[Federal Register: June 12, 2008 (Volume 73, Number 114)]
[Proposed Rules]
[Page 33374-33381]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12jn08-37]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 2, 12, 22, and 52
[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: Proposed rule.
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SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council (Councils) are proposing to amend the
Federal Acquisition Regulation (FAR) to require certain contractors and
subcontractors to use the U.S. Citizenship and Immigration Services'
(USCIS) E-Verify system as the means of verifying that certain of their
employees are eligible to work in the United States.
DATES: Interested parties should submit written comments to the FAR
Secretariat on or before August 11, 2008 to be considered in the
formulation of a final rule.
ADDRESSES: Submit comments identified by FAR case 2007-013 by any of
the following methods:
Regulations.gov: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov. Submit
comments via the Federal eRulemaking portal by inputting ``FAR Case
2007-013'' under the heading ``Comment or Submission''. Select the link
``Send a Comment or Submission'' that corresponds with FAR Case 2007-
013. Follow the instructions provided to complete the ``Public Comment
and Submission Form''. Please include your name, company name (if any),
and ``FAR Case 2007-013'' on your attached document.
[[Page 33375]]
Fax: 202-501-4067.
Mail: General Services Administration, Regulatory
Secretariat (VPR), 1800 F Street, NW., Room 4035, ATTN: Laurieann
Duarte, Washington, DC 20405.
Instructions: Please submit comments only and cite FAR case 2007-
013 in all correspondence related to this case. All comments received
will be posted without change to http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov, including
any personal and/or business confidential information provided.
FOR FURTHER INFORMATION CONTACT: 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 FAR case 2007-013.
SUPPLEMENTARY INFORMATION:
A. Background
This rule proposes to amend the Federal Acquisition Regulation
(FAR) to require that certain contracts contain a clause requiring that
the contractor and certain subcontractors utilize the E-Verify System
to verify employment eligibility of all newly hired employees of the
contractor or subcontractor and all employees directly engaged in the
performance of work in the United States under those contracts.
The Government awards numerous contracts each fiscal year worth
hundreds of billions of dollars. At the same time, one of the
Government's primary responsibilities is the enforcement of the
immigration laws of the United States. It is appropriate to ensure that
Government contractors and subcontractors abide by the immigration laws
that the Government enforces. In 1986, Congress amended the Immigration
and Nationality Act (INA) to prohibit the hiring or continued
employment of aliens, knowing that the aliens are unauthorized to work
in the United States. Public Law 99-603, Title I, Sec. 101(a)(1), 100
Stat. 3360, codified at 8 U.S.C. 1324a(a). Congress also established an
employment verification system in 8 U.S.C. 1324a(b), and 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). To assist in the development of such changes and additions to
the system, Congress also authorized the President to establish
demonstration projects designed to strengthen the employment
verification system. 8 U.S.C. 1324a(d)(4). In 1992 the Immigration and
Naturalization Service (INS) launched the Telephone Verification System
(TVS) pilot program--an early form of what is now the E-Verify system--
as a demonstration project. 69 Interpreter Releases 702 (June 8, 1992);
515 (Apr. 27, 1992). In 1996, Congress established the Basic Pilot
program (now E-Verify) as part of the Illegal Immigration Reform and
Immigrant Responsibility Act (IIRIRA). Public Law No. 104-208,
Sec. Sec. 401-405, 110 Stat. 3009-655--3009-665 (1996) (8 U.S.C. 1324a
note). The Basic Pilot statute instructs all departments of the
Executive Branch to participate in E-Verify as part of their hiring
process. IIRIRA Sec. 402(e)(1).
This rule is authorized by an exercise of the President's authority
under the Federal Property and Administrative Services Act of 1949
(FPASA), 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 aim of ``provid[ing] the
Federal Government with an economical and efficient'' procurement
system. 40 U.S.C. 121, 101. The ``economy and efficiency'' benefits to
Federal contracting that flow from ensuring that the Federal Government
does not do business with contractors that hire or employ unauthorized
aliens were first set forth in Executive Order 12989 (see 61 FR 6091,
February 15, 1996). That order, which pre-dated Congress's creation of
the Basic Pilot program (now E-Verify), noted 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. The executive order
entitled ``Economy and Efficiency in Government Procurement Through
Compliance with Certain Immigration and Nationality Act Provisions and
Use of an Electronic Employment Eligibility Verification System'' of
June 6, 2008, amends Executive Order 12989 and, together with the
Designation by the Secretary of Homeland Security, directs Federal
agencies, in light of the recent advances in the reliability,
convenience, and accuracy of the E-Verify system, to use this powerful
tool to avoid both the general inefficiencies that flow from
contracting with employers burdened with unstable workforces as well as
the direct costs of disruptions to Federal contract performance that
result when unauthorized aliens are found in, and must be subsequently
removed from, the Federal contract workforce.
