Federal Acquisition Regulation; FAR Case 2007-013, Employment Eligibility Verification, 67651-67705 [E8-26904]

Agencies

• General Services Administration
• National Aeronautics and Space Administration
• DEPARTMENT OF DEFENSE

[Federal Register Volume 73, Number 221 (Friday, November 14, 2008)]
[Rules and Regulations]
[Pages 67651-67705]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-26904]



[[Page 67651]]

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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 2, 22, and 52

[FAC 2005-29; FAR Case 2007-013; Docket 2008-0001; Sequence 1]
RIN 9000-AK91


Federal Acquisition Regulation; FAR Case 2007-013, Employment 
Eligibility Verification

AGENCIES: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) have agreed on a final rule 
amending the Federal Acquisition Regulation (FAR) to require certain 
contractors and subcontractors to use the E-Verify system administered 
by the Department of Homeland Security, U.S. Citizenship and 
Immigration Services, as the means of verifying that certain of their 
employees are eligible to work in the United States.

DATES: Effective Date: January 15, 2009.
    Applicability Date: Contracting Officers should modify, on a 
bilateral basis, existing indefinite-delivery/ indefinite-quantity 
contracts in accordance with FAR 1.108(d)(3) to include the clause for 
future orders if the remaining period of performance extends at least 
six months after the final rule effective date, and the amount of work 
or number of orders expected under the remaining performance period is 
substantial.

FOR FURTHER INFORMATION CONTACT: Ms. Meredith Murphy, Procurement 
Analyst, at (202) 208-6925 for clarification of content. For 
information pertaining to status or publication schedules, contact the 
FAR Secretariat at (202) 501-4755. Please cite FAC 2005-29, FAR case 
2007-013.

SUPPLEMENTARY INFORMATION:

A. Background and Purpose

Employment Eligibility Verification Requirements

    As explained more fully in the proposed rule, the Federal Property 
and Administrative Services Act of 1949 (FPASA), authorizes the 
President to ``prescribe policies and directives'' governing 
procurement policy ``that the President considers necessary to carry 
out'' that Act and that are ``consistent'' with the Act's purpose of 
``provid[ing] the Federal Government with an economical and efficient'' 
procurement system. 40 U.S.C. 101, 121. On June 6, 2008, the President 
exercised this authority and the authority vested in him under section 
301 of Title 3 of the United States Code in issuing Executive Order 
13465 ``Economy and Efficiency in Government Procurement through 
Compliance with Certain Immigration and Nationality Act Provisions and 
the Use of an Electronic Employment Eligibility Verification System.'' 
73 FR 33285, Jun. 11, 2008, amending Executive Order 12989 (signed 
February 13, 1996, published February 15, 1996 at 61 FR 6091), 
previously amended by Executive Order 13286 (signed February 28, 2003, 
published March 5, 2003 at 68 FR 10619). As amended, Executive Order 
12989 now provides, at Section 5.(a), that ``Executive departments and 
agencies that enter into contracts shall require, as a condition of 
each contract, that the contractor agree to use an electronic 
employment eligibility verification system designated by the Secretary 
of Homeland Security to verify the employment of: (i) All persons hired 
during the contract term by the contractor to perform employment duties 
within the United States; and (ii) all persons assigned by the 
contractor to perform work within the United States on the Federal 
contract.'' The Executive Order also requires, at Section 5.(c), that 
the Secretary of Defense, the Administrator of General Services and the 
Administrator of the National Aeronautics and Space Administration 
``amend the Federal Acquisition Regulation to the extent necessary and 
appropriate to implement the * * * employment eligibility verification 
responsibility * * * assigned to heads of departments and agencies 
under this order.''
    On June 9, 2008, the Secretary of Homeland Security designated the 
``E-Verify system, modified as necessary and appropriate to accommodate 
the policy set forth in the Executive Order * * * as the electronic 
employment eligibility verification system to be used by Federal 
contractors.'' (See 73 FR 33837, Jun. 13, 2008.)
    This final rule responds to these requirements, and the Secretary's 
designation, by amending the FAR to require certain Federal contractors 
and subcontractors to use the E-Verify system (E-Verify) administered 
by the Department of Homeland Security (DHS), U.S. Citizenship and 
Immigration Services (USCIS) as the means of verifying that certain of 
their employees are authorized to work in the United States.

