On January 15, 2009, the FAR Councils issued the final rule implementing the provision of the Trafficking Victims Protection Reauthorization Act of 2005 ("TVPA") 22 U.S.C. § 7104(g). The final rule is implemented by FAR 52.222-50 entitled “Combatting Trafficking in Persons.”
The TVPA represents Congress’ most recent effort to address what the California Peace Officers’ Commission on Standards and Training ("POST") calls "one of the most horrific crimes committed in our society today…[involving] the recruitment, abduction… transfer, sale, or receipt of persons, within national or across international borders… [placing] persons in situations of slavery or slave-like conditions, forced labor or services, such as forced prostitution or sexual services…" Guidelines on Law Enforcement Response To Human Trafficking (POST, April 2008). For its part, and with unusual pithiness, Congress has defined human trafficking as "… a form of modern day slavery." 22 U.S.C. § 7102(8) And, from a global perspective, such slavery may be massive in scope — "…[t]he International Labor Organization (ILO)… estimates that there are 12.3 million people in forced labor, bonded labor, forced child labor, and sexual servitude at any given time; other estimates range from 4 million to 27 million". Trafficking in Persons Report of 2008. Whatever the magnitude of human trafficking worldwide, the persons engaged in it are committing serious crimes and should be vigorously pursued and prosecuted and their victims protected and given succor—and fulfillment of those goals is the apparent purpose of most provisions of the TVPA.
FAR 52.222-50 addresses the foregoing principles and objectives, and then some. As we discuss below, certain TVPA provisions represent an unprecedented Congressional attempt to render government contractors, as institutions, responsible for conduct of their employees — including certain sexual behavior and the hiring of domestic workers — that takes place completely outside the scope of work on a government contract and beyond the scope of any employment related activities. As we discuss, FAR 52.222-50 in a very real sense punishes contractors for private conduct over which they have no knowledge or control, can easily give rise to severe contract sanctions for conduct that (however detestable or morally bankrupt) might completely legal, and makes the threat of those sanctions an instrument for the legal or illegal coercion of monetary or other advantages by third parties. One would like to think that a more narrowly tailored regulation would have achieved the underlying objectives.
The final rule explicitly establishes a "zero tolerance" policy that applies to all government contractors, including commercial and non-commercial contractors and subcontractors and their employees, imposing severe sanctions in the event that, during the period of contract performance, they engage in (a) "severe forms of trafficking in persons," e.g., "obtaining of a person for labor or services through the use of force, fraud, or coercion" or (b) "sex trafficking’, including the "obtaining of a person for the purpose of a commercial sex acts", which includes the engagement of prostitutes even in jurisdictions where the activity is legal — as it is, for example, in certain Nevada counties See 73 Fed. Reg. 2709-2711. www.boogieonline.com/revolution/body/repro/nevada.html
The plain language of the TVPA makes clear that Congress intends for government contractors and their subcontractors to be held accountable for the conduct of their employees in these regards at any time during the period of contract performance — whether or not the conduct relates to the scope of an employee’s work on a government contract or even is beyond the scope of any employment related activities. Specifically, the statute mandates that contracts include a condition authorizing the Government to terminate the contract the event the contractor, subcontractor or an employee "engages in severe forms of trafficking in persons or has procured a commercial sex act during the period of time that the grant, contract, or cooperative agreement is in effect…" 22.U.S.C.§§7104(g); 18 U.S.C. §3271(a) and §3272(a) (Emphasis added.)
FAR 52.222-50 implements this policy in paragraph (b), as follows:
(b) Policy. The United States Government has adopted a zero tolerance policy regarding trafficking in persons. Contractors and contractor employees shall not
(1) Engage in severe forms of trafficking in persons during the period of performance of the contract;
(2) Procure commercial sex acts during the period of performance of the contract; or
(3) Use forced labor in the performance of the contract
Failure to comply with the zero tolerance policy articulated in paragraph (b) may render a contractor subject to criminal remedies available to the government under Title 18 of the U.S. Code and civil remedies available under other titles of the code, and to the following contractual remedies set out in paragraph (e), some of which are draconian:
(1) Required removal of a Contractor employee or employees from the performance of the contract;
(2) Required subcontractor termination;
(3) Suspension of contract payments;
(4) Loss of award fee,
(5) Termination of the contract for default or cause;
(6) Suspension or debarment.
