Proposed E-Verify Expansion Leaves Subcontractors
With More Questions Than Answers

ALEXANDRIA, Va. - Before requiring subcontractors on the federal government’s domestic construction projects to participate in E-Verify, regulators need to address E-Verify’s inaccuracies and clearly describe how a proposed, new Federal Acquisition Regulation (FAR) Subpart 22.18 would incorporate subcontractors’ new responsibilities to use E-Verify, the American Subcontractors Association Inc. (ASA) said in comments filed on Aug. 11, 2008.

In its comments, ASA said that a rule proposed by the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council on June 12, 2008, failed to provide enough detail and to provide solutions so that E-Verify could be successfully integrated into the wide range of federal projects proposed by the councils. The councils issued the proposed rule less than a week after President Bush directed federal agencies on June 6 to require their contractors to use E-Verify (Executive Order 12989). E-Verify is an online system maintained by the Department of Homeland Security and the Social Security Administration that allows employers to check employees’ eligibility to work in the United States.

“Rushing incomplete regulations out the door will not help fix the nation’s immigration system,” said 2008-09 ASA President Bill Olmo, Fedco Construction Inc., Santa Rosa, Calif. “ASA has been seeking an immigration system that functions efficiently for employers, workers and government agencies. Unfortunately, this proposed rule doesn’t provide that efficiently functioning system. Subcontractors are simply not provided the details of how the E-Verify program will be expanded to cover most of the federal government’s domestic construction. A substantial portion of this work will be performed by subcontractors.”

Among subcontractors’ top concerns is the proposed rule’s lack of a clear explanation of how the requirement to use E-Verify would apply to them. Federal projects typically contain multiple tiers of subcontractors. Under the proposed rule, prime contracts for federal construction would include a clause requiring contractors to:

• Enroll in E-Verify within 30 calendar days of contract award.
   

• Use E-Verify to verify the employment eligibility of all employees assigned to the contract within 30 days of contract award.
   

• Verify the employment eligibility of new employees assigned to the contract within three days.
   

• Flow down the same requirements to all subcontracts exceeding $3,000.

In its comments, ASA noted that the proposed rule fails to provide higher-tier contractors with the contract language, including the FAR definitions, that they must use to describe E-Verify responsibilities for subcontractors and suppliers. As written, the rule would leave subcontractors and suppliers without answers to such questions as:

• Would a supplier of lighting supplies to be furnished to an electrical subcontractor be a covered subcontractor, if the furnished material was in excess of $3,000?
   

• Would a supplier of custom-made electrical control panels being built in the United States to be furnished to an electrical subcontractor in the United States be covered, if another division of the same electrical subcontractor was installing the panels in a building to be constructed by the general constructor in a non-U.S. location?
   

• Would an in-house estimator of the subcontractor who was sent to the job site to develop the subcontractor’s portion of an equitable adjustment due to a unilateral change order issued to the general contractor by the Government become an assigned employee because of this?

Furthermore, ASA challenged the Civilian Agency Acquisition Council’s and the Defense Acquisition Regulations Council’s assertion that the proposed rule merely “implements” the president’s executive order. ASA pointed out that Executive Order 12989 cites FAR Part 9.4 (Debarment, Suspension, and Eligibility) as an enforcement mechanism, and that this section of the FAR uses a $25,000 threshold, much higher than the proposed rule’s $3,000 threshold.

The rule’s low $3,000 threshold and requirement to run all employees assigned to the contract through E-Verify “seem to be crafted so that every subcontractor who intends to do Federal construction will, in practical business terms, be compelled to clear all of its employees hired after November 6, 1986,” ASA said. ASA also called the councils’ estimate that the proposed rule would not have a significant economic impact on smaller firms “unsubstantiated.”

To address problems in the proposed rule, ASA urged regulators to provide:

• New FAR language requiring notice about the mandatory participation in E-Verify to subcontractors and suppliers that bid such projects.
   

• New FAR language explaining how compliance with the E-Verify memorandum of understanding developed by the Department of Homeland Security and the Social Security Administration is intended as a contract “performance requirement.”
   

• A substantive explanation of how the federal government has addressed problems with the reliability, convenience, and accuracy of the E-Verify system.
   

• A clear explanation of the duration of required participation in E-Verify, and of which subcontractors and suppliers do not have to participate in E-Verify.
   

• Alignment of the rule with FAR definitions, thresholds and standards.

Read ASA’s comments under the advocacy section of http://www.asaonline.com.

Founded in 1966, ASA amplifies the voice of, and leads, trade contractors to improve the business environment for the construction industry and to serve as a steward for the community. ASA’s vision is to be the united voice dedicated to improving the business environment in the construction industry. The ideals and beliefs of ASA are ethical and equitable business practices, quality construction, a safe and healthy work environment, and integrity and membership diversity.

American Subcontractors Association, Inc.
1004 Duke St.
Alexandria, VA 22314

Contact: David Mendes
(703) 684-3450, Ext. 1335
dmendes@asa-hq.com