E-Verify Program

    The E-Verify system, formerly known as the Basic Pilot/Employment 
Eligibility Verification Program, is an Internet-based system operated 
by DHS USCIS, in partnership with the Social Security Administration 
(SSA) that allows participating employers to electronically verify the 
employment eligibility of their newly hired employees. E-Verify 
represents the best means currently available for employers to verify 
the work authorization of their employees.
    Before an employer can use the E-Verify system, the employer must 
enroll in the program and agree to the E-Verify Memorandum of 
Understanding (MOU) required for program participants. The terms of the 
MOU are established by USCIS and are not negotiated with each 
participant. In consenting to the MOU, employers agree to abide by 
current legal hiring procedures and to ensure that no employee will be 
unfairly discriminated against in the use of the E-Verify program. 
Violation of the terms of the MOU by the employer is grounds for 
termination of the employer's participation in the E-Verify program.
    Current law (8 U.S.C. 1324a(b)) requires all employers in the 
United States to complete an Employment Eligibility Verification Form 
(Form I-9) for each newly hired employee to verify each employee's 
identity and employment eligibility. Under this final rule, Federal 
contractors will additionally enter the worker's identity and 
employment eligibility information into the E-Verify system, which 
checks that information against information contained in SSA, USCIS and 
other Government databases.
    SSA first verifies that the name, social security number (SSN), and 
date of birth are correct and, if the employee has stated that he or 
she is a U.S. citizen, confirms U.S. citizen status through its 
databases. If the system confirms identity and U.S. citizenship, and 
there are no other indicators that the information is not correct, SSA 
confirms employment-eligibility. USCIS also verifies through database 
checks that any non-U.S. citizen employee is in an employment-
authorized immigration status.
    If the information provided by the worker matches the information 
in the SSA and USCIS records, no further action will be required. E-
Verify procedures require only that the employer record on the Form I-9 
the

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verification identification number and the result obtained from the E-
Verify query or print a copy of the transaction record and retain it 
with the Form I-9.
    If SSA is unable to verify information presented by the worker, the 
employer will receive an ``SSA Tentative Nonconfirmation'' notice. 
Similarly, if USCIS is unable to verify information presented by the 
worker, the employer will receive a ``DHS Tentative Nonconfirmation'' 
notice. Employers can receive a tentative nonconfirmation notice for a 
variety of reasons, including inaccurate entry of information by the 
employer into the E-Verify Web site, and changes in the worker's name 
or immigration status that the worker has not updated in the SSA 
database searched by the E-Verify system. If the individual's 
information does not match the SSA or USCIS records, the employer must 
provide the worker with a written notice generated by the E-Verify 
system, called a ``Notice to Employee of Tentative Nonconfirmation''. 
The worker must then indicate on the notice whether he or she contests 
or does not contest the finding reflected in the tentative 
nonconfirmation that he or she appears unauthorized to work, and both 
the worker and the employer must sign the notice.
    If the worker chooses to contest the tentative nonconfirmation, the 
employer must print a second notice generated by the E-Verify system, 
called a ``Referral Letter,'' which contains information about 
resolving the tentative nonconfirmation, as well as the contact 
information for SSA or USCIS, depending on which agency was the source 
of the tentative nonconfirmation. The worker then has eight Federal 
Government workdays to visit an SSA office or call USCIS to try to 
resolve the discrepancy. Under the E-Verify MOU, if the worker contests 
the tentative nonconfirmation, the employer is prohibited from 
terminating or otherwise taking adverse action against the worker while 
he or she awaits a final resolution from the Federal Government agency. 
If the worker fails to contest the tentative nonconfirmation, or if SSA 
or USCIS is unable to resolve the discrepancy, the employer will 
receive a notice of final nonconfirmation and the worker's employment 
may be terminated.
    Participation in E-Verify does not exempt the employer from the 
responsibility to complete, retain, and make available for inspection 
Forms I-9 that relate to its employees, or from other requirements of 
applicable regulations or laws. However, the following modified 
requirements apply by reason of the employer's participation in E-
Verify: (1) Identity documents used for verification purposes must have 
photos (except as discussed below with respect to accommodations); (2) 
if an employer obtains confirmation of the identity and employment 
eligibility of an individual in compliance with the terms and 
conditions of E-Verify, a rebuttable presumption is established that 
the employer has not violated section 274A(a)(1)(A) of the Immigration 
and Nationality Act (INA) with respect to the hiring of the individual; 
(3) the employer must notify DHS if it continues to employ any employee 
for whom the employer has received a final nonconfirmation, and the 
employer is subject to a civil money penalty between $500 and $1,000 
for each failure to notify DHS of continued employment following a 
final nonconfirmation; (4) if an employer continues to employ an 
employee after receiving a final nonconfirmation and that employee is 
subsequently found to be an unauthorized alien, the employer is subject 
to a rebuttable presumption that it has knowingly employed an 
unauthorized alien in violation of Immigration and Nationality Act 
(INA) section 274A(a); and (5) no person or entity participating in E-
Verify is civilly or criminally liable under any law for any action 
taken in good faith reliance on information provided through the 
confirmation system.
    Further information on registration for and use of E-Verify can be 
obtained via the Internet at https://www.dhs.gov/E-Verify.