This proposed rule inserts a clause into Federal contracts
committing Government contractors to use the United States Citizenship
and Immigration Service (USCIS) E-Verify System to verify that all of
the contractors' new hires, and all employees (existing and new)
directly engaged in the performance of work under Federal contracts,
are authorized to work in the United States. The E-Verify System is
expected to help contractors avoid employment of unauthorized aliens
and will assist Federal agencies to avoid contracting with companies
that knowingly hire unauthorized aliens. This enhances the Government's
ability to protect national security and ensure compliance with the
nation's immigration laws--core aspects of the Government's mission
that otherwise could be compromised by the presence of unauthorized
aliens in Government facilities or by the employment of unauthorized
aliens in the Government's supply chain. It also protects U.S. workers
by creating another disincentive for companies to hire unauthorized
aliens who may command lower wages.
In summary, the proposed rule--
1. Requires insertion of a clause into Government prime contracts
that include work in the United States, other than those that do not
exceed the micro-purchase threshold (generally $3,000), or that are for
commercially available off-the-shelf (COTS) items or items that would
be COTS items but for minor modifications (the rule adopts the
statutory definition of COTS).
2. Requires inclusion of the clause in subcontracts over $3,000 for
services or for construction.
3. Requires a contractor or subcontractor to enroll in the E-Verify
program within 30 days of contract award, begin verifying the
employment eligibility of all new employees of the contractor or
subcontractor that are hired after enrollment in E-Verify, and continue
to use the E-Verify program for the life of the contract.
4. Requires contractors and subcontractors to use E-Verify to
confirm the employment eligibility of all existing employees who are
directly engaged in the performance of work under the covered contract.
5. 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
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
[[Page 33376]]
expected under the remaining performance period is substantial.
6. In exceptional circumstances, allows a head of the contracting
activity to waive the requirement to include the clause. This authority
is not delegable.
The proposed rule applies only to employment in the United States
as defined at section 101(a)(38) of the Immigration and Nationality Act
(INA), 8 U.S.C. 1101 et seq. ``United States'' includes the fifty
States and the District of Columbia, Guam, Puerto Rico, and the United
States Virgin Islands. It does not currently include the United States
territories of American Samoa and the Commonwealth of the Northern
Mariana Islands. Under the Consolidated Natural Resources Act of 2008,
Federal immigration law will begin to apply--through a phased process--
to the Commonwealth of the Northern Mariana Islands starting in mid-
2009. At this time, however, these two territories have their own
immigration laws and are not covered by the employment verification
requirements of INA section 274A, 8 U.S.C. 1324a (see Form I-9). The
proposed rule also does not apply to any employment outside the United
States, including work on United States embassies or military bases in
foreign countries. Finally, the proposed rule does not apply to any
employee 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 Councils are attempting to balance competing needs in drafting
this rule. It was written to apply the requirements in a manner to
ensure effective compliance by the contractor community, but it exempts
certain prime contracts and subcontracts when the cost of compliance
would likely outweigh the benefits, e.g., COTS items. Comments are
solicited with regard to how well this balance has been achieved.
The E-Verify program is an internet-based system operated by USCIS,
in partnership with the Social Security Administration (SSA), and
requirements for obtaining access to E-Verify and procedures for the
use of E-Verify are established by the Department of Homeland Security
(DHS), USCIS's parent agency. Before an employer can participate in the
E-Verify program, the employer must enter into a Memorandum of
Understanding (MOU) with DHS and SSA. This MOU requires employers to
agree to abide by current legal hiring procedures and to ensure that no
employee will be unfairly discriminated against as a result of the E-
Verify program. Violation of the terms of this agreement by the
employer is grounds for immediate termination of its participation in
the program. Employers participating in E-Verify must still complete an
Employment Eligibility Verification Form (Form I-9) for each newly
hired employee, as required under current law. Following completion of
the Form I-9, the employer must enter the worker's information into the
E-Verify website, and that information is then checked against
information contained in SSA and USCIS databases.
