The Trump Administration has declared this month National Slavery and Human Trafficking Prevention Month, calling on industry associations, law enforcement, private businesses, and others to work toward ending modern slavery and human trafficking. This proclamation follows the Administration’s efforts to combat human trafficking, which we have previously discussed here, and comes on the heels of an OMB memorandum released last fall aimed at “enhanc[ing] the effectiveness of anti-trafficking requirements in Federal acquisition while helping contractors manage and reduce the burden associated with meeting these responsibilities.”

The OMB memorandum directs executive agencies to conduct a review of contract spending to ensure appropriate safeguards are in place to prevent trafficking in high-risk areas. These safeguards include potentially incorporating additional obligations in solicitations (such as code of conduct requirements) and documenting trafficking issues that arise during contract performance through the past performance process. The OPM memorandum also directs executive agencies to appoint a trafficking in persons expert and a procurement trafficking in persons contact for purposes of coordinating and implementing anti-trafficking requirements.

Additionally, the OMB memorandum seeks to respond to a host of questions that contractors have raised since the FAR’s anti-trafficking requirements were revised in 2015. To that end, the OMB memorandum provides a list of “best practices” that a contractor may implement as part of its anti-trafficking compliance program. These best practices generally fall within two categories:

  • Internal Steps: Compliance Policies and Accountability Official – The OMB memorandum notes that the FAR anti-trafficking rule does not technically require compliance policies or an accountability official, but the memorandum identifies such measures as important steps in ensuring compliance. According to the OMB memorandum, compliance policies (including a compliance plan, when required) should take into account recruitment practices, disciplinary action, and host country housing and employment requirements. The compliance policies should also regularly be assessed and updated to account for developing best practices and lessons learned. The OMB memorandum further explains that an official within the company should be responsible for implementing anti-trafficking policies and have the authority to assess supply chain compliance.
  • External Steps: Monitoring High-Risk Portions of the Supply Chain – The OMB memorandum’s guidance for external steps focuses largely on supply chain due diligence that prioritizes high-risk areas and assessing subcontractor compliance. For instance, it explains that contractors should maintain auditing processes to ensure subcontractor compliance with anti-trafficking requirements, including methods for assessing the use of recruiters and the sufficiency of reporting mechanisms. The OMB memorandum also recommends confirming that corrective action measures are in place to ensure appropriate remedial action (including contract termination) and follow-up monitoring when subcontractors engage in violations of anti-trafficking rules.

Notably, the OMB memorandum explains that contracting officers may use these best practices in assessing a contractor’s anti-trafficking compliance program, and notes that such assessments should be performed periodically, such as when a contractor reports a human trafficking incident, as part of a procurement involving a high-risk area, or in connection with a past performance review. When trafficking issues arise, the OMB memorandum advises contracting officers to consider a range of mitigating factors, including:

  • whether the contractor identified the issue as the result of effective monitoring and reporting programs,
  • how quickly the contractor notified the government of the incident,
  • the contractor’s cooperation with the resulting investigation,
  • the complexity of the contractor’s supply chain,
  • the contractor’s experience as a federal contractor, and
  • the presence of systemic violations.

Finally, the OMB memorandum seeks to provide further guidance to contractors’ most frequently asked questions regarding anti-trafficking compliance. Of particular note, the OMB memorandum acknowledges that contractors have struggled to determine the threshold for reporting “credible information” and notes that the term is not defined in the FAR. Although the OMB memorandum attempts to provide some guidance by explaining that the term “refers to believable information received from any source,” the memorandum’s guidance still leaves contractors without any particular direction for determining if an allegation is “believable” or “credible.” In addition, the OMB memorandum addresses a common question concerning whether to develop a company-wide or contract-specific compliance plan, explaining that multiple plans may be impractical and instead encouraging contractors to develop a company-wide compliance plan, which is subsequently tailored to specific contracts.

Given the increased emphasis on anti-trafficking requirements and the need for contractors to certify compliance with such requirements, contractors would be well served by assuring that their compliance structures meet government expectations, including confirming that work performed outside the United States is covered by an adequate compliance plan, if required, and that appropriate diligence and monitoring procedures are in place to address potential human trafficking risk in supply chains.

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Photo of Jennifer Plitsch Jennifer Plitsch

Jennifer Plitsch is co-chair of the firm’s Government Contracts practice group. Her practice includes a wide range of contracting issues for large and small businesses in both defense and civilian contracting. Her practice involves advising clients on contract proposal, performance, and compliance questions…

Jennifer Plitsch is co-chair of the firm’s Government Contracts practice group. Her practice includes a wide range of contracting issues for large and small businesses in both defense and civilian contracting. Her practice involves advising clients on contract proposal, performance, and compliance questions as well as transactional and legislative issues. Her practice also includes bid protest and contract claims and appeals litigation before GAO, agency boards and the federal courts. Ms. Plitsch has particular expertise in advising clients in the pharmaceutical and biologics industry. She advises a range of pharmaceutical and biologics manufacturers on Federal Supply Schedule contracts, including the complex pricing requirements imposed on products under the Veterans Health Care Act, as well as research and development contracts and grants with various federal agencies. She also has significant experience advising on the requirements of various programs under which vaccine products and biodefense medical countermeasures are procured by the Government.

Photo of Frederic Levy Frederic Levy

Frederic Levy is one of the nation’s leading suspension and debarment lawyers, focusing his practice on the resolution of complex compliance and ethics issues. He has successfully represented numerous high-profile corporations and individuals under investigation by the government in civil and criminal matters…

Frederic Levy is one of the nation’s leading suspension and debarment lawyers, focusing his practice on the resolution of complex compliance and ethics issues. He has successfully represented numerous high-profile corporations and individuals under investigation by the government in civil and criminal matters, including False Claims Act cases, and in suspension and debarment proceedings to ensure their continued eligibility to participate in federal programs. He has also conducted numerous internal investigations on behalf of corporate clients, particularly in the areas of program fraud and export controls, and often involving sensitive personnel or fiduciary matters. He has also advised corporations in voluntary or mandatory disclosures to a variety of federal agencies. Mr. Levy regularly counsels clients on government contract performance issues, claims and terminations, and he litigates such matters before the boards of contract appeals and in the Federal Circuit.

Photo of Alexander Hastings Alexander Hastings

Alex Hastings advises clients across a broad range of government contracting issues, including advising clients in transactional matters involving government contractors and assisting defense contractors and pharmaceutical companies in securing and performing government contracts.

Mr. Hastings also advises clients concerning best practices in…

Alex Hastings advises clients across a broad range of government contracting issues, including advising clients in transactional matters involving government contractors and assisting defense contractors and pharmaceutical companies in securing and performing government contracts.

Mr. Hastings also advises clients concerning best practices in e-discovery. He assists in investigations and litigations that involve complex e-discovery issues and has represented clients in matters involving the U.S. Department of Justice, Securities and Exchange Commission and the United States International Trade Commission.

Mr. Hastings’ government contracts experience includes advising clients regarding new developments in regulatory requirements, including the Federal Acquisition Regulation’s (FAR) anti-human trafficking requirements and the FAR and Bayh-Dole Act’s intellectual property provisions. Mr. Hastings also provides due diligence regulatory advice to clients contemplating the acquisition of government contracting entities or assets.

Mr. Hastings’ e-discovery experience includes advising a wide-array of clients on best practices in information governance and document collection and assisting clients develop effective mobile device and document management policies.

Mr. Hastings also maintains an active pro bono practice and routinely writes on issues related to government contracts and e-discovery.