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E-Verify: Subcontractor registers as Federal Contractor

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We are a prime contractor with a subcontractor who is registered in E-Verify but refuses to identify as a Federal Contractor (FC) on advice of its legal counsel. FAR 52.222-54(e) of our prime requires us to flow down the clause to our subs and we have specified in our subcontracts that subs must be registered as FC. Our sub's legal counsel argues that the "appropriately modified for identification of the parties" means it has a right to choose its own identity as relates to FC or not.  We interpret it to mean substitute "[Our company]" for "Government" or "contract analyst" for "Contracting Officer", etc.

(e) Subcontracts. The contractor shall include the requirements of this clause, including this paragraph (e) (appropriately modified for identification of the parties), in each subcontract that—

After searching awhile for answers, I contacted DHS from the E-Verify website link to get an answer, but did not leave with any level of confidence in its help desk response. When I asked the help desk if there were a definition of FC on the E-Verify site (or anywhere) as FAR doesn't define, she told me to look in Webster's! Then said that we [prime] can't tell our subs how to register [identify] in E-Verify.

I would appreciate knowing if your agencies require subs to register as FC and how you interpret the above red text. Please don't send me to Websters. :)

Thank you.

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What is the exact language, including modifications of parties, if any, that your firm included in the subcontract? In my view, Your "interpretation" of what your firm "means," is not the same as actual "substitution" language that was included in the contract. The actual contract language would determine which requirements the subcontractor is required to comply with, including registration. In the absence of any modification for identification of the parties, the Contractor is required to comply with the requirements but it would not be clear what, if anything, the subcontractor is required to comply with.   

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17 hours ago, sjst1 said:

we have specified in our subcontracts that subs must be registered as FC.

The subcontract is pending completion of negotiations at this time. I know what they are to comply with contractually (if they sign), that is not my question. I am interested in

 

17 hours ago, sjst1 said:

knowing if your agencies require subs to register as FC and how you interpret the above red text.

Thanks for your response.

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sjst1: You're hopping into a common mistake: Thinking that regulations which apply to federal employees conducting acquisition (FAR) apply to contracts between two private businesses ("subcontracts"). The FAR commands the federal employees to include certain clauses. You, as the prime contractor, might be stuck with those clauses. You, as the prime contractor, might be required to include or "flow-down" those clauses in certain subcontracts.

18 hours ago, sjst1 said:

Then said that we [prime] can't tell our subs how to register [identify] in E-Verify.

Following these principles, what the help desk said sounds quite reasonable. The subcontractor can do what they want. You can also end your contractual relationship with the subcontractor, if you want. You can also choose to write better contracts with your subcontractors to avoid this type of problem in the future.

If you tell a subcontractor that "the government told me something" or "the FAR says XYZ," any well-informed subcontractor is going to say, "Cool story, bro. What does it say in the contract that we have together?"

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Why are you, as the prime, making it your business to tell your sub how to register in E-Verify? Why are you making their identification a condition of entering into a subcontract with your company?

The clause requires you to flow it down to your subs. You've done that. It doesn't tell you to verify how your sub registers, or to ride herd on your subs to make sure they properly (according to you) identify themselves. If the subcontract contains that clause, it becomes the sub's contractual responsibility to register in E-Verify. You completed your contractual obligation by inserting the clause in the subcontract.

Don't make subcontracting more difficult than it needs to be.

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sjst1 has a good question, but she didn't ask it well. Here's the relevant text of the clause (FAR 52.222-54(b)(1)):

Quote

If the Contractor is not enrolled as a Federal Contractor in E-Verify at time of contract award, the Contractor shall—

(i) Enroll. Enroll as a Federal Contractor in the E-Verify program within 30 calendar days of contract award

She needs to flow that requirement down to her subcontractor. Appropriately modifying the clause for identification of the parties, I presume she wants to flow it down like this:

Quote

 

If the subcontractor is not enrolled as a Federal Contractor in E-Verify at time of contract award, the subcontractor shall—

(i) Enroll. Enroll as a Federal Contractor in the E-Verify program within 30 calendar days of contract award

 

The subcontractor is taking exception to the language in bold. They think the bold language should also be modified for identification of the parties. If the subcontractor can enroll as a "Federal Subcontractor" or something similar, then this would be an easy fix. If not, then I think the subcontract would have to require the subcontractor to enroll as a "Federal Contractor." The use of "Federal Contractor" in the clause is to refer to a status in the E-Verify program, it's not being used to refer to a party to the subcontract.

