractors to contact USCIS regarding possible accommodation.
The contractor is prohibited from taking adverse employment action
against the employee until the contractor receives a final
nonconfirmation.
4. Comment: Many commenters, and in particular immigrants rights
advocates, religious associations, employers, unions, chambers of
commerce, and employer groups commented that verification through the
use of E-Verify will result in increased disparate treatment employment
discrimination. Some of these commenters speculate that contractors
will give preference in hiring and assignment of work to applicants
they believe ``look like'' U.S. citizens and discriminate against
applicants who sound or dress ``foreign'' or have ``foreign sounding''
names.
Several commenters stated that use of E-Verify will lead to
disparate impact discrimination claims because approximately 10 percent
of foreign-born U.S. citizens receive tentative nonconfirmations for
work eligibility versus 0.1 percent for native-born U.S. citizens.
Response: The Councils oppose unlawful discrimination in any form
and, in particular, unlawful discrimination that undermines the intent
and purpose of this E-Verify final rule. As was stated above,
contractors who use the E-Verify system to unlawfully discriminate
against individuals in hiring or employment violate Title VII, as well
as INA Section 274B, and are subject to civil penalties and termination
of participation in the E-Verify program after suspension and debarment
procedures. Such illegal practices can include selective verification;
discharging, refusing to hire, or assigning or refusing to assign to
Federal contracts to qualified employment eligible employees because
they appear or sound ``foreign''; and premature termination of
employees based on tentative nonconfirmations. Contractors are
protected from civil or criminal liability under IIRIRA Section 403(d),
8 U.S.C. 1324a note, when taking actions in good faith reliance on
information provided through the E-Verify confirmation system. This,
however, does not permit contractors to unlawfully discriminate against
applicants or employees in other aspects of the employment
relationship.
The Councils are not aware of any opportunity to discriminate in
use of the E-Verify system that is any greater than the potential for
discriminating against employees in application of the Form I-9
process. Contractors may also unlawfully select out candidates for
employment because of foreign sounding names or other ``foreign''
characteristics because they do not believe those employees will be
able to complete the I-9 process. There is thus no reason to believe
that the E-Verify program will spur any greater disparate treatment
discrimination than the current Form I-9 process. See Chicanos Por La
Causa, Inc. et al. v. Napolitano et al., Civil No. 07-17272, 2008 WL
4225536 at *8 (9th Cir. 2008) (``Congress requires employers to use
either E-Verify or I-9, and appellants have not shown that E-Verify
results in any greater discrimination than I-9.'').
With respect to comments related to disparate impact claims
potentially arising from differing tentative nonconfirmation issuance
rates for foreign-born U.S. citizens and U.S.-born citizens, the
Councils agree that DHS and SSA should improve their database
administration to help alleviate all instances of tentative
nonconfirmations. As one commenter observes, ``myriad reasons'' account
for errors in the SSA database, including clerical errors made by
agency employees and an employer's or a worker's own errors when
completing Government forms. Moreover, an error may stem from a name
change due to marriage, divorce, or naturalization. An error may also
come from the misuse of an SSN by an unauthorized worker. There are
thus many legitimate nondiscriminatory reasons why these databases
might produce a greater percentage of tentative nonconfirmations for
one group of persons than another. However, these tentative
nonconfirmations can be contested and resolved prior to final
confirmation or nonconfirmation of employment eligibility. Contractors
must agree not to take an adverse action against an employee based upon
the employee's perceived employment eligibility status while SSA or DHS
is processing a verification request unless the contractor obtains
knowledge (as defined in 8 CFR 274a.1(l)) that the employee is not work
authorized. A tentative nonconfirmation, or the finding of a photo non-
match, does not establish and cannot be interpreted by the contractor
as evidence that the employee is not work authorized. Accordingly, the
tentative nonconfirmation provided by the DHS and SSA databases does
not necessarily lead to an employee's termination from employment or
any other adverse action. In fact, the employee is protected from such
actions during the process. The Councils therefore do not view the
possibility of disparate impact claims as an impediment to issuing this
final rule.
The MOU
1. Need for the MOU
Comment: One commenter urged that the proposed rule be modified to
make explicit its linkages to the required MOU. Another commenter
suggested that the proposed rule, and all prime- and sub-contracts
issued under the proposed rule, should set forth with specificity the
sanctions and enforcement protocols provided for by the MOU. One
commenter suggested that MOU use is not necessary, and that the new
contract clause created by this rulemaking should be sufficient to
detail E-Verify's compliance requirements.
Response: The Councils do not agree. As noted above, the purpose of
the FAR clause is solely to require contractors to agree to use E-
Verify and to specify when the program will be used. The clause is not
intended to duplicate the E-Verify program's internal terms of use.
Those program use requirements are appropriately addressed under the
MOU. DHS has statutory responsibilities and law enforcement authorities
that are addressed under the MOU and those responsibilities and
authorities are inappropriate to address either in the FAR or in a
contract clause. For the same reasons that industry and Federal
standards are not required to be incorporated in full into each
contract
[[Page 67667]]
that requires adherence to them, it is not necessary to incorporate the
E-Verify MOU requirements in each covered contract. Incorporating by
reference laws, regulations, industry standards, and other FAR clauses
is normal practice in Federal contracting.
2. Public Comments on the MOU
Comment: One commenter asserted that the public should be afforded
an opportunity to comment on the provisions in the E-Verify MOU.
Response: The Councils placed the proposed MOU reflecting the
program participation requirements for Federal contractors into the
public docket, and discussed the requirements under that document in
the preamble of the proposed rule. See 73 FR 33376-77. In response, the
Councils received many comments related to the MOU in general and as to
specific provisions within the MOU, which are addressed in greater
detail later in this section. Accordingly, commenters were afforded an
opportunity to comment on the provisions of the MOU and, in fact, did
provide such comments to the Councils. A final version of the MOU will
be available on the E-Verify Web site http://www.dhs.gov/E-Verify.
3. Specific MOU Provisions
1. Comment: Three commenters expressed concern with provisions of
the draft MOU regarding those employers who may one day wish to become
Federal contractors. One commenter commented that employers will be
terminated from E-Verify for technical violations of the (MOU) thereby
becoming an obstacle to an employer's later participation in Federal
contracts. Another comment stated that those employers who are not
currently Federal contractors will not be permitted to query existing
workers thereby harming the interests of those employers who may be
preparing to enter the Federal marketplace. A comment observed that
greater clarity is needed with respect to when termination or
suspension can be invoked. One commenter commented that the FAR rule
materially changes the MOU between USCIS, SSA and companies
participating in E-Verify. A university suggested that the employer
have the ability to resolve DHS tentative nonconfirmations on behalf of
their employees.
Response: The Councils agree that employers who seek to obtain
their first Federal contract may be at some disadvantage in relation to
employers who already hold Federal contracts covered by this rule,
since the new entrant would face the start-up costs associated with
running E-Verify queries of its existing workforce that the already-
established contractor has previously incurred. The Councils note,
however, that this small ``barrier to entry'' is no different from the
myriad other such ``barriers'' that new contractors must face to come
into compliance with the unique requirements for Federal contracting
that are codified in the FAR.
USCIS retains its authority to investigate violations of the E-
Verify program. DHS and SSA may terminate a contractor's MOU and deny
access to the E-Verify system in accordance with the terms of the MOU.
If DHS or SSA terminates a contractor's MOU, the terminating agency
will refer the contractor to a suspension or debarment official for
possible suspension or debarment action. During the period between
termination of the MOU and a decision by the suspension or debarment
official whether to suspend or debar, the contractor is excused from
its obligations under paragraph (b) of the clause at 52.222-54. If the
contractor is suspended or debarred as a result of the MOU termination,
the contractor will not be eligible to participate in E-Verify during
the period of its suspension or debarment. If the suspension or
debarment official determines not to suspend or debar the contractor,
then the contractor must reenroll in E-Verify.
The Councils appreciate the recommendations of the commenter with
respect to the ability of employers to resolve a tentative
nonconfirmation on behalf of those employees whose work authorization
stems from J-1, H-1B or O-1. The system is designed to give the
employee the responsibility to handle their own case to reduce employer
burden, allow the employee to maintain their own documents regarding
their status and protect employee privacy. Additionally, it is
important to note that the responsibility of providing documents for
employment eligibility purposes is on the employee. The instructions
accompanying Form I-9 currently require employees to present original
documents. Placing the burden on the employee to resolve tentative
nonconfirmations is consistent with the requirement that the employee
provide documents establishing his or her employment eligibility.
Privacy concerns, including confidentiality related to certain visa
status, preclude employers from resolving tentative nonconfirmations on
behalf of employees. Nothing prohibits an employer from assisting an
employee with this process at the request of the employee.
2. Comment: One commenter stated that the language referencing the
``rebuttable presumption'' that an Employer has not violated Section
274 (a)(1)(A) of the Immigration and Nationality Act exists only in the
draft MOU and not in the FAR rule and that the MOU must be altered to
include additional time for cases involving an SSA no match.
Response: The commenter is correct that certain provisions
mentioned by the commenter do not exist in the current clause contained
in the rule. This is not required by the FAR. With respect to the
recommendation that the MOU be changed to allow additional time for
addressing SSA ``no-match'' cases, the comment appears to confuse the
time allotted under the MOU to contact SSA (or DHS) to start resolving
a mis-match with the time allotted under DHS's no-match rule for an
employee to complete the process of resolving a mis-match.
3. Comment: A building trade's association commented that several
provisions of the draft FAR MOU is using the same disclaimer language
as previous versions of the MOU and that that language has not been
subjected to judicial review.
Response: The commenter is correct that the provisions of the draft
MOU have not been subjected to judicial review. However, the provisions
contained in that draft MOU closely follow language in MOUs currently
in use by over 80,000 employers, which have gone unchallenged over the
life of the program, and which have been drafted consistent with the
controlling law related to the E-Verify program.
4. Comment: A chamber of commerce commented that current employees
of Federal contractors should be allowed to opt out of work prior to
being verified in E-Verify.
Response: The rule does not seek to tell employers which current
employees they should assign to Federal contract work, or what
privileges or rights employees may have relating to which tasks they
are assigned in their workplace. Unless there is something in the
specific contract relating to that, that is an internal business and
labor management decision for the contractor to make subject to its
normal processes and requirements. Therefore, it would be inappropriate
to include provisions relating to employees ``opting out'' of work on
Federal contracts.
a. Reporting Change in Status
Comment: There is no comment listed for this topic but the Councils
nonetheless address this issue in the response below.
[[Page 67668]]
USCIS does not require that employees report a change in status to
E-Verify. E-Verify is able to determine whether an employee is work
authorized using numerous databases without receiving information
directly from an employee. Once an employee has been verified through
E-Verify, he or she does not need to be re-verified in E-Verify until
employed by a new employer.
A related matter is the Form I-9. If the document presented by an
employee (who indicated that he or she is an alien authorized to work)
when completing the Form I-9 has expired, the employer is required to
update the Form with the new document establishing that employee's work
authorization. The new document should be listed under Section 3
(``Updating and re-verification'') of the Form I-9. The Employer may
opt instead to complete a new Form I-9 with the new document.
b. Resolution of Tentative Nonconfirmations
Comment: Five commenters indicated that they were concerned that a
tentative nonconfirmation might not be resolved within the time
allotted by E-Verify. Of those, four commenters commented that
employees had insufficient time to resolve a tentative nonconfirmation
particularly if the employees are in remote areas that lack access to
transportation and to a nearby SSA office. The other commenter also
expressed concern that an SSA tentative nonconfirmation could not be
resolved in 90 days.
Response: Under the program rules for E-Verify, after a tentative
nonconfirmation has been generated, the employer must provide that
notice to the employee. Once the employee actually receives the
tentative nonconfirmation and decides to contest it, the employer
initiates a referral through the E-Verify system. Once a case is
referred, then the employee has eight Federal Government work days to
contact the appropriate agency. He or she can do so by simply
contacting SSA or DHS. Once the employee has initiated the process of
contesting the tentative nonconfirmation, the employee may continue
working until the case has been resolved.
The Councils believe that providing the employee with eight days is
a sufficient amount of time for the employee to contact SSA or DHS to
begin working out any discrepancy, even taking into account remote
locations. It is important to note that the eight-day timeframe in the
E-Verify program rules is the time allotted for the employee to
initiate the process of resolving his or her tentative
nonconfirmation--not the time allotted for a tentative nonconfirmation
to be finally resolved. Most SSA tentative nonconfirmations are
resolvable within two days, and DHS statistics show that SSA resolves
96.6 percent of cases within 7 days of the date the individual first
contacts SSA. In a few cases, the SSA has extended the time period in
order to allow for the employee sufficient time to obtain a required
document.
With respect to employees who reside in remote locations, it is
important to note that employees who receive a tentative
nonconfirmation from DHS are not required to visit a USCIS office.
Moreover, in most cases, a DHS tentative nonconfirmation can be
resolved over the phone using a toll-free number. In an effort to make
the process simpler for many employees living in remote areas, DHS has
made system enhancements to E-Verify. As a result, in most instances,
naturalized U.S. citizens who receive a tentative nonconfirmation from
the SSA are no longer required to personally visit a SSA office.
Naturalized citizens are now able to contact DHS directly (over the
phone). USCIS believes that this process will greatly limit the number
of employees who must make personal visits to a SSA office thereby
easing the burden on those who are in remote locations.
The Councils also note that these comments relate to a previous E-
Verify process that has since been replaced by a more efficient one. It
is true that at one time, the way an employer verified that a tentative
nonconfirmation was successfully resolved was to re-query the system.
However, beginning in October 2007, SSA and DHS began using a new
automated system known as EV-STAR to provide automated feedback to
employers concerning the status and resolution of any tentative
nonconfirmations received by employees. Since that time, there has been
no need for employers to re-query the system.
c. Due Process
Comment: An immigrant rights advocacy group and a union commented
that workers have insufficient due process procedures in place to allow
them redress. One commented that there are insufficient judicial
remedies in place to provide relief to an aggrieved employee.
Response: The Councils recognize the due process concerns raised by
the commenters, but believe that the processes in place with the E-
Verify system provide adequate opportunity for employees to contest and
resolve any issues that arise. E-Verify, through the MOU and its
internal practices and procedures, which are published on the E-Verify
program Web site, has provided a system that protects the rights of
employees while providing the means to verify the work authorization
status of those persons. The MOU prohibits the Employer from
discharging, refusing to hire, or assigning or refusing to assign to
federal contracts employees because they appear or sound ``foreign'' or
have received tentative nonconfirmations. The Employer is further
warned in the MOU that any violation of the unfair immigration-related
employment practices provisions in section 274B of the INA could
subject the Employer to civil penalties, back pay awards, and other
sanctions, and violations of Title VII could subject the Employer to
back pay awards, compensatory and punitive damages. The MOU agreed to
by the Employer also states that violations of either section 274B of
the INA or Title VII may also lead to the termination of its
participation in E-Verify. If the employee believes that s/he has been
discriminated against, he or she should contact OSC at 1-800-255-7688
or 1-800-237-2515 (TDD). Employers that have questions relating to the
anti-discrimination provision should contact OSC at 1-800-255-8155 or
1-800-237-2515 (TDD). Concerns regarding the judicial remedies are
better framed to other offices within the Executive and legislative
branches of Government.
The E-Verify program offers employees who receive a tentative
nonconfirmation the opportunity to contest the finding and clarify
their records with either SSA or DHS. This is a form of due process
protection. If an employee does contest the tentative nonconfirmation
and is not able to clarify his or her record with additional
documentation, he/she will be issued a final nonconfirmation. Employers
or employees may contact the E-Verify program if additional time is
needed to provide such documentation or if they believe a final
nonconfirmation was received in error. The E-Verify program may delay a
final nonconfirmation finding on a case by case basis in those cases
where employees have experienced delays in receiving needed
documentation that will help prove their employment eligibility, and
the program will work with the employer and/or employee to research the
case and identify the reason for the final nonconfirmation.
The E-Verify program is committed to protecting the rights of
employees who feel that they have been discriminated against or who
believe they have
[[Page 67669]]
erroneously received a tentative nonconfirmation. On the E-Verify Web
site, on all tentative nonconfirmation letters that employees receive,
and in the MOU that E-Verify users sign when joining the program, E-
Verify provides the contact information to OSC. In addition, E-Verify
registered employers are also required to display two posters which
apprise the employees of their rights and how to contact the OSC in the
event of perceived discrimination: (1) The ``You Should Know Your
Rights and Responsibilities under E-Verify'' poster produced by USCIS
and (2) the ``Employee Rights Poster'' produced by the OSC. Once a
complaint has been made, the Office of Special Counsel is able to
investigate any case brought to its attention. The Councils believe
that these due process protections are sufficient to ensure that the E-
Verify system promotes economical and efficient Federal Government
contracting.
Content of FAR Rule
1. Definitions (22.1801 and 52.222-54(a))
a. ``Assigned to the Contract'' and ``Directly Performing the Work''
Comment: Several commenters commented that there is no guidance as
to how to identify an employee who is ``directly performing'' work
under a contract and expressed concerns that this could result in
inconsistent application of the rule and disagreements over which
existing employees must be run through the E-Verify system.
One employer suggested that ``directly performing work under a
contract'' be clarified to mean a person customarily performing more
than 50 percent of his/her time in direct support of the covered
contract or multiple covered contracts.
A university commented that the proposed rule is too unclear as to
how to treat overhead employees who perform some work that benefits a
contract and requests that the Councils clarify this situation.
Many other commenters expressed concern over whether the E-Verify
requirement applies to employees who are only tangentially involved
with covered contracts. Specifically, they inquired whether agreements
to provide service, support, or maintenance on an ``as needed'' basis
would be covered even if employees would spend only a small portion of
their time on these contracts. Commenters also asked whether employees
working to prepare a bid or proposal be covered.
One commenter requested clarification as to whether the requirement
to verify current employees on covered projects extends beyond those
working exclusively at project sites, or whether it extends to others
working off-site but dedicated exclusively to the covered project. The
commenter suggested that the regulations must provide a high degree of
specificity on this issue, as the costs and employment administration
ramifications are significant.
Response: The Councils have removed the definition of ``assigned
employee'' and provided instead a definition of ``employee assigned to
the contract'' because that is the term used in the final rule. The
revised definition makes it clear that an employee is not considered to
be directly performing work under the contract if the employee normally
performs support work, such as indirect or overhead functions, and does
not perform any substantial duties under the contract. The Councils do
not believe it is appropriate to try to establish a mathematical
definition of an assigned employee. Contractors will instead have to
interpret the definition stated in the final rule as it applies to
various individual situations.
The Councils note that it is immaterial whether services are
provided intermittently or for only a small portion of an individual
employee's time as long as the work is done in the United States in
direct support of a contract. However, tangential involvement, if it is
in terms of indirect involvement instead of directly working on a
contract, does not necessarily trigger the E-Verify requirement. For
example, a mailroom clerk who delivers mail to a program office
supporting a contract as well as to all other offices served by the
mailroom, would not be required to go through the E-Verify process.
Other non-FAR requirements, however, would necessitate that the
employer vet the mailroom clerk at hiring through the I-9 process.
The Councils also note that working on a proposal, as opposed to
working on an awarded contract, does not constitute work under the
contract in question and would not trigger E-Verify requirements.
There is nothing in the definition of ``employee assigned to the
contract'' that would imply that it makes a difference where that
employee is working, as long as it is in the United States.
b. ``Commercially Available Off-the-Shelf (COTS) Item''
Comment: Various commenters advised that the definition of COTS
items was not sufficiently clear with respect to ``bulk cargo.''
Several commenters sought clarification that the rule would not be
applicable to their products because they believed their products
qualify under the definition of COTS. These commenters recommended that
the Councils make clear that the rule would not apply to the items they
believed to be COTS. Specifically, the commenters asked that the final
rule clarify the definition of COTS so that packaged agricultural
products are clearly excluded from the definition of bulk cargo so as
to avoid deliveries of fruit and other food stuffs from being
considered ``bulk cargo'' and therefore outside of the definition of
COTS items.
Response: The Councils concur and have amended the final rule in
response to these comments to clarify the definition of COTS to explain
that a cargo subject to ``mark or count'' is not bulk cargo. Nearly all
food and agricultural products should fall within the definition of
COTS. The only likely exceptions would be bulk shipments of grains in
ship holds. The final rule has added an exception for bulk cargo as
well as COTS items.
c. ``Contract'' and ``Contractor''
1. Comment: Commenters requested that the Councils define
``contract'' to exclude agreements that are not governed by the FAR,
such as grants and cooperative agreements.
Response: The Councils do not concur with this request. The FAR
already defines the term ``contract'' and the term does not include
grants or cooperative agreements. A grant or cooperative agreement that
is not governed by the FAR is not required to include the clause in
this rule.
2. Comment: Several commenters suggested that the Councils more
clearly define the term ``contractor'' to exclude subsidiaries of a
parent where the parent holds the contract but the subsidiaries do not.
Response: Whoever signs a contract is the contractor. Only the
legal entity that signs the contract and is bound by the performance
obligations of the contract is covered by this E-Verify term. If
ambiguity remains, this issue will have to be handled on a case-by-case
basis consistent with traditional FAR principles.
3. Comment: One commenter was concerned about the effect of mergers
upon implementation of the E-Verify program.
Response: If a novation agreement takes place, then the merged
entity becomes the contractor. Otherwise, there is no impact.
[[Page 67670]]
d. ``Subcontract'' and ``Subcontractor''
Comment: A number of commenters, in addressing the proposed rule's
subcontractor flowdown requirement, expressed concern as to the
definition of ``subcontract'' and ``subcontractor'' and the extent to
which the rule might apply to their activities. This was a concern
common to agricultural and dairy interests. Two agricultural
associations noted that there are numerous sales and supply
arrangements that may or may not fall within the rule's coverage. There
are direct sales by a producer of an agricultural commodity; direct
sales by a packing operation that obtains fruits or vegetables or other
commodities from other producers and then sells the product directly to
the Government; sales by a broker or handler of agricultural products
who purchases the products from a producer or producers but who
directly contracts with the Government; and processors of agricultural
products that purchase them from producers and sell them to the
Government after processing them. One commenter requested clarification
that farmers providing food for canning are not ``subcontractors'' and
that truckers hauling processed food are not subcontractors for
purposes of application of this clause.
In addition, it was noted that the proposed rule does not
adequately address the distinct marketing characteristics of
agricultural cooperatives. Several commenters pointed to the
distinction between farmer cooperatives and their farmer members and
referred to court decisions highlighting this distinction.
Another commenter stated that many employers hold contracts with
delivery companies, suppliers, maintenance companies, and others who
may perform work in support of the Federal contract, and noted that it
was unclear from the proposed rule whether these subcontractors would
also be required to enroll in E-Verify.
Response: With respect to agricultural and dairy products, the
referenced items appear to fall within the definition of COTS or bulk
cargo. COTS suppliers would not be subject to the E-Verify requirements
because they are supplies, which are not covered at the subcontract
level. With respect to the comment regarding potential coverage of
delivery companies, suppliers, maintenance companies, and others who
may perform work in support of the contract, it was determined that the
existing FAR definitions of subcontractor when read in conjunction with
previous applicability discussions would address the concerns noted
above. The Councils have amended the rule at 22.1801 and the clause at
52.222-54 to include the definitions ``subcontract'' and
``subcontractor,'' found at FAR 44.101.
e. ``Period of Performance'' vs. ``Life of Contract''
Comment: One commenter requested that the ``Period of Performance''
should be defined as ending on the date that delivery is complete.
Another commenter questioned the use of the term ``life of the
contract'' in the preamble to the proposed rule.
Response: The Councils do not agree. The term ``period of
performance'' is used throughout the FAR and various contracts further
refine the definition of that period individually for that contract. In
general, the period of performance would start at the award date of the
contract and extend through the date delivery is complete, unless
otherwise specified in the contract. The period of performance does not
extend to the date of contract closeout. The Councils concur that for
the sake of consistent terminology, the term ``period of performance''
is the correct term to express the required period of required
compliance with E-Verify, not ``life of the contract.''
f. Distinction Between Products and Services
Comment: One commenter stated that the rule should make a clearer
distinction between products and services.
Response: The Councils do not concur with this comment. Contracts
for services are clearly defined in Part 37 of the FAR.
2. Mandatory Enrollment (22.1802 and 52.222-54(b)(1)(i))
a. Noncompliant Employers Only
Comment: Several commenters stated that the rule should be
restricted in its applicability only to contractors who have engaged in
the knowing employment of unauthorized foreign nationals or who have
shown that they routinely shirk their obligations under I-9 procedures,
such as those who receive multiple ``no-match'' letters demonstrating
that their concern for the work eligibility of their workforce may be
lacking. Alternatively, the commenters recommended application of E-
Verify only to verify employees whose work eligibility may be in
question due to receipt of a ``no-match'' letter.
Response: The Executive Order 12989, as amended, does not authorize
such a limited approach. In any event, restricting the applicability of
the rule to employers who routinely shirk their obligations would not
foster the stability and dependability across the entire Federal
contractor community in the manner envisioned by Executive Order 12989.
Using E-Verify at the beginning of the contract should reduce the
number of ``no match'' letters received by the employer later in the
process.
b. Non-Citizens
Comment: Another commenter suggested that contractors should only
verify non-citizen employees using E-Verify to reduce employer burden.
Response: Executive Order 12989, as amended, directs the Councils
to implement the President's procurement policy through a FAR rule that
requires federal contractors to agree, as part of their contract
performance, to verify all new hires without differentiating between
citizens and non-citizens. Modifying the rule to require verification
only of non-citizens would not satisfy the requirements of this
presidential directive. Moreover, the Councils believe that verifying
only those who do not claim to be U.S. citizens would be discriminatory
and would not meet the ultimate goal of fostering a more stable and
dependable Federal contractor workforce.
Verifying only those employees who attest to work-authorized alien
status would defeat the basic purpose of E-Verify and this rule. E-
Verify is designed to guard against identity and immigration fraud in
the paper-based I-9 process, which may take the form of false claims of
U.S. citizenship backed up with either false or fraudulently obtained
driver's licenses, birth certificates, social security cards and/or
other Form I-9 documentation other than DHS immigration status
documents. An alien-only verification system would not only fail to
deter this kind of fraud, but it would encourage it.
Using E-Verify only for non-citizens would likely violate the anti-
discrimination provisions of the Immigration and Nationality Act (INA),
8 U.S.C. 1324b, which prohibits discrimination with respect to hiring,
firing, or recruitment or referral for a fee, on the basis of national
origin or, for certain classes of protected individuals, on the basis
of citizenship status. Employers may not treat individuals differently
on the basis of national origin, and U.S. citizens, recent permanent
residents, temporary residents, asylees and refugees are protected from
citizenship status discrimination. This anti-discrimination provision
is enforced by OSC. If an employee believes that he or she has been
discriminated against during the employment eligibility verification
[[Page 67671]]
process, he or she should contact OSC at 1-800-255-7688 or 1-800-237-
2515 (TDD). Employers that have questions relating to the anti-
discrimination provision should contact OSC at 1-800-255-8155 or 1-800-
237-2515 (TDD).
c. Increase in Program Abuse
Comment: Several commenters were concerned that mandatory use will
increase abuse of the program. One commenter stated that preliminary
reports from Arizona's mandatory use of E-Verify suggest that some
employers are violating the terms of the MOU and engaging in illegal
employment practices such as verifying existing employees, rather than
verifying only new hires and that they are doing so in a discriminatory
way. The commenters believed that implementation of the proposed rule
will exacerbate the situation regarding discriminatory use of the
program. Also, some commenters claimed that employers do not understand
the ways in which E-Verify is to be implemented in the workplace, and
that as a result they take mistaken actions, such as firing workers
when they are not required to do so (or are prohibited from doing so).
