New E-Verify Rules For Federal Contractors

A final rule published late last year in the Federal Register amends the Federal Acquisition Regulation (FAR) to require certain federal contractors and sub-contractors to use the E-Verify system. All federal solicitations issued and contracts awarded after January 15, 2009 will include a clause related to the new rule.

The E-Verify System was established by the U.S. Citizenship and Immigration Services (USCIS) to verify the employment eligibility of newly-hired employees against the information contained in the Social Security Administration, USCIS, and other government databases. Under the new rule, federal contractors and subcontractors will be required to verify through E-Verify the employment eligibility of all new-hires and all existing and new employees directly performing work on the covered federal contract, during the term of the covered contract. Existing indefinite-delivery/indefinite-quantity federal contracts will be amended to include the E-Verify clause for future orders if the performance period extends at least to July 16, 2009 and the work or number of orders will be or is expected to be “substantial.”

Coverage Has Exceptions

The rule covers prime federal contracts with a value of at least $100,000 and a period of performance of 120 days or longer. A contract is not covered by this rule if: 1) the work will be performed only outside the U.S.; 2) the performance period is less than 120 days; 3) it includes only commercially available off-the-shelf (COTS) items (or but for minor modifications would be COTS items); or 4) it is for a value of less than $100,000. The rule also does not apply to prime contracts for food and agricultural products shipped as bulk cargo and which would otherwise be classified as COTS items.

Subcontractors are covered only if the prime contract includes a clause covering the subcontract and only for services or construction with a value of $3,000 or more. In exceptional circumstances, the head of the contracting activity is allowed to waive the requirement to include the E-Verify clause in the contract or, after the contract award, to waive the E-Verify requirements temporarily or for the period of performance.

Institutions of higher education, state and local governments, federally recognized Indian tribes, and sureties operating under a takeover agreement with a Federal agency pursuant to a performance bond are required to verify only employees assigned to the covered federal contract.

Employees holding an active security clearance of confidential, secret or top secret or who have undergone background investigations under the Homeland Security Presidential Directive (HSPD-12) are exempt from verification requirements.

Employees are not considered to be directly performing work under the contract if they normally perform general company administration or indirect or overhead functions, and do not perform any substantial duties on an individual contract.

Time Is Phased In

Federal contractors and subcontractors who are not currently enrolled i