Human Trafficking:

Oversight of Contractors' Use of Foreign Workers in High-Risk Environments Needs to Be Strengthened

GAO-15-102: Published: Nov 18, 2014. Publicly Released: Nov 18, 2014.

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What GAO Found

Current policies and guidance governing the payment of recruitment fees by foreign workers on certain U.S. government contracts do not provide clear instructions to agencies or contractors regarding the components or amounts of permissible fees related to recruitment. GAO found that some foreign workers—individuals who are not citizens of the United States or the host country—had reported paying for their jobs. Such recruitment fees can lead to various abuses related to trafficking in persons (TIP), such as debt bondage. For example, on the contract employing the largest number of foreign workers in its sample, GAO found that more than 1,900 foreign workers reported paying fees for their jobs, including to recruitment agencies used by a subcontractor. According to the subcontractor, these fees were likely paid to a recruiter who assisted foreign workers with transportation to and housing in Dubai before they were hired to work on the contract in Afghanistan (see figure). Some Department of Defense (DOD) contracting officials GAO interviewed said that such fees may be reasonable. DOD, the Department of State (State), and the U.S. Agency for International Development (USAID) have developed policy and guidance for certain contracts addressing recruitment fees in different ways. However, these agencies do not specify what components or amounts of recruitment fees are considered permissible, limiting the ability of contracting officers and contractors to implement agency policy and guidance.

Sample Recruitment Paths for Foreign Workers on a U.S. Government Contract in Afghanistan

Sample Recruitment Paths for Foreign Workers on a U.S. Government Contract in Afghanistan

GAO found that agency monitoring, called for by federal acquisition regulations and agency guidance, did not always include processes to specifically monitor contractor efforts to combat TIP. For 7 of the 11 contracts in GAO's sample, DOD and State had specific monitoring processes to combat TIP. On the 4 remaining contracts, agencies did not specifically monitor for TIP, but rather focused on contractor-provided goods and services, such as building construction. In addition, some DOD and State contracting officials said they were unaware of relevant acquisitions policy and guidance for combating TIP and did not clearly understand their monitoring responsibilities. Both DOD and State have developed additional training to help make contracting officials more aware of their monitoring responsibilities to combat TIP. Without specific efforts to monitor for TIP, agencies' ability to implement the zero tolerance policy and detect concerns about TIP is limited.

Why GAO Did This Study

Since the 1990s, there have been allegations of abuse of foreign workers on U.S. government contracts overseas, including allegations of TIP. In 2002, the United States adopted a zero tolerance policy on TIP regarding U.S. government employees and contractors abroad and began requiring the inclusion of this policy in all contracts in 2007. Such policy is important because the government relies on contractors that employ foreign workers in countries where, according to State, they may be vulnerable to abuse.

GAO was mandated to report on the use of foreign workers. This report examines (1) policies and guidance governing the recruitment of foreign workers and the fees these workers may pay to secure work on U.S. government contracts overseas and (2) agencies' monitoring of contractor efforts to combat TIP. GAO reviewed a nongeneralizable sample of 11 contracts awarded by DOD, State, and USAID, composing nearly one-third of all reported foreign workers on contracts awarded by these agencies at the end of fiscal year 2013. GAO interviewed agency officials and contractors about labor practices and oversight activities on these contracts.

What GAO Recommends

GAO recommends that agencies (1) develop a more precise definition of recruitment fees and (2) ensure that contract monitoring specifically includes TIP. DOD concurred with the first recommendation, while State and USAID noted that forthcoming regulations would prohibit all recruitment fees. Agencies concurred with the second recommendation.

For more information, contact Thomas Melito at (202) 512-9601 or melitot@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: In comments on a draft of the report, the Department of Defense (DOD) concurred with this recommendation and indicated that it would define recruitment fees as part of the next review of DOD policy on combating trafficking in persons. In January 2015, DOD and other agencies issued a final rule in the Federal Acquisition Regulation (FAR) that prohibits charging employees any recruitment fees; however, this rule did not provide a precise definition of such fees. In May 2016, DOD and others proposed a new FAR rule defining "recruitment fees." The public comment period for this proposed rule ended in July 2016, and, as of August 2016, the proposed rule was in process. In addition, DOD has updated its policy and guidance on combating trafficking in persons, most recently in June 2015. GAO is monitoring these efforts and will provide an update once the proposed FAR rule is finalized.

    Recommendation: To help ensure agencies can more fully implement their monitoring policy and guidance related to recruitment of foreign workers, the Secretaries of Defense and State and the Administrator of the U.S. Agency for International Development should each develop, as part of their agency policy and guidance, a more precise definition of recruitment fees, including permissible components and amounts.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: In response to GAO's recommendation, State issued revised procurement guidance on combating TIP in April 2015 that requires proposals for certain contracts to include a recruitment plan that states that the recruited employee will not be charged recruitment fees. This guidance defines recruitment fees to include, but not be limited to, the following fees, charges, or costs: (1) for soliciting, identifying, considering, interviewing, referring, retaining, transferring, selecting, or placing potential employees; (2) for covering the cost, in whole or in part, of advertising; (3) for certifying labor applications; (4) for processing petitions; (5) for visas and any fee that facilitates an employee obtaining a visa such as appointment and application fees; (6) for government-mandated costs such as border crossing fees; (7) for procuring photographs and identity documentation, including any nongovernmental passport fees; (8) fees charged as a condition of access to the job opportunity, including procuring medical examinations and immunizations and obtaining background, reference and security clearance checks and examinations; and (9) for an employer's recruiters, agents or attorneys. The guidance states further that recruitment fees included by the prime contractor in the contract price must be allowable by country law, allocable to the contract based on benefit to the program, and reasonable based on what a prudent businessperson would pay for similar expenses and charges.