Response: The rule is clear in its requirements to verify existing
employees. All who are assigned to a contract must be verified. This
provides no latitude for discrimination. Also, the E-Verify program MOU
will actually serve to reduce confusion over employer responsibilities
when workers are in the process of clearing up questions as to their
authorization to work in the United States. The MOU gives clear
descriptions that prohibit employers from firing workers during that
period or from taking other adverse actions.
To address employer abuse and/or fraud, the E-Verify program has
created a Monitoring and Compliance unit that can detect, deter, and
remedy improper use of the system. The Monitoring and Compliance unit
also works to safeguard personal privacy information; prevent the
fraudulent use of counterfeit documents; and refer instances of fraud,
discrimination, and illegal or unauthorized use of the system to
enforcement authorities. Once fully staffed, the E-Verify's Monitoring
and Compliance unit will carry out its mission by educating employers
on compliance procedures and guidelines and providing assistance
through compliance assistance calls. The unit will also conduct follow-
up with desk audits and/or site visits to unresponsive employers if
necessary, and refer cases of fraud, discrimination, and illegal use to
the OSC or ICE, as appropriate. The Monitoring and Compliance unit will
also monitor system usage to identify when registered employers have
not used the system within an appropriate time period given the size of
the organization.
3. Application to Employees (22.1802(b)(2) and (c), and 52.222-54(b))
a. All New Hires During Period of Performance of the Contract
Comment: Several commenters suggested that it is inappropriate to
require an entire company to be subject to E-Verify for all new hires
when the company has only a small number of Federal contracts that
comprise a small proportion of its business. They argued that the
proposed rule is an overbroad use of the procurement authority to cover
new hires that are not associated with performance of a contract and
stated that the rule should apply only to new hires at a work site that
is performing a contract.
Response: Applying the duty to verify all new hires of the entire
organization of the contractor is a requirement of Executive Order
12989, as amended. If the requirement were limited only to new hires at
locations doing Government work, the rule would be impractical and too
easy to undermine by transferring employees from non-contracting work
sites to contracting work sites. Not all hires of a contractor are
hired through the location where they work. It is very common for a
contractor to hire through a central site that has no connection to
various work sites. In addition, there are few Federal contractors who
have segregated their workforces in the manner suggested in the
comments. Modern technology, most notably email, has broadened and
facilitated doing work in multiple dispersed locations through a
national and even international network of collaborators. Thus,
defining the work site would be too unwieldy for an effective rule,
making enforcement of this aspect of the rule too difficult and too
easy to misinterpret or undermine.
With respect to providers with few Government contracts, the rule
does include an exception for COTS to recognize that COTS providers
will generally be predominantly commercial, with only a small
proportion of business with the Government, as well as exceptions for
institutions of higher education; State and local governments and
governments of Federally recognized Indian tribes; and for sureties
performing under a takeover agreement.
b. Existing Employees Assigned to the Contract
i. No Verification
Comment: Many commenters requested that the rule eliminate the
requirement for verification of employment of existing employees
assigned to the contract. One commenter states that there is no policy
reason why Federal contractors should be so radically different from
all other employers who participate in the program. More detailed
reasons for opposition to verification of existing employees are also
separately addressed in the following paragraphs.
Response: The Councils do not agree with this approach. The final
rule reflects the requirements stated in Executive Order 12989, as
amended, that the FAR incorporate a rule that will require verification
of all existing employees assigned to a contract. Verification of
existing employees who work under contracts is a critical element of
this rule, and the elimination of that aspect of the rule would be
contrary to the Executive Order.
ii. Burdensome To Track Which Employees Have Been Verified
Comment: Many commenters were concerned about the burden of
identifying employees assigned to the contract, including time and
money required to develop new systems. For example:
One commenter observed that assigned employees may work on
several projects at once and it is burdensome to require them to be
tracked to determine which ones have been verified by E-Verify.
Another commenter stated that the chance of a single
employee being ``dedicated'' to a single contract--whether for a
private customer or a Government agency--is the rare exception in a
large company. A large, multi-jurisdictional company will be challenged
to identify which employee in fact ``directly performs work'' under a
covered contract.
Another commenter recommended verifying all employees at
all hiring sites.
Another commenter stated that in normal circumstances it
will impose considerable burdens and take months, if not years, to put
in place the required tracking processes.
Several university commenters stated that these
requirements would impose significant financial and organizational
burdens on all affected employers, including substantial costs
associated with developing new software systems.
[[Page 67672]]
Another commenter stated that employers would need to
create a new process for screening current employees and a process for
tracking which employees already have been through the E-Verify
screening process every time an employee is assigned to work on a
Federal contract.
Response: With regard to tracking which employees have been
verified, the Councils do not believe this is a problem that warrants a
change to the proposed rule. Modern personnel and payroll systems
identify numerous qualifications and attributes for each employee. It
is a minor effort to add one more attribute to those already included
in the accounting and payroll systems. For example, each employee is
typically identified against a wage rate, security level, FLSA coverage
or not, vacation records, professional qualifications, labor category,
etc. Personnel/payroll systems that track these sorts of data typically
permit ready modification and expansion in the number and type of
attributes that are tracked. It is typically a simple operation to add
an attribute to such a system.
Further, contractors can recover associated costs incurred to
comply with this program in their proposed prices as they already do
with other overhead costs. However, the Councils recognized that the
task of identifying which employees are assigned to the contract may be
more problematic for some employers. Should the employer find the task
of identifying which employees have been assigned to the contract and
tracking those employees who have already been verified unduly
burdensome, the Councils have amended the rule consistent with Section
8. (a) of Executive Order 12989 to permit a contractor to verify its
entire workforce.
iii. Conflicts Between Public and Private Contracts
Comment: Several commenters stated that employers are currently
prohibited from using E-Verify to confirm the employment eligibility of
existing employees not assigned to a Federal contract. They believe
that the proposed rule therefore poses potential problems for firms
that hold both public and private contracts.
Response: The current MOU required to be signed by all employers
that register for E-Verify does prohibit the use of E-Verify to confirm
the employment eligibility of existing employees. Upon promulgation of
this rule, however, there will be a revised MOU with requirements
applicable to Federal contractors. The revised MOU does not contain the
same prohibition on verification of existing employees as to Federal
contractors, because the Executive Order and this final rule require
the use of E-Verify to confirm the employment eligibility of existing
employees who are assigned to Federal contracts. If a contractor that
was already using E-Verify enrolls in E-Verify as a Federal contractor,
then that contractor may need to sign a new MOU, which will allow the
use of E-Verify for existing employees.
iv. Selective Verification Issues
Comment: Some human resources organizations stated that selective
screening verification of existing employees increases an employer's
exposure to allegations of discrimination based on document abuse,
citizenship status discrimination, national origin discrimination or
other characteristics protected by Title VII and the anti-
discrimination provision of the Immigration and Nationality Act (INA),
8 U.S.C. 1324b. Another commenter questioned whether employers might
register or bid for contracts only so they can verify existing
employees.
Response: The requirement to ensure that any employee who is
assigned to work directly on a contract in the United States is, in
fact, authorized to work in the United States is not discriminatory as
that term is defined by Title VII and case law. However, the Councils
agree that it is appropriate to limit as much as possible opportunities
for unscrupulous companies to abuse the E-Verify system. That is why
the rule clearly specifies which employees must be verified by the
employer. It is also important to note that OSC investigates
allegations of national origin and citizenship status discrimination in
the workplace, as well as demands for additional documentation in the
employment eligibility verification process (``document abuse'') and
retaliation under the anti-discrimination provision of the Immigration
and Nationality Act (INA), 8 U.S.C. 1324b. The E-Verify MOU makes clear
that an employer may not use E-Verify procedures for pre-employment
screening of job applicants. In addition, an employer cannot verify
only certain employees selectively--for example on the basis of
perceived national origin--and may be subject to penalties under the
anti-discrimination provision of the INA if it prescreens employees on
the basis of perceived national origin or citizenship status.
With regard to an employer bidding on a Government contract just to
use E-Verify to verify existing employees, the employer would not be
authorized to verify existing employees unless the contract was
actually awarded to that contractor.
v. Permitting Multiple Alternatives
Comment: Another commenter requested that if the proposed current
employee verification system is to remain a part of these regulations,
the Councils should provide an option for employers in the regulations
so that they can adopt a compliance method that meets objectives with
the least disruption or cost to contractor operations. Suggested
examples included allowing an employer to verify all employees at all
hiring sites, all employees at any hiring site that services a covered
contract, or only those employees assigned to work on the contract.
Response: Consistent with Section 8.(a) of Executive Order 12989,
as amended, which requires implementation of the Order ``in a manner
intended to minimize the burden on participants in the Federal
procurement process,'' the Councils have included a provision in the
final rule permitting contractors a voluntary alternative: The option
to verify all existing employees of the contractor, provided the
contractor initiates verification within 180 days of notifying DHS of
its decision to verify its entire workforce. The Councils believe that
this alternative best prevents opportunities for discrimination or the
appearance of discrimination, relative to other possible alternatives,
while potentially reducing the burden of compliance for some
contractors.
vi. Workforce Stability
Comment: Several commenters stated that requiring verification of
current employees will severely impact workforce stability due to
expected errors, delays, and other disruptive effects such as employer
misuse of tentative nonconfirmations. The commenters stated that the
decision to extend the E-Verify requirement to existing employees
actually undermines the FAR Council's stated view that the Federal
Government's procurement interests are advanced by a stable workforce
with less turnover. The commenters claim that subjecting existing
employees to E-Verify is guaranteed to exacerbate, rather than
alleviate, the posited problem of instability and turnover in the
workforces of Federal contractors and subcontractors.
Response: The Councils do not concur. The Councils consider that
the additional time allowed in the final rule should alleviate the
commenters'
[[Page 67673]]
concerns regarding expected errors, delays, and other disruptive
effects. The Councils do not believe that the concerns that E-Verify
will exacerbate instability and turnover in the workforce are well
founded, assuming that employers are currently complying with existing
law and only employing individuals who are actually authorized to work
in the United States.
vii. Employees Hired After November 6, 1986
Comment: A university commenter believed that the proposed rule is
applicable to all employees hired after November 6, 1986. The commenter
stated that its concerns are magnified by the proposal in the proposed
rule that the E-Verify program be extended to all employees hired after
November 6, 1986 and that this requirement greatly expands the cost and
process burden on employers far beyond the current pilot program.
Response: The commenter is mistaken about the requirements of the
proposed rule. The proposed rule was not to be applicable to all
employees hired after November 6, 1986. However, because of concerns by
some contractors that determining and tracking employees assigned to
the contract is too difficult, the final rule does provide an option to
contractors to verify all employees hired after November 6, 1986.
c. All Employees of the Contractor
Comment: Several commenters believe that the contractor might have
to verify all existing employees to achieve compliance and recommended
that the rule should provide additional flexibility to allow this. Some
employers may find it easier to verify all existing employees and new
hires, rather than attempt to distinguish between those who are and who
are not working on Federal contracts, thus ensuring compliance. Another
company commented that it would be very burdensome to create a
mechanism to identify ``assigned employees'' under a process accounting
system because no one individual charges to a particular job
(contract).
Response: The Councils agree with these comments and have amended
the proposed rule. In situations where a contractor does not believe it
has an economical or efficient way to identify employees who perform
work principally under a particular contract, or if the contractor
believes it is more efficient to verify all employees, the final rule
will give the contractor the option to initiate verification of the
employment eligibility of all existing employees, within 180 days,
rather than limiting the employees who can be verified only to those
who are assigned to work under a contract. This approach is entirely at
the option of the contractor.
The Council notes that the great majority of ``process accounting''
would be under COTS contracts, which are exempt from the rule.
Job order costing--work is broken into E.g., auto mechanics,
jobs; each job is tracked separately. carpenters, painters, print
shops, computer repair.
Process costing--a large quantity of E.g., auto assembly plants, hot
identical or similar products are mass dog manufacturing, any large
produced. mechanized production
facility.
Each cost accounting system gathers and reports on the same
information. The method used depends on the needs of the business.
Process costing traces and accumulates direct costs, and allocates
indirect costs, through a manufacturing process. Costs are assigned to
products, usually in a large batch, which might include an entire
month's production. Eventually, costs have to be allocated to
individual units of product.
Accordingly, the final rule will permit a contractor to choose
between two alternative approaches. The rule will permit the Federal
contractor to choose either to run only existing employees who are
assigned to the contract and all new employees through E-Verify, or to
run all existing employees and all new employees of the company through
E-Verify.
d. Need for Re-Verification
Background: It is important to distinguish what commenters mean by
re-verification. They may mean re-verification of employees who have
been verified by a system other than E-Verify, or they may mean re-
verification of employees who have been verified through E-Verify, by
another employer or by the same employer. Each of these types of re-
verification will be separately addressed.
i. Re-Verification of Existing Employees
Comment: Many commenters stated that the requirement of re-
verification of existing employees working on Federal contracts is
unnecessary because those employees who have been hired after November
6, 1986, have already been through the employment eligibility
verification (I-9) process. For example, one commenter asked the
Councils to eliminate the requirement to use E-Verify for employees
assigned to work on contracts because such employees who were hired
after November 1986 will have already been through an employment
eligibility verification process.
The following are some of the objections raised to re-verification
for employees whose I-9s were completed long ago:
A contractor may have accepted documents to demonstrate
identity (drivers' licenses) or work authorization (passports or green
cards) that have now expired.
Until 2007, it was permissible for naturalized U.S.
citizens to present certificates of naturalization to prove work
eligibility, and many employees chose to use these forms in the I-9
process. Those certificates are not usable as part of the E-Verify
process.
The I-9 process does not require an employee to provide an
SSN, but E-Verify does require it. The contractor will have to devise a
process to collect and authenticate SSNs for many employees, especially
those who started as foreign national legal immigrants, who were not
required to have a number when they started work.
The E-Verify process requires a picture identification
document.
Another commenter remarked that the money spent re-verifying
employees who are assigned to work directly on a Federal project would
be much better spent in fundamental research being conducted by the
commenter.
Response: Executive Order 12989, as amended, requires the re-
verification of existing employees assigned to the Federal contract,
even if the employees were screened previously using the I-9 process.
The E-Verify process is expected to achieve a much higher level of
accuracy in verification than was achieved under the I-9 process alone;
E-Verify has built-in tools for accessing databases to further verify
the employment eligibility of an employee, whereas the documents
submitted by employees under the I-9 process were probably subjected to
very little additional verification if they looked acceptable on their
faces.
With respect to the process for re-verifying existing employees,
the draft MOU contemplated and addressed the
[[Page 67674]]
matters raised by the commenter. Employers may use a previously
completed Form I-9 as the basis for initiating E-Verify verification of
an assigned employee as long as that Form I-9 complies with the E-
Verify documentation requirements and the employee's work authorization
has not expired, and as long as the employer has reviewed the Form I-9
with the employee to ensure that the employee's stated basis for work
authorization has not changed (including, but not limited to, a lawful
permanent resident alien having become a naturalized U.S. citizen). If
the Form I-9 does not comply with the current E-Verify requirements, or
the employee's basis for work authorization has expired or changed, the
employer shall complete a new I-9. If the Form I-9 is otherwise valid
and up-to-date but reflects documentation (such as a U.S. passport or
Form I-551) that expired subsequent to completion of the Form I-9, the
Employer shall not use the photo screening tool, subject to any
additional or superseding instructions that may be provided on this
subject by USCIS. While in some cases these procedures will place on
employers and employees the initial burden of completing a new Form I-
9, they are designed to avoid the greater burden of unnecessary
tentative nonconfirmations resulting from the use of stale data to run
E-Verify queries.
Some contractors that are submitting an E-Verify query for a
current employee may be put in the position of asking that employee to
produce an I-9 document that is different from what was presented
during the initial I-9 process. It is important that contractors not
engage in illegal discrimination during this process, such as by
selectively requesting or rejecting documents during the verification
or reverification process with the purpose or intent of discriminating
against employees on the grounds that they appear or sound foreign. See
8 U.S.C. 1324b. If an employee believes that he or she has been
discriminated against during the employment eligibility verification
process, he or she should contact OSC at 1-800-255-7688 or 1-800-237-
2515 (TDD). Employers that have questions relating to the anti-
discrimination provision should contact OSC at 1-800-255-8155 or 1-800-
237-2515 (TDD).
In addition, it is not technically correct that certificates of
naturalization were acceptable until 2007. They were taken off the
acceptable document list in the regulations in 1997, but DOJ and then
DHS had a policy not to enforce violations of this regulation until it
updated the Form I-9 instructions to reflect this change, which did not
happen until 2007. With respect to SSNs, the Councils do not anticipate
that the commenter or other employers should have significant
difficulty obtaining their current employees' SSNs, as they already
should have these on file for other business purposes.
ii. Re-Verification of Employees Verified by Another Employer
Comment: One commenter believed that employees covered by a
collective bargaining unit should not have to be re-verified each time
they switch to a new company, e.g., in the construction business.
Response: The commenter's point appears to relate to the existing
statutory provision regarding employment pursuant to a collective
bargaining agreement in section 274A(a)(6)(A) of the INA, which
provides that in certain cases a subsequent employer is deemed to have
complied with the Form I-9 requirements by virtue of verification by
another employer within the agreement. If a previous employer within
such an arrangement has completed the Form I-9 and E-Verify, a
subsequent employer does not have to reverify, as long as the
employment is within the scope of the statutory provision.
iii. Re-Verification of Employees Already Verified by the Contractor
Comment: Many commenters were concerned about the requirement to
re-verify an existing employee when the employee is assigned to work on
a contract. One commenter concluded that by mandating that Federal
contractors verify or re-verify existing employees each time they are
assigned to work on a new contract, the proposed rule too radically
restructures the E-Verify program, making it unmanageable and
unworkable for employers.
Response: The proposed rule clearly stated that a contractor is not
required to perform additional employment verification using E-Verify
for any employee whose employment eligibility was previously verified
through E-Verify by that contractor. It is not necessary to run the
employee through the E-Verify program again each time the employee is
assigned to work on a new contract. When, however, an existing employee
is assigned to a contract and that employee has not previously been
verified through the E-Verify system, then that employee must be
processed through E-Verify at the time of assignment to work on the
contract. The end result of this procedure is that for any single
company, no employee, whether existing or newly hired, needs to be
verified through the E-Verify system more than once.
In addition, the Councils have revised the final rule to exempt
employees who hold an active U.S. Government security clearance for
access to confidential, secret, or top secret information in accordance
with the National Industrial Security Program Operating Manual. The
rule also exempts employees for which background investigations have
been completed and credentials issued pursuant to HSPD-12, promulgated
by the President on August 27, 2004.
4. Time Periods (52.222-54(b))
Background: The proposed rule set forth the following timeframes:
------------------------------------------------------------------------
Timeframe Start point Required action
------------------------------------------------------------------------
Within 30 calendar days..... After contract award Enroll in E-Verify.
Within 30 calendar days..... After enrollment.... Initiate
verification of
employees assigned
to the contract at
time of enrollment.
Within 3 business days...... After date of Initiate a
Within 30 calendar days..... assignment to the verification of
contract; or each assigned
Of the award of the employee who is
contract.. assigned to the
contract after
enrollment in the E-
Verify program.
------------------------------------------------------------------------
1. Comment: Many commenters were concerned that the timeframes
provided were insufficient for compliance. These commenters requested
longer timeframes because employers would need to develop complex
systems to track and report employees. Among the various
recommendations:
Extend the registration period to 90 days after contract
award, to allow time for orderly transition and provide time for
employers.
[[Page 67675]]
Permit larger organizations to implement E-Verify in
stages across worksites;
Allow a 6-month phase-in period to allow for registration,
training and implementation and verification;
Add a 90-day transition period before a contractor must
begin verifying employees, after the date of contract award.
Provide a time period to initiate verification of assigned
employees that is no less than 60 days from enrollment and 30 days from
assignment to a contract, respectively.
Extend the phase-in period applicable to verification of
existing employees for employers who are already signed up for E-
Verify. Three days is not long enough to change systems to handle
verification of existing employees.
Response: The Councils carefully considered all the requested
extensions and concur that some of the timeframes need to be extended.
The Councils recognize that some of the periods for contractor action
in the proposed rule did not all allow sufficient time. The Councils
have substantially extended various periods to permit contractors more
latitude on when they must begin verifying employees.
The Councils also noted concerns that the requirements for a
contractor that is already enrolled as a Federal contractor in E-Verify
were not clear. These requirements were only addressed in the policy
section of the proposed rule, not in the clause. Nor did the proposed
clause specify whether the enrollment referred to was as a non-Federal
contractor or as a Federal contractor (which will become important as
the implementation of the rule progresses). The Councils have added
specific instructions applicable to contractors already enrolled as
Federal contractors in E-Verify and amended the time periods in the
clause by which the contractors must have taken various actions.
The Councils have simplified the policy section and added more
details in the clause. The changes in time periods in the final rule
are summarized as follows:
After new enrollment in E-Verify as a Federal contractor,
90 days to initiate verification of new employees within three business
days of hire. This allows a contractor time to set up a new system, or
modify an existing system from the non-Federal to the Federal form of
E-Verify.
90 days (instead of 30) to initiate verification of
existing employees after enrollment into the program (or after contract
award, if already enrolled as a Federal contractor). Contractors will
likely have to make adjustments to current employee information systems
to be able to identify employees assigned to the contract and to track
whether employees have been vetted through E-Verify. 90 days after
award of a contract that contains the clause should be sufficient for
this.
--Thereafter, verify the employee 30 days (instead of 3) after an
employee is assigned to work under a contract.
--180 days for initiation of verification of all existing employees (if
chosen at the option of the contractor).
The Councils did not extend the 30-day period to enroll in E-
Verify. Very few commenters argued that this timeframe was
insufficient. The Councils also considered that employers already
enrolled on the Federal E-Verify program should not need additional
time to continue verification of new employees within three business
days of hire. The Councils also did not make amendments to timeframes
that are required by the MOU rather than the FAR clause.
2. Comment: One commenter suggested that E-Verify should provide
employers with an option to mark that an SSN has been ``applied for''
when foreign nationals are waiting on SSN cards that could take weeks
to receive. Another commenter expressed concern over the fact that SSNs
are not required on the Form I-9 and the SSN is the basis for the
electronic verification.
Response: DHS has informed the Councils that the MOU will be
amended to provide that notating the Form I-9 satisfies ``initiating
verification'' in the narrow situations where (1) the employee has
applied for an SSN from SSA and is waiting to receive a SSN; and (2)
the employee has requested an accommodation from the photo
identification requirement from the E-Verify program and is in the
process of resolving the issue. The employer still has an obligation to
work in good faith to follow through on that process and ultimately
verify the employee with the system.
5. Threshold for Applicability in Prime Contracts (22.1803(b))
Comment: A number of commenters requested an increase in the dollar
threshold for applicability of the clause. Commenters state that there
is no rationale for the $3,000 threshold.
For example, several commenters proposed increasing the
dollar threshold for applicability of the proposed contract clause from
the micro-purchase threshold of $3,000 to the simplified acquisition
threshold of $100,000. One of these commenters stated that the
applicability standard should be proportionate to its requirement.
Another commenter proposed raising the threshold from
$3,000 to $50,000.
Response: The Councils have raised the threshold for inclusion of
the clause in a prime contract from the micro-purchase threshold to the
simplified acquisition threshold. The statute at 41 U.S.C. 427 directs
the FAR to provide for simplified acquisition procedures for purchases
of property and services for amounts not greater than the simplified
acquisition threshold. In order to promote simplified processes for
such small acquisitions, the Councils have revised the final rule to
exempt all prime contract awards under the simplified acquisition
threshold from application of this rule.
According to Federal Procurement Data System (FPDS) data, during FY
2007, there were approximately 2.8 million contract awards (new
contracts, not orders) Governmentwide totaling approximately $9 billion
for which the basic contract value were less than or equal to the
simplified acquisition threshold ($100,000) each. This is less than 3
percent of total obligations made during FY 2007. Therefore, the
exclusion of such low dollar value contracts should have minimal impact
on achieving the objectives of the Executive Order, while being of
great benefit to small businesses, since acquisitions below the
simplified acquisition threshold are generally set aside for small
business.
In addition, the Councils have added to the final rule a threshold
relating to length of the period of performance of the contract. Since
contractors have 30 days to enroll in E-Verify and another 90 days to
initiate verification of employees, the Councils concluded that it was
not practical to require compliance with the clause in contracts that
have a period of performance of less than 120 days.
6. Subcontractor Flowdown (22.1802(b)(4) and 52.222-54(e))
Comment: Analysis of the comments relating to the subcontractor
flowdown requirements (22.1802(b)(4) (22.1802(c) in proposed rule) and
52.222-54(e)) discloses five general concerns from a broad range of
commenters.
a. Definitions
For concerns relating to the definitions of ``subcontract'' and
``subcontractor,'' see G.1.d.
[[Page 67676]]
b. Flowdown Thresholds
Comment: Various commenters recommended limitation of subcontract
flowdown as follows:
The flowdown threshold of $3,000 is extraordinarily low,
and that an explanation and justification for this dollar threshold
should be provided to the public.
Raise the threshold to $10,000 and make it applicable only
to first tier subcontractors whose subcontracts meet the stated
criteria, consistent with the flowdown requirement for the annual EEO-1
report and affirmative action obligations under Executive Order 11246
and Section 503 of the Rehabilitation Act.
Raise the threshold to $100,000.
If the flowdown requirement is maintained, limit it to (1)
first tier subcontractors, or (2) subcontracts valued at more than the
threshold for obtaining cost or pricing data under FAR 15.403-4,
currently $650,000.
Remove the flowdown requirement or, at a minimum, limit it
to major subcontracts exceeding $5 million.
Response: The Councils do not agree. Although the selection of the
appropriate threshold is always somewhat subjective, unless specified
by statute or Executive order, rulemakers seek to achieve balance
between achieving the policy objectives and not unduly burdening
smaller subcontracts. With respect to subcontract actions, the flowdown
is already limited by the proposed rule to only subcontracts for
construction and for services. These types of subcontracts often
involve lower dollar amounts and increasing the threshold would leave
too high a portion of the targeted subcontracts not covered by the
rule. There is no particular logic that would tie this threshold to EEO
reporting, the simplified acquisition threshold (which applies only to
prime contracts), or the cost or pricing data threshold. There is no
compelling reason to either eliminate or limit the flowdown requirement
since the obligation to include the clause at 52.222-54(f) is not any
more burdensome than many other flowdown requirements, and the
objectives of the Executive Order 12989, as amended, will not be
adequately met without extensive subcontractor flowdown. The Councils
have therefore maintained the subcontractor flowdown for services and
construction to all tiers of subcontracts above the threshold of
$3,000.
c. Period of Performance
Comment: One commenter urged that consideration be given to
recognizing that an early finishing subcontractor or supplier to a
Federal prime construction contractor should not, without exception, be
bound to the duration of the prime contract.