E-Verify Basis and Development

1. Legislative History
    Laws pertaining to the control of illegal immigration have received 
serious attention from Congress and the Executive Branch since at least 
the early 1950s. Chief among the legislative approaches to these 
problems has been the proposed establishment of penalties for the 
employment of undocumented aliens and related laws requiring the 
verification of employment authorization. See INA Section 274(a), 
codified at 8 U.S.C. 1324(a). The House of Representatives Report filed 
with the Immigration Reform and Control Act of 1986 (IRCA), found at 
1986 U.S. Code Cong. and Adm. News, p. 5649, clearly describes the 
basis for that legislation:

    This legislation seeks to close the back door on illegal 
immigration so that the front door on legal immigration may remain 
open. The principal means of closing the back door, or curtailing 
future illegal immigration, is through employer sanctions. The bill 
would prohibit the employment of aliens who are unauthorized to work 
in the United States because they either entered the country 
illegally, or are in an immigration status which does not permit 
employment. U.S. employers who violate this prohibition would be 
subject to civil and criminal penalties. Employment is the magnet 
that attracts aliens here illegally or, in the case of 
nonimmigrants, leads them to accept employment in violation of their 
status. Employers will be deterred by the penalties in this 
legislation from hiring unauthorized aliens and this, in turn, will 
deter aliens from entering illegally or violating their status in 
search of employment. The logic of this approach has been recognized 
and backed by the past four administrations * * *. Now, as in the 
past, the Committee remains convinced that legislation containing 
employer sanctions is the most humane, credible and effective way to 
respond to the large-scale influx of undocumented aliens. While 
there is no doubt that many who enter illegally do so for the best 
of motives--to seek a better life for themselves and their 
families--immigration must proceed in a legal, orderly and regulated 
fashion. As a sovereign nation, we must secure our borders.

    H.R. Rep. No. 99-682(I), 99th Cong., 1st Sess. 46 (1986), 1986 U.S. 
Code Cong. & Admin. News, p. 5649. INA Section 274A, as established by 
IRCA, thus prohibits any ``person or other entity'' from knowingly 
hiring, or knowingly continuing to employ, any unauthorized alien. INA 
section 274A(b) provides for an ``Employment Verification System,'' 
which requires that employers attest, after examination of 
documentation presented by the employee, that the person being hired, 
recruited or referred for employment is not an unauthorized alien. INA 
section 274A also provides for the assessment of civil monetary 
penalties and cease and desist orders against any employer that has 
knowingly hired or continued to employ an unauthorized alien, or that 
has failed to comply with the employment verification system mandated 
by INA section 274A(b). 8 U.S.C. 1324a(e)(4)-(e)(5).
    Employers who engage in a ``pattern or practice'' of violating the 
prohibition against illegal employment of unauthorized workers may face 
criminal sanctions. INA section 274A(f), 8 U.S.C. 1324a(f). DHS U.S. 
Immigration and Customs Enforcement (ICE) investigates complaints of 
potential violations of INA section 274A by inspecting employment 
eligibility verification forms maintained by employers with respect to 
their current and former employees, and compelling the production of 
evidence or the attendance of witnesses by subpoena. 8 U.S.C. 
1324a(e)(2); 8 CFR 274a.2(b)(2).

