New US Human Trafficking Law Mandates Referral of Substantiated Allegations to Agency Suspending and Debarring Officials

The US End Human Trafficking in Government Contracts Act of 2022 (“Act”) was signed into law on October 17, 2022. This Act amends the Monitoring and Investigation of Trafficking in Persons statute (22 U.S.C. § 7104b) and requires agencies to refer to the agency’s suspending and debarring official (“SDO”):

• Substantiated allegations¹ of human trafficking against a recipient of a federal contract, grant, or cooperative agreement (or any subcontractor, subgrantee, or agent of the recipient)
• Notifications of an indictment, criminal information, or criminal complaint involving human trafficking

A referral may result in the exclusion of recipients from federal contracting or other federal award programs. Previously, the law only required the head of an agency to consider referring the substantiated allegation to the agency’s SDO, which was one of several remedial actions within an agency head’s discretion.²

The Act also requires that, within 90 days of enactment, the director of the Office of Management Budget submit a report to Congress on the Act’s implementation.

Background

According to the Senate’s Homeland Security and Governmental Affairs Committee report accompanying the Act, the impetus for this legislation was an August 4, 2021, Government Accountability Office (“GAO”) report, GAO-21-546, which found weaknesses in the Department of Defense’s oversight of defense contractors and subsequent reporting of investigations related to government contracts. The Senate report explained that although “[t]he U.S. government has a zero tolerance policy for human trafficking among U.S. government employees and contractors,” the GAO “found that foreign workers employed under U.S. government contracts continue to be trafficked on a persistent basis.”

Against this backdrop, Senator James Lankford (R-Oklahoma) proposed the legislation to provide more oversight of remedial action taken by agencies. In a September 30, 2022, press release, Senator Lankford stated that the goal is to “prevent any contractor found to be participating in human trafficking from doing business ever again with U.S. taxpayer dollars.” The lawmaker previously asserted in a January 13, 2022, op-ed that “the hammer now has to be swift and strong against participating in human trafficking.”

Takeaways

The Act’s mandatory referral of substantiated allegations of human trafficking to agency SDOs is expected to increase their awareness of these allegations and result in more contractors excluded from federal contracting opportunities.

But the Act does not impose mandatory debarment for such substantiated allegations.

Instead, agency SDOs retain discretion to exclude entities from doing business with the government under the procedures of FAR part 9.4 for recipients of federal procurement contracts or 2 CFR § 180 for recipients of other federal awards. Thus, agency SDOs may still consider several factors in determining whether a contractor is presently responsible, including whether a contractor:

• Had effective standards of conduct or internal controls in place when the conduct arose
• Fully cooperated with government agencies during an investigation
• Has taken appropriate disciplinary action against individuals responsible for the conduct³

¹ Generally, substantiated allegations are those involving a determination by an agency inspector general (”IG”) that a preponderance of credible evidence demonstrates the contractor or grant recipient engaged in any of the trafficking activities described in 22 U.S.C. § 7104(g) (for example, the use of forced labor; procurement of a commercial sex act; and destroying, concealing, removing, or otherwise denying employees access to their identity or immigration documents).

² 22 U.S.C. § 7104b(c) and Federal Acquisition Regulation (“FAR”) Clause 52.222-50 (Combating Trafficking in Persons) enumerate the remedial actions available to the government, which include removing a contractor employee from performance of the contract, requiring a contractor to terminate a subcontract, and withholding payment until a contractor takes appropriate remedial action.

³ FAR 9.406-1 and 2 CFR § 180.860 provide a non-exhaustive list of factors SDOs consider in determining an entity’s present responsibility.