Response: When flowing down the clause to the subcontractor, it
would be effective only for the duration of the subcontract. By the
very nature of subcontract to prime contract, many subcontracts are of
shorter duration than the prime contract. However, the Councils decided
not to extend the 120-day limitation on flowdown. The period of
performance of the subcontract is not within the control of the
Government. If the subcontractor does not have any subcontract running
longer than 30 days, the subcontract term would end before the
subcontractor would be required to register with E-Verify. However, if
the subcontract period runs beyond 30 days, the subcontractor would be
required to enroll in E-Verify, and if the subcontractor continues to
receive subcontracts it will be obligated to begin using E-Verify for
its new hires.
d. Prime Contractor Responsibility for Subcontractor Violations
Comment: There was broad concern raised by commenters (covering the
service, construction, educational, transportation, and agriculture
sectors) regarding the extent to which a prime contractor may be held
accountable for violations by its subcontractors. A number of
commenters suggested that the prime contractor's flowdown obligation
was too difficult to monitor. One commenter noted, for example, that
subcontractors do not have privity of contract with the Government,
thus they are not normally required to be identified in a Government
contract as a party. There was substantial concern among these
commenters with respect to the prime contractor's compliance assurance
responsibilities. Specifically, these comments focused on the extent to
which the prime contractor is responsible for subcontractor failure to
comply with the contract obligation to use the E-Verify program. Many
commenters questioned how a prime contractor could monitor
subcontractor compliance and the extent to which a prime contractor
would be accountable for a lower tier subcontractor's non-compliance.
Many commenters argued that the prime contractors' flowdown
responsibilities should be limited to ensuring that the clauses are
included in their subcontracts and that their subcontractors should be
responsible for initiating the E-Verify enrollment process and carrying
through with use of E-Verify for employee verification. As an exception
to this general consensus, one commenter suggested that it would be
appropriate to require prime contractors to obtain written assurances
from contractors that they are complying with all Federal rules,
including verification of employment eligibility.
Response: The Councils believe that prime contractors are
responsible for all aspects of contract performance including
subcontract requirements. The methods used to assure compliance are
also the responsibility of the prime and the subcontractor. The
contractor should perform general oversight of subcontractor compliance
in accordance with the contractor's normal procedures for oversight of
other contractual requirements that flow down to subcontractors. Prime
contractors are not expected to monitor the verification of individual
subcontractor employees. Nor is the prime contractor responsible for
the subcontractor's hiring decisions. However, the prime contractor is
responsible for ensuring by whatever means the contractor considers
appropriate, that all covered subcontracts at every tier incorporate
the E-Verify clause at 52.222-54, Employment Eligibility Verification,
and that all subcontractors use the E-Verify system.
Further, these roles and responsibilities are adequately addressed
in the Federal Contractor MOU. Accordingly, the MOU contains a
provision that the employer (prime contractor and subcontractors alike)
acknowledge that compliance with the MOU is a performance requirement
under the terms of the Federal contract or subcontract and that the
employer consents to the release of information relating to compliance
with its verification responsibilities under the MOU to contracting
officers or other officials authorized to review the employer's
compliance with Federal contracting requirements.
The Councils consider that it would be an unnecessary information
collection to impose a requirement that the prime contractor obtain
written assurances from subcontractors that they are complying with all
Federal rules, including verification of employment eligibility.
e. Notice to Subcontractors
Comment: One commenter recommended that the proposed clause impose
a requirement for a prime contractor, and any higher-tier
subcontractor, to provide a notice along with its requests for bids
from prospective subcontractors and suppliers on the Federal
construction
[[Page 67677]]
contract. Such notice should make explicit to prospective
subcontractors and suppliers that the prime contract is subject to the
proposed new FAR Subpart 22.18 (Employment Eligibility Verification)
and that the requirements of the proposed new clause (FAR 52.222-54,
Employment Verification) will be imposed on a subcontractor at any
tier, if the subcontract falls within the reach of proposed new FAR
22.1802(b)(4).
Response: The Councils do not endorse the need for a separate
notice to subcontractors, apart from the notice that is provided by
flowing down the clause to the appropriate subcontractors. Many
requirements flow down to subcontractors, and it is the responsibility
of the subcontractor to review all requirements associated with the
requests for bids or proposals. However, the Contractor may write such
a notice.
7. Waiver (22.1802(d))
Comment: The proposed rule allows the head of the contracting
activity to waive the clause requirement in exceptional cases. Several
commenters noted that the proposed rule did not define the term
``exceptional cases'' and proposed that a definition and/or standards
for using the waiver be added to the final rule. One commenter proposed
that the term be defined to include national security emergencies,
natural disasters, acts of terrorism against the United States, urgent
military war fighter needs, and FAA emergencies.
Response: The term ``exceptional cases'' is intentionally not
defined in the rule in order to allow the head of a contracting
activity the flexibility to use this waiver as unique situations arise
within each agency. Each head of the contracting activity will be
accountable to the agency leadership to appropriately balance the needs
of the agency and the policies and goals of the Executive Order 12989.
8. Safe Harbor
Comment: Public comments indicated numerous concerns over the
mechanics and operability of the E-Verify system. Specifically,
employers expressed concerns about potential litigation that could be
brought against them as they rely on E-Verify to verify not only newly
hired employees, but also to verify existing employees. For example,
one commenter cited the legal risk in the event that an unauthorized
worker erroneously verified by E-Verify is later found to have
committed identification fraud and was therefore improperly employed.
Likewise, some companies fear litigation from employees who are fired
as a result of the E-Verify process and file claims of wrongful
discharge because E-Verify provided wrong answers in the verification
process.
Several commenters believed that the revised MOU for E-Verify
leaves employers to face any such legal liability on their own. Article
V, ``Parties'' paragraph E of the revised MOU reads: ``Each party shall
be solely responsible for defending any claim or action against it
arising out of or related to E-Verify or this MOU, whether civil or
criminal, and for any liability wherefrom, including (but not limited
to) any dispute between the Employer and any other person or entity
regarding the applicability of Section 403(d) of IIRIRA to any action
taken or allegedly taken by the Employer.''
Other companies claimed that they enjoy immunity as a result of the
language in the MOU that states ``no person or entity participating in
a pilot program authorized [by IIRIRA] shall be civilly or criminally
liable under any law for any action taken in good faith reliance on
information provided through the confirmation system.'' This immunity
language was also repeated in the preamble to this rule. However, there
is concern that these immunity provisions may not apply to situations
where an adverse employment action is taken against an existing
employee.
As a result of these litigation concerns, commenters requested that
the rule provide protection from both DHS enforcement actions, as well
as discrimination lawsuits, if employees are terminated after the
employers have properly complied with program requirements. They
recommended that provisions be included in the rule that would
indemnify the employer with full disclosure of this indemnification to
the employee. As one commenter stated, the rule should be revised to
provide a safe harbor that explicitly protects contractors and
subcontractors from penalties or other reprisals under state law
related to the use of the E-Verify system. The commenter recommended
that the preamble immunity language be inserted into the regulatory
text as a clear safe-harbor to make it clear that it applies to all
employees.
Response: The applicable statute, section 403(d) of IIRIRA,
provides broad legal protection to employers participating in E-Verify.
The MOU language in Article V. E. only clarifies that the Government
does not guarantee any level of legal protection under this or any
other statute to employers, and will not defend or indemnify claims
that may be brought against employers.
The E-Verify statute (IIRIRA Section 403) does not distinguish
between new hires and existing employees in the immunity protections it
provides employers. IIRIRA section 403(d). The Councils find that the
statutory protection from liability for actions taken by employers in
good faith reliance on information provided by the E-Verify system
provides sufficient protection.
Issues with respect to compliance with E-Verify and adverse actions
taken as a result of such actions are the responsibility of DHS and not
the contracting officer. Therefore, the proposed safe harbor language
is not appropriate for inclusion in the FAR.
9. Enforcement and Sanctions for Non-Compliance
Comment: Several commenters requested clarification in the rule of
how MOU violations would warrant contract sanctions, and if so, what
procedures for contract suspension or termination would apply in that
circumstance.
Response: USCIS retains its authority to investigate violations of
E-Verify program. DHS may terminate a contractor's MOU and deny access
to the E-Verify system in accordance with the terms of the MOU. If DHS
terminates a contractor's MOU, DHS will refer the contractor to a
suspension or debarment official for possible suspension or debarment
action. During the period between termination of the MOU and a decision
by the suspension or debarment official whether to suspend or debar,
the contractor is excused from its obligations under paragraph (b) of
the clause at 52.222-54. If the contractor is suspended or debarred as
a result of the MOU termination, the contractor will not be eligible to
participate in E-Verify during the period of its suspension or
debarment. If the suspension or debarment official determines not to
suspend or debar the contractor, then the contractor must re-enroll in
E-Verify.
10. Process for Resolving Disputes About Applicability of the Clause
Comment: One commenter expressed concern that a decision about what
contracts are required to include the clause will be left entirely
within the discretion of the contracting officer. The commenter was
concerned that the presumption would be in favor of including the
clause even though it is not required with certain types of contracts,
such as those for purchase of COTS items. The commenter was concerned
that there is no method for disputing the applicability of the clause.
[[Page 67678]]
Response: The Councils do not concur with the commenter's concerns.
As an initial matter, the contracting officer's conclusions about
whether the clause applies will be informed by what the Government is
acquiring with the contract. The contracting officer will take into
consideration whether the contract is for services or supplies, and
whether the supplies are COTS items. The contracting officer will then
evaluate whether any applicable exceptions apply such that compliance
with E-Verify is not required. Therefore, the Councils do not agree
with the commenter's statement that the contracting officer has
``complete discretion'' to decide whether the E-Verify clause will be
inserted in the contract.
Further, the Councils do not agree that it is necessary to develop
dispute resolution procedures, because appropriate procedures already
exist in the FAR. If a contractor disagrees with a contracting
officer's conclusion about the applicability of the clause in advance
of award, the contractor may obtain review by submission of a protest
to the Contracting Officer, Agency Head or GAO in accordance with FAR
Part 33.
FAR 33.101, Protest, defines a protest as a ``written
objection by an interested party to * * * [a] solicitation or other
request by an agency for offers for a contract for the procurement of
property or services.''
FAR 33.102(a) states that upon receipt of a protest, the
contracting officer ``shall consider all protests and seek legal advice
* * *'' The requirement to seek legal advice after receipt of a protest
ensures that the contracting officer's conclusion about applicability
will be reviewed.
If a contractor's disagreement with the contracting officer's
conclusion about the applicability of the clause arises after award and
during administration of the contract, the process for resolving the
dispute is set forth in FAR 33.202, Contract Disputes Act of 1978.
Again, upon receipt of a claim, FAR 33.211 requires the contracting
officer to ``secure assistance from legal and other advisors.'' The FAR
also requires the contracting officer to seek input from other agency
officials, including that of agency counsel, and therefore the
contracting officer's conclusion about the applicability will be
legally reviewed.
Despite commenter's statements, the FAR specifies when the E-Verify
requirement shall be included in a contract and the FAR also provides a
method for resolving disputes about applicability, both pre-award and
during contract performance. (See also H.3.f. on applicability at the
subcontract level.)
C. Applicability of FAR Rule
1. Commercial Items
a. Commercial Items Exemption
Comment: Several commenters recommended that the rule should exempt
all commercial items, not just COTS items, claiming that such a change
would be consistent with procurement reforms facilitating government
access to commercial products and services.
Response: The Councils do not concur with this comment. The final
rule intentionally covers commercial item contracts that are not for
COTS items. The intent of the rule was to cover as many contractors and
contractor employees consistent with the mandate in Executive Order
12989. The only reason COTS items are exempt is because the Councils
believe that COTS providers may choose not to do business with the
Government rather than changing their practices to use E-Verify. The
Councils concluded that this could result in an unacceptable reduction
in the Government's access to items it needs in order to operate. On
the other hand, contractors who provide commercial items that are not
COTS items are providing commercial products that are custom-made for
the Government or services that are categorized as commercial items.
These contractors have decided to be part of the Government
marketplace. These contractors have established procedures and
sometimes created organizations designed to do business with the
Government. The Councils determined that the requirement for these
contractors to use E-Verify would not be sufficient to drive them from
the Government market. Also, to the extent such a business incurs added
cost to comply with the E-Verify contract clause, it is free to include
that added cost in its proposed contract prices, but will be required
to take into account the pricing practices of its competitors if it
wishes to be awarded the contract.
b. Exempt COTS-Related Services
Comment: Various commenters pointed out that COTS suppliers
typically sell services along with their COTS items and that the
exemption of COTS items from the rule would not be adequate unless it
also exempts related services. COTS suppliers who must provide services
along with their COTS items would gain no benefit from the COTS
exemption if the services are not also exempt.
One commenter requested that the Councils add services to the
definition of COTS.
Response: The Councils concur in part with this comment. Although
the definition of COTS is statutory and does not include services, the
Councils agree that the clause should not apply to certain types of
services:
The services must be procured at the same time as the COTS
item is procured.
The services may be provided only by the COTS item
supplier. That will eliminate services provided by other contractors
who are in the service business. By covering the COTS provider
services, the Councils intend to reduce the regulatory burden for
companies who provide only COTS items that do not require use of E-
Verify. The services must be performed only on or for the COTS item.
This means that we do not exempt services that are ``custom.''
Third, the services must be typical or normal for the COTS
provider.
c. Applicability of COTS Exception to Food Products
Comment: Several commenters representing various agricultural
interests commented that the rule will have far reaching and
detrimental effects on the agriculture industry, most particularly
growers and harvesters. Examples of sectors of the agriculture industry
that were highlighted as problematic are: Fruit growers, fruit
harvesters, suppliers of fruit to Federal school lunch programs, and
distributors of fruit. These commenters wanted to make sure that the
rule was not intended to apply to them or, if it was intended to cover
them, they requested that it be made inapplicable to them.
Response: The Councils do not believe that any of the examples of
agricultural products cited by these commenters would be covered by the
rule as originally proposed or as promulgated in this final rule.
First, all food products described by the commenters would fall
under the definition of commercially available off-the-shelf (COTS)
items or a minor modification to a COTS item, which are exempt from the
clause. COTS items are defined as ``any item of supply'' (food is an
item of supply) that is ``a commercial item'' (the foodstuffs described
by the commenters are commercial items) ``offered to the Government,
without modification, in the same form in which it is sold in the
commercial marketplace'' (the foodstuffs described by the commenter
meet these standards).
[[Page 67679]]
Secondly, most of the concerns relayed by the commenters centered
on the growers and harvesters. Neither the proposed rule nor the final
rule require flowdown of the clause to subcontractors which provide
supplies such as food. The only subcontracts that are covered by this
rule are services or construction subcontractors. In the unlikely event
that a contractor enters a contract with the Government for food
products that do not meet the definition of a COTS item or a minor
modification of a commercial item, the subcontractors who sold the food
to that contractor (farmers, or harvesters or distributors) are not
required by this rule to have the contract clause in their
subcontracts. This means that they are not covered by the rule when
they are subcontractors because no subcontracts for supplies are
covered by the rule for any subcontractor. The only providers of
supplies who are covered by this rule are prime contractors, not
subcontractors. The Councils purposely excluded all subcontracts for
supplies from application of this rule for many of the same reasons
that prompted the concerns of the agriculture industry commenters.
Nevertheless, the Councils have further modified the COTS-related
exception to address these concerns. The exception in the clause
prescription at 22.1803 for COTS-related items has been expanded also
to exempt items that would be COTS items but for being bulk cargo. By
incorporating this expanded exception for COTS-related items, the
Councils intend to exempt foodstuffs such as grains, oils, produce and
all other agricultural products shipped as bulk cargo, to the extent
they are otherwise classified as COTS items.
d. Acquisitions of Commercial Items Under the FAR
Comment: Several commenters requested that the final rule make it
clear that the rule applies only to commercial acquisitions under the
FAR. According to these commenters, many grant recipients and State and
local governments may incorrectly assume the rule applies to them. One
comment also sought clarification of whether the rule would apply to a
carnival operator hired to provide services on a military installation.
Response: The Councils do not concur. There are several parts to
this question, addressing both the application of the rule to
commercial items and the question of acquisitions under the FAR versus
``non-acquisitions.''
The commenters misunderstand the applicability to
commercial items. The rule does not apply only to commercial items. It
applies to both non-commercial and commercial items (although COTS
items are excluded).
An exception has been added to permit State and local
governments to limit their use of E-Verify only to employees assigned
to the contract (allowing them to exclude new hires not assigned to the
contract).
Also, the requirements to use E-Verify only occur when a
contract includes the FAR clause. There is no mechanism for the FAR to
require insertion of the clause in any grants or contracts that use
non-appropriated funds that are not covered by the FAR. Whether the
clause would apply to a contractor providing carnival services will
depend on several factors; the location of the contract performance
alone will not be determinative, unless the contract is performed
outside the United States.
2. Small Business
a. Unfair Impact on Small Business
Comment: Many commenters were concerned that E-Verify may impose
significant and costly administrative requirements on small business,
and that the rule will have a disproportionate adverse impact on small
business.
For example, one commenter noted that few small businesses
have specific human resource departments to manage the increased
workload, and many more lack the necessary equipment to run the
program.
Another commenter noted that small businesses do not have
the luxury of large staffs to prevent lost productivity while employees
resolve tentative nonconfirmations.
Commenters suggested that small businesses may also face
accessibility issues, such as lack of access to high-speed internet.
The SBA Office of Advocacy stated that small businesses
may lack the financial resources and human capital to adapt their
technology infrastructure systems to changing requirements being
imposed by the Federal Government.
The SBA Office of Advocacy also noted that small business
Federal contractors operate on very thin profit margins and these types
of technology systems require capital outlays that cannot be easily
recouped by passing the cost to the client and are costly to the small
business owner.
Another commenter stated that small companies that do not
have the means to set up systems and staffing with adequate training to
monitor nonconfirmations may find themselves at risk for noncompliance.
Some comments argued that the burden is even greater on
small businesses that are subcontractors. SBA Office of Advocacy
expressed concern that the compliance cost burden on small business
subcontractors could be disproportionate, because such businesses have
fewer contracts among which they can spread the cost of doing business.
Some of these commenters were concerned that some small businesses
would not have the resources to implement E-Verify and may therefore
exit the Government market. For example, one commenter noted that E-
Verify requires both infrastructure and an investment of employee
expertise. Small businesses that do not have the resources to implement
may decide not to pursue Government contracts. Further, a small
business council was concerned that to stay competitive, small
businesses would not be able to pass the extra costs of E-Verify on to
the Government, and will therefore be deterred from bidding.
Several commenters expressed concern about the detrimental effect
that loss of participation by small businesses will have on the
Government and the taxpayers. One commenter noted that through the loss
of competition by small businesses, the Government loses out on the
innovative ideas of small businesses that exit the market. Another
commenter stated that the Federal sector will lose the benefit from the
``ingenuity and flexibility'' that small businesses bring to the table.
Several commenters noted that Congress has expressed concern about
the potential impact of E-Verify on small businesses. For example,
various commenters cited to the mandated study of impact on small
business in H.R. 6633, a bill passed by the House of Representatives
that would have extended the E-Verify program for another 5 years.
Response: The Councils do not agree that this rule imposes an
unfair burden on small businesses. The economic analysis found that
total compliance costs increase as the size of the contractor
increases. For example, a 10-employee firm may only need one person
trained to execute E-Verify queries, but a 100-person firm may need 2
or 3 employees trained in E-Verify. However, when compliance costs are
considered as a percent of revenue, the impact on smaller contractors
is greater than the impact on larger contractors since smaller firms
have less revenue available. The Small Business Administration
publication The Impact of Regulatory Costs on Small Firms (2005) shows
that on a per employee
[[Page 67680]]
basis, smaller firms have a larger regulatory compliance cost burden
than larger firms. The SBA study states: ``On a per employee basis, it
costs about $2,400, or 45 percent, more for small firms to comply than
their larger counterparts.'' Consequently, the results of the economic
analysis that show a relatively higher regulatory impact burden on the
smaller entities than the larger entities are not unusual or specific
to this final rule.
The requirement for entities (both large and small) to enroll in E-
Verify only applies to contractors and subcontractors who choose to
perform certain work for the Federal Government. Presumably, entities
which do not receive the desired return on revenue to justify the
expense of participating in E-Verify would choose not to be a Federal
contractor or subcontractor.
It has been the law since 1986 that all employers must verify the
eligibility of new hires to work in the United States. E-Verify
provides a tool that will make this verification easier and more
reliable. Although the E-Verify system does require the employer to
have access to some equipment such as a computer, Internet access, a
printer, and either a scanner, photo copier, or a digital camera, the
Councils believe that this equipment is not prohibitively expensive.
Almost all small businesses doing business with the Government would
already have such equipment or be able to readily acquire it. The
equipment for a small business to implement E-Verify need not be
particularly sophisticated or complex.
H.R. 6633, which has been passed by the House allows 2 years for
the GAO study of the impact of E-Verify Pilot Program on small
businesses, including specific details on small entities operating in
States that have mandated the use of E-Verify. The bill has not been
passed by the Senate, but it does not request that any implementation
of E-Verify be suspended pending completion of the study. In addition,
Congress reauthorized E-Verify and appropriated $100 million for the
program for fiscal year 2009 in the Consolidated Security, Disaster
Assistance, and Consolidated Appropriations Act, 2009, Public Law 110-
329 (Sept. 30, 2008), without requiring this study, and it does not
appear that there will be any additional legislative developments on E-
Verify in the 110th Congress.
The Councils have endeavored to limit the impact of this rule on
small businesses by raising the threshold of applicability of the
clause to contracts in excess of the simplified acquisition threshold.
As a result of this change, a substantial quantity of contracts below
that threshold will be exempt from the E-Verify clause, and will be
available to small business contractors that do not wish to participate
in the program. Since the FAR currently requires set-aside of contracts
below the simplified acquisition threshold for small business
participation, contracting opportunities that do not necessarily
require E-Verify use will remain available for small businesses.
b. Small Businesses Exemptions
Comment: Various commenters suggested exemption or waiver for some
or all small businesses. For example:
Exempt all small businesses: The SBA Office of Advocacy
recommended that, until better data is available, small businesses
should be exempted from the requirements of the rule. Another commenter
recommended consideration of exempting all small businesses that
qualify under the size standards established by SBA.
Exempt small businesses with less than 15 employees: One
commenter recommended that the applicability standard should be
proportionate to its requirements and suggested that this rule should
follow E.O. 13201, under which the Notice of Employee Rights Concerning
Payment of Union Dues does not apply to contractors with less than 15
employees.
Exempt small businesses with less than 75 employees:
Several commenters recommended exemption for businesses with less than
75 employees. One commenter asserted that small enterprises do not have
the administrative capacity to comply with this contract clause.
Another commenter stated that applying the new verification
requirements only to locations employing at least 75 individuals full-
time would allow for sufficient personnel to manage the system and
ensure compliance and consistency.
Waive the requirement for certain small businesses:
Several commenters recommended waivers for certain small businesses for
which compliance with the system would be burdensome.
Response: The goal of this rule is to apply verification broadly,
to the extent feasible and consistent with Executive Order 12989, in
order to enhance the stability of Government contractors' and
subcontractors' workforces and to assist them in compliance with the
immigration laws of the United States. Nonetheless, the Councils have
inserted certain dollar and contract duration thresholds for
applicability and have provided specific exceptions because the
Councils have concluded those thresholds and exceptions are consistent
with their mandate to implement Executive Order 12989 in a way best
calculated to improve the efficiency and economy of the Federal
contracting system. The Councils do not believe providing exemptions
for small businesses based on the number of employees will further that
goal and note that other revisions, discussed above, will likely ease
the burden on small businesses.
c. Alternatives To Lessen the Burden on Small Businesses
Comment: Various commenters suggested other ways to reduce the
burden on small businesses that participate in E-Verify under this
rule, for example:
Allow small businesses more time to initiate the clearance
process for new assigned employees (see G.4).
Raise the thresholds to the simplified acquisition
threshold (or other thresholds more than $3,000).
Response: Most of these comments are discussed elsewhere in the
report in more detail. The Councils have agreed to the above
modifications to the E-Verify rule which will lessen the burden on
small businesses, as well as other revisions, such as:
Lengthening other time periods for compliance (See G.4).
Applying a period of performance of 120 days (See G.5).
In addition, the USCIS E-Verify Program's outreach office has
coordinated closely with the Small Business Administration since April
2008 to conduct outreach events to ensure specific concerns relating to
small businesses are heard and addressed.
3. Agriculture
a. Applicability to Agricultural Cooperatives
Comment: Some commenters asked if the agricultural cooperative is
the prime contractor under a FAR contract, whether the grower member is
considered the prime contractor as well for purposes of checking the
status of grower employees. Commenters also asked whether the answer
would be the same when the agricultural cooperative is a marketing
cooperative.
Response: The Councils have made clear in the final rule that
virtually all food products are COTS and COTS contracts are exempt from
the rule. Therefore, the Councils believe these concerns have been
addressed.
However, there are various types of cooperatives, and many are
corporations. Some cooperatives buy the
[[Page 67681]]
agricultural product from the grower and resell to the Government. In
this case, the grower is a subcontractor and would be exempt from the
rule because--
This involves a supply rather than a service; and
Supplies are exempt from subcontract flowdown.
Other cooperatives involve pooling arrangements that are not
subcontracts, but rather under which there is one prime contract
between the Government and the cooperative (on behalf of the growers).
In this case the answer is more difficult. If the growers are
considered prime contractors for other purposes of Government
contracting, then they would be so for purposes of E-Verify
application. If, on the other hand, the cooperative alone is the prime
contractor, then the growers are not the prime contractor.
Applicability of the clause to each contract and different types of
agricultural producers is a fact-based analysis that cannot be
definitively answered by the Councils.
b. Rural Farms
Comment: Some commenters pointed out that many growers are small
farms located in remote rural areas. Many farms hire seasonal workers
at field sites that are not in an office, and so electronic or
telephonic use of E-Verify is not readily available to the employer. In
addition, employer and employees are not near the Social Security
office.
Response: The Councils have made clear in the final rule that
virtually all food products are exempt from the requirements of this
rule. The commenters concerns about access to technology necessary to
use E-Verify or the remote location of the contractor have been raised
by other commenters as well and addressed in this rule.
The Councils believe that most entities involved in Federal
contracting at any level, or their designated agents, will have access
to basic office equipment such as a telephone, computer, and internet
access. The employer is not required to visit the Social Security
office; only the employee must visit if an SSA tentative
nonconfirmation is received, and he or she is afforded eight Federal
Government working days in which to contact SSA or USCIS. As noted
above, when the employee is a naturalized citizen, the employee may
choose to call USCIS directly to resolve a citizenship-based tentative
nonconfirmation, rather than visit the SSA office. DHS tentative
nonconfirmations can be handled with a telephone call rather than a
personal visit.
c. Implementation During Harvest
Comment: Some commenters stated that implementing the rule in some
agriculture sectors will be unworkable because of the rapid pace
required for harvest. Seasonal laborers will move out to another job
long before employer is able to obtain verification of employment
status. Seasonal laborers need to work on harvesting/packing, not
traveling to and spending time at the Social Security office.
Response: The Councils have made clear in the final rule that
virtually all food products are exempt.
d. Government Sales
Comment: Some commenters noted that the increased costs, and risks
of losing large percentage of workforce, would be too great for some
growers to continue selling to the Government. Increased grower costs
and less competition would increase the Government's costs. If food
growers stop selling to the Government, commenters claim that foreign
countries will become the source of food for U.S. servicemen and school
children.
Response: The Councils have made clear in the final rule that
virtually all food products are exempt, therefore the concerns
expressed by the commenters have been addressed.
e. Agricultural Employees
Comment: One commenter noted that the Westat study data on recently
enrolled users showed that recently enrolled users were more likely
than long-term users to have a small percentage of foreign born
employees. This is different from U.S. agricultural employers, where
according to a recent USDA study, over a third of hired farm workers do
not have citizenship status, and of those 90 percent list Mexico as the
birth country.