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That may be, although I interpreted sjst1 as saying that they required the FC identification in the subcontract itself, outside of 52.222-54. We'll have to see what sjst1 says.

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Don is correct, and yes, there is an option to identify as something other than a FC, however, I am not privy to what the identifiers are w/o going into the registration process. Our subcontracts read that the subs must enroll in E-Verify as a FC and provide proof within 30 days...only after we verify this, is our job as Prime considered complete on this subject.  Also, this is what our DOE CO approved as our standard practice. If what the sub's legal counsel believes is true re: (appropriately modified for identification of the parties) [see original post], then we may be in a position to revise our subcontract language and not require the FC designation.

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2 hours ago, sjst1 said:

Our subcontracts read that the subs must enroll in E-Verify as a FC and provide proof within 30 days.

Where in that clause do you see a requirement to provide proof to you of enrollment within 30 days? Unless I'm missing it, even the prime is not required to provide proof (and to whom, the CO?).

 

2 hours ago, sjst1 said:

only after we verify this, is our job as Prime considered complete on this subject.

Why do you consider it the prime's job to verify that your sub enrolled in E-Verify? Do you require your subs to verify to you that they have filed their EEO reports; have AA plans; notify their employees of rights under the NLRA; etc, just to name a few other mandatory flowdown clauses?

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2 hours ago, Fara Fasat said:

Where in that clause do you see a requirement to provide proof to you of enrollment within 30 days? Unless I'm missing it, even the prime is not required to provide proof (and to whom, the CO?).

Why do you consider it the prime's job to verify that your sub enrolled in E-Verify? Do you require your subs to verify to you that they have filed their EEO reports; have AA plans; notify their employees of rights under the NLRA; etc, just to name a few other mandatory flowdown clauses?

Fara: You make a good point re: the proof of enrollment not being in the FAR clause. The requirement came from our DOE Contracting Officer in 2010. And yes, in some cases we do verify our subs have filed the EEO reports, especially if they have disclosed on their Reps & Certs they have not and have no exemption.

Our subcontract clause reads: "Within 30 calendar days after award, the Seller shall demonstrate that it has enrolled as a Federal Contractor in the E-Verify System by providing the Contract Analyst a copy of the Seller's ‘Company Information’ page printed directly from the E-Verify System."

Many of our subcontractors have multiple subKs and the Contract Analysts may exclude the above clause from the subK if they perform a search in E-Verify prior to subK award and the sub is enrolled as a FC. No further followup action is required. If the sub is not enrolled or is enrolled but not listed as a FC is when this issue arises.

I have just reread our CO Guidance and it includes a link to the E-Verify User Manual for Federal Contractors.  On page 14 of this document there is an "Important Note: Only Federal contractors who choose 'Federal Contractor with FAR E-Verify clause' are permitted to verify existing employees."  It seems that flowing down the FC requirement is the only way to insure our subs can verify its existing employees who will perform under the federally-funded subcontract. 

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FWIW, I think you're making too much of the sub's business into your business. In 25+ years doing this, I have dealt with all the major primes and hundreds of smaller. I have seen all of their standard terms and non-standard terms. With the exception of a FAR clause that specifically requires it, none of them require the sub to separately confirm or verify their compliance with any flowdown clause. My company is also a major prime, and we don't do it. There are some that might require some monitoring of a sub, like the counterfeit parts clause, but certainly not EEO, AA, etc.

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