If you are among the estimated 300,000 companies that conduct business with the government prepare for yet another supply chain compliance concern. A final rule released late last week by the Defense Department, General Services Administration, and National Aeronautics and Space Administration amends the Federal Acquisition Regulation to strengthen prohibitions on human trafficking.

The new FAR rule, which imposes new reporting requirements on companies with federal contracts, expands upon existing laws and makes good on objectives detailed in a 2012 Executive Order by President Barack Obama. It prohibits federal contractors and subcontractors from charging employees recruitment fees or using misleading or fraudulent recruitment practices. Those performing work over $500,000 outside the United States must develop and maintain a trafficking compliance plan and certify that, to the best of their knowledge, neither they nor any of their subcontractors has engaged in trafficking-related activities.

Human trafficking is defined in the rule as: "the recruitment, harboring, transportation, provision, or obtaining of a person for labor or services, through the use of force, fraud, or coercion." Forced labor is described as "knowingly providing or obtaining the labor or services of a person by threats of serious harm to, or physical restraint against, that person or another person." The rule, as detailed in the Federal Register, cites recent studies and Congressional testimony as identifying “a need for additional steps to prohibit trafficking in Government contracting.”

Contractors and subcontractors are prohibited from denying access by an employee to identity or immigration documents; using misleading or fraudulent recruitment practices, charging recruitment fees, and providing sub-standard housing in the host country housing and safety standards.

On an annual basis, companies that are required to prepare a compliance plan must detail efforts to prevent, detect, and respond to potential and existing human trafficking and forced labor violations. The plans must cover both the company itself and its network of suppliers and sub-suppliers. Contractors are also expected to cooperate with any government inquiry and must self-report any credible information that an employee or subcontractor has violated the FAR requirements and prohibitions. Compliance plan requirements do not apply to companies providing commercially available off-the-shelf supplies.

Penalties for non-compliance can include: termination of the government contract; debarment; a prison term of up to five years’ imprisonment and a $250,000 fine; and enforcement of the False Claims Act.

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