Response: The FAR Council notes that agricultural employees are
more likely to have immigration issues than most other kinds of
employees. Nevertheless, because of the exception for COTS, non-
agricultural employers are much more likely to be covered by the
electronic verification requirements of the rule.
f. Shift to Foreign Agricultural Growers
Comment: One commenter noted that prime contractors might not want
to hire U.S. agricultural growers as subcontractors because of wanting
to avoid E-Verify problems. Also, the prime contractors might force
subcontractors to use E-Verify even when the FAR would exempt the
subcontract.
Response: The E-Verify clause does not flow down to subcontracts
for supplies. A subcontractor for supplies that has an E-Verify clause
in the subcontract should contact the prime contractor or next higher
tier subcontractor that included the clause. If unable to obtain
resolution, the subcontractor may contact the contracting officer for
assistance in resolving the issue.
4. Institutions of Higher Education; State and Local Governments and
Governments of Federally Recognized Indian Tribes; and Sureties
a. Institutions of Higher Education
Comment: Seven universities and two associations opposed the
application of the rule to educational institutions. In general, the
universities supported efforts to encourage improvements to compliance
with requirements to demonstrate work authorization and citizenship,
but recommend an exemption for research and higher education
institutions, arguing that the rule would impose an unnecessary
financial and administrative burden. The commenting associations
predicted that including academic institutions within the scope of this
rule would place stress on the E-Verify system.
The several commenters emphasized various aspects of the
interrelated problems that universities face, as follows:
One of the largest universities contended that E-Verify is
difficult to use and that the proposed rule underestimates the time and
resources required by an organization of its size to implement E-
Verify, and its impact on U.S. citizens and lawful permanent residents.
Another university described its use of a ``sponsored pool
accounting system'' to facilitate frequent changes in researchers' and
staff members' funding sources, and how its separation of contract
administration and human resources processes complicates E-Verify's
clearance procedure.
Another university that employs a large number of foreign
nationals claimed to have a strong program to monitor work
authorizations. It stated that the added procedural burden on the
university and its employees will hamper its ability to attract highly
sought foreign nationals, impacting the quality of its research
programs.
Another estimated that modifying its existing employment
eligibility monitoring system to comply with the proposed 3-day
clearance requirement would cost $1 million because new processes would
need to be implemented outside the payroll system it currently uses. In
addition, the
[[Page 67682]]
commenter claimed that employee relations issues would be a major
impact, and notes that Federal contracts are only 2 percent of its
business.
Another university described universities as low-risk
employers because their international population is already subject to
oversight through the Federal visa approval processes and their own
internal recruitment and other mechanisms.
Another university was most explicit about the other
internal mechanisms that reduce the vulnerability of educational
institutions to immigration violations. According to this comment,
research organizations operate in an environment of strict regulation
and control, including export control and intellectual property as well
as immigration and employment requirements. These contribute to their
high level of regulatory compliance and they rarely encounter problems
with document fraud or with employees lacking proper documentation of
their employment authorization.
Another university also recommended exempting universities
from the proposed contract term, but also expressed concerns about the
impact on grants and cooperative agreements as well. (Grants and
cooperative agreements are not covered by FAR, so the requirements do
not in fact apply.)
One association cited, as an example of potential stress
on the E-Verify system's resources, the fact that the University of
California employs approximately 170,000 faculty and staff. The demand
on system resources at a university is subject to annual spikes at the
beginning of the academic terms, according to another association.
Association commenters were also concerned about the potential impact
of this rule on international personnel at colleges and universities
who face delays in securing SSNs. Its members report that many
international employees were incorrectly denied SSNs by the SSA.
According to these commenters, many who eventually received SSNs did so
only after repeated interventions by institutions and after a process
that took, in many cases, several months. These delays may be as long
as some student workers or staff members are employed by the
institution. Such individuals can be employed in a range of positions,
from short-term work-study jobs in smaller offices to long-term
research projects in large laboratories. The commenters claimed that
delays resulting from E-Verify use could jeopardize both the
individuals and employers.
Response: The Councils do not find the comments about value,
accuracy, or capacity of the E-Verify system to be bases to exempt
educational institutions from the rule, for reasons addressed elsewhere
in this final rule. Moreover, other Government contractors also attract
a foreign talent base that supports U.S. science and technology
capabilities.
However, the Councils recognize that coverage of a large number of
educational institutions was not anticipated in the proposed rule.
These entities have a large number of students with intermittent
employment, which may complicate these institutions' efforts to comply
with E-Verify requirements. Most Federal funding of universities is in
the form of Federal grants, and there are relatively few Federal
contracts, but under the proposed rule, a single contract could be
sufficient to require an entire university to use E-Verify for all its
new hires.
The Councils are also concerned that including universities under
this broad rule may increase incentives for academic institutions to
insist on grant funding rather than agreeing to enter into contracts.
This would increase costs and performance risks to the Federal
Government.
Accordingly, the Councils have reduced the burden on institutions
of higher education by revising the applicability of the E-Verify
requirements to cover only those employees assigned to a Government
contract. In order to focus this exception, it is limited to
institutions of higher education as defined at 20 U.S.C. 1001(a).
b. State and Local Governments and Governments of Federally Recognized
Indian Tribes
Comment: One commenter was concerned about whether the rule might
be misconstrued when applied to contracts under the Randolph-Sheppard
Program. The concern was whether the State licensing agency, which
signs the contract with the Federal Government on behalf of the blind
entrepreneur would be required to enroll in E-Verify.
Response: The State licensing agency would be considered the
contractor, but the Councils have decided that State and local
Governments, as well as the Governments of federally recognized Indian
tribes, should only be required to use E-Verify to verify the
employment eligibility of employees assigned to the Government
contract. The clause would be included in the contract, however, and
would flow down to covered subcontractors for services or construction,
including the blind entrepreneurs under Randolph-Sheppard.
c. Sureties
Comment: A sureties association requested a de minimis exception.
Government construction contracts require that contractors obtain
performance and payment bonds in accordance with the Miller Act, 40
U.S.C. 3131 et seq. A performance bond secures the contractor's
performance in the event of a default. If the construction contractor
defaults, the surety steps in to complete the contract using one of
three methods.
Sureties can enter into a takeover agreement with the
Government and then the surety completes the project using a completing
construction contractor.
The second method involves the surety obtaining bids for
completion of the project after which the Government contracts with the
winning bidder to complete the project.
The third method permits the surety to reimburse the
Government for the excess costs incurred by the Government to pay a
completing contractor.
The first method, where surety enters into a takeover agreement
directly with the Government, is frequently selected. Sureties are
concerned that if the rule applies to sureties who enter into takeover
agreements, then many sureties will select one of the other options to
avoid the cost of complying with the FAR rule. Additionally, issuing
performance bonds on Federal construction contracts is often a very
small portion of each surety's business because the sureties often sell
other types of insurance such as auto, homeowners and general
liability. If the FAR rule applies to all employees performing
activities unrelated to bonds as well as new hires of the surety after
the effective date of the takeover agreement, sureties may conclude
that it is too expensive to enter into takeover agreements. The
commenter also noted that when a surety enters into a takeover
agreement with the Government, the actual work of completing the
construction project is performed by a construction contractor hired by
the surety and not by the surety itself. The sureties requested a de
minimis exception ``under which companies whose contracts with the
Federal Government are a small portion of the company's total revenues
need only verify the eligibility of employees involved with the
contract.''
Response: The Councils, while not agreeing to an across-the-board
de minimis exception, have individually
[[Page 67683]]
considered the issues and agree that an exception applicable to
sureties is appropriate. E-Verify use will not be necessary unless a
surety provides a performance bond, the contractor defaults and the
surety subsequently enters into a takeover agreement with the
Government to complete the project. Prompt completion of construction
projects using the most appropriate method available is a priority and
it is not in the Government's interest to create an obligation that
will discourage sureties from entering into a takeover agreement with
the Government if such an agreement is appropriate. Therefore, E-Verify
compliance will apply only to those employees of the surety directly
assigned to the takeover agreement and to the construction
contractor(s) that are hired by the surety. The full clause
requirements will flow down to the construction subcontractors.
5. Financial Institutions
1. Comment: Several commenters recommended that banks and other
financial institutions whose contracts are limited to serving as
issuing and paying agents for U.S. savings bonds and savings notes or
being insured by the FDIC should be excluded from the e-verification
requirement. One commenter requested similar treatment for financial
institutions that are parties to financial agency agreements (FAAs)
with the Federal Government because FAAs are not subject to the FAR.
This commenter stated that FAAs explicitly state: ``This FAA is not a
Federal procurement contract and is therefore not subject to the
provisions of the Federal Property and Administrative Services Act (41
U.S.C. Sections 251-260), the Federal Acquisition Regulations (48 CFR
Chapter 1), or any other Federal procurement law.''
Response: Agreements or activities performed by financial
institutions that are not subject to the FAR are not required to comply
with the E-Verify provisions and clauses of the FAR.
2. Comment: One commenter requested clarification that the rule
applies to ``contracts in which a Federal agency is purchasing goods or
services, and does not apply to companies who purchase goods or
services from the Federal Government.''
Response: Contracts for purchase of goods by companies from the
Federal Government are not subject to the FAR and therefore are not
required to comply with the E-Verify provisions and clauses in the FAR.
6. Hospitality Industry
Comment: One commenter commented on the difficulty of applying E-
Verify to hotel employees. This commenter stated that it is impossible
to determine beforehand which specific employee would be interacting
with a guest, since many of the individual interactions are initiated
by the guest and could involve one of many possible employees in each
instance. Further, hotels do not have segregated areas for Government
employees nor do they assign specific employees to serve Government
employees. This situation is further complicated by the fact that
employers are specifically prohibited from screening existing employees
through E-Verify, except for those employees assigned to the Government
contracts.
Response: First, the revision to the proposed rule that will make
the clause inapplicable to contracts that will have a period of
performance of less than 120 days may eliminate almost all hotel
contracts from being subject to the rule. Second, the decision to allow
contractors the option of using E-Verify for all existing employees,
rather than just those assigned to the contract, will likely resolve
any remaining issue.
7. Other
a. Security Clearances
Comment: Several commenters recommended that the rule permit
employees who hold security clearances or HSPD-12 identification to be
an equivalency for use of E-Verify.
Response: HSPD-12 mandates that a person must be suitable (minimum
of a national agency check with inquiries (NACI)) in order to be issued
an HSPD-12 card. Specifically, HSPD-12 imposes certain credentialing
standards prior to issuing personal identity verification cards,
including verification of name, date of birth, and social security
number (among other data points) against Federal and private data
sources. The Councils agree that the degree of scrutiny applied to
individuals granted HSPD-12 credentials provides sufficient confidence
that any such person is likely truthful about his or her authorization
to work in the United States that additional investigation through E-
Verify is not necessary.
With regard to security clearances, the degree of scrutiny applied
to individuals granted security clearances also provides sufficient
confidence that any such cleared person is likely truthful about his or
her authorization to work in the United States that additional
investigation through E-Verify is not necessary if the security
clearance is active.
b. Hiring Halls and Intermittent Work
Comment: One commenter requested clarification about how new hires
are impacted if they are not full time employees, such as ``hiring
hall'' laborers hired for short time work on a specific project.
Response: The INA requires employers to verify the work eligibility
of all new hires. There is no exception for short-term or part-time
employment, as long as the situation involves ``employment'' as defined
in 8 CFR 274a.1(h). When the employer completes the Form I-9 process,
it should also use E-Verify to verify employment eligibility. If the
employment is for less than three days, the I-9 must be completed at
the time of hire, as opposed within the three days after hire that is
allowed for longer-term employment. In either situation, the E-Verify
query must be initiated when the I-9 process is completed. In addition,
there is an existing statutory provision regarding employment pursuant
to a collective bargaining agreement in section 274A(a)(6)(A) of the
INA, which provides that in certain cases a subsequent employer is
deemed to have complied with the Form I-9 requirements by virtue of
verification by another employer within the agreement. If a previous
employer within such an arrangement has completed the Form I-9 and E-
Verify query, a subsequent employer does not have to reverify, as long
as the employment is within the scope of the statutory provision.
c. Applicability To Change Orders and Material Modifications
Comment: Various commenters requested that the rule should
specifically clarify whether and how the new requirements would apply
to change orders or material modifications entered into after the
effective date of the regulations on base contracts that were entered
into before the regulations take effect. Another commenter recommended
that the rule should be revised to specifically disallow inclusion of
this E-Verify clause in such amendments, so that existing contractors
are allowed to complete their current contracts under the same terms
that were initially agreed upon.
Response: Inclusion of the E-Verify clause in change orders or
material modifications will be implemented on a bilateral basis.
[[Page 67684]]
D. Implementation Schedule
1. Effective Date
a. More than 30 Days After Publication of the Rule
Comment: Several commenters asked that the effective date be some
time more than the usual 30 days after publication of the final rule.
Some commenters asked for an extension, but did not ask
for a specific time period.
Many commenters asked for 120 days after publication.
Some universities and a personnel council asked for a
minimum of 180 days. One commenter justified this because it needed
time to hire and train new staff to use E-Verify, time to develop new
processes to support compliance, and time to evaluate equipment and
computer software upgrades.
Response: The rule will be effective on January 15, 2009. The
timelines for initial verifications have been increased. In the
proposed rule, verification queries on new and existing employees
assigned to the contract had to be initiated within 30 calendar days of
enrollment; whereas in the final rule it will be 90 calendar days.
Also note that the burden on some of the commenters (agriculture
and education in particular) will not be as severe as the commenters
expected. Agriculture will mostly be unaffected, due to the COTS
exception. Institutions of higher education will be able to choose to
only verify the existing employees and new hires that are assigned to
the contract. The impact on sureties has also been minimized.
b. Congressional Action
Comment: Several commenters felt the final rule should not be
published until Congress reauthorized the E-Verify program, which at
the time was set to expire in November 2008. Another commenter wanted
Congress to study the rule, or enact comprehensive immigration reform.
One commenter suggested that a one year postponement would give an
opportunity for Congress to consider the consequences of a mandatory
program.
Response: Congress reauthorized E-Verify and appropriated $100
million for the program through the end of fiscal year 2009 in the
Consolidated Security, Disaster Assistance, and Consolidated
Appropriations Act, 2009, Public Law 110-329 (Sep. 30, 2008). If in the
future Congress fails to extend E-Verify and the program is terminated,
the rule will need to be reconsidered at that time. Otherwise, the
Councils must implement the Executive Order 12989, as amended.
c. Finalization of the ``No-Match'' Rule
Comment: One commenter asked that the effective date be delayed
until the ``no-match'' rule is finalized. It pointed out that the 2007
proposed rule regarding safe-harbor steps associated with SSA's no-
match program would provide up to 90 days for employers to resolve
discrepancies within their records.
Response: The Councils disagree. As an initial matter, DHS's No-
Match Rule has been finalized with the publication of the Supplemental
Final Rule on October 28, 2008. More significantly, the comment
confuses two separate and independent programs. The DHS No-Match Rule
provides guidance to employers that receive a no-match letter from SSA
on how to conduct appropriate due diligence and settle questions raised
by the no-match letter regarding the work authorization of employees
identified by the letter. Employers that follow the steps set forth in
DHS's No-Match Rule are guaranteed a safe harbor from the use of the
no-match letter as evidence of the employer's violation of INA section
274A.
d. Finalization of the Revised MOU and Training
Comment: One commenter noted that DHS needed to finalize the MOU
prior to the effective date of the FAR rule. Another commenter expanded
upon this point to assert that DHS needs to finalize the E-Verify Web
site, training materials, and program manual prior to the effective
date of the FAR rule. A chamber of commerce wanted DHS to undertake a
nationwide program to educate and train contractors prior to the rule's
effective date.
Response: The Councils concur that implementation of the final rule
must coincide with finalization of the MOU and other necessary systems
revisions. The Councils expect that the MOU and other DHS systems and
procedures will be ready in time for the effective date of the final
rule.
e. Establishment of a Post-Final Nonconfirmation Process
Comment: One commenter, citing its experience with E-Verify, asked
that DHS adopt processes for a post-final nonconfirmation process,
initiated by either the employee or the employer, so that performance
of contracts is not hampered by unnecessary termination of work-
authorized employees.
Response: Under E-Verify rules, an employee must be permitted to
continue working until a final nonconfirmation is issued. After the
final nonconfirmation, if the employer has grounds to believe the final
nonconfirmation is in error, the employer may still allow the employee
to work, but the employer must inform DHS of its decision to retain the
worker, and if the worker is later found to be unauthorized, the
employer will be subject to a rebuttable presumption that the employer
knowingly employed an illegal alien. See IIRIRA Section 403(a)(4)(C).
Employers or employees may contact the E-Verify program if additional
time is needed to provide such documentation or if they believe a final
nonconfirmation was received in error. The E-Verify program may delay a
final nonconfirmation finding on a case by case basis in those cases
where employees have experienced delays in receiving needed
documentation that will help prove their employment eligibility, and
the program will work with the employer and/or employee to research the
case and identify the reason for the final nonconfirmation.
f. Inaccuracies in the DHS and SSA Data Bases Are Fixed
Comment: Several commenters asked the rule be delayed until DHS and
SSA fixed alleged inaccuracies in their data, which could stem from
name changes, incorrect data entry, and delayed citizenship status
updates.
Response: Some of these inaccuracies cannot be fixed until the
employee takes steps to correct the problem, and the employee will
discover the problem when the employer initiates a verification query
and receives a tentative nonconfirmation. The actual numbers of
inaccuracies can only be estimated, and the estimates vary
significantly according to the estimator. As noted above, DHS has
implemented several improvements to the E-Verify system to avoid
tentative nonconfirmation responses resulting from out-of-date
citizenship data. The Councils do not agree that the rule should be
delayed.
g. Implementation of the Westat Report Recommendations
Comment: One commenter recommended that the Westat report
recommendations be implemented before the E-Verify system is expanded.
Response: DHS's continues to improve and further develop the E-
Verify system. Many of the Westat recommendations have already been
implemented. There is no need to delay the rule.
[[Page 67685]]
h. GAO Study Completed
Comment: Some commenters asked that the rule be postponed until GAO
completed its study called for under the pending five-year re-
authorization legislation. One commenter felt the studies mandated by
H.R. 6633 (if enacted) might offer insights on ways to strengthen the
program. The first study is an examination of the causes of tentative
nonconfirmations, and the second is an assessment of the impacts on
small businesses.
Response: The Councils have decided not to postpone the rule. H.R.
6633, which has been passed by the House of Representatives, allows two
years for the GAO study of the impact of E-Verify Pilot Program on
small businesses, including specific details on small entities
operating in States that have mandated the use of E-Verify. The bill
has not been passed by the Senate, but it does not request that any
further implementation of E-Verify be held up pending completion of the
study. In addition, Congress reauthorized E-Verify and appropriated
$100 million for the program through the end of fiscal year 2009 in the
Consolidated Security, Disaster Assistance, and Consolidated
Appropriations Act, 2009, Public Law 110-329 (Sep. 30, 2008), without
requiring this study, and it does not appear that there will be any
additional legislative developments on E-Verify in the 110th Congress.
2. Phased Transition
a. General
Comment: One commenter suggested that because of the existing
``error rates'' and capacity concerns, the Government should take a
more measured or phased approach in increasing E-Verify participation,
rather than implementing a rule that will encompass almost all
Government contractors within a very short period. Another commenter
argued that USCIS indicated the current issues could be adequately
addressed in four to five years, which suggests that neither DHS nor
SSA anticipated that the agencies would be required to immediately
implement full coverage for all contractors at one time and instead
contemplated a more realistic implementation period of anywhere from
four to five years.
Response: The Councils have decided that a delay in the
implementation of the rule is not necessary. DHS and SSA have stated
that they are ready to handle full implementation.
b. Four-Phase Transition
Comment: One commenter recommended a four-step phase-in--
New employees of prime contractors;
New employees of subcontractors; following this, the
Councils should evaluate the success of the program for new employees
before proceeding to:
Existing employees of a prime contractor assigned to a new
Federal contract; and then
Existing employees of new subcontractors.
Response: The Councils must implement the Executive Order
expeditiously. The time periods for verification have been lengthened,
to ease the burden on employers.
c. From Largest to Smallest Contractors or Contracts
Comment: Several commenters recommended phased implementation, over
periods of up to 7 years, based on number of employees of the
contractor, or the number of employees required to effectuate the
contract.
The first year of the program would be for the largest
noncommercial contracts, and gradual rollout over the next four years
in descending order of size, measured by the number of employees who
would be required to effectuate the contract.
Apply the first year to contractors and subcontractors
with 2,000 or more employees. Do not count harvest-time employees as if
they were year-round employees in measuring the number of employees for
a phase-in.
Response: The Councils do not expect agricultural employers to be
significantly affected by this rule, because of the COTS exemption.
Implementation of the suggested phase-in would be very difficult, and
the Councils have decided against this proposal. The dollar threshold
exception for prime contracts has been raised to $100,000 (which will
especially help small business) and the verification deadlines
lengthened.
d. By Agency
Comment: One commenter suggested a phase-in over a period of time
or perhaps by agency.
Response: The phase-in by agency is an interesting suggestion.
However, the Councils do not believe it is necessary to phase-in by
time or agency. DHS and SSA are prepared to support implementation of
this rule as revised.
3. Applicability to Indefinite Delivery/Indefinite Quantity Contracts
a. Existing IDIQs
Background: The proposed rule's preamble stated that the proposed
rule: ``Applies to solicitations issued and contracts awarded after the
effective date of the final rule in accordance with FAR 1.108(d).''
Under the final rule, Departments and agencies should, in accordance
with FAR 1.108(d)(3), amend existing indefinite-delivery/indefinite-
quantity (IDIQ) contracts to include the clause for future orders if
the remaining period of performance extends at least six months after
the effective date of the final rule and the amount of work or number
of orders expected under the remaining performance period is
substantial.
1. Comment: One commenter suggested that not applying the rule to
existing IDIQ contracts would enable a more even rollout of the
program.
Response: The Councils have been advised that DHS and SSA are
prepared to process E-Verify queries of contractor employees subject to
the rule, including those performing under existing IDIQ contracts.
2. Comment: The same commenter objected to applying the rule to
existing IDIQ contracts because companies made business decisions to
bid on these contracts initially without contemplating the significant
cost that will be incurred as a result of this new requirement.
Response: The contracts would be modified on a bilateral basis. The
contractor will be able to decide whether it wishes to accept the
clause. There can be no unilateral imposition of the clause on any pre-
existing IDIQ contract without the contractor's consent.
b. Cost Recovery for Modified Contracts
Comment: Two commenters asked for the rule to spell out the amount
contractors would receive to implement compliance on existing IDIQ
contracts.
Response: The FAR does not normally spell out the amount of
consideration it expects the Government to pay on a contract
negotiation. This is a contract-by-contract issue determined by
individual contracting officers.
c. Meaning of ``Substantial''
Comment: One commenter asked the Councils to define ``substantial
work'' or ``substantial number of orders.''
Response: The interpretation of ``substantial'' will be within the
discretion of the contracting officer. The normal use of the word
applies.
d. Meaning of IDIQ Contract.
Comment: One commenter stated that the FAR proposed rule would
require re-verifying all employees currently employed under
``indefinite delivery/indefinite quantity'' contracts, and that most
university Federal grants are multiyear agreements under which
[[Page 67686]]
thousands are employed. Another commenter discussed a multiyear
contract it had with HHS to provide social services on a national level
to victims of human trafficking, where HHS paid for services, up to a
certain amount, and for a fixed period, to victims of trafficking on a
per capital basis. This commenter asserted that--
Its contract was not IDIQ;
A contract extension is not a new contract; and
A Federal contract for the provision of mainly social
services to victims of trafficking is not an IDIQ contract.
Response: The commenters may be somewhat confused about what a FAR
IDIQ contract is. A grant is not an IDIQ contract; grants are not
covered by the FAR. A contract for social services to victims of
trafficking might be an IDIQ contract. The contract itself will say
whether it is an IDIQ contract; if so it would contain an IDIQ clause,
such as 52.216-22 ``Indefinite Quantity.'' IDIQ contracts are described
in the FAR at Subpart 16.5, especially at 16.504.
E. Regulatory Flexibility Analysis and/or EO 12866/Regulatory Impact
Analysis/Paperwork Reduction Act
1. Benefit Analysis Issues
Comment: Several commenters believe this rule will increase the
Government's cost of doing business because many contractors will pass
back to the Government their costs of using E-Verify. Also, commenters
claim that this rule will mean fewer businesses will want to bid on
Government contract work.
Response: The Councils concur that this rule may result in
additional compliance costs for contractors, and these additional costs
could be passed back to the Government. However, Executive Order 12989,
as amended, requires that contractors use an electronic employment
eligibility verification system designated by the Secretary of Homeland
Security to verify the employment eligibility. The President has found
that Executive Order 12989 ``is designed to promote economy and
efficiency in Federal Government procurement. Stability and
dependability are important elements of economy and efficiency. A
contractor whose workforce is less stable will be less likely to
produce goods and services economically and efficiently than a
contractor whose workforce is more stable.'' Consequently, the
President has made the finding that the increased economy and
efficiency to the Government as a result of this rule outweighs the
cost of the rule.
2. Cost Estimates
a. On Contractor
1. Comment: Commenters, including the SBA Office of Advocacy, argue
that the Initial Regulatory Flexibility Analysis (IRFA) did not
consider all of the relevant costs. They state that profit margins vary
by industry, and even very low compliance costs could be significant
for some businesses. For example, in the architecture and engineering
contracting environment, the maximum allowable profit margin is six
percent. Commenters also claim that the analysis did not consider costs
such as the social welfare cost or the cost of penalties and lawsuits.
Response: The IRFA fully complied with the requirements of the
Regulatory Flexibility Act, 5 U.S.C. 603. The IRFA compared estimated
compliance costs for four distinct sizes of small business (10, 50,
100, and 500 employees) to the respective revenue of these businesses,
using information obtained from the Small Business Administration.
The Councils do not agree that a compliance cost burden of 0.03
percent of revenue could typically be regarded as a significant
economic impact. The Councils further disagree that it would be
appropriate to add additional cost factors such as the ``upcoming three
percent mandatory IRS withholding'' when these costs are not direct
compliance costs of the rule.
With regard to the full social welfare cost of the rule, Regulatory
Flexibility Analyses are only to include the direct impacts of a
regulation on a small entity that is required to comply with the
regulation. Mid-Tex Electric Coop. v. FERC, 773 F.2d 327, 340-343 (D.C.
Cir. 1985) (holding indirect impact of a regulation on small entities
that do business with or are otherwise dependent on the regulated
entities not considered in RFA analyses). See also Cement Kiln
Recycling Coalition v. EPA, 255 F.3d 855, 869 (D.C. Cir. 2001) (In
passing the Regulatory Flexibility Act, ``Congress did not intend to
require that every agency consider every indirect effect that any
regulation might have on small businesses in any stratum of the
national economy. * * * [T]o require an agency to assess the impact on
all of the nation's small businesses possibly affected by a rule would
be to convert every rulemaking process into a massive exercise in
economic modeling, an approach we have already rejected.''). See, also,
Regulatory Flexibility Improvements Act, Hearing before the
Subcommittee on Commercial and Administrative Law, Committee on the
Judiciary, on H.R. 682, 109th Cong., 2nd Sess. (2006), at 13 (Statement
of Thomas Sullivan, Chief Counsel for Advocacy, Small Business
Administration, testifying on the RFA by noting that ``the RFA * * *
does not require agencies to analyze indirect impacts.'').