    Recommendation: To help ensure agencies can more fully implement their monitoring policy and guidance related to recruitment of foreign workers, the Secretaries of Defense and State and the Administrator of the U.S. Agency for International Development should each develop, as part of their agency policy and guidance, a more precise definition of recruitment fees, including permissible components and amounts.

    Agency Affected: Department of State

  3. Status: Open

    Comments: In commenting on a draft of this report, the U.S. Agency for International Development (USAID) noted that a proposed amendment to the Federal Acquisition Regulation (FAR) on combating Trafficking in Persons (TIP) contained language that would prohibit charging contractor employees any recruitment fees. In January 2015, the final FAR rule was issued, prohibiting employers from charging employees any recruitment fees on government contracts; however, this rule did not provide a precise definition of such fees. In May 2016, a new FAR rule defining "recruitment fees," which would apply to USAID, among others, was proposed. The public comment period for this proposed rule ended in July 2016, and, as of August 2016, the proposed rule in process, GAO is monitoring the status of these actions and will provide an update on USAID's activities to define components of recruitment fees once the proposed FAR rule is finalized.

    Recommendation: To help ensure agencies can more fully implement their monitoring policy and guidance related to recruitment of foreign workers, the Secretaries of Defense and State and the Administrator of the U.S. Agency for International Development should each develop, as part of their agency policy and guidance, a more precise definition of recruitment fees, including permissible components and amounts.

    Agency Affected: United States Agency for International Development

  4. Status: Open

    Comments: In comments on a draft of the report, the Department of Defense (DOD) concurred with this recommendation and indicated that it would update the Defense Federal Acquisition Regulation Supplement (DFARS) accordingly once the final Federal Acquisition Regulation on Ending Trafficking in Persons had been published. In January 2015, DOD updated the DFARS to include a sample checklist for auditing compliance with Combating Trafficking in Persons (CTIP) policy. This checklist reiterates the U.S. government's zero tolerance policy regarding trafficking in persons and includes, among other items, questions regarding contractors' treatment of employee passports and other identification documents. In addition, DOD has assigned the Deputy Director, Contract Policy and International Contracting, as a Labor Compliance Advisor to assist contracting officers with evaluating contractor CTIP compliance plans. GAO is monitoring these efforts and will provide an update on DOD's progress as more information becomes available.

    Recommendation: To help improve agencies' abilities to detect potential TIP abuses and implement the U.S. government's zero tolerance policy, the Secretaries of Defense and State and the Administrator of the U.S. Agency for International Development should each take actions to better ensure that contracting officials specifically include TIP in monitoring plans and processes, especially in areas where the risk of trafficking is high. Such actions could include developing a process for auditing efforts to combat TIP or ensuring that officials responsible for contract monitoring are aware of all relevant acquisition policy and guidance on combating TIP.

    Agency Affected: Department of Defense

  5. Status: Closed - Implemented

    Comments: State concurred with this recommendation, noting that it would add a requirement to the process that contracting officer's representatives (COR) use to certify that they are familiar with requirements for TIP monitoring and include verification of TIP monitoring in reviews of contracting operations. In response to GAO's recommendation, State issued new guidance on combatting TIP in April 2015 that included an attachment outlining CORs' responsibilities for monitoring TIP. This attachment listed several actions CORs will take to minimize the risk of TIP on their contract during the pre-solicitation, pre-proposal, post-award, and monitoring phases. It also instructed CORs monitoring contracts in areas where the risk of trafficking is high to be especially vigilant in developing a monitoring plan. Finally, the guidance provided a method for CORs to document contract monitoring efforts and included sample interview questions to elicit information from contractor employees.

    Recommendation: To help improve agencies' abilities to detect potential TIP abuses and implement the U.S. government's zero tolerance policy, the Secretaries of Defense and State and the Administrator of the U.S. Agency for International Development should each take actions to better ensure that contracting officials specifically include TIP in monitoring plans and processes, especially in areas where the risk of trafficking is high. Such actions could include developing a process for auditing efforts to combat TIP or ensuring that officials responsible for contract monitoring are aware of all relevant acquisition policy and guidance on combating TIP.

    Agency Affected: Department of State

  6. Status: Open

    Comments: In commenting on a draft of this report, USAID stated that all USAID staff would be required to take training in trafficking in persons (TIP). Further, USAID said that it will develop training for contracting officer's representatives on how to include combating TIP in monitoring plans, as well as training for contracting officers to verify that efforts to combat TIP have been appropriately included in the monitoring plans. In January 2016, the Federal Acquisition Institute Training Application System made available to USAID staff and others an on-line training module on combating TIP. This training is intended to educate all acquisition professionals about the new TIP requirements contained in the January 2015 FAR rule on Ending Trafficking in Persons. GAO is monitoring these actions and will provide an update as further information becomes available.

    Recommendation: To help improve agencies' abilities to detect potential TIP abuses and implement the U.S. government's zero tolerance policy, the Secretaries of Defense and State and the Administrator of the U.S. Agency for International Development should each take actions to better ensure that contracting officials specifically include TIP in monitoring plans and processes, especially in areas where the risk of trafficking is high. Such actions could include developing a process for auditing efforts to combat TIP or ensuring that officials responsible for contract monitoring are aware of all relevant acquisition policy and guidance on combating TIP.

    Agency Affected: United States Agency for International Development

 

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