SSA first verifies that the name, SSN, and date of birth are
correct and, if the employee has stated that he or she is a U.S.
citizen, confirms whether this is in fact the case through its
databases. If the employee is a U.S. citizen, SSA establishes that the
employee is employment-eligible. 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 generally be
required, and the worker may continue employment. E-Verify procedures
require only that the employer record on the I-9 form the verification
ID number and result obtained from the E-Verify query, or print a copy
of the transaction record and retain it with the I-9 form.
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 into the
E-Verify Web site, name changes, or changes in immigration status that
are not reflected in the database. If the individual's information does
not match the SSA or USCIS records, the employer must provide the
employee with a written notice of the fact, 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
tentative nonconfirmation, 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, 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 work days
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 was unable to resolve the discrepancy the employer will receive a
notice of final nonconfirmation and the employee 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; (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 after receiving a final nonconfirmation, and 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
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 based 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://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.dhs.gov/E-Verify.
This proposed rule differs in one significant respect from the
requirements generally applicable to employers participating in E-
Verify; that is, current employees of Federal contractors that are
assigned to work in
[[Page 33377]]
the United States on a covered Federal contract, as well as the
contractor's new hires in the United States, must be verified under
this rule. In the initial contract start-up phase, employees assigned
to the contract must be verified within 30 days; thereafter, the
proposed rule requires newly hired and newly assigned employees to be
verified within 3 days. Requiring employment eligibility confirmation
of all workers assigned to a new Government contract is mandated by the
June 6, 2008, Executive Order amending Executive Order 12989, is most
consistent with the Federal Government's own obligation to use E-Verify
when hiring Federal employees, and will most effectively ensure that
the Federal Government does not indirectly exploit an illegal labor
force.
USCIS is in the process of revising its MOU, program manual,
training materials, Web site, and other E-Verify System materials to
reflect the duties that Federal contractors will take on when they sign
a contract containing the clause promulgated by this proposed rule.
Those E-Verify System accommodations will make this proposed FAR
amendment and the E-Verify System consistent for Federal contractors,
but will not apply to E-Verify users who are not required to comply
with the contract clause promulgated by this rule. Federal contractors'
compliance with that revised MOU will be a performance requirement
under the terms of the Federal contract or subcontract, and the
contractor must consent to the release of information relating to
compliance with its verification responsibilities to contracting
officers or other officials authorized to review the Employer's
compliance with Federal contracting requirements. A revised MOU
reflecting the program participation requirements for Federal
contractors has been placed in the docket for this rulemaking and will
be available online at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov.
B. Executive Order 12866 Regulatory Planning and Review
This is a significant regulatory action and, therefore, was subject
to review under section 6(b) of Executive Order 12866, Regulatory
Planning and Review, dated September 30, 1993. This rule 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 proposed rule is
available in the docket. For access to the docket to read background
documents or comments received, go to http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov. A
summary of the cost and benefits of the proposed rule follows:
In the initial fiscal year, the rule is expected to be effective
(2009), we estimate that there will be approximately 168,324
contractors and subcontractors that will be required to enroll in E-
Verify due to this rule and there will be an additional 3.8 million
employees vetted through E-Verify. In the initial year, the cost of
the proposed rule at 7% net present value is approximately $107.0
million and, over the ten-year period of analysis (2009-2018), the
cost of the proposed rule is approximately $550.3 million. In the
initial year, the cost of the proposed rule at 3% net present value
is approximately $111.2 million and, over the ten-year period of
analysis (2009-2018), the cost of the proposed rule is $668.9
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. A very small number of employers may need to purchase a
computer and internet connection for their hiring site if that
hiring site does not already have internet access.
Training--Employees that 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 for this training, as the employee's
time could have been spent on other activities.
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 would need
to be away from work to visit SSA to correct his/her information. We
believe 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 receive a tentative nonconfirmation, but choose not to take the
steps necessary to resolve the tentative nonconfirmation (despite
the strong economic incentives to resolve the issue). To the extent
that the accompanying E-Verify rulemaking results in the termination
of a worker authorized to work in the U.S., those costs could 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 since 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)(1), (2), 8 U.S.C. 1324a(a)(1),
(2), 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 Federal Acquisition
Regulation requiring Employment Eligibility Verification for certain
federal contractors and subcontractors.