2. Comment: A commenter stated that OMB guidelines direct agencies
to account for all regulatory (i.e., non-budgetary) costs and that, in
general, costs that are not within the discretion of an agency to avoid
or prevent are properly attributable to the statute, and an agency may
assign them accordingly. The commenter further stated that,
nevertheless, all regulatory (i.e., non-budgetary) costs must be
accounted for and must be included in the IRFA.
Response: The commenter has confused the requirements of the
Regulatory Flexibility Act, 5 U.S.C. 601 et seq. (RFA), with the
requirements of other administrative reviews. For example, the
commenter is apparently suggesting that the IRFA should comply with OMB
Circular A-4 and Executive Order 12866. These analyses are not required
by the RFA, nor are they mandated for this rule under any other
provision of law. The internal, managerial nature of this and other
similarly-worded Executive Orders has been recognized by the courts,
and actions taken by an agency to comply with the Executive Order are
not subject to judicial review. Cal-Almond, Inc. v. USDA, 14 F.3d 429,
445 (9th Cir. 1993) (citing Michigan v. Thomas, 805 F.2d 176, 187 (6th
Cir. 1986)). Although the requirements of the RFA analysis is fairly
compatible with many of the analytical requirements under OMB guidance,
the comments invoking Executive Order 12866 and OMB Circular A-4
standards to identify alleged deficiencies in the IRFA are misplaced.
3. Comment: A commenter stated that, upon hiring a new worker or
upon assigning an employee to Federal contract work, and running the
employee against E-Verify, the employer who receives a tentative
nonconfirmation for an employee must continue to pay and train the new
employee, only to possibly find out later that the worker cannot
resolve the nonconfirmation and must be terminated. According to the
commenter the IRFA should have taken these costs into account.
Response: The economic analysis included a cost of $5,000 in
termination and replacement expenses for each authorized employee that
is terminated or resigns employment due to this rule. This $5,000
estimate is meant to include the full range of the direct costs of
termination, such as administrative expenses and training costs.
[[Page 67687]]
4. Comment: The SBA Office of Advocacy claimed that the economic
analysis did not distinguish between prime small business contractors
and small business subcontractors and that there is a disproportionate
compliance cost burden on small business subcontractors.
Response: It is not clear how the direct cost of complying with the
rule would materially differ depending on whether the contractor was a
prime contractor or a subcontractor. The commenter did not give any
specific examples of how a subcontractor's direct compliance costs
would differ from a prime contractor's direct compliance costs.
5. Comment: The SBA Office of Advocacy stated that some contractors
in the construction or manufacturing industries, for example, can have
hundreds of employees and still be considered small. The commenter
claimed that it is doubtful that DHS' $419 figure is an accurate
statement of the costs of the rule to these small businesses.
Response: The economic analysis did not state the cost to a
contractor with ``hundreds of employees'' would be $419. The economic
analysis presented information showing how the rule would impact four
sizes of small entities (10, 50, 100, and 500 employees) by comparing
their estimated compliance costs to their respective revenues. The
estimate of $419 was for a contractor with ten employees. The economic
analysis estimated the compliance cost to a company with 500 employees
to be $8,964, so the Councils agree with the commenter that a
contractor with hundreds of employees would be expected to incur more
than $419 in compliance costs.
6. Comment: The SBA Office of Advocacy stated that if, after
reviewing the comments received regarding its RFA certification, the
FAR Council has reason to believe that it can no longer certify that
the proposed rule will not have a significant economic impact on a
substantial number of small entities, then the FAR Council should
examine feasible alternatives that would lessen the burden on small
entities. In that event, the commenter stated that the FAR Council
should also publish an IRFA detailing those alternatives, describing
the scope and impacts of the proposed rule on small entities, and
provide another opportunity for small businesses to comment prior to
publication of the final rule.
Response: The Councils did prepare an Initial Regulatory
Flexibility Analysis. The Councils did not certify that the rule would
not have a significant economic impact on a substantial number of small
entities. For the final rule, the Councils have prepared a Final
Regulatory Flexibility Analysis. The proposed rule, at 73 FR 33379,
explained the alternatives that were considered in order to minimize
the impact of the rule on small entities. The Councils have considered
additional alternatives in the FRFA based on public comments.
7. Comment: Many commenters argued that the assumption contained in
the economic analysis that the costs related to unauthorized workers,
such as the turnover and replacement costs and lost productivity costs
due to the employment of unauthorized workers ``are attributable to the
Immigration and Nationality Act, not to the Federal Acquisition
Regulation'' would be true only if the Immigration and Nationality Act
imposed on employers a continuing duty, post-hire, to investigate the
immigration status of existing employees. The commenters are of the
opinion that the Act imposes no such duty, and that Congress
deliberately decided against imposing such a duty when it enacted IRCA
in 1986. They argue that an employer who is currently employing
unauthorized employee Jane Roe, after having hired her in 2002 in full
accordance with I-9 procedures, and who has no knowledge or suspicions
as to Roe's immigration status, is not breaking any law and is not
illicitly avoiding any cost of doing business by keeping Roe in its
employ without periodically investigating her status. Therefore, the
commenters conclude that any new regulation that would force the
employer to investigate Roe and acquire the knowledge that would
require the employer to terminate her and replace her would impose a
cost on the employer.
Response: The Immigration and Nationality Act expressly prohibits
employers from knowingly continuing to employ an alien who is not
authorized to work in the United States. INA section 274A(a)(2), 8
U.S.C. 1324a(a)(2). How an employer obtains knowledge of an employee's
illegal status is immaterial--employers that have actual or
constructive knowledge of their employees' illegal work status are
statutorily obligated to cease their employment, and any costs that
result are attributable to the statute, not to this rulemaking.
The commenters suggest that they would not have discovered the
illegality but for their compliance with this rule, and that the
consequences of their discovery should be accounted as a cost of this
rule. This argument appears to rest on the belief that the INA's
prohibition on illegal employment applies only until the employee has
filled out the Form I-9. While it may be that many employers have taken
a misguided ``see no evil'' approach under which they hope to avoid
learning inconvenient truths about the legal status of their existing
workforce, that is not an approach that is countenanced by the INA.
While the cost of terminating or replacing unauthorized workers
cannot properly be considered a cost of this rule, some turnover
involving legal workers that are unable or unwilling to resolve their
tentative non-confirmations can be counted as a cost of the rule. Such
turnover costs for legal workers were estimated in the IRFA and Final
Regulatory Flexibility Analysis (FRFA).
8. Comment: A commenter stated that the economic analysis assumes
that the employee would bear the cost of driving to SSA, ``but it will
be the employer who likely will bear the salary cost of that time.'' In
addition, the commenter believed that contractors and subcontractors
will suffer far larger lost opportunity and productivity costs than
those included in the economic analysis.
Response: The Councils disagree with the commenter. The economic
analysis actually assumes the employer would incur a lost productivity
cost 100% of the time an authorized employee needed to visit SSA to
resolve the tentative non-confirmation and used ``fully-loaded'' wages
to estimate lost productivity. A fully-loaded wage includes such
benefits as retirement and savings, paid leave (vacations, holidays,
sick leave, and other leave), insurance benefits (life, health, and
disability), legally required benefits such as Social Security and
Medicare, and supplemental pay (overtime and premium, shift
differentials, and nonproduction bonuses). The Councils used data from
the Bureau of Labor Statistics in order to estimate the fully-loaded
wage. Nevertheless, in practice we believe some employers may not incur
lost productivity or opportunity cost if the employee takes personal
time to resolve their non-confirmations. Also, to the extent employers
have the capability to plan around employee absences and other
employees are available, the productivity losses estimated in the
economic analysis could be higher than what employers may actually
incur. Given the fact that the economic analysis estimated a lost
productivity cost 100 percent of the time an authorized employee needed
to visit SSA at the fully loaded wage rate for a full eight hour day,
the Councils
[[Page 67688]]
do not believe that the lost-productivity cost estimate for going to
SSA is unreasonable.
9. Comment: Commenters stated that the economic analysis did not
allocate costs for the time required for employers to identify covered
employees and manage compliance with E-Verify. For new employees,
commenters noted that these costs are admittedly nominal, as new
employees are self-identified, and the E-Verify process goes hand-in-
hand with the I-9 process already required. But the commenters stated
that this is not the case for current employees because--
To comply with current employee requirements, the employer
must first take steps, through performance file review or manager
interviews, to determine which employees are subject to the current
employee obligation;
Once the covered employees are identified, the employer
must then ascertain if an E-Verify query is required, by checking E-
Verify or I-9 records to see if a prior query was obtained;
If not, the employer must then proceed to obtain the
information necessary to conduct an E-Verify query for all such
employees.
Response: The rulemaking requires existing employees assigned to
the contact to be vetted through E-Verify. The economic analysis
accounted for the marginal cost of the time it would take to execute
the queries for the existing employees; however, the Councils agree
that additional time should be added to account for the time needed to
identify the covered existing employees.
Contractors will incur an opportunity cost of time to determine
which of their existing employees will actually need to be vetted.
After those employees have been identified, the contractor will review
the employee's previously completed I-9 form to see if the I-9 complies
with the terms of E-Verify enrollment. If the I-9 meets the criteria
for E-Verify enrollment, the human resources specialist is expected to
contact (by telephone for example) the employee to ensure that the
information on the existing I-9 is still accurate (such as the stated
basis for work authorization).
Some commenters appear to have assumed that each I-9 required a
``face-to-face'' meeting between the employee and a company
representative. A ``face-to-face'' meeting may not be necessary if the
I-9 does not need to be updated. Contractors will not normally need to
spend several minutes with each employee discussing the need to confirm
their Form I-9 information. For example, many contractors may send out
an e-mail to their employees or otherwise communicate to alert them
that human resources may be contacting them in the future to validate
the information on their I-9. However, there will be occasions when a
face-to-face meeting will have to be arranged between the human
resources specialist and an employee (to review E-Verify acceptable
work authorization documents for example). Assuming an average of 20
minutes for a human resources specialist to review an existing I-9 and
either call an employee to validate this I-9 or meet with the employee
to review documents and an employee's average opportunity cost of 10
minutes to discuss the I-9 information, the RIA will be updated. In
addition, the RIA will include an assumption that 10 percent of the
time a second 20 minute contact (phone call or meeting) between the
employee and human resources specialist could be necessary to resolve
any additional I-9 issues related to E-Verify.
10. Comment: A commenter stated the economic analysis estimates 3.5
million Government contractor employees will be required to be vetted
through E-Verify in 2009. Using the Government's own estimate, the
commenter stated that about 370,000 employees will be terminated even
though they are legally entitled to work in the United States.
Another commenter stated that in the economic analysis of the
proposed rule, the assumption is made that 3.8 million employees of
Federal contractors will be required to be run through E-Verify as a
result of this rule for the first year the rule is in effect. Based on
prior statements by DHS, the commenter notes that two percent of these
workers will ultimately be fired because of their inability to resolve
a tentative non-confirmation with the SSA or DHS. Thus the commenter
calculates that, as a conservative estimate, approximately 70,000
lawfully authorized workers will be fired as a result of this rule.
Response: The economic analysis estimated that two percent of the
cases where the tentative non-confirmation was not resolved could
potentially result in an authorized worker either choosing to resign
instead of working diligently to resolve the tentative non-confirmation
or the employee being terminated. The economic analysis indicated that
5.3 percent of the time there was a tentative non-confirmation that was
not resolved. Multiplying 2 percent times 5.3 percent equals 0.106
percent. In order to estimate the number of authorized employees that
choose to get employment elsewhere or otherwise do not resolve the
tentative non-confirmation (for whatever reason), multiply the
3,831,992 employees vetted through E-Verify times 0.106 percent to get
4,060 authorized employees, not the 370,000 stated by the one
commenter, nor the 70,000 ``fired'' as stated by the other commenter.
11. Comment: A commenter stated the RIA subtracted 10 percent of
contract dollar volume but did not provide any basis for that
assumption.
Response: Page 21 of the RIA stated that 10 percent was the
approximation for contracts with no work performed in the U.S. The
Federal Procurement Data System--Next Generation was the source of that
information.
12. Comment: A commenter stated the economic analysis assumes that
labor turnover at Government contractors mimics the annual labor
turnover rates in private industry. Multiplying the calculated number
of employees (1.5 million) by 1.4 yields 2.2 million contractor
employees, a number that is compounded at a 5 percent annual rate for
future years. The commenter stated that this appears to be a reasonable
first approximation because contractors are not burdened by civil
service rules that effectively forbid employee termination. The problem
is that this assumption is logically inconsistent with the previous
assumption that contractor labor and Government labor earn the same
wages and salaries. The commenter concludes that, if this were true,
turnover in Government employment would be no different than private
sector turnover.
Response: The economic analysis stated ``in order to adjust for
turnover we assumed an annual turnover rate of 40.7 percent as the
Bureau of Labor Statistics (BLS) estimated the annual turnover rate for
all industries and regions in 2006 at 40.7 percent.'' We disagree that
it is ``logically inconsistent'' to assume for the purposes of the
economic analysis that Federal Government contractors have a turnover
rate that is equivalent to the turnover in ``all industries and
regions'' in the U.S. It is not entirely clear if the commenter
believes the turnover rate used in the economic analysis is too high or
too low as the commenter did not suggest a specific turnover rate that
should be used in place of the 40.7% rate used in the economic
analysis.
According to the BLS publication Job Openings and Labor Turnover:
January 2007 (which is the same source used for the 40.7% turnover
estimate), the turnover rate for the federal government was 25%. It is
very possible that the turnover rate for the federal government
contract workforce more closely resembles the 25% turnover in the
federal workforce than the 40.7% ``all
[[Page 67689]]
industries and regions'' turnover rate used in the economic analysis
and that we have overestimated the number of employees vetted through
E-Verify. However, there are more factors involved with turnover than
simply pay. For example, the perceived increased job security of
federal employment compared with the private sector likely influences
the federal turnover rate. Also, the pension a federal employee
receives is based on age and years of service and likely serves to
encourage federal workers who have accrued significant amount of
federal service not to leave federal employment. Many federal employees
also choose to work for the federal government in order to serve the
public good. Consequently, we did not feel it was appropriate to assume
that federal contractor turnover rate was equivalent to the federal
government turnover rate since there are nonwage considerations
involved with job turnover. If federal contract employees do have a
turnover rate closer to the federal government of 25% rate than the
40.7% estimated in the analysis, the amount of turnover and number of
employees vetted through E-Verify have been overestimated in the
economic analysis and the costs of the rule are therefore an
overestimate.
13. Comment: A commenter stated the RIA includes what is described
as an uncertainty analysis, but in fact it consists of merely a
numerical sensitivity analysis with respect to two assumptions: (1) The
number of contractors and subcontractors affected by mandatory E-
Verify; and (2) the number of contractor and subcontractor employees
that would be vetted through mandatory E-Verify. The commenter stated
that ``[t]he product of this `uncertainty analysis' is a series of
impressive looking, but substantively and presentationally misleading
color graphs.'' The commenter also claimed that this analysis violates
Office of Management and Budget's Guidelines for Ensuring and
Maximizing the Quality, Objectivity, Utility, and Integrity of
Information Disseminated by Federal Agencies (2002); Notice and
Republication.
Response: The Regulatory Flexibility Act does not require any
sensitivity analysis or uncertainly analysis be performed in an IRFA.
However, the RIA provided a sensitivity analysis simply to show how the
costs of the rule could change if the primary estimates of two key cost
drivers were varied. First, the sensitivity analysis varied the number
of employees that are vetted through E-Verify (holding all else
constant) and determined how the overall cost of the rule would change.
Secondly, the sensitivity analysis varied the number of covered
contractors and subcontractors (holding all else constant) that have to
be enrolled into E-Verify and determined how the overall cost of the
rule would be impacted. Finally, the sensitivity analysis varied both
the number of employees and the number of contractors simultaneously in
order to get an overall sense of how uncertainty in these two key
variables impacts the overall cost.
The model developed by the Councils to estimate the number of
employees vetted through E-Verify included variables that were informed
by professional judgment. Such variables include the contract
percentage for labor (26 percent), overhead (26 percent), material
expenses (26 percent), general and administrative (12 percent),
subcontractors (20 percent), and the average wage of a Federal contract
worker ($66,705). (Some of these figures are percentages of others.)
Changes in any of these variables would impact the estimate of the
number of employees vetted through E-Verify. As the estimate of the
number of employees vetted through E-Verify is directly influenced by
these variables, we believe it is useful to show how the overall costs
of the rule could change if the number of employees vetted changed. The
Councils continue to believe its estimate of the number of employees
vetted through E-Verify is reasonable; but the sensitivity analysis
does show how the costs would change if the number of employees
estimated were varied by 50 percent using a triangular distribution.
The estimate of the number of primary contractors within the scope
of the rule is based on a query of the Federal Procurement Data System-
Next Generation and is not based on a professional estimate. However,
the number of covered subcontractors that are not otherwise a prime
contractor is not available and this variable is a professional
estimate. The sensitivity analysis shows how the costs would change if
the number of covered contractors estimated were varied by 25 percent
using a triangular distribution. Both the 25 percent and 50 percent
ranges used in the sensitivity analysis were selected based on
professional judgment.
14. Comment: A commenter disagreed with the Fiscal Year 2007
estimate that 3,475,730 employees will be vetted through E-Verify. The
commenter believes that the Government is assuming that 75 percent of a
contractor's employees will be assigned to a contract while only 25
percent will not. The commenter knows of many large employers and with
few exceptions the portion of their revenue derived from Federal
contracts is significantly less than 25 percent. The commenter believes
many more employees will be vetted through E-Verify than has been
estimated by the Government. Thus the commenter concluded that the
costs have been understated.
Response: The Councils agree that there are numerous businesses
which contract with the Federal Government but derive a relatively
small portion of their revenue from the Federal Government. However,
there are also many contractors that have enough Federal contracting
business that they have organized themselves into business units that
concentrate on Federal contracting sales. The estimate takes into
account both businesses that do both relatively little Federal
contracting and those that do extensive Federal contracting.
Many commenters appear to be interpreting the term ``contractor''
in an overbroad fashion. Only the legal entity that signs the contract
is bound by the E-Verify obligation, not necessarily all affiliates or
subsidiaries of that entity. Each contractor has the ability to
organize or incorporate itself as it chooses, and questions of whether
certain entities are a part of the contracting legal entity can only be
answered in specific factual contexts.
Regarding the commenter's belief that the number of employees
vetted through E-Verify is understated, there were several assumptions
made when conducting the economic analysis that may mean the actual
number of employees vetted has been overestimated. The proposed rule
does not apply to any employees hired prior to November 6, 1986, as
these employees are not subject to employment verification under INA
section 274A, 8 U.S.C. 1324a. The economic analysis did not remove any
of these workers from the estimate of the number of employees vetted.
In addition, several States have laws that already require varying
degrees of E-Verify use. There are also Federal contractors that have
already chosen to enroll in E-Verify that do not operate in a State
with an E-Verify requirement. Since many Federal contractors are
already enrolled in E-Verify or operate in a State with an E-Verify
requirement, these contractors have already incurred many of the
enrollment costs of this rulemaking and their newly hired employees
would be vetted through E-Verify even absent this rulemaking. The
economic analysis did not reduce the cost estimate to account for the
costs of
[[Page 67690]]
employers who have already enrolled in E-Verify.
Furthermore this final rule has narrowed the scope of those
required to be vetted through E-Verify. For example, the final rule
clarifies that the E-Verify requirement does not apply to prime
contracts with performance periods of less than 120 days and raises the
threshold for prime contractors to the simplified acquisition threshold
($100,000) instead of the micro-purchase threshold ($3,000). However,
the estimate of the number of employees vetted through E-Verify has not
been reduced. We believe for these reasons the cost estimates are not
understated.
15. Comment: Other commenters, including the SBA Office of
Advocacy, that believed that the number of contractors that will be
vetted through E-Verify has been underestimated criticize the fixed
factors (e.g., 26 percent for labor) used in the economic analysis as
well as the estimate that the number of subcontractors is assumed to
equal 20 percent of the number of prime contractors. One commenter
claims that the estimates used by the Councils are not based on
``empirical data'' and that the economic analysis was not explicit
regarding how these factors were determined.
Response: The dollar value of the contracts estimated to be within
the scope of the rule was found by querying the Federal Procurement
Data System and does not rely on an estimate by the Councils. Instead
of simply providing a ``top-level'' estimate, the Councils developed a
model to estimate the number of employees that would be expected to be
vetted through E-Verify. The factors utilized (e.g., 26 percent for
labor) are all multiplied against the estimated dollar value of
contracts. When describing the percentage estimates used to estimate
factors utilized, the economic analysis specifically stated ``we
understand these assumptions are rough and we welcome public comment
providing more precise information.'' However, the commenters have not
provided better information.
We note that the analysis required by the Regulatory Flexibility
Act need not produce statistical certainty. The law requires that the
Councils ``demonstrate a `reasonable, good-faith effort' to fulfill
[the RFA's] requirements.'' Ranchers Cattlemen Action Legal Fund, 415
F.3d 1078, 1101 (9th Cir., 2005). See also Associated Fisheries of
Maine v. Daley, 127 F.3d 104, 114-15 (1st Cir. 1997). The IRFA and
economic analysis produced by the Councils in this rulemaking meet that
standard. The assumptions underlying the economic analysis are
reasonable, and the Councils have utilized the best data available to
produce the IRFA and the economic analysis. We continue to believe the
estimates we provided are reasonable.
16. Comment: A commenter stated that over 54 million people are
currently employed by companies that work on Government contracts
(commenter cited Wall Street Journal Examines How Federal Government
Use of Contract Workers Contributes to Number of Uninsured U.S.
Residents, Wall Street Journal, 26 March 2008). The commenter assumed
an 8 percent error rate for E-Verify, and claimed that as many as
432,000 legal employees could have their employment disrupted.
Response: The article cited by the commenter stated there were
``5.4 million Federal service-contract workers'' not the 54 million
contract workers cited by the commenter. We note that the 5.4 million
estimate may include contracts that are not covered by the rule. For
example, the scope of the rule excludes contracts that do not include
any work that will be performed in the United States.
The Councils disagree that 432,000 legal employees will have their
employment disrupted. The economic analysis stated there was a 5.8
percent tentative non confirmation rate. Multiplying 3,831,992
employees by 5.8 percent equals 222,256 employees (who are both
authorized and unauthorized) that would receive a tentative non-
confirmation under the projections in the economic analysis. Current
experience with E-Verify shows that about 0.5 percent of employees
successfully take steps to resolve the tentative non-confirmation,
which equals 19,160 authorized employees who may be required to resolve
a tentative nonconfirmation.
17. Comment: The SBA Office of Advocacy stated that the Regulatory
Planning and Review section of the rule states that the rule will
impact 168,324 businesses. The commenter further stated that the
regulatory flexibility analysis states that there will be 162,125 small
businesses affected by the rule. The commenter concludes that the
public is left to assume that there are 162,125 small business with
prime contracts and subcontracts. The commenter cites data from the
Small Business Administration that in FY 2006 agencies awarded
$60,703,667,336 to small business subcontractors. The commenter
calculates that if this amount were distributed to 162,125 small
business subcontractors it would mean that each business received on
the average a contract valued at $375,000. However, the commenter noted
that DHS cites the average annual revenue of a ten-person firm as
approximately $1.4 million.
Response: The estimate of 168,324 contractors impacted is the FY09
annual estimate. However, the 162,125 small business subcontracts is
not an annual estimate. As noted in the proposed rule at 73 FR 33378,
``while there are no reliable numbers for subcontracts awarded to small
businesses, the Dynamic Small Business database of the Central
Contractor Registration--a database of basic business information for
contractors that seek to do business with the Federal Government--gives
a number of 324,250 small business profiles that are registered.
Assuming that 50 percent of these small businesses contract with the
Federal Government at either the prime or subcontract level, then that
number is 162,125 small businesses.'' Registration with the Central
Contractor Registration (CCR) does not mean the small business is
currently or ever will be a Federal contractor; it simply means the
registrant seeks to do business with the Federal Government.
Consequently, dividing 50 percent of the small business CCR registrants
(162,125 small businesses) by the FY 06 SBA estimate of $61 billion in
small business contract awards may yield $375,000, but the meaning of
that statistic is not clear.
As explained in the economic analysis, the estimate of average
annual revenue of $1.4 million for a ten-person firm is based on data
from the Small Business Administration. We have no reason to believe
this data from SBA is unreliable. We assume many small businesses have
revenue from sources other than Federal Government contracts. The
economic analysis also made no claim that a ten-person firm was the
average size of a small business that received a Federal contract.
Rather, it presented information on how the rule would impact four
sizes of small entities (10, 50, 100 and 500 employees) by comparing
their estimated compliance costs to their estimated respective
revenues.
18. Comment: Commenters noted that, in order to comply with the E-
Verify MOU, employers agree to only accept ``List B'' documents listed
on the Form I-9 that contain a photo. Commenters stated that the cost
of obtaining a photo ID for those employees should be included as a
cost of this rule. In addition, commenters stated that 11 percent of
U.S. citizens do not currently have a photo ID and cited the Brennan
Center for Justice's report entitled ``Citizens Without Proof, A Survey
of Americans' Possession of Documentary Proof of Citizenship and Photo
[[Page 67691]]
Documentation, Brennan Center for Justice, New York School of Law,
November 2006.''
Response: The cost of obtaining a photo ID should be included as a
cost of the regulation, and it has been added into the economic
analysis. However, the Councils do not agree that 11 percent of the
employees covered by the requirements of the rule might not have a
photo ID.
The entire study cited by the commenter was only three pages and
did not include many details such as survey methodology and how the
results were determined. In addition to the Brennan survey cited by the
commenter, a publicly available American University study entitled
``Voter IDs Are Not the Problem: A Survey of Three States'' was
reviewed. (American University Center for Democracy and Election
Management, January 9, 2008. http://www.american.edu/ia/cdem/pdfs/
VoterIDFinalReport1-9-08.pdf). This survey of 2,000 registered voters
in Indiana, Maryland, and Mississippi determined that, overall, only
1.2 percent of the total respondents lacked Government-issued photo
identification. Comparing the results of the American University study
with the Brennan survey shows there appears to be considerable
disagreement among the estimates of the percentage of Americans without
a photo ID.
However, it is not clear how either the results of the Brennan
study or the American University study is definitive for the purposes
of the final rule's economic analysis. The rulemaking is regulating
federal contractors. The universe of federal contractors is not
directly comparable to either the population of ``voting-age American
citizens'' (the Brennan survey sample) or ``registered voters'' (the AU
study sample). Both the ``voting-age American citizen'' and
``registered voter'' populations by definition include people not in
the workforce.
Consequently, the final economic analysis will assume 0.5 percent
of workers vetted through E-Verify will need to obtain a photo ID and
that employers will incur an eight-hour opportunity cost so that the
employees can obtain a photo ID.
19. Comment: Commenters believed that the costs of implementing the
rule are underestimated.
Response: The Councils agree in part, and have reviewed the
economic analysis with the E-Verify program and have increased certain
enrollment and training time cost estimates in the economic analysis
for those contractors that enroll in E-Verify. Additional costs have
been added for employers to identify those existing employees that need
to be vetted through E-Verify. Consequently, the estimated
implementation costs have increased for the final rule relative to the
costs estimated for the proposed rule. Another category of
implementation costs was added to the economic analysis. This category,
called ``Miscellaneous Implementation Costs,'' is estimated to be an
additional 10 percent of the total calculated implementation costs
(such as employer enrollment, reviewing and updating the I-9's of
existing employees, the purchase of a computer) to cover costs
companies may incur to execute the rulemaking requirements, such as
planning.