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Development of E-Verify

    E-Verify provides a modern means of verifying employment 
authorization information in addition to the traditional I-9 process. 
When Congress established the paper-based employment verification 
system in 8 U.S.C. 1324a(b), it directed the President to evaluate that 
system's security and efficacy and implement necessary changes, subject 
to congressional oversight. 8 U.S.C. 1324a(d). Congress also authorized 
the President to establish demonstration projects designed to 
strengthen the employment verification system. 8 U.S.C. 1324a(d)(4).
    The first demonstration project, in 1992, included the Telephone 
Verification System (TVS) pilot program--a predecessor to the E-Verify 
system. 69 Interpreter Releases 702 (June 8, 1992); 515 (Apr. 27, 
1992). In 1996, Congress established the Basic Pilot program--now 
called E-Verify--as part of the Illegal Immigration Reform and 
Immigrant Responsibility Act (IIRIRA). Public Law 104-208, Sections 
401-405, 110 Stat. 3009-655-3009-666 (1996) (8 U.S.C. 1324a note).
    On August 10, 2007, the Acting Director of the Office of Management 
and Budget instructed agencies to encourage their existing and future 
contractors to use E-Verify and attached a letter that DHS had sent to 
its major contractors encouraging their use of E-Verify and emphasizing 
E-Verify's ability to help contractors comply with immigration law. See 
``Memorandum for the Heads of Departments and Agencies M-07-21,'' 
Stephen S. McMillin, Acting Director, Office of Management and Budget 
(August 10, 2007) (https://www.whitehouse.gov/omb/memoranda/fy2007/m07-
21.pdf) attaching ``Letter from Paul A. Schneider, Under Secretary for 
Management'' (Aug. 10, 2007). The OMB Memorandum also announced that 
the Federal Acquisition Regulatory Council was developing appropriate 
Governmentwide regulatory coverage to apply E-Verify to Federal 
contractors. It also indicated that by October 1, 2007, all Federal 
departments and agencies should begin verifying their new hires through 
E-Verify.

Compliance Requirements for Federal Contractors

    The Executive branch has long recognized that the instability and 
lack of dependability that afflicts contractors that employ 
unauthorized workers undermines overall efficiency and economy in 
Government contracting. The first formal expression of this policy is 
found in Executive Order 12989, signed by President Clinton in February 
1996. (See 61 FR 6091, Feb. 15, 1996.) That Order, which pre-dated 
Congress's enactment of IIRIRA authorizing what is now the E-Verify 
program, found that the presence of unauthorized aliens on a 
contractor's workforce rendered that contractor's workforce less stable 
and reliable than the workforces of contractors who do not employ 
unauthorized aliens:

    Stability and dependability are important elements of economy 
and efficiency. A contractor whose work force is less stable will be 
less likely to produce goods and services economically and 
efficiently than a contractor whose work force is more stable. It 
remains the policy of this Administration to enforce the immigration 
laws to the fullest extent, including the detection and deportation 
of illegal aliens. In these circumstances, contractors cannot rely 
on the continuing availability and service of illegal aliens, and 
contractors that choose to employ unauthorized aliens inevitably 
will have a less stable and less dependable work force than 
contractors that do not employ such persons. Because of this 
Administration's vigorous enforcement policy, contractors that 
employ unauthorized alien workers are necessarily less stable and 
dependable procurement sources than contractors that do not hire 
such persons. I find, therefore, that adherence to the general 
policy of not contracting with providers that knowingly employ 
unauthorized alien workers will promote economy and efficiency in 
Federal procurement.