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 Proposed Rule
[7% Present value]
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Employer Employee Government
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Year Authorized Total
Startup & employee Verification Verification Verification
training costs replacement cost cost cost cost
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2009........................................ $ 61,630,740 $18,980,895 $24,174,247 $677,403 $ 1,547,194 $107,010,479
2010........................................ 28,859,143 9,840,872 12,533,427 351,208 802,161 52,386,811
2011........................................ 28,319,789 9,656,932 12,299,159 344,643 787,167 51,407,690
2012........................................ 27,790,462 9,476,427 12,069,267 338,201 772,454 50,446,811
2013........................................ 28,040,474 9,299,296 11,843,671 331,880 758,015 50,273,336
2014........................................ 27,516,328 9,125,478 11,622,295 325,676 743,847 49,333,625
2015........................................ 27,002,030 8,954,912 11,405,060 319,589 729,944 48,411,535
2016........................................ 26,497,248 8,787,531 11,191,882 313,615 716,300 47,506,576
2017........................................ 26,589,062 8,623,278 10,982,689 307,753 702,911 47,205,693
[[Page 33378]]
2018........................................ 26,092,101 8,462,096 10,777,406 302,001 689,773 46,323,377
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Total................................... 308,337,378 101,207,717 128,899,103 3,611,970 8,249,766 550,305,932
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Because illegal aliens are at risk of being apprehended in
immigration enforcement actions, contractors who hire illegal aliens
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 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.
Because of the Executive Branch's obligation to enforce the
immigration laws, including the detection and removal of illegal
aliens identified through vigorous worksite enforcement, contractors
that employ illegal aliens cannot rely on the continuing
availability and service of those illegal workers, and 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
they do not knowingly hire or knowingly continue to employ
unauthorized workers.
Contractors that use E-Verify to confirm the employment
eligibility of their 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 to 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. This is likely to be particularly
beneficial where contractors operate at sensitive national
infrastructure sites.
B. Regulatory Flexibility Act
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. An Initial Regulatory
Flexibility Analysis has been prepared and the results of the analysis
show that the direct cost of this rule on an average cost per
contractor basis does not appear to rise to the level of being
economically significant; however, the Councils request comments on
this finding. 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. An Initial Regulatory Flexibility Analysis
has been prepared for public comment and is summarized as follows:
The June 6, 2008 Executive Order, amending Executive Order
12989, 61 FR 6091 (February 15, 1996), 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 proposed rule is being promulgated to institute a
contractual requirement for contractors and subcontractors to
utilize E-Verify as the means of verifying that all new hires of the
contractor or subcontractor and all employees directly engaged in
performing work under covered contracts or subcontracts are eligible
to work in the United States. The proposed 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 ability to protect national security and
ensure compliance with the nation's immigration laws--core aspects
of the Government's mission that otherwise could be compromised by
the presence of unauthorized aliens in Government facilities or by
the employment of unauthorized aliens in the Government's supply
chain.
This rule will impact nearly every small entity in the Federal
contractor base. Major exceptions are contractors providing
commercially available off-the-shelf (COTS) items and COTS items
with only minor modifications and subcontractors that provide
supplies, not 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.
We 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 expenses for 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 spend time on
processing employee verifications. Employers will incur start-up
costs from enrolling in the E-Verify program. We believe a small
number of employers may need to
[[Page 33379]]
purchase a computer and Internet connection 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 costs of vetting employees
through the E-Verify system.
We estimate the average direct cost of this rule to a contractor
with 10 employees to be $419 in the initial year; for a contractor
with 50 employees, we estimate the average direct cost of
participating in E-Verify to be $1,168 in the initial year; for a
contractor with 100 employees we estimate an initial year impact of
$2,102; while a contractor with 500 employees is expected to have an
initial year impact of $8,964. 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
higher than the average estimated costs, those employers may
reasonably be expected to face a significant economic impact.
As discussed previously, we 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
who choose to perform certain work for the Federal Government. If an
entity does believe that participating in E-Verify would impose a
significant economic impact on their operation, the entity would
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 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.
The Councils seek further comment on the actual costs or
expenditures, if any, of registering for and using the E-Verify
System and the extent to which these costs may differ or vary for
small entities.
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 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 proposed amendment to the Federal Acquisition
Regulation is designed to ensure that unauthorized aliens are not
brought into the Federal Government's contractor workforce.
The Councils considered the following alternatives in order to
minimize the impact on small business concerns:
Whether to require E-Verify participation as a preaward
eligibility requirement or treat it as a postaward contract
performance requirement. The proposed 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 post-award contract performance requirement.