20. Comment: A commenter stated that the proposed rule requires
contracting officers to modify covered existing indefinite quantity/
indefinite delivery (IDIQ) contracts to add the proposed E-Verify
contract clause. Commenters believe the RIA excludes the cost of
modifying these IDIQs and that the Government will need to engage in
negotiations with these IDIQ contractors. In addition, the commenter
believes the Government will owe ``consideration'' to the contractors
in exchange for agreeing to include the E-Verify contract clause. The
commenter believes, based on the professional estimate of a former
Federal procurement official, that the number of existing IDIQ
contracts that would need to be modified is approximately 10,000.
Response: The Councils agree that the economic analysis did not
include the cost of modifying these IDIQ contracts, but disagree
regarding the extent of the cost burden of these modifications. For the
purpose of the economic analysis, the commenter's estimate that 10,000
existing contracts will need to be modified was used. However,
extensive ``negotiations'' between the Government and the contractors
are not expected. The final economic analysis uses a two-hour
opportunity cost of time for the contractor to process the modification
and have discussions with the Government, if needed.
The Federal Register does not normally spell out the amount or type
of consideration the Government expects to pay on a contract
negotiation. This is a contract-by-contract issue determined by
individual contracting officers. This is a pass-through cost to the
Government. However, due to the statutory preference for multiple award
IDIQs and the resultant competitive pressures, the Councils expect that
the amount of consideration required at time of contract modification
would be negligible.
21. Comment: A commenter disagrees with the estimate of the average
wage of a Federal contractor used in the economic analysis. The
commenter notes that the economic analysis assumed the average yearly
salary a Federal Government employee earns ($66,705) is a reasonable
proxy for the average annual salary of a Federal contractor and noted
that, according to the Bureau of Labor Statistics, the average wage
rate in the U.S. is approximately $40,000. The commenter believed that
the average salary a Government contractor earns is less than the
average salary a Federal employee earns and the BLS estimate of $40,000
is a better approximation of Federal contractor pay than the $66,705
used in the economic analysis. The commenter concludes that the
consequence of the annual salary of Federal contractors being
overestimated is an underestimate of the number of contract employees
and an underestimate of the costs of mandatory E-Verify.
Response: The Councils do not have data that shows the average wage
of a contract employee on a Federal contract. Consequently, we had to
rely on our extensive knowledge of Federal contracts and our knowledge
of the personnel who perform work on those contracts to inform our
estimate of a reasonable wage rate of a Federal contractor.
The Councils continue to believe the average U.S. wage rate of
approximately $40,000 annually is a poor proxy for the average Federal
contractor wage. As explained in the economic analysis, the average
educational attainment level of the average Federal Government employee
is significantly higher than the educational attainment level of the
general U.S. workforce. In addition, according to the Bureau of Labor
Statistics, ``Although the Federal Government employs workers in every
major occupational group, workers are not employed in the same
proportions in which they are employed throughout the economy as a
whole * * * The analytical and technical nature of many Government
duties translates into a much higher proportion of professional,
management, business, and financial occupations in the Federal
Government, compared with most industries. Conversely, the Government
sells very little, so it employs relatively few sales workers.'' (see
http://www.bls.gov/oco/cg/cgs041.htm).
As a result of the higher Government educational level, which is
driven by the higher proportion of professional, management, business,
and financial occupations in Government when
[[Page 67692]]
compared to the U.S. workforce, the U.S. workforce's average annual
$40,000 salary can not reasonably be used as a proxy for the work the
Federal Government is required to perform. The Councils believe the
average wage rate for employees performing the work the Federal
Government is required to perform is certainly higher than the U.S.
average wage rate and based on our experience with contracts we
continue to believe that $66,705 is a reasonable approximation of the
average Federal contractor's annual salary. This estimate is an
approximation and the actual wage rate of a Federal contractor could be
higher or lower than our estimate. The economic analysis includes a
sensitivity analysis that shows how the cost of the regulation changes
based on increases or decreases in the number of employees being vetted
through E-Verify.
We further note there is some credible information that shows
Federal Government employees are significantly underpaid when compared
to similar private sector occupations. For example, according to the
Federal Salary Council, ``Federal employees make an average of 23
percent less than their private sector counterparts.'' (see http://
www.govexec.com/story_page.cfm?articleid=38212&ref=rellink). While we
did not increase the $66,705 average Federal Government salary upward
by 23 percent to account for this ``pay gap'' when estimating the wage
of Federal Government contractors, commenters should be aware of this
information.
22. Comment: A commenter provided wage survey data that established
the prevailing rate for many occupations covered under the McNamara
O'Hara Service Contract Act and the Davis Bacon Act for seven specific
job titles. The commenter provided hourly and annual wage rates for the
jobs: Accounting Clerk I, Data Entry Operator I, Cook I, Food Service
Worker, Janitor, Laborer, Grounds Maintenance, Computer Operator I. The
commenter noted that the wage rates for the seven specific occupations
(selected by the commenter) were much less than the $66,705 average
wage rate used in the economic analysis.
Response: While the Councils do not dispute that there are specific
occupations in which Federal contractors make less than the average
wage rate of $66,705 used in the analysis, the higher proportion of
professional, management, business, and financial occupations in the
Federal Government, compared to the U.S. workforce, means the work the
Federal Government performs requires a relatively higher educated
workforce that earns more than the national average.
23. Comment: A commenter stated that the economic analysis begins
with a figure for the number of prime Government contractors in 2007
and assumes that this number will increase at a 5 percent compound
annual rate over the study period. No justification is provided for
this assumption.
Response: The economic analysis noted that it is difficult to
project the number of contractors over the ten-year period of analysis
(FY 2009-FY 2018) due to the number of variables that could influence
the amount of Government spending and the amount of that spending that
would be used to purchase contract support. The Councils continue to
believe that a 5 percent growth rate is a reasonable assumption.
24. Comment: The SBA Office of Advocacy stated that the proposed
rule does not allow small businesses to fully assess the impact of the
rule because the economic analysis lacks transparency. The commenter
argues that the economic analysis in the docket is problematic from a
methodological point of view because the proposal includes only the
number of contracts in FY06, total value of contracts in FY06, and the
total value of contracts in FY07. The commenter concludes that the
remainder of the analysis amounts to a series of behavioral assumptions
that are neither substantiated nor justified.
Response: The Councils disagree that the economic analysis is
problematic or that it lacks transparency. The write-up, accompanying
tables, and sample calculations show exactly how the costs were
calculated. In addition, the economic analysis included a section that
showed how small entities of various sizes (10, 50, 100, and 500
employees) would be impacted by the specific cost categories of the
rule (start-up and training costs, verification costs, authorized
employee replacement cost) and compared those costs to the estimated
revenue of companies in those respective sizes in order to get an idea
of the economic impact of the rule on those sizes of small entities.
The economic analysis did use FY 2006 data to estimate the number
of contractors, but as explained in the economic analysis, the number
of real dollars spent on Federal contracts remained nearly the same in
FY 2006 and FY 2007. The commenter did not provide any information to
show why our assessment was incorrect or unreasonable, but just
asserted that it was ``problematic.'' While there is not ``empirical
data'' to support every assumption in the economic analysis, the use of
professional judgment is accepted practice when conducting IRFAs. The
IRFA requested comments in the section of the analysis that explained
very methodically how the number of employees impacted were modeled and
invited more precise information from the public to inform our model.
None was received.
25. Comment: The SBA Office of Advocacy stated that the total
number of contracts is derived by making various assumptions, such as
assuming that subcontractors have a 20 percent share, there are 20
percent new contracts per year, and that the total number of contracts
grows at five percent per year. The commenter states if any of these
assumptions were to change the total number of contracts in the
analysis would be affected. The commenter further states the proposal
does not indicate where the percentages came from.
Response: Page 19 of the economic analysis stated ``The 20 percent
estimate of covered subcontractors is a ``best guess'' provided by
Government contracting professionals.'' Page 20 states ``* * * the
Federal Government does not have an estimate of the total number of
assigned employees that perform work on Government contracts or an
estimate of the number of new hires at a covered contractor or
subcontractor. In order to estimate the number of employees that will
be vetted through the E-Verify system, we must make a series of
assumptions that allow us to estimate the amount of contract labor
being purchased by the Government and then convert the amount of labor
being purchased into Full Time Equivalent positions (FTE's).'' Pages 21
through 23 explain the calculations and clearly label which numbers are
estimates.
The Councils agree that changes in these assumptions would change
the number of contractors and the number of personnel vetted through E-
Verify. The economic analysis includes an appendix that shows how the
cost of the rule would change if the number of contractors and the
number of employees vetted through E-Verify change.
26. Comment: A commenter stated that the rule should consider the
cost of the rule on businesses that make a business decision not to do
business with the Federal Government due to the rule.
Response: The Councils agree, but we note that under the Regulatory
Flexibility Act, the economic analysis need only include the direct
impact of a regulation on a small entity that is required to comply
with the regulation. Nevertheless, the analysis provided
[[Page 67693]]
under the requirements of EO 12866 and the Regulatory Flexibility Act
implicitly takes this potential impact into account. The analysis is
conducted under the assumption that every federal contractor and
subcontractor would choose to incur the cost of the rulemaking and
continue to do business with the Federal Government. Businesses may
choose not to incur the cost of compliance with this rule, but would
presumably only do so were the cost of compliance higher than avoiding
doing business with the government. In such cases, the analysis would
actually have overestimated the impact of the rule.
27. Comment: A commenter believes the Federal Procurement Data
System-Next Generation (FPDS-NG), the source for the estimate of the
number of FY 2006 prime contractors in the economic analysis, contains
inaccurate data. The commenter believes the use of data from the FPDS-
NG in the economic analysis is ``questionable'' and that the number of
contractors in FPDS-NG is underreported.
Response: The Councils disagree. FPDS is the comprehensive web-
based tool for agencies to report contract actions. It collects,
processes, and disseminates official data on Government contracts. It
is therefore the best available source of data on Government contract
actions.
28. Comment: A commenter stated that multiple people would need to
be trained to run the E-Verify checks and estimated that it would take
``3 to 4 hours of time for one person to register, understand the MOU
and take the tutorial.'' The commenter questioned estimates contained
in the economic analysis such as: The ten-minute registration process,
the training time needed for the different types of E-Verify Users
(Corporate Administrator and General User 1.5 hours and Program
Administrator 2.5 hours; Program Administrators and General Users would
also incur 0.5 hours of recurring training), and the estimate of the
amount of time needed to review the MOU. The commenter further noted
that the economic analysis assumed that to sign the MOU would take 30
minutes for a Human Resources Manager; if a General Manager reviews the
MOU (assumed to be 40 percent of the time) the General Manager's review
would add another 30 minutes, and if an attorney reviewed the MOU
(assumed to be 25 percent of the time), the attorney's review would add
another one hour. The commenter did not believe these estimates were
accurate for a multinational corporation.
Response: The burden estimates used in the economic analysis are
assumed to reflect an average burden for all contractors that enroll in
E-Verify. Experiences of one company or a specific group of companies
may not accurately reflect the burden at the typical contractor.
However, the E-Verify program office has reviewed the commenter's
comments and has agreed that some of the estimates used in the economic
analysis should be increased.
The economic analysis assumed that a human resources manager would
take 0.5 hours to read and sign the MOU; that estimate has been
increased to 1.5 hours. Also, the hours for attorney review are being
increased from 1 hour to 2 hours, and the estimate for a general
manager review will be raised from 0.5 hour to 1 hour. Note that in
many companies, especially the smaller entities; the human resources
manager is the same person as the general manager. We have assumed
that, even though there is no requirement for more than one person to
be involved with registering the company and signing the MOU, there may
be multiple personnel involved in some instances.
The initial training hours for the corporate administrator have
been increased from 1.5 hours to 2 hours, the program administrator
initial training hours have been raised from 2.5 hours to 3 hours, and
the general user initial training hours are increased from 1.5 hours to
2 hours.
The 30-minute estimate for annual recurring training for the
program administrator and general user will be increased to a full hour
for each. This ``recurring training'' includes time to review new
additions to the user manual.
In summary, while it could take three to four hours to register,
understand the MOU, and take the tutorial, these activities only occur
when the contractor initially enrolls. Staff later registered by the
contractor as general users and program administrators will only need
to take the tutorial to begin utilizing the E-Verify system.
29. Comment: Commenters believed that on-going compliance
obligations have been understated. The commenters stated that
calculations did not include an analysis of coping with the constantly
changing program. Commenters argue that--
Every time the MOU changes, E-Verify employers will have
to analyze whether they need to sign a new MOU;
Every time the manual changes, employers will need to
spend time reviewing what has changed, whether it impacts them, and how
to accommodate any required changes; and
Every time the photo tool changes and expands, all E-
Verify organizations will need to train their staff and change their
processes accordingly and then will need to audit compliance with the
new standards.
The commenters consider that this on-going compliance obligation is
compounded by the fact that a large employer cannot simply distribute
the information provided by the Government about legal changes, because
each change must be translated into materials specific to the
employer's processes and procedures.
Response: We disagree with the characterization that E-Verify is a
burdensome, constantly changing program. The September 2007 Westat
report found that ``The vast majority of [E-Verify] employers (96
percent of long-term users) disagreed or strongly disagreed that the
tasks required by the system overburden their staff.'' (pg. 65) The
report also stated that approximately 97 percent of long-term users
found the indirect set-up and maintenance costs associated with the
system were either no burden or only a slight burden (pg. 106). DHS
does not require employers to sign a new MOU when there is a change to
the program. Currently, upon logging onto E-Verify, users are greeted
with a message board that contains all new enhancements to the system
and any applicable policy changes. The message board contains a full
archive of all messages in the event that the employer has not logged
on to the E-Verify system in several months. Of all the recent
enhancements to the program, only the addition of the Photo Tool
required E-Verify users to complete additional training. This action
was atypical. This additional training was an unusual requirement for
the program as changes to the program do not typically require
mandatory training. The analysis includes a full hour of ``on-going''
training each year so that the user can keep current on any changes to
E-Verify.
Federal contractors who happen to be currently enrolled in E-Verify
will be required to take a tutorial refresher that addresses the
verification of existing employees. However, the economic analysis
assumed that none of the Federal contractors were currently enrolled in
E-Verify and consequently estimated the costs for the full training
module, not for the refresher module. To the extent that the contractor
is an existing E-Verify user, the economic analysis likely
overestimates the training burden.
30. Comment: A commenter noted the challenges and costs of
resolving tentative nonconfirmations are understated. Commenter states
that, for its members, consistency and
[[Page 67694]]
compliance are critical and must be built into the process from day
one. This is especially important for implementing tentative
nonconfirmation procedures. Based upon the experience of its members
that are E-Verify users, the commenter believes the RIA estimates are
grossly understated. One large multinational employer provided the
following data on its experience with E-Verify when it was hiring many
student interns between January 1, 2008 and May 22, 2008. Out of 598
queries submitted, it received tentative nonconfirmation notices on 92
or 15.38 percent. Out of the 83 DHS tentative nonconfirmations (the
remainder were SSA tentative nonconfirmations), about 80 percent of
those tentative nonconfirmations required personal attention to
resolve, at a great cost to the employer and the impacted foreign
nationals.
Response: While the RIA estimated that 5.1 percent of the employees
would receive SSA tentative nonconfirmations; the employer in the
example only received 9 SSA tentative nonconfirmations (if 83 were DHS
tentative nonconfirmations) out of 598 total queries. This is 1.5
percent, or significantly less than the 5.1 percent estimated in the
RIA.
However, the Councils agree with the commenter that the RIA
estimate of ten minutes to complete the tentative nonconfirmations
should be increased. The Councils believe ten minutes is a reasonable
estimate solely for the time needed to review the tentative
nonconfirmation notice with the employee and for the employee to decide
if he/she want to contest the tentative nonconfirmation. If the
employee decides to contest the tentative non-confirmation, it should
take an additional ten minutes for the employer to print out and
provide the referral notice to the employee; this additional time is
being added to the estimate.
The employee must then contact the appropriate Government office
within eight Federal working days. The employer is not required to
spend any additional time on the resolution process until the employee
has resolved the case with the appropriate Federal agency. This time
commitment is part of the verification process followed by all E-Verify
users and is not unique to Federal contractors.
31. Comment: A commenter noted that its members report that
corrections at the SSA usually take in excess of 90 days. The members
report that employees must wait four or more hours per trip, with
repeated trips to SSA frequently required to get their records
corrected. The members also report that policies for handling this,
e.g., does the employee get paid time off to go to SSA, must be
consistent and fair. One member reports that its biggest issue actually
happens after an employee gets his or her record corrected by SSA. At
that point, the member states that the employer must spend weeks
waiting in limbo. According to the employer, E-Verify instructed this
employer to check the record weekly because it was still not clearing
even after SSA fixed the error. The commenter notes that when this
occurs, the employer and employee are left in an awkward predicament
because nothing happens--no approval is issued, no new tentative
nonconfirmation is issued, and no final nonconfirmation is issued.
Response: First, this rule does not require that the employer
compensate the employee for time away from work. Next, the September
2007 Westat report concluded that ``[m]ost case study employees who had
received tentative nonconfirmations reported no costs associated with
resolving the finding * * *.'' (pg. 101) Data capture methods
instituted for E-Verify with the new electronic secondary process at
SSA show that the vast majority of SSA tentative nonconfirmations (94.9
percent) are resolved within 24 hours of contacting the SSA Field
Office.
32. Comment: A commenter stated that a number of the commenter's
members have made arrangements to electronically deliver tentative
nonconfirmations, and they inform the commenter that it is not unusual
for 24 hours to pass before the tentative nonconfirmation even reaches
the employee. The commenters state that where companies conduct some of
their E-Verify queries in-house and outsource other queries to a third
party, the amount of time needed to discuss a tentative nonconfirmation
will vary depending on who submitted the query.
Response: A 24-hour or longer delay in passing a tentative
nonconfirmation notice to an employee does not impact the eight-day
timeframe for contacting DHS or SSA. The employee must be given the
tentative nonconfirmation notice in advance of an employer referring a
case to DHS or SSA. The employer must review the tentative
nonconfirmation notice with the employee and ask the employee whether
he/she chooses to contest the tentative nonconfirmation. If the
employee chooses to contest the tentative nonconfirmation, the employer
will then go back into the E-Verify system and initiate the referral in
the system, which begins the eight-day period.
33. Comment: One commenter disagreed with the economic analysis
regarding the one-minute estimate to resolve a final nonconfirmation.
Response: The one-minute period estimated for resolution of a final
nonconfirmation refers solely to the time it takes for an employer to
close the case in the E-Verify system, not the external processes the
employer may take in response to a final nonconfirmation. The economic
analysis includes a $5,000 termination and replacement cost for an
authorized employee who leaves employment with the employer (the
employee is terminated or resigns). The cost of replacing unauthorized
workers is attributed to the cost of current immigration law and is not
considered to be a cost of this rule.
34. Comment: Commenters stated that the eight-day timeframe
provided to employees for resolving a discrepancy is likewise
inadequate. They state that--
When an employer receives a tentative non-confirmation,
the employer must notify the employee and provide him or her with an
opportunity to contest that finding;
If the employee contests, he or she then has eight
business days to visit an SSA office or call USCIS to try to resolve
the discrepancy; and
Eight business days does not provide enough time for many
employees to visit an SSA office, particularly in cases where the
employee is working on a remote jobsite potentially hundreds of miles
away from the closest SSA office and/or where transportation is not
readily available.
Therefore, the commenter suggested amending the requirement to
allow employees thirty business days to try to resolve the discrepancy
with SSA or DHS.
Response: An employee who receives a tentative nonconfirmation is
given eight Federal Government work days to contact the appropriate
agency. After visiting SSA, or placing a phone call to DHS, the
applicable agency must also provide a response to the employee within
two days.
The E-Verify statute (404(c) of IIRIRA) sets forth the design
parameters for the secondary confirmation system. It states that the
Secretary of Homeland Security shall specify a secondary verification
system capable of providing a final confirmation or nonconfirmation
within 10 working days after the date of the tentative nonconfirmation.
USCIS experience in administering the program shows that 95 percent of
secondary verifications are completed within 2 days. In order for the
system
[[Page 67695]]
to comply with the statutory specifications, USCIS allows eight working
days for the employee to visit SSA or contact DHS.
In cases where additional time may be required for resolving the
discrepancy with SSA or DHS, the employer will receive a message
through E-Verify called ``Case in Continuance,'' which may extend
beyond the ten-day resolution period. During this time, the employer
may not take action against the employee while the employee is
resolving his or her case.
35. Comment: A commenter from an institution of higher education
expected that most rejections will involve non-immigrant post-doctoral
associates and fellows who have already undergone careful scrutiny in
obtaining a visa to enter the United States.
Response: The Immigration Reform and Control Act of 1986 (IIRCA)
requires all employers to verify the identity and work authorization of
any employee working in the U.S. by having the employee complete a Form
I-9. While nonimmigrant post-doctoral associates and fellows have
already obtained a visa to enter the U.S., this does not alleviate the
employer of its responsibility under IRCA. In addition, the fact that
an alien has been issued a visa has nothing directly to do with whether
the alien is work-authorized in the United States, as millions of
aliens who are issued visas and admitted to the United States in B, F
or certain other nonimmigrant categories are not authorized to be
employed in this country.
36. Comment: The SBA Office of Advocacy was concerned about its
ability to successfully complete the on-line tutorial, required by the
MOU that contractors will be required to sign. The commenter states
that, while the proposed rule acknowledges the tutorial, it does not
acknowledge the requirement that a proficiency test at the end of the
tutorial needs to be taken and a 71 percent pass rate achieved. The
commenter is concerned about the cost implications to an employer who
does not pass the test, stating that the costs involved have more
dimensions than just the opportunity cost.
Response: The E-Verify program knows of no situation in the history
of the program where an employer was ultimately unable to participate
because it could not pass the mastery test. The cost and burden
associated with the tutorial is more than adequate to also cover the
mastery test as well.
Employers are able to retake the mastery test as many times as is
necessary to pass. Taking the tutorial and the mastery test is a
requirement to use the system and run verification queries. Those
responsible for running queries (and passing the mastery test) are not
always the same as those who have signed the MOU on behalf of the
entire company.
37. Comment: Commenters stated that not all contractors have
computers at all sites at which they engage in hiring. Consequently,
they conclude that they will incur costs to computerize and establish
Internet accessibility for every facility at which they hire employees.
Given the mobile nature of traveling carnivals and circuses, as well as
the sporadic availability of Internet access in some rural areas, the
commenter does not believe that all employers can have reliable
Internet access or even regular access to a computer while traveling to
conduct business. Being mobile, the carnival industry would face
additional costs associated with transporting this equipment from
location to location.
Response: It would be unusual for a Federal Government contractor
not to have Internet access and a computer. Still, employers have the
option of using an outside company or vendor to run their queries.
Through this method of using E-Verify, the third party engages in an
MOU with the DHS and SSA on behalf of its client. Employers could also
seek out other sources of Internet access, such as a public library.
While the commenter offered no specific information on the increased
marginal cost of transporting a laptop computer and printer, it does
not appear to be significant.
The economic analysis estimated that two percent of contractors did
not have a computer or Internet connection at their hiring site. The
economic analysis stated ``If we do not receive comments indicating
that covered Federal contractors or subcontractors would need to
purchase a computer and/or internet connection, we may eliminate this
category of costs in the final rule.'' As such comments were received,
that cost will be included in the final rule.
38. Comment: Commenters noted the E-Verify MOU requires the
employer to make photocopies of certain documents, and to print certain
documents if a tentative non-confirmation occurs. The commenters stated
that the analysis fails to consider the additional cost of printing and
copying equipment an employer must acquire and maintain at each hiring
site under the rule. Further, the commenters noted that the E-Verify
MOU requires, under certain circumstances, that the employer either
scan certain documents provided by the employer for electronic
submittal to DHS or use an express mail account. The commenters stated
that the added cost of a scanner--wherever employees are hired--is not
considered by the analysis.
Response: The economic analysis will add additional printing costs
to the analysis. The analysis will add the cost of an ``all-in-one''
printer/copier/scanner/fax machine for the contractors that may need to
purchase a computer. The economic analysis had already considered
certain photocopying costs. However, the printer/copier/scanner/fax
machine that is being included provides an alternative (such as
scanning a document) to photocopying documents.
39. Comment: The SBA Office of Advocacy stated that contractors
will be required to sign a MOU that is an agreement between them, the
SSA, and USCIS. The commenter stated that the proposed rule provides
the contractor with an opportunity to negotiate the terms of the MOU
and that the cost of compliance includes a line item for the
contractor's attorney to read the MOU. The commenter recommended that
the cost of compliance should recognize the cost for an attorney to
negotiate an acceptable MOU.
Response: The terms of the MOU are not negotiable.
40. Comment: A commenter stated that the rule does not take into
account the costs businesses would incur as a result of ``erroneous
nonconfirmations'' that result from E-Verify database inaccuracies. The
commenter stated that Government-commissioned reports, congressional
testimony, and other evidence support its opinion about the
unreliability of the E-Verify program. The commenter also stated that
the recent reauthorization of the program by the U.S. House of
Representatives specifically acknowledged this fact by requiring
further study by the GAO of the erroneous tentative nonconfirmation
rate.
Response: The Westat report in 2007 found that the erroneous
tentative nonconfirmation rate for all workers from October 2004--March
2007 was 0.6 percent. (Westat report pg. 57, table) This means that 0.6
percent of workers that were found work-authorized by the system
initially received a tentative nonconfirmation during the verification
process. A system that correctly verifies authorized workers as work-
authorized 99.4 percent of the time cannot reasonably be termed
``unreliable.'' Further, the economic analysis did estimate the cost to
employers of resolving the tentative nonconfirmations.
41. Comment: A commenter stated that there are no reliable figures
to report the number of erroneous final nonconfirmations because there
is
[[Page 67696]]
currently no process in place to appeal such an outcome. The commenter
submits that most employers will simply fire individuals with a final
nonconfirmation report from E-Verify.
Response: Employers or employees may contact the E-Verify program
if additional time is needed to provide such documentation or if they
believe a final nonconfirmation was received in error. The E-Verify
program may delay a final nonconfirmation finding on a case by case
basis in those cases where employees have experienced delays in
receiving needed documentation that will help prove their employment
eligibility, and the program will work with the employer and/or
employee to research the case and identify the reason for the final
nonconfirmation. Where an employer or employee has questions about a
final nonconfirmation, DHS or SSA can place such cases ``in
continuance'' for resolution by either SSA or DHS.
42. Comment: A commenter states that according to a June 7, 2008,
Government Accountability Office Report, the existing electronic
verification systems in place at DHS and SSA are frequently unable to
provide the ``instant'' verification that E-Verify is supposed to
provide. The commenter quotes this report as finding that in eight
percent of the cases, ``[r]esolving these nonconfirmations can take
several days, or in a few cases even weeks.'' June 7, 2008 GAO Report,
``Electronic Verification: Challenges Exist in Implementing a Mandatory
Electronic Verification System,'' p. 3. The commenter states that the
delays are attributable to several factors, including USCIS's failure
to promptly update its database when it receives new citizenship
information. The commenter claims that, in those circumstances, an
authorized worker will be terminated under the proposed rule even if he
or she promptly attempts to correct the database error.
Response: Employees are not penalized if their case requires
additional time to resolve. As long as they contact the appropriate
agency within the required eight-day timeframe and begin the process of
contesting a tentative nonconfirmation, they must be permitted to
continue working until their case is resolved.
