On January 29, 2015, the Federal Acquisition Regulation (“FAR”) Council published the long-awaited final rule (“the Final Rule”) implementing Executive Order 13627 and title XVII of the National Defense Authorization Act of 2013, significantly augmenting existing human trafficking-related prohibitions for Federal contractors and subcontractors. The Final Rule is similar to the previously summarized proposed rule.
The Final Rule is broadly applicable to all Federal contractors and subcontractors, regardless of contract type or dollar amount, including contractors providing commercial items, commercially-available off-the-shelf items, or goods on the Federal Supply Schedule. In addition, certain contractors providing goods and services abroad will be required to make new certifications and implement compliance plans. Failure to comply may result in financial penalties, termination for default, suspension or debarment, and potential litigation, including false claims suits. Because of its breadth, severe penalties, and compliance costs, the rule may necessitate fundamental risk assessments about contractors’ business practices and the practices within their supply chains.
Our in-depth analysis of the Final Rule is available here. Though the Final Rule’s aim of preventing human trafficking is undoubtedly praiseworthy, it addresses few of the ten lingering questions that we raised in November 2013.
The Final Rule will be effective on March 2, 2015. The FAR Council urged Contracting Officers to include the Final Rule in Indefinite Delivery/Indefinite Quantity (“ID/IQ”) contracts with task orders remaining after March 2 through bilateral modification, so both new and existing contracts will be subject to the Final Rule after that date.
The Department of Defense also issued a final rule for its Defense Federal Acquisition Regulation Supplement (“DFARS”). The DFARS final rule is unchanged from the proposed rule and adds a few noteworthy requirements to the FAR Final Rule, as we discussed here.