Whether the use of E-Verify should be required for
existing employees of the contractor that are assigned to work under
the Government contract, or should be limited only to the new hires
of the contractor. The Councils decided that requiring employment
eligibility confirmation of all workers assigned to a new Government
contract was most consistent with the Federal Government's own
obligation to use E-Verify when hiring Federal employees, and 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. The Councils decided that requiring
contractors to use the E-Verify program as part of their standard
hiring practices would simplify employment verification, and better
conforms 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 but for minor
modifications.
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
proposed 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.
The FAR Secretariat has submitted a copy of the IRFA to the Chief
Counsel for Advocacy of the Small Business Administration. A copy of
the IRFA may be obtained from the FAR Secretariat. The Councils will
consider comments from small entities concerning the affected Subpart
FAR 22.18 in accordance with 5 U.S.C. 610. Comments must be submitted
separately and should cite 5 U.S.C 601, et seq. (FAR case 2007-013), in
correspondence.
C. Paperwork Reduction Act
The Paperwork Reduction Act (Pub. L. 104-13) applies because the
proposed rule contains information collection requirements over and
above the burden hours already approved for the E-Verify System. The
OMB control number for the currently approved Information Collection
Request is 1615-0092. The Privacy Impact Assessments and the System of
Records Notice for the E-Verify program may be found at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.dhs.gov/xinfoshare/publications/editorial_0511.shtm#4 and at 73 FR
10793. Although the E-Verify System has a currently approved Paperwork
Reduction Act clearance, we are seeking an additional approval for this
proposed amendment to the FAR because the proposed FAR rule will
increase the number of E-Verify users. The OMB control number for the
currently approved Information Collection Request is 1615-0092. This
additional burden is created by the requirement in this rule to verify
employment eligibility of certain current employees in each
contractor's existing workforce. Also included in the additional burden
estimate is the number of employers and employees that would not have
utilized E-Verify but for the issuance of this rule. Accordingly, the
Councils will forward a request for approval of a new
[[Page 33380]]
information collection requirement concerning this burden to the Office
of Management and Budget under 44 U.S.C. 3501, et seq. Public comments
concerning this request will be invited through a subsequent Federal
Register notice.
Annual Reporting Burden: The number of Respondents estimated below
is the average number of covered contractors and subcontractors per
year for the first three years the rule is in effect. The number of
total annual responses is the sum of the MOUs that must be signed by
each employer, the number of employer registrations, the number of
employees that undergo training, and the average number of E-Verify
queries per year for the first three years the rule is in effect.
Public reporting burden for this collection of information is estimated
to average .40 hours per response, including the time for reviewing
instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
collection of information.
The annual reporting burden is estimated as follows:
Respondents: 177,196.
Responses per respondent: 21.05.
Total annual responses: 3,729,406.
Preparation hours per response: .40 hrs.
Total response burden hours: 1,500,357.
D. Request for Comments Regarding Paperwork Burden
Submit comments, including suggestions for reducing this burden,
not later than August 11, 2008 to: FAR Desk Officer, OMB, Room 10102,
NEOB, Washington, DC 20503, and a copy to the General Services
Administration, FAR Secretariat (VPR), 1800 F Street, NW., Room 4035,
Washington, DC 20405.
Public comments are particularly invited on: Whether this
collection of information is necessary for the proper performance of
functions of the FAR and will have practical utility; whether the above
estimate of the public burden of this collection of information is
accurate and based on valid assumptions and methodology; ways to
enhance the quality, utility, and clarity of the information to be
collected; and ways in which the burden of the collection of
information can be minimized on those who are to respond, through the
use of appropriate technological collection techniques or other forms
of information technology.
Requester may obtain a copy of the justification from the General
Services Administration, FAR Secretariat (VR), Room 4035, Washington,
DC 20405, telephone (202) 501-4755. Please cite OMB Control Number
9000-XXXX in all correspondence.
List of Subjects in 48 CFR Parts 2, 12, 22 and 52
Government procurement.
Dated: June 10, 2008.
Al Matera,
Director, Office of Acquisition Policy.
Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 2, 12,
22, and 52 as set forth below:
1. The authority citation for 48 CFR parts 2, 12, 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
2. Amend section 2.101 in paragraph (b)(2), in the definition
``United States,'' by redesignating paragraphs (5) through 8 as
paragraphs (6) through 9, respectively, and adding a new paragraph (5)
to read as follows:
2.101 Definitions.
* * * * *
(b) * * *
(2) * * *
* * * * *
United States, * * *
* * * * *
(5) For use in Subpart 22.18, see the definition at 22.1801.
* * * * *
PART 12--ACQUISITION OF COMMERCIAL ITEMS
3. Amend section 12.301 by adding paragraph (d)(3) to read as
follows:
12.301 Solicitation provisions and contract clauses for the
acquisition of commercial items.
* * * * *
(d) * * *
(3) Insert the clause at 52.222-XX, Employment Eligibility
Verification, as prescribed in 22.1803.
* * * * *
4. 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:
PART 22--APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS
22.102-1 Policy.
* * * * *
(i) Eligibility for employment under United States immigration
laws.
5. 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 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--
Assigned employee 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.
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 FAR 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.
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 contracts, as prescribed
at 22.1803, a requirement for contractors to--
[[Page 33381]]
(1)(i) Enroll in the E-Verify program within 30 calendar days of
contract award, and use E-Verify within 30 calendar days thereafter to
verify employment eligibility of their employees assigned to the
contract at the time of enrollment in E-Verify; or
(ii) If the contractor is already enrolled in E-Verify, use E-
Verify within 30 calendar days of contract award to verify employment
eligibility of their employees assigned to the contract; and
(2) Following this initial period, initiate verification of all new
hires of the contractor and of all employees newly assigned to the
contract within three business days of their date of hire or date of
assignment to the contract.
(c) Subcontractor flowdown. The contracting officer shall require
contractors to flow down the requirement to use E-Verify to
subcontracts that--
(1) Are for commercial or noncommercial services or construction;
(2) Exceed $3,000; and
(3) Include work performed in the United States.
(d) In exceptional cases, the head of the contracting activity may
waive the requirement to insert the clause at 52.222-XX, Employment
Eligibility Verification, for a contract or subcontract or a class of
contracts or subcontracts. This waiver authority may not be delegated.
22.1803 Contract clause.
Insert the clause at 52.222-XX, Employment Eligibility
Verification, in all solicitations and contracts, except those that--
(a) Are for commercially available off-the-shelf items or items
that would be COTS items, but for minor modifications (as defined at
paragraph (3)(ii) of the definition of ``commercial item'' at FAR
2.101);
(b) Are under the micro-purchase threshold; or
(c) Do not include any work that will be performed in the United
States.
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
6. Add section 52.222-XX to read as follows:
52.222-XX Employment Eligibility Verification.
As prescribed in 22.1803 and 12.301(d)(3), insert the following
clause:
EMPLOYMENT ELIGIBILITY VERIFICATION ([DATE])
(a) Definitions. As used in this clause--
(1) Assigned employee 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.
(2) 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) The Contractor shall--
(1) Enroll in the E-Verify program within 30 calendar days of
contract award;
(2) Use E-Verify to verify the employment eligibility of all
assigned employees; and
(3) Comply, for the period of performance of this contract, with
the requirements of the E-Verify program, including, but not limited
to, verifying the employment eligibility of all new employees of the
Contractor.
(c) 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://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.dhs.gov/E-Verify.
(d) Initiation of verification. The Contractor shall initiate a
verification query--
(1) Within 30 calendar days of its enrollment in the E-Verify
program, for each assigned employee who is assigned to the contract
at the time of enrollment in the E-Verify program;
(2) Within three business days of the date of assignment to this
contract, or within 30 days of the award of the contract to which
the employee is assigned, whichever is later, for each assigned
employee who is assigned to the contract after the date of
enrollment in the E-Verify program; and
(3) Within three business days of the date of employment, for
all employees of the Contractor hired after the date of enrollment
in the E-Verify program.
(e) Individuals previously verified. The Contractor is not
required by this clause to perform additional employment
verification using E-Verify for any employee whose employment
eligibility was previously verified by the Contractor through the E-
Verify program.
(f) Subcontractor flowdown. The Contractor shall flow down the
requirements of this clause, including this paragraph (f)
(appropriately modified for identification of the parties), to each
subcontract that--
(1) Is for commercial or noncommercial services or construction;
(2) Exceeds $3,000; and
(3) Includes work performed in the United States.
(End of clause)
[FR Doc. E8-13358 Filed 6-11-08; 8:45 am]
BILLING CODE 6820-EP-S