Contrary to the commenter's assertions, DHS does update its
database when immigrants are naturalized as citizens. However, when
naturalized employees properly state that they are citizens, their
information is verified against the SSA database, which may not yet
reflect their naturalized status. USCIS implemented a change to the E-
Verify system in May 2008 to re-check against DHS naturalization
databases any citizens that SSA cannot verify because of a citizenship
mismatch. This change prevents naturalized citizens from receiving a
tentative nonconfirmation if their information is available in the more
current DHS database. However, new citizens remain responsible for
updating their records with SSA when they are naturalized.
Moreover, the E-Verify MOU makes clear that employers are
prohibited from discharging, refusing to hire, or assigning or refusing
to assign to federal contracts employees because they appear or sound
``foreign'' or have received tentative nonconfirmations. The MOU also
notifies an employer that any violation of the unfair immigration-
related employment practices provisions in section 274B of the INA
could subject the Employer to civil penalties, back pay awards, and
other sanctions, and violations of Title VII could subject the Employer
to back pay awards, compensatory and punitive damages. Violations of
either section 274B of the INA or Title VII may also lead to the
termination of the employer's participation in E-Verify. If the
employee believes that he or she has been discriminated against, he or
she should contact OSC at 1-800-255-7688 or 1-800-237-2515 (TDD).
Employers that have questions relating to the anti-discrimination
provision should contact OSC at 1-800-255-8155 or 1-800-237-2515 (TDD).
43. Comment: A commenter stated that the FAR Council says that the
only currently employed lawful workers who will be casualties of its
proposed rule are those who ``choose not to take the steps necessary to
resolve a tentative nonconfirmation,'' and who thereafter are fired. 73
FR at 33377. The commenter states that that assertion is premised on
the notion that there are no errors in the relevant databases that
cannot be quickly corrected in the eight-day period provided for in the
Proposed Rule. The commenter contends that that notion is undeniably
false--as the GAO Report makes clear when it says that it sometimes
takes ``weeks'' to correct an error under the E-Verify system.
Response: The commenter appears to misunderstand the eight-day
period under the E-Verify program for an employee with a tentative
nonconfirmation to contact SSA or DHS. Employees are not expected to
resolve their tentative nonconfirmations within eight days--they are
only required to contact the appropriate agency within that timeframe
in order to challenge the tentative nonconfirmation. The economic
analysis does assume there could be some authorized employees who are
terminated, but this should occur only under unusual circumstances. The
authorized worker has an economic incentive to ensure his/her
information properly matches SSA's records both to preserve his/her job
and to ensure the employee receives full credit for contributions made
into Social Security. The analysis estimated that 2 percent of the 5.3
percent unresolved tentative nonconfirmation cases (2% x 5.3% = .106%)
represent an authorized employee who either resigned or was terminated.
44. Comment: A commenter stated that, so far this year, the
commenter has initiated nearly 1,400 new-hire queries through E-Verify
and anticipates that new-hire queries will approximate 3,000 a year.
The commenter states that its E-Verify tentative non-confirmation rate
far exceeds the estimated rate of non-confirmations published by E-
Verify and USCIS. The commenter notes that all of its tentative
nonconfirmations have ultimately been cleared by E-Verify as work
authorized, but only after significant investment of time and money.
Response: Employers' tentative nonconfirmation rates will vary
depending on the makeup of their workforces. While the majority of SSA
tentative nonconfirmations are resolved within ten days, E-Verify does
accommodate employees whose cases cannot be resolved within that
timeframe provided that they have contacted SSA and have followed all
of the requirements.
USCIS continues to partner with SSA in the implementation of the E-
Verify program, especially in diminishing database errors and resolving
mistaken final nonconfirmations. It is the responsibility of individual
citizens to update their records with SSA; this includes the most
common updates of name change due to marriage and change in citizenship
status due to the naturalization process.
45. Comment: A commenter stated that mandating contractors to use
the Basic Pilot/E-Verify program will not eliminate the U.S. economy's
demand for unauthorized workers. According to the commenter,
contractors who need workers will continue to hire them ``off the
books.''
Response: The INA prohibits hiring or continuing to employ aliens
whom the employer knows are not authorized to work in the United
States. INA section 274A(a)(1), (a)(2). Any employment of aliens whom
the employer knows are not authorized to work in the United States is a
violation of the law. We disagree with the implication that
[[Page 67697]]
employers will find a way to violate the law anyway, so lax enforcement
of the law is in the U.S. economy's best interest.
46. Comment: A commenter stated that smaller businesses may find it
financially more difficult to comply with Executive Order 12989.
According to the commenter, the proposed rule indicates that the costs
of participation in the E-Verify program will likely include startup
registration costs, opportunity costs of the time spent on training,
opportunity costs of the time spent on employee verification,
productivity costs when employees need to leave work to visit SSA/USCIS
to correct information, and employee turnover costs. The commenter
quotes statistics drawn from a survey of employers who have used the
system to demonstrate that the startup process for E-Verify can be
burdensome.
Response: The statistics reported by the commenter in the example
from page 60 of the September 2007 Westat report are incorrectly drawn
from the table in the report. In fact, 72.9 percent of employers
disagreed with the statement ``the on-line registration process was too
time consuming''; only 13.4 percent agreed with the statement (of which
2.4 percent strongly agreed). Also, 75.9 percent of employers surveyed
disagreed with the statement ``the on-line tutorial was hard to use,''
an additional 21.2 percent of employers surveyed strongly disagreed
with the statement, only 2.8 percent agreed (of which 0.2 percent
strongly agreed). Finally, 67.9 percent of employers disagreed with the
statement ``the tutorial takes too long to complete;'' only 21.6
percent of employers agreed (of which 3.8 percent strongly agreed). The
statistic on the importance of passing the mastery test and the
perceived burden was correctly drawn from the table.
System set up and maintenance costs are a concern for the program
and especially their impact on smaller employers. Therefore, questions
on these costs have been and will continue to be asked in the
independent evaluations of the program. The statistics cited in the
example are accurately quoted from the Sept. 2007 Westat report,
however, it must be noted that the average start-up and maintenance
costs are calculated from a very widely skewed distribution of cost
data. As stated on pg. 104 of the Westat report, ``Eighty-four percent
of employers that used the Web Basic Pilot for more than a year
reported spending $100 or less for start-up costs, and 75 percent said
they spend $100 or less annually to operate the system. However, 4
percent of long-term users said they spend $500 or more for start-up
costs, and 11 percent spent $500 or more annually for operating
costs.'' The report does not segregate the employers that reported a
high level of cost into large and small employers. However, the report
does state on page 106 that ``[n]ot surprisingly, maintenance costs
were higher for employers that verified employees at multiple locations
than for those that verified at only one location ($1,653 versus
$490).'' So, to the extent that small employers are less likely to
verify employees at multiple widely distributed locations, their costs
would be expected to be lower than the average provided in the report.
Separate from this final rule, the E-Verify program is working to
identify and address issues that may result in an employee not fully
understanding the opportunity to contest an initial mismatch, e.g., the
Plain Language Initiative. The program currently provides program
materials in English and Spanish and is currently working to produce
documents in nine additional languages.
47. Comment: Commenters stated that the RIA assumes that 2 percent
of authorized workers for whom E-Verify generates a tentative
nonconfirmation will not resolve their records to the Government's
satisfaction. Commenters believe that failing to resolve a tentative
nonconfirmation leads inexorably to a final nonconfirmation, which
results in employee termination. The commenters note that the RIA
claims that these workers ``choose not to resolve the non
confirmation,'' but no evidence is provided showing that the lack of
records resolution is the result of worker choice. Furthermore, the
commenters note that the RIA does not explain why workers would
intentionally choose a path that leads to termination. The commenters
believe that a more plausible explanation is that these workers have
unusually difficult problems to resolve or they are less capable than
their peers at navigating multiple Government bureaucracies or they are
marginal workers for whom the burden of resolving records exceeds the
gain from remaining in the formal labor market. Whatever the cause(s),
the commenters believe E-Verify will be responsible for these
terminations and the RIA acknowledges this and includes, as a cost to
employers, the additional recruitment and training that are required to
replace these employees. However, commenters believe the RIA ignores
the opportunity cost of termination to the employees themselves. The
$10 billion present value cost estimate should be understood as a
lower-bound for the true social cost of forced unemployment of
authorized workers.
Response: The Councils disagree that there will be any significant
``forced unemployment'' cost caused by this rule on authorized workers.
If the E-Verify program issues a tentative non confirmation to an
employee, the employer cannot fire, prevent from working, or withhold
or delay training or wages for that employee during the resolution
process. All employees receiving tentative nonconfirmations are given
the opportunity to contest and correct their records.
A limited case study in the 2007 Westat report notes that ``Most
employees reported positive experiences correcting their paperwork with
SSA or USCIS'' and ``Overall, employees who contested SSA findings did
so quickly: The record review showed an average of only 2.1 days
between the referral to SSA and the date the SSA representative signed
the referral letter (if one was provided to the employee)'' (Appendix E
pages E-13 and E-14). This 2.1 day average time to resolve a tentative
non-confirmation suggests the resolution process is not an unreasonably
difficult burden for those that choose to utilize the process.
As there is no law that compels an authorized worker to resolve a
tentative non-confirmation, the Councils believe it is reasonable to
add a cost for an employer to replace an authorized worker who does not
resolve the tentative non-confirmation. For the purpose of the economic
analysis, the Councils assumed that 2 percent of the 5.3 percent
unresolved tentative non-confirmations were authorized workers leaving
employment with the employer (2% x 5.3% = .106%). The employer would
incur employee replacement (turnover) costs whether the authorized
employee resigned or was terminated. Due to the economic incentive to
ensure one's records are correct with SSA and to continue employment,
it would be a very unusual circumstance for an authorized worker not to
work diligently to resolve the tentative non-confirmation.
We disagree with the commenter's assertion of a ``$10 billion''
present value cost estimate of ``forced unemployment.'' The commenter's
$10 billion estimate is apparently premised upon assuming a 15 year
period of analysis of ``forced unemployment'' and a ``disemployment
rate'' of ``1.060%.'' We assume the ``disemployment rate'' used by the
commenter was meant to be the ``.106%'' estimate in the RIA for the
proposed analysis of people who are authorized to work but either
resign or
[[Page 67698]]
are terminated for failure to resolve the tentative non-confirmation.
If true, this would cause an order of magnitude error in the
commenter's calculations. Also, the economic analysis assumed the 2%
replacement rate for authorized workers who do not resolve their
tentative non-confirmations included any and all reasons an authorized
employee potentially leaves employment, such as voluntary resignation.
Finally, the E-Verify program knows of no information that supports
the commenter's assertion that workers who do not resolve their
tentative non-confirmations have ``unusually difficult problems to
resolve, or they are less capable than their peers at navigating
multiple government bureaucracies, or they are marginal workers for
whom the burden of resolving records exceeds the gain from remaining in
the formal labor market.''
48. Comment: Commenters stated the RIA extrapolates to a coerced
population of Federal contractors from the current E-Verify population,
which consists of volunteers. In this case, the commenters believed
volunteers are likely to be firms for which participation in the
program is actually beneficial. The commenters concluded, if this were
the only criterion for participation, then they would expect data from
these firms to be ``better'' than data the Government will obtain once
it makes participation mandatory.
Response: The economic analysis used actual information regarding
the E-Verify authorization process (i.e., percentage of tentative non-
confirmations, percentage of final nonconfirmations, etc.) generated by
the entities that were using the E-Verify program during October 2006-
March 2007 in order to estimate costs.
The rate of tentative non-confirmations, percentage of final
nonconfirmations, and other operational statistics may be different for
entities that choose to be Federal contractors than for the existing E-
Verify population, but there is no evidence to support the theory that
data from the existing E-Verify enrollees would be ``better'' (lower
tentative nonconfirmation rates) than data the Government will obtain
once additional Federal contractors join E-Verify. We note there are
many states that currently require certain employers to participate in
E-Verify. For example, Arizona and Mississippi are currently requiring
all employers to enroll in E-Verify and authorize the work status of
newly hired employees. Also, Idaho, Minnesota, and North Carolina
require state government agencies to vet newly hired state employees
through E-Verify.
In fact, there is data that suggests there could be fewer tentative
non-confirmations among the federal contractor population than in the
general population. The September 2007 Westat report stated on page 41
(note that E-Verify was formerly known as ``Basic Pilot''): ``* * *
establishments registering for the Web Basic Pilot differ significantly
from employers not enrolled in the program. More specifically, pilot
participants tend to be larger than most establishments, have higher
proportions of foreign-born employees, and be more concentrated in
certain industries and locations.'' The report also stated, ``* * * it
appears currently that citizens are underrepresented in the Web Basic
Pilot program compared to the nation. Since citizens are more likely
than noncitizens to be authorized automatically and less likely to get
an erroneous tentative nonconfirmation, it is reasonable to expect that
a program that verifies all new hires nationally would have a higher
percent verified automatically and a lower erroneous tentative
nonconfirmation rate than is currently the case, if nothing else
changes.'' (pg. 134) Consequently, we could reasonably expect that
tentative non-confirmation rates for federal contractors could be lower
than the rates experienced by current E-Verify enrollees.
49. Comment: A commenter stated that the calculations from the
sample should be treated with caution because the sample consisted of a
six-month season that did not include Spring- and Summer-hires. The
commenter further stated that seasonal workers would be covered by E-
Verify but are excluded from this sample. In addition, the commenter
stated that if a Federal agency had proposed to collect data from
volunteer E-Verify participants and use them to predict results from a
mandatory E-Verify program, the Office of Management and Budget would
have been compelled by law and its own regulations to disapprove the
information collection on the ground that it lacked practical utility
(commenter cited in footnote 24--``OMB's information collection rule
forbids it from approving a statistical survey `that is not designed to
produce valid and reliable results that can be generalized to the
universe of study.' '' See 5 CFR 1320.5(d)(2)(v); 60 FR 44988.
Response: The Council agrees a full year's worth of data would
provide a better indicator of the likely impacts of the final rule.
Therefore, for the final rule's economic analysis, a full 12 months of
data are used, instead of the six months used in the proposed rule's
economic analysis. However, given that the economic analysis did not
conduct a ``statistical survey,'' the commenter's purpose in stating
that the economic analysis did not comply with OMB ``statistical
survey'' guidelines is not clear.
50. Comment: The SSA provided additional information regarding the
marginal cost of the rule to SSA.
Response: The economic analysis will be revised to incorporate the
cost estimates provided by SSA. For example, the economic analysis
estimated the cost to SSA in FY09 to be $622,699, while the SSA
estimated its FY09 costs to be $1,023,294.
b. On Federal Acquisition Workforce
Comment: A commenter stated that the proposed rule assumes only
$1,547,194 in costs that the Federal Government will incur in 2009 as
``operating costs from each query that an employer executes'' and
``resolving tentative nonconfirmations.'' According to the commenter,
the proposed rule has not considered costs associated with contracting
officer time and effort.
Response: Contracting officer duties under the final rule consist
almost exclusively of inserting the clause into appropriate
solicitations and contracts. The marginal effort associated with that
duty is so slight as to be practically immeasurable. Further, there is
no reason to believe that additional contracting officers will need to
be hired due to the impact of this rulemaking.
3. Reasonable Alternatives
Comment: The SBA Office of Advocacy suggested that the
Administration should examine feasible alternatives to the proposed
rule, if comments received indicate that the proposed rule would have a
significant economic impact on a substantial number of small
businesses. Another commenter wrote that the Administration's analysis
of reasonable alternatives is flawed for failure to take into account
all reasonable alternatives, and for failure to adequately address the
lone alternative taken into account.
Response: The Council has considered all reasonable alternatives,
as addressed herein and in the FRFA, and has adopted all the
alternatives that fulfill the objective of the Executive Order.
4. Paperwork Reduction Act
Comment: An immigration lawyers association commented that the
proposed rule violated the Paperwork Reduction Act by imposing an
additional information collection
[[Page 67699]]
burden on employers and because employers who fail to keep such records
will face significant liability.
Response: The Councils recognized in the proposed rule that the
rule contains information collection requirements over and above the
burden hours already approved for the E-Verify System. 73 FR 33379. The
Councils have requested and received approval from OMB for this new
information collection requirement. Accordingly, the information
collection requirements of this rule fully comply with the requirements
of the Paperwork Reduction Act.
F. Final Regulatory Flexibility Act Analysis
This Section F constitutes the Final Regulatory Flexibility Act
Analysis (FRFA), as required by the Regulatory Flexibility Act, 5
U.S.C. 604. The issues covered here are also addressed in detail in the
Regulatory Impact Analysis for FAR Case 2007-013, available at http://
www.regulations.gov.
This final rule implements Executive Order, 12989, as amended, to
enhance the stability and dependability of Federal Government
contractor workforces by requiring them to use the USCIS' E-Verify
system as the means for verifying employment eligibility of certain
employees.
The Councils expect this rule to impact nearly every small entity
in the Federal contractor base. However, the direct cost this rule
imposes does not appear to have a significant economic impact on a
substantial number of small entities, within the meaning of the
Regulatory Flexibility Act, 5 U.S.C. 601, et seq. Nevertheless, the
Councils have not formally certified the rule as not having a
``significant economic impact on a substantial number of small
entities,'' as allowed under section 605(b) of the Regulatory
Flexibility Act.
In addition to the costs of this final rule, the Councils expect
this rule to carry certain benefits to employers in that it provides an
economical, web-based method for performing verification of employment
eligibility of employees, improving the reliability of the employment
verification procedures employers are already required to perform.
Federal contractors' participation in E-Verify is also expected to
reduce the likelihood that contractors will discover, long after the
fact, that they have hired unauthorized aliens, thereby sparing
contractors the cost of terminating and replacing employees not
authorized to work under Federal immigration law after resources have
been expended on the training of those employees.
In addition, a number of changes have been made in the final rule
to lessen the impact on small businesses; they should also benefit
large businesses in reduced compliance costs. Specifically, the
timelines have been significantly extended (see Section B., ``Changes
Adopted in the Final Rule'', paragraph 1., ``Significantly Extended
Timelines'', for the precise changes); the threshold for prime
contracts has been raised from $3,000 to the simplified acquisition
threshold ($100,000); contracts with a performance period of less than
120 days are exempted; the COTS-related exemption has been expanded
(see Section B., ``Changes Adopted in the Final Rule'', paragraph 9.,
``Expanded COTS-related exemptions for:'' of this rule); contractors
are offered the option of using E-Verify on all existing employees so
as to eliminate the necessity of segregating employees performing
directly on a Federal Government contract from those who are not; and
contractors may exempt employees with an active, current security
clearance or for whom background investigations have been completed and
credentials issued pursuant to Homeland Security Presidential Directive
(HSPD) 12.
Executive Order 12989, as amended, prohibits Federal agencies from
contracting with companies that knowingly hire employees not eligible
to work in the United States and instructs Federal agencies to contract
with companies that agree to use an electronic employment verification
system to confirm the employment eligibility of their workforce. The E-
Verify System is the best available means for contractors and
subcontractors to verify employment eligibility. Consequently, this
final rule is being promulgated to institute a contractual requirement
for contractors and subcontractors to utilize E-Verify as the means of
verifying that (1) all new hires of the contractor or subcontractor and
(2) all employees directly engaged in performing work under covered
contracts or subcontracts are eligible to work in the United States.
The final rule adds a new FAR Subpart 22.18 and a new clause.
The prohibition against Federal agencies contracting with companies
that knowingly hire employees not eligible to work in the United States
has existed since 1996. Virtually all employers in the United States,
including Federal Government contractors and subcontractors, are
prohibited from hiring an individual without verifying his or her
identity and authorization to work and from continuing to employ an
alien whom they know is not authorized to work in the United States
(section 274A(a) of the Immigration and Nationality Act of 1952, as
amended (INA), 8 U.S.C. 1324a; 8 CFR part 274A). Many aliens, including
lawful permanent residents, refugees, asylees, and temporary workers
petitioned by a U.S. employer, are authorized to work in the United
States (see 8 CFR 274a.12, listing classes of work-authorized aliens).
The new contractual requirement to use the E-Verify System will
enhance the Government's procurement system by decreasing the
employment of unauthorized aliens in the Government's supply chain and
thereby fostering a more stable and dependable Federal Government
contracting community.
This rule will impact many small entities in the Federal contractor
base. Major exceptions are contractors providing commercially available
off-the-shelf (COTS) items and items that would be COTS items but for
minor modifications, entities that enter into contracts with a value
less than $100,000, and subcontractors that provide supplies rather
than services or construction. In Fiscal Year 2006, there were over
100,000 small businesses that received direct Federal contracts. While
there are no reliable numbers for subcontracts awarded to small
businesses, the Dynamic Small Business database of the Central
Contractor Registration--a database of basic business information for
contractors that seek to do business with the Federal Government--gives
a number of 324,250 small business profiles that are registered.
Assuming that 50% of these small businesses contract with the Federal
Government at either the prime or subcontract level, then that number
is 162,125 small businesses.
The Councils have placed in the public docket a detailed Regulatory
Impact Analysis of the compliance requirements of this rule. Generally,
employers will incur opportunity cost of the time their employees will
spend complying with the requirements of the regulation. Employees will
need to be trained in order to be able to operate the E-Verify system,
as well as spending time on processing employee verifications.
Employers will incur start-up costs from enrolling in the E-Verify
program, including costs such as reviewing and updating USCIS Form I-9
(Employment Eligibility Verification) for existing employees and
potentially a cost to modify an existing personnel or payroll system to
be able to record the E-Verify status of their employees. We believe a
small number of employers may need to purchase a computer,
[[Page 67700]]
internet connection, and printer for their hiring site. Certain
employee replacement (turnover) costs may also be incurred due to this
regulation.
In order to further inform our understanding of the economic impact
of this rule on small entities, we considered hypothetical contractors
with 10, 50, 100, and 500 employees and estimated the economic impact
of the rule on those four sizes of entities in their initial year of
enrollment. The initial year a contractor enrolls in E-Verify is
expected to be the year with the highest compliance cost, as the
contractor is incurring both the start-up costs of enrolling in E-
Verify as well as the majority of the costs of vetting its existing
employees through the E-Verify system.
The estimated average direct cost of this rule to a contractor with
10 employees is $1,254 in the initial year. For a contractor with 50
employees, the estimated average direct cost of participating in E-
Verify is $3,163 in the initial year. For a contractor with 100
employees, the estimated initial-year impact is $5,615. A contractor
with 500 employees is expected to have an initial year impact of
$24,422. This level of direct cost burden is well under 1% of the
expected annual revenue of these four sizes of entities and does not
appear to represent an economically significant impact on an average
direct cost per contractor basis. To the extent that some small
entities incur direct costs that are significantly higher than the
average estimated costs, those employers may reasonably be expected to
face a significant economic impact.
As discussed previously, the Councils do not consider the cost of
complying with preexisting immigration statutes to be a direct cost of
this rulemaking. Thus, while some employers may find the costs incurred
by replacing employees that are not authorized to work in the United
States to be economically significant, those costs of complying with
the Immigration and Nationality Act are not direct costs attributable
to this rule.
In addition, the requirement for entities (both large and small) to
enroll in E-Verify only applies to contractors and subcontractors that
choose to perform certain work for the Federal Government. When an
entity's leadership determines that participating in E-Verify would
impose a significant economic impact on the operation, the leadership
must make a business decision whether the revenue generated by doing
business with the Federal Government would provide a financial return
sufficient to justify the cost of such participation in E-Verify.
Presumably, entities that do not receive the desired return to justify
the expense of participating in E-Verify would choose not to be a
Federal contractor or subcontractor.
The SBA Office of Advocacy claims that the initial analysis did not
consider costs such as the social welfare cost or the cost of penalties
and lawsuits. However, the IRFA fully complied with the requirements of
Sec. 603 of the Regulatory Flexibility Act. The IRFA compared
estimated compliance costs for four distinct sizes of small business
(10, 50, 100, and 500 employees) to the respective revenue of these
businesses, using information obtained from the Small Business
Administration, and identified a compliance cost burden of 0.03 percent
of revenue for the small entity with 10 employees. The Councils do not
agree that 0.03 percent would typically be regarded as a significant
economic impact. Further, with regard to the full social welfare cost
of the rule, regulatory flexibility analyses need not include anything
other than the direct costs of a regulation on a small entity that is
required to comply with the regulation.
The SBA Office of Advocacy believes that the Councils
underestimated the number of contractors that will be vetted through E-
Verify and criticizes the fixed factors (e.g., 26 percent for labor)
used in the economic analysis, as well as the estimate that the
assumption that the number of subcontractors is 20 percent of the
number of prime contractors. It claims that the estimates the Councils
used are not based on ``empirical data'' and that the economic analysis
was not explicit regarding how these factors were determined. The
Councils respond that the dollar value of the contracts within the
scope of the rule was found by querying the Federal Procurement Data
System and does not rely on an estimate by the Councils. Instead of
simply providing a ``top-level'' estimate, the Councils developed a
model to estimate the number of employees that would be expected to be
vetted through E-Verify. The factors utilized (e.g., 26 percent for
labor) are all multiplied against the estimated dollar value of
contracts. When describing the percentage estimates used to estimate
factors utilized, the economic analysis specifically stated ``we
understand these assumptions are rough and we welcome public comment
providing more precise information.'' However, no better information
was provided in the comments. The SBA Office of Advocacy encouraged the
FAR Council to revisit the economic analysis as more data become
available. The Councils will consider reviewing this aspect of the
economic analysis once the final rule has been in effect and useful
data becomes available.
The Councils are unaware of any duplicative, overlapping, or
conflicting Federal rules. There are current requirements for all
employers, not just Federal contractors and subcontractors, to verify
the employment eligibility of their newly hired employees. These
requirements have existed since 1986. Arguably related rules include
DHS's ``No-Match'' rule, which provides guidance to employers on how
best to respond to the Social Security Administration's (SSA) no-match
letters, through which employers are alerted annually about their
employees whose names and Social Security numbers submitted on tax
forms do not match up to the information in the SSA's database.
Although this ``No-Match'' rule concerns the SSA's letters generated
from one of the data sources used by the E-Verify system, the ``No-
Match'' rule is not directly associated with use of the E-Verify
System. The two rules interact insofar as use of E-Verify--and the
resulting strengthening of Federal contractors' employment verification
processes--is expected to reduce the incidence of SSA ``No-Matches'' in
the Federal contract workforce resulting from the employment of
unauthorized alien workers. But the ``No-Match'' rule is designed to
assist employers to ensure that their entire existing workforce remains
work-authorized, while this amendment to the FAR is designed to ensure
that unauthorized aliens are not brought into the Federal Government's
contractor workforce.
In addition to the alternatives discussed above in the response to
public comments--particular, the section entitled ``Small Business,''
and its subsections including ``Alternatives to Lessen the Burden on
Small Businesses''--the Councils considered the following alternatives
in order to minimize the impact on small business concerns:
Whether to exempt small businesses entirely from the
requirement to use E-Verify. The SBA Office of Advocacy was concerned
that small businesses do not have the financial resources and human
capital to adapt their technology infrastructure systems to rapidly
change requirements being imposed by the Federal Government. The
Councils limited the applicability of this rule to small businesses by
raising the dollar threshold, limiting flowdown, exempting COTS
suppliers, and in various other ways discussed throughout this notice.
[[Page 67701]]
How to limit the compliance costs for small businesses.
The SBA Office of Advocacy noted that small business Federal
contractors operate on very thin profit margins and the types of
technology systems necessary here require capital outlays that cannot
be easily recouped by passing the cost to the client and are costly to
the small business owner. Although the E-Verify system does require the
employer to have access to some equipment such as a computer, Internet
access, a printer, and either a scanner, photo copier, or a digital
camera, the Councils believe that this equipment is not prohibitively
expensive. Almost all small businesses doing business with the
Government would already have such equipment or be able to readily
acquire it. The equipment for a small business to implement E-Verify
need not be particularly sophisticated or complex. The Councils have
made every effort to limit the cost of compliance.
