Business Administration's Office of Advocacy is urging federal
acquisition councils to consider exempting small firms from a
regulation that would force contractors to verify workers' employment
eligibility using a Homeland Security database.
The controversial rule,
proposed June 12, would insert a clause into all future federal
contracts requiring companies to vet employees through the Homeland
Security Department's E-Verify system within 30 days of winning
The SBA advocacy office said the councils'
assessment of the rule's financial implications was inadequate. The
potential burden, already disproportionate for small firms, would be
magnified because the E-Verify database duplicates other government
clearance programs, the office stated in comments on the proposal.
office also echoed other organizations' concerns about the accuracy of
information in E-Verify. In December 2006, the Social Security
Administration's inspector general found that the database had an error
rate of 4.1 percent.
Homeland Security Secretary Michael Chertoff
said in June that glitches had been fixed and the rate of mistakes was
down to 0.5 percent.
Nevertheless, the advocacy office urged the
defense and civilian acquisition councils to delay implementing
mandatory compliance with E-Verify for contractors until improvements
are made. If the councils are unable or unwilling to delay
implementation, then they should exempt small businesses until there is
a better review of the potential economic impact, the office stated.
The proposal, issued in response to a June 9 executive order,
already contains a number of exemptions. Companies holding contracts
with a value of less than $3,000 would not have to comply. Employees
working on contracts outside the United States or hired before Nov. 6,
1986, and subcontracts for materials for commercially available
products would also be exempt.
More than 120 interested parties have submitted comments.
Professional Services Council, a group representing contractors,
opposes the rule. The association stated that it strongly encourages
voluntary use of E-Verify, but "contractors should not be subjected to
any greater requirement than federal employees and today, only new
federal employees are required to be verified through the E-Verify
PSC also recommended that the regulation include a more
specific timeline for confirming employees' status, a phase-in period
for the requirement and a broader definition of commercial items.
"All of these issues must be addressed before any FAR rule is put into place," said Alan Chvotkin, the group's vice president.
in favor of the proposal stressed the importance of ensuring taxpayer
dollars go to companies hiring only legal workers.
"It is clear
that the federal government should lead the way in using this new
technology that protects American workers and employers," wrote Melanie
Gray of Santa Barbara, Calif. "This executive order is at least a start
towards re-imposing the rule of law in an increasingly unlawful
The Federal Register announcement touted the potential requirement as a benefit to companies.
that use E-Verify to confirm the employment eligibility of their
workforce are much less likely to face immigration enforcement actions,
and are generally more efficient and dependable procurement sources
than contractors that do not use that system to verify the work
eligibility of their workforce," the notice stated.