FAR 52.222-50 (e)
Obviously, it is the phrase in paragraph (b)– "during the period of performance of the contract"– that implements the zero tolerance policy by rendering the contractor accountable for employee conduct outside the scope of his work on a government contract or beyond the scope of any employment related activities. The language of the regulation is, on its face, not limited to trafficking “in connection with” or “relating to” or “during” performance of any Government contract. By contrast with the qualifying language applicable to the use of forced labor, which is prohibited only “in the performance of the contract,” severe trafficking in persons and commercial sex acts will trigger penalties whenever they occur “during the period of performance of the contract.” It speaks in temporal terms only, requiring no nexus to the contracting process other than an employer/employee relationship between the presumed malefactor (i.e., the employee) and the principal target of the penalties (i.e., the employer).
The choice of language here was not inadvertent. In response to a request that the rule be limited to conduct occurring "during the performance of the contract,[and] not to employee behavior outside work, the Councils replied:
As written, the rule reflects the statutory language …The Councils believe that limiting the rule in the manner requested…would inadequately implement the statute since employee violations are more likely to occur after working hours. …(Emphasis added.)
The rule obviously places contractors in a role to which they have traditionally have been unaccustomed, regulating for the purposes of their own economic interests certain types of private conduct that has customarily been regarded as off limits for employers.
For example, and to take the most dramatic example, if a contractor employee were to choose to go to Nevada on vacation and, while there, lawfully to engage the services of a prostitute, then the contractor (not merely the employee) would immediately be subject to one of the above remedies, whether or not the employer knew of the employee’s Nevada activities — or was even aware that the employee was in Nevada in the first place. In this regard, one respondent in fact asked during the comment period how the remedies of the regulation intersect with otherwise lawful sex acts in certain places in the United States and in foreign countries. In response, the Councils stated that they
… recognized the challenges contractors face in monitoring employee actions during non-work hours. However, contractors and their employees need to understand that procuring commerical sex acts is an unacceptable behavior that carries penalties.
See 74 Fed. Reg. 2744.
The implications of this rule are potentially quite staggering. An aggrieved spouse who uncovers a partner’s wayward trip to the bordello literally has the power to threaten the financial viability of a contract or of a business as a whole. Farfetched, one might say, but the power and the threat are there, and has our Government really proven to be reluctant to enforce its rights against the weaker sisters in the procurement community?
Nor does the threat need to come from familial discord. Take the case of the unmarried and unattached contractor employee who holds a security clearance. His heretofore lawful conduct in Nevada might not have made him a blackmail target for the extraction of classified information. Does FAR 52.222-50 alter that calculus?
Readers are free to envision their own scenarios, which are not limited to sojourns in the Silver State or in foreign countries. The policy question, of course, is whether the federal procurement function should be used to create personal codes of conduct for employees that are unrelated to the contracting process itself but can be enforced in severe fashion against an unknowing contractor/employer who is powerless to prevent the conduct in the first instance. The Congress and the Councils obviously have no problem answering this policy question in the affirmative.
Whether or not implementation of FAR 52.222-50 will lead to absurd or extreme outcomes, it is the law and contractors need to position themselves to deal with it. It is therefore critical that contractors prepare meaningful policies and, given the sensitivity of the subject matter, implement those policies through procedures crafted with care and attention to the specific nature of contractor operations. Given the wide variety of contractor operations there will necessarily be considerable variation among contractor procedures implementing the zero tolerance policy. A detailed exposition of the elements of contractor programs aimed at compliance with the zero tolerance regime established by FAR 52.222-50 is therefore well beyond the scope of this blog. But contractors and subcontractors should at a minimum:
(1) Establish and distribute to their employees written policies and procedures and, where practicable, promulgate those policies on an intranet website, placing special emphasis on the Government’s zero tolerance policy and the consequences for violating it;
(2) Develop and maintain procedures for discipline of employees who violate the policy;
(3) Develop and maintain internal controls that provide reasonable assurance that the procedures are fully implemented and that, as implemented, they consistently reflect contractor policy, and
(4) Assure that audit of the internal controls is incorporated in the contractor’s plans for internal and outside audit