How to limit appropriately the burden of compliance on
subcontractors. The SBA Office of Advocacy is concerned that there is
disproportionality in the compliance cost burden on small business
subcontractors because there are fewer avenues and fewer contracts
among which the small businesses can spread the cost of doing business.
The final rule adds a number of exemptions that will ease the burden on
small business and large business contractors; for example, contractors
will have the option of verifying all existing employees, not just
those performing directly on the contract. This eliminates the need to
develop a system to identify employees assigned to the contract.
Whether to require E-Verify participation as a preaward
eligibility requirement rather than as a postaward contract performance
requirement. The rule is distinct from the existing E-Verify program,
in that it would require E-Verify queries to be performed on certain
existing employees of a contractor, and the Councils believe that the
obligations created by the rule should be codified as a postaward
contract performance requirement.
Whether the use of E-Verify should be required for
existing employees of the contractor who are assigned to work under the
Government contract or should be limited only to the new hires of the
contractor. Executive Order 12989, as amended, instructs Federal
contracting agencies to contract with employers that agree to use E-
Verify to confirm the work eligibility of their existing employees
assigned to work on Federal contracts. The Councils decided that
requiring employment eligibility confirmation of all workers assigned
to a new Government contract was most consistent with Executive Order
12989 and with the Federal Government's own obligation to use E-Verify
when hiring Federal employees, and it would most effectively ensure
that the Federal Government does not indirectly exploit an illegal
labor force.
Whether to require contractors to use E-Verify only for
new hires that would be assigned to work under a Government contract
and exclude all other new hires of the contractor from the E-Verify
requirement. Executive Order 12989, as amended, instructs Federal
contracting agencies to contract with employers that agree to use E-
Verify for all new hires of the contractor. The Councils decided that
requiring contractors to use the E-Verify program as part of standard
hiring practices would simplify employment verification, and conforms
with the requirements of Executive Order 12989 and with a principal
goal of the rule--to ensure that the Federal Government does business
with companies that do not employ unauthorized aliens.
Whether the use of E-Verify should be required for all
prime contracts or only for those contracts that do not call for COTS
items or items that would be COTS items but for minor modifications, as
defined at FAR Part 2 (containing the definition of a commercial item).
Because COTS suppliers, by definition, do not specialize in serving the
Federal Government, and because the Government might lose access to
COTS suppliers if they determine the cost of complying with the rule
outweighs their gains from Government business, the Councils decided
not to require the use of E-Verify for COTS items and items that would
be COTS items but for minor modifications. As noted above, the Councils
expanded the reach of this exception for COTS items in response to
comments received on the proposed rule.
Whether the requirements of the rule should flow down to
all subcontracts or should be limited to subcontracts for services or
construction. The Councils determined to apply the rule only to
subcontracts for commercial or noncommercial services, including
construction. It does not apply to subcontracts for material or to
subcontracts less than $3,000.
G. Statutory and Regulatory Requirements
Executive Order 12866
Executive Order 12866, ``Regulatory Planning and Review,'' directs
agencies and the Office of Management and Budget (OMB) to determine
whether a regulatory action is ``significant'' and therefore subject to
review by OMB and subject to the analyses directed by that Executive
Order. 58 FR 51735, October 4, 1993, as amended. The Councils have
determined that this rule is a ``significant regulatory action'' under
Executive Order 12866, section 3(f), because there is significant
public interest in issues pertaining to immigration and because this is
an economically significant rule pursuant to this Executive Order.
Accordingly, this final rule has been submitted to OMB for review.
This is a major rule under 5 U.S.C. 804.
A Regulatory Impact Analysis that more thoroughly explains the
assumptions used to estimate the cost of this final rule is available
in the docket as indicated under ADDRESSES. For access to the docket to
read background documents or comments received, go to http://
www.regulations.gov. A summary of the cost and benefits of the final
rule follows:
In the initial fiscal year the rule is expected to be effective
(fiscal year 2009), the Councils estimate that there will be
approximately 168,624 contractors and subcontractors that will be
required to enroll in E-Verify due to this rule and that there will
be an additional 3.8 million employees vetted through E-Verify. In
the initial year, the cost of the final rule at 7% net present value
is approximately $245.4 million, and, over the ten-year period of
analysis (2009-2018), the cost of the final rule is approximately
$1,105.4 million. In the initial year, the cost of the final rule at
3% net present value is approximately $254.9 million, and, over the
ten-year period of analysis (2009-2018), the cost of the final rule
is $1,336.5 million. Compliance costs from participating in the E-
Verify program fall into the following general categories, and Table
1 below provides a summary of the costs:
Startup Costs: Employers must register to use the E-
Verify system and sign a Memorandum of Understanding with USCIS and
SSA. Employers will also incur costs such as reviewing and updating
USCIS Form I-9 (Employment Eligibility Verification) for existing
employees and potentially a cost to modify an existing personnel or
payroll system to be able to record the E-Verify status of their
employees. A very small number of employers may need to purchase a
computer, internet connection and printer for their hiring site if
that hiring site does not already have internet access.
Training: Employees who use the E-Verify system are
required to take an on-line tutorial. While USCIS does not charge a
fee for this training, employers will incur the opportunity cost of
the time the employee spends on the training, as the employee's time
could have been spent on other activities.
[[Page 67702]]
Employee Verification: Employers will incur the
opportunity cost of the time spent entering data into E-Verify and,
if the employee receives a tentative nonconfirmation, employers
would inform the employee and spend time closing out the case after
resolution of the tentative nonconfirmation. In addition, the
employer would incur lost productivity when an employee needs to be
away from work to visit SSA to correct his/her information. As
estimated, the employee would bear the cost of driving to SSA.
Employee Replacement (Turnover) Cost: There may be a
small percentage of workers who are authorized to work in the U.S.
and who receive a tentative nonconfirmation but do not take the
steps necessary to resolve it (despite the strong economic
incentives to do so). The Councils cannot predict why an authorized
employee would not work diligently to resolve the tentative
nonconfirmation, given the incentives to do so, but we believe the
economic analysis should reasonably account for such a possibility.
Assuming that a small number of authorized employees would not
resolve their tentative nonconfirmations, and would either resign or
be terminated, is simply a conservative analytical assumption in
light of the fact that there is no law compelling employees to
resolve their tentative nonconfirmations; thus, employers may incur
some additional costs due to having to replace a small number of
authorized employees. To the extent that the accompanying E-Verify
rulemaking results in the termination or resignation of a worker
authorized to work in the U.S., those associated employee
replacement costs would be considered to be a cost of the rule.
However, the termination and replacement costs of unauthorized
workers are not counted as a direct cost of this rule because
current immigration law prohibits employers from hiring or
continuing to employ aliens whom they know are not authorized to
work in the U.S. The termination and replacement of unauthorized
employees will impose a burden on employers, but INA section
274A(a), 8 U.S.C. 1324a(a), expressly prohibits employers from
hiring or continuing to employ an alien whom they know is not
authorized to work in the United States. Accordingly, costs that
result from employers' knowledge of their workers' illegal status
are attributable to the Immigration and Nationality Act, not to the
FAR rule.
Federal Government Cost: The Government will incur
operating costs from each query that an employer executes and will
also incur costs from resolving tentative nonconfirmations.
Table 1--10 Year Cost of Final Rule
[7% present value]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Employer Employee Government
-------------------------------------------------------------------------------------
Authorized
Year employee Verification Verification Verification Total
Startup costs replacement cost cost cost
cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
2009.............................................. $188,138,945 $15,041,464 $37,836,372 $2,436,863 $1,928,888 $245,382,532
2010.............................................. 72,368,319 7,798,427 19,616,690 1,263,415 998,560 102,045,411
2011.............................................. 71,015,802 7,652,663 19,250,187 1,239,831 979,895 100,138,378
2012.............................................. 69,688,407 7,509,622 18,890,355 1,216,654 961,579 98,266,617
2013.............................................. 69,443,845 7,369,253 18,537,018 1,193,865 943,606 97,487,587
2014.............................................. 68,145,775 7,231,511 18,190,724 1,171,588 925,973 95,665,570
2015.............................................. 66,872,076 7,096,345 17,850,716 1,149,689 908,670 93,877,497
2016.............................................. 65,621,976 6,963,703 17,516,996 1,128,187 891,691 92,122,553
2017.............................................. 65,041,291 6,833,541 17,189,537 1,107,092 875,028 91,046,490
2018.............................................. 63,825,632 6,705,812 16,868,275 1,086,406 858,677 89,344,803
-----------------------------------------------------------------------------------------------------
Total......................................... 800,162,068 80,202,341 201,746,869 12,993,591 10,272,566 1,105,377,436
--------------------------------------------------------------------------------------------------------------------------------------------------------
Because unauthorized workers are at risk of being apprehended in
immigration enforcement actions, contractors who hire them will
necessarily have a more unstable workforce than contractors who do not
hire unauthorized workers. Given the vulnerabilities in the I-9 system,
many employers that do not knowingly employ illegal aliens nevertheless
have unauthorized workers, undetected, on their workforce.
This rule will promote economy and efficiency in Government
procurement. Stability and dependability are important elements of
economy and efficiency. A contractor with a less stable workforce will
be less likely to produce goods and services economically and
efficiently than will a contractor with a more stable workforce.
Because of the Executive Branch's obligation to enforce the immigration
laws, including the detection and removal of illegal aliens identified
through worksite enforcement, contractors that employ illegal aliens
cannot rely on the continuing availability and service of those illegal
workers. Such contractors inevitably will have a less stable and less
dependable workforce than contractors that do not employ such persons.
Where a contractor assigns illegal aliens to work on Federal contracts,
the enforcement of Federal immigration laws imposes a direct risk of
disruption, delay, and increased expense in Federal contracting. Such
contractors are less dependable procurement sources, even if the
contractors did not knowingly hire or knowingly continue to employ
unauthorized workers.
Contractors that use E-Verify to confirm the employment eligibility
of the workforce are much less likely to face immigration enforcement
actions and are generally more efficient and dependable procurement
sources than contractors that do not use that system to verify the work
eligibility of their workforce. Rigorous employment verification
through E-Verify will also help contractors confirm the identity of the
persons working on Federal contracts, enhancing national security at
less expense to the Government than it would cost for contractors to
obtain more rigorous security clearances that may not be otherwise
required by their contracts. This is likely to be particularly
beneficial where contractors operate at sensitive national
infrastructure sites.
H. Paperwork Reduction Act
Under the Paperwork Reduction Act of 1995, Public Law 104-13, 109
Stat. 163 (1995) (PRA), all Departments are required to submit to the
Office of Management and Budget (OMB), for review and approval, any
information collection requests in a final rule. It is estimated that
this rule will increase the information collection burden hours already
approved for the E-Verify Program. The OMB control number for the
currently approved E-Verify Program Information Collection Request is
1615-0092.
[[Page 67703]]
Although the E-Verify Program has a currently approved Paperwork
Reduction Act clearance, we are seeking OMB approval on the proposed
amendments to the current OMB approved collection. The purpose of this
notice is to allow 60 days for public comments on the amendments to the
E-Verify Program collection of information, not on the amendments to
the FAR rule. Comments on the amendments to the E-Verify Program should
be submitted no later than January 13, 2009. This process is conducted
in accordance with 5 CFR 1320.10.
When submitting comments on the information collection, they should
address one or more of the following four points:
(1) Evaluate whether the collection of information is necessary for
the proper performance of the agency, including whether the information
will have practical utility;
(2) Evaluate the accuracy of the agency's estimate of the burden of
the collection of information, including the validity of the
methodology and assumptions used;
(3) Enhance the quality, utility, and clarity of the information to
be collected; and
(4) Minimize the burden of the collection of the information on
those who are to respond, including through the use of any and all
appropriate automated, electronic, mechanical, or other technological
collection techniques or other forms of information technology, e.g.,
permitting electronic submission of responses.
Overview of Information Collection for the E-Verify System (OMB
Control Number 1615-0092):
a. Type of information collection: Revision of currently approved
information collection.
b. Title of Form/Collection: E-Verify Program.
c. Agency form number, if any, and the applicable component of the
Department of Homeland Security sponsoring the collection: No form
number. OMB Control Number 1615-0092; U.S. Citizenship and Immigration
Services.
d. Affected public who will be asked or required to respond, as
well as a brief abstract: Primary respondents are business or other
for-profit entities, small business, or other organizations. The E-
Verify Program allows employers to electronically verify the
eligibility status of newly hired employees. Certain Federal
contractors and subcontractors will also be required to perform queries
on existing employees assigned to the contract.
e. An estimate of the total number of respondents and the amount of
time estimated for an average respondent to respond:
Implementation: 125,015 at 0.86 hours per response.
Training: 521,134 at 2.26 hours per response.
ID/IQ Contracts: 3,333 at 2.00 hours per response.
Initial Query: 4,094,955 at 0.12 hours per response.
Secondary Query: 195,329 at 1.94 hours per response.
For implementation, it is estimated that the number of responses
per respondent will be 17. For all others, the number of responses per
respondent will be one.
f. An estimate of the total of public burden (in hours) associated
with the collection: Approximately 3,882,482 burden hours.
All comments regarding this information collection should be
directed to the Department of Homeland Security, U.S. Citizenship and
Immigration Services, Regulatory Management Division, 111 Massachusetts
Avenue, NW., 3rd Floor, Washington, DC 20529, Attention: Chief, 202-
272-8377.
List of Subjects in 48 CFR Parts 2, 22, and 52
Government procurement.
Dated: November 6, 2008.
Al Matera,
Director, Office of Acquisition Policy.
0
Therefore, DoD, GSA, and NASA amend 48 CFR parts 2, 22, and 52 as set
forth below:
0
1. The authority citation for 48 CFR parts 2, 22, and 52 continues to
read as follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
PART 2--DEFINITIONS OF WORDS AND TERMS
0
2. Amend section 2.101 in paragraph (b)(2), in the definition ``United
States'', by redesignating paragraphs (6) through (8) as paragraphs (7)
through (9), respectively, and adding a new paragraph (6) to read as
follows:
2.101 Definitions.
* * * * *
(b) * * *
(2) * * *
United States * * *
(6) For use in Subpart 22.18, see the definition at 2.1801.
* * * * *
PART 22--APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS
0
3. Amend section 22.102-1 by removing from the end of paragraph (g) the
word ``and''; removing the period from the end of paragraph (h) and
adding ``; and'' in its place; and adding paragraph (i) to read as
follows:
22.102-1 Policy.
* * * * *
(i) Eligibility for employment under United States immigration
laws.
0
4. Add Subpart 22.18 to read as follows:
Subpart 22.18--Employment Eligibility Verification
Sec.
22.1800 Scope.
22.1801 Definitions.
22.1802 Policy.
22.1803 Contract clause.
22.1800 Scope.
This subpart prescribes policies and procedures requiring
contractors to utilize the Department of Homeland Security (DHS),
United States Citizenship and Immigration Service's employment
eligibility verification program (E-Verify) as the means for verifying
employment eligibility of certain employees.
22.1801 Definitions.
As used in this subpart--
Commercially available off-the-shelf (COTS) item--
(1) Means any item of supply that is--
(i) A commercial item (as defined in paragraph (1) of the
definition at 2.101);
(ii) Sold in substantial quantities in the commercial marketplace;
and
(iii) Offered to the Government, without modification, in the same
form in which it is sold in the commercial marketplace; and
(2) Does not include bulk cargo, as defined in section 3 of the
Shipping Act of 1984 (46 U.S.C. App. 1702), such as agricultural
products and petroleum products. Per 46 CFR 525.1 (c)(2), ``bulk
cargo'' means cargo that is loaded and carried in bulk onboard ship
without mark or count, in a loose unpackaged form, having homogenous
characteristics. Bulk cargo loaded into intermodal equipment, except
LASH or Seabee barges, is subject to mark and count and, therefore,
ceases to be bulk cargo.
Employee assigned to the contract means an employee who was hired
after November 6, 1986, who is directly performing work, in the United
States, under a contract that is required to
[[Page 67704]]
include the clause prescribed at 22.1803. An employee is not considered
to be directly performing work under a contract if the employee--
(1) Normally performs support work, such as indirect or overhead
functions; and
(2) Does not perform any substantial duties applicable to the
contract.
Subcontract means any contract, as defined in 2.101, entered into
by a subcontractor to furnish supplies or services for performance of a
prime contract or a subcontract. It includes but is not limited to
purchase orders, and changes and modifications to purchase orders.
Subcontractor means any supplier, distributor, vendor, or firm that
furnishes supplies or services to or for a prime contractor or another
subcontractor.
United States, as defined in 8 U.S.C. 1101(a)(38), means the 50
States, the District of Columbia, Puerto Rico, Guam, and the U.S.
Virgin Islands.
22.1802 Policy.
(a) Statutes and Executive orders require employers to abide by the
immigration laws of the United States and to employ in the United
States only individuals who are eligible to work in the United States.
The E-Verify program provides an Internet-based means of verifying
employment eligibility of workers employed in the United States, but is
not a substitute for any other employment eligibility verification
requirements.
(b) Contracting officers shall include in solicitations and
contracts, as prescribed at 22.1803, requirements that Federal
contractors must--
(1) Enroll as Federal contractors in E-Verify;
(2) Use E-Verify to verify employment eligibility of all new hires
working in the United States, except that the contractor may choose to
verify only new hires assigned to the contract if the contractor is--
(i) An institution of higher education (as defined at 20 U.S.C.
1001(a));
(ii) A State or local government or the government of a Federally
recognized Indian tribe; or
(iii) A surety performing under a takeover agreement entered into
with a Federal agency pursuant to a performance bond;
(3) Use E-Verify to verify employment eligibility of all employees
assigned to the contract; and
(4) Include these requirements, as required by the clause at
52.222-54, in subcontracts for--
(i) Commercial or noncommercial services, except for commercial
services that are part of the purchase of a COTS item (or an item that
would be a COTS item, but for minor modifications), performed by the
COTS provider, and are normally provided for that COTS item; and
(ii) Construction.
(c) Contractors may elect to verify employment eligibility of all
existing employees working in the United States who were hired after
November 6, 1986, instead of just those employees assigned to the
contract. The contractor is not required to verify employment
eligibility of--
(1) Employees who hold an active security clearance of
confidential, secret, or top secret; or
(2) Employees for whom background investigations have been
completed and credentials issued pursuant to Homeland Security
Presidential Directive (HSPD)-12.
(d) In exceptional cases, the head of the contracting activity may
waive the E-Verify requirement for a contract or subcontract or a class
of contracts or subcontracts, either temporarily or for the period of
performance. This waiver authority may not be delegated.
(e) DHS and the Social Security Administration (SSA) may terminate
a contractor's MOU and deny access to the E-Verify system in accordance
with the terms of the MOU. If DHS or SSA terminates a contractor's MOU,
the terminating agency must refer the contractor to a suspension or
debarment official for possible suspension or debarment action. During
the period between termination of the MOU and a decision by the
suspension or debarment official whether to suspend or debar, the
contractor is excused from its obligations under paragraph (b) of the
clause at 52.222-54. If the contractor is suspended or debarred as a
result of the MOU termination, the contractor is not eligible to
participate in E-Verify during the period of its suspension or
debarment. If the suspension or debarment official determines not to
suspend or debar the contractor, then the contractor must reenroll in
E-Verify.
22.1803 Contract clause.
Insert the clause at 52.222-54, Employment Eligibility
Verification, in all solicitations and contracts that exceed the
simplified acquisition threshold, except those that--
(a) Are only for work that will be performed outside the United
States;
(b) Are for a period of performance of less than 120 days; or
(c) Are only for--
(1) Commercially available off-the-shelf items;
(2) Items that would be COTS items, but for minor modifications (as
defined at paragraph (3)(ii) of the definition of ``commercial item''
at 2.101);
(3) Items that would be COTS items if they were not bulk cargo; or
(4) Commercial services that are--
(i) Part of the purchase of a COTS item (or an item that would be a
COTS item, but for minor modifications);
(ii) Performed by the COTS provider; and
(iii) Are normally provided for that COTS item.
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
4. Amend section 52.212-5 by--
0
a. Revising the date of the clause;
0
b. Redesignating paragraphs (b)(26) through (b)(41) as paragraphs
(b)(27) through (b)(42), respectively, and adding a new paragraph
(b)(26); and
0
c. Redesignating paragraph (e)(1)(xi) as paragraph (e)(1)(xii), and
adding a new paragraph (e)(1)(xi) to read as follows:
52.212-5 Contract Terms and Conditions Required to Implement Statutes
or Executive Orders--Commercial Items.
* * * * *
Contract Terms and Conditions Required to Implement Statutes or
Executive Orders--Commercial Items (Jan 2009)
* * * * *
(b) * * *
-- (26) 52.222-54, Employment Eligibility Verification (Jan
2009). (Executive Order 12989). (Not applicable to the acquisition
of commercially available off-the-shelf items or certain other types
of commercial items as prescribed in 22.1803.)
* * * * *
(e)(1) * * *
(xi) 52.222-54, Employment Eligibility Verification (Jan 2009).
* * * * *
(End of clause)
0
5. Add section 52.222-54 to read as follows:
52.222-54 Employment Eligibility Verification.
As prescribed in 22.1803 and 12.301(d)(3), insert the following
clause:
Employment Eligibility Verification (Jan 2009)
(a) Definitions. As used in this clause--Commercially available
off-the-shelf (COTS) item--
(1) Means any item of supply that is--
(i) A commercial item (as defined in paragraph (1) of the
definition at 2.101);
(ii) Sold in substantial quantities in the commercial
marketplace; and
[[Page 67705]]
(iii) Offered to the Government, without modification, in the
same form in which it is sold in the commercial marketplace; and
(2) Does not include bulk cargo, as defined in section 3 of the
Shipping Act of 1984 (46 U.S.C. App. 1702), such as agricultural
products and petroleum products. Per 46 CFR 525.1(c)(2), ``bulk
cargo'' means cargo that is loaded and carried in bulk onboard ship
without mark or count, in a loose unpackaged form, having homogenous
characteristics. Bulk cargo loaded into intermodal equipment, except
LASH or Seabee barges, is subject to mark and count and, therefore,
ceases to be bulk cargo.
Employee assigned to the contract means an employee who was
hired after November 6, 1986, who is directly performing work, in
the United States, under a contract that is required to include the
clause prescribed at 22.1803. An employee is not considered to be
directly performing work under a contract if the employee--
(1) Normally performs support work, such as indirect or overhead
functions; and
(2) Does not perform any substantial duties applicable to the
contract.
Subcontract means any contract, as defined in 2.101, entered
into by a subcontractor to furnish supplies or services for
performance of a prime contract or a subcontract. It includes but is
not limited to purchase orders, and changes and modifications to
purchase orders.
Subcontractor means any supplier, distributor, vendor, or firm
that furnishes supplies or services to or for a prime Contractor or
another subcontractor.
United States, as defined in 8 U.S.C. 1101(a)(38), means the 50
States, the District of Columbia, Puerto Rico, Guam, and the U.S.
Virgin Islands.
(b) Enrollment and verification requirements. (1) If the
Contractor is not enrolled as a Federal Contractor in E-Verify at
time of contract award, the Contractor shall--
(i) Enroll. Enroll as a Federal Contractor in the E-Verify
program within 30 calendar days of contract award;
(ii) Verify all new employees. Within 90 calendar days of
enrollment in the E-Verify program, begin to use E-Verify to
initiate verification of employment eligibility of all new hires of
the Contractor, who are working in the United States, whether or not
assigned to the contract, within 3 business days after the date of
hire (but see paragraph (b)(3) of this section); and
(iii) Verify employees assigned to the contract. For each
employee assigned to the contract, initiate verification within 90
calendar days after date of enrollment or within 30 calendar days of
the employee's assignment to the contract, whichever date is later
(but see paragraph (b)(4) of this section).
(2) If the Contractor is enrolled as a Federal Contractor in E-
Verify at time of contract award, the Contractor shall use E-Verify
to initiate verification of employment eligibility of--
(i) All new employees. (A) Enrolled 90 calendar days or more.
The Contractor shall initiate verification of all new hires of the
Contractor, who are working in the United States, whether or not
assigned to the contract, within 3 business days after the date of
hire (but see paragraph (b)(3) of this section); or
(B) Enrolled less than 90 calendar days. Within 90 calendar days
after enrollment as a Federal Contractor in E-Verify, the Contractor
shall initiate verification of all new hires of the Contractor, who
are working in the United States, whether or not assigned to the
contract, within 3 business days after the date of hire (but see
paragraph (b)(3) of this section); or
(ii) Employees assigned to the contract. For each employee
assigned to the contract, the Contractor shall initiate verification
within 90 calendar days after date of contract award or within 30
days after assignment to the contract, whichever date is later (but
see paragraph (b)(4) of this section).
(3) If the Contractor is an institution of higher education (as
defined at 20 U.S.C. 1001(a)); a State or local government or 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, the Contractor may choose to
verify only employees assigned to the contract, whether existing
employees or new hires. The Contractor shall follow the applicable
verification requirements at (b)(1) or (b)(2), respectively, except
that any requirement for verification of new employees applies only
to new employees assigned to the contract.
(4) Option to verify employment eligibility of all employees.
The Contractor may elect to verify all existing employees hired
after November 6, 1986, rather than just those employees assigned to
the contract. The Contractor shall initiate verification for each
existing employee working in the United States who was hired after
November 6, 1986, within 180 calendar days of--
(i) Enrollment in the E-Verify program; or
(ii) Notification to E-Verify Operations of the Contractor's
decision to exercise this option, using the contact information
provided in the E-Verify program Memorandum of Understanding (MOU).
(5) The Contractor shall comply, for the period of performance
of this contract, with the requirements of the E-Verify program MOU.
(i) The Department of Homeland Security (DHS) or the Social
Security Administration (SSA) may terminate the Contractor's MOU and
deny access to the E-Verify system in accordance with the terms of
the MOU. In such case, the Contractor will be referred to a
suspension or debarment official.
(ii) During the period between termination of the MOU and a
decision by the suspension or debarment official whether to suspend
or debar, the Contractor is excused from its obligations under
paragraph (b) of this clause. If the suspension or debarment
official determines not to suspend or debar the Contractor, then the
Contractor must reenroll in E-Verify.
(c) Web site. Information on registration for and use of the E-
Verify program can be obtained via the Internet at the Department of
Homeland Security Web site: http://www.dhs.gov/E-Verify.
(d) Individuals previously verified. The Contractor is not
required by this clause to perform additional employment
verification using E-Verify for any employee--
(1) Whose employment eligibility was previously verified by the
Contractor through the E-Verify program;
(2) Who has been granted and holds an active U.S. Government
security clearance for access to confidential, secret, or top secret
information in accordance with the National Industrial Security
Program Operating Manual; or
(3) Who has undergone a completed background investigation and
been issued credentials pursuant to Homeland Security Presidential
Directive (HSPD)-12, Policy for a Common Identification Standard for
Federal Employees and Contractors.
(e) Subcontracts. The Contractor shall include the requirements
of this clause, including this paragraph (e) (appropriately modified
for identification of the parties), in each subcontract that--
(1) Is for--(i) Commercial or noncommercial services (except for
commercial services that are part of the purchase of a COTS item (or
an item that would be a COTS item, but for minor modifications),
performed by the COTS provider, and are normally provided for that
COTS item); or
(ii) Construction;
(2) Has a value of more than $3,000; and
(3) Includes work performed in the United States.
(End of clause)
[FR Doc. E8-26904 Filed 11-13-08; 8:45 am]
BILLING CODE 6820-EP-P