    Executive Order 12989 (preamble), 61 FR 6091. This finding is as 
applicable today as it was in 1996. The Government is aware, in 
particular, of recent instances where Federal Government contracts have 
been disrupted when the contractor's employees were identified as 
unauthorized workers. See, e.g., Tami Abdollah, ``2 Sentenced for 
Hiring Illegal Migrants; Golden State Fence Executives Get Probation 
and Fines, and the Company is Ordered to Forfeit $4.7 Million in 
Profits,'' Los Angeles Times, March 29, 2007, (detailing the criminal 
prosecution of two Federal Contractor company executives for hiring 
illegal workers that resulted in a guilty plea; judgment of probation 
and combined $300,000 in fines for the two individuals in addition to 
the forfeiture of $4.7 million in company profits the company reaped by 
employing unauthorized immigrant workers); Karen Lee Ziner, ``3 at 
Bianco Plant Indicted on Immigration Charges,'' Providence Journal 
Bulletin, August 4, 2007, at A3 (reporting the indictment of company 
president along with two managers for ``conspiring to harbor and hire 
illegal immigrants'' to work on Government contracts valued over $200 
million); Mark Bowes, ``U.S. Immigration Agents Arrest 33: Workers at 
Richmond Site of New Federal Courthouse Alleged to be Here Illegally,'' 
Richmond Times Dispatch, May 8, 2008, at B3 (reporting the arrest of 33 
alleged illegal immigrant workers employed by a Federal contractor 
during a raid by immigration authorities at the construction site of a 
future Federal courthouse in Richmond, Virginia); Giovanna Dell'Orto, 
``Illegal Immigrants Arrested at Military Bases,'' Press-Register, 
January 20, 2007, at B12 (publishing an article on the arrest of 
roughly 40 illegal immigrant workers over a three day period that were 
hired by Federal contractors to work at three different military bases 
including Fort Benning in Georgia and the Marine Corp Base Quantico in 
Virginia); Rob Bell, ``Mills Manufacturing Corporation Raided by ICE,'' 
Western Carolina Business Journal, August 15, 2008 (reporting that 
immigration officials raided a Federal defense contractor and arrested 
57 illegal immigrant workers).
    Consistent with the President's authority under FPASA, and to 
``ensure the economical and efficient administration and completion of 
Federal Government contracts,'' Executive Order 12989 instructed the 
Attorney General of the Department of Justice to investigate to 
determine whether a contractor or an organizational unit thereof is not 
in compliance with the INA employment provisions, transmit that 
determination to the contracting agency and have the head of the 
contracting agency pursue debarment or other such action as may be 
appropriate under the FAR. (See Executive Order 12989, Sections 3 and 
4.) With the establishment of the DHS, the Attorney General's 
investigative authority transferred to the Secretary of Homeland 
Security. See Executive Order 13286, Sec. 19, (Feb. 28, 2003), 68 FR 
10623. Thus, as early as 1996, agencies were instructed to use 
provisions within the FAR to support economical and efficient Federal 
Government contracting by avoiding doing business with contractors that 
employ unauthorized workers.
    On June 6, 2008, President Bush issued Executive Order 13465, 
amending Executive Order 12989 by adding an electronic employment 
eligibility verification requirement to strengthen the long-standing 
Executive branch policy of furthering economical and efficient 
contracting through only contracting with Federal contractors who 
employ persons in the United States who are authorized to work in the 
United States. Executive Order 13465 echoes the findings and 
conclusions stated in Executive Order 12989 and

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builds upon the ``economy and efficiency'' justifications for the 1996 
Executive Order in light of the significant advances in the technology 
for employment eligibility verification that have been made since the 
issuance of Executive Order 12989. As amended, Executive Order 12989 
now states:

    It is the policy of the Executive branch to use an electronic 
employment verification system because, among other reasons, it 
provides the best available means to confirm the identity and work 
eligibility of all employees that join the Federal workforce. * * * 
I find, therefore, that adherence to the general policy of 
contracting only with providers that do not knowingly employ 
unauthorized alien workers and that have agreed to utilize an 
electronic employment verification system designated by the 
Secretary of Homeland Security to confirm employment eligibility of 
their workforce will promote economy and efficiency in Federal 
procurement.

    Executive Order 12989, as amended by Executive Order 13465, 73 FR 
33285.
    Executive Order 12989, as amended, further specifically directs the 
agency heads of DoD, GSA and NASA to implement this policy through 
amendments to the FAR. Executive Order 13465 at Section 3, 73 FR 33286. 
Accordingly, the Councils amend the FAR in this final rule in 
accordance with the President's direction, pursuant to his authority 
under FPASA to ``prescribe policies and directives'' governing Federal 
procurement that are consistent with the Act's aim of providing the 
Federal Government with an economical and efficient procurement system. 
40 U.S.C. 101, 121.

B. Final Rule

Summary of the Elements of the Proposed Rule That Are Retained in the 
Final Rule

    This final rule inserts a clause into Federal contracts committing 
Government contractors to use the USCIS E-Verify System to verify that 
all of the contractors' new hires, and all employees (existing and new) 
directly performing work under Federal contracts, are authorized to 
work in the United States. Consistent with the requirements first set 
forth in the proposed rule, the final rule--
    1. Exempts contracts that are for--
     Commercially available off-the-shelf (COTS) items; and
     Items that would be COTS items but for minor 
modifications.
    2. Requires inclusion of the clause in subcontracts over $3,000 for 
services or for construction.
    3. Requires contractors and subcontractors to use E-Verify to 
confirm the employment eligibility of all existing employees who are 
directly performing work under the covered contract.
    4. Applies to solicitations issued and contracts awarded after the 
effective date of the final rule in accordance with FAR 1.108(d). Under 
the final rule, Departments and agencies should, in accordance with FAR 
1.108(d)(3), amend--on a bilateral basis--existing indefinite-delivery/
indefinite-quantity contracts to include the clause for future orders 
if the remaining period of performance extends at least six months 
after the effective date of the final rule.
    5. In exceptional circumstances, allows a head of the contracting 
activity to waive the requirement to include the clause. This authority 
is not delegable.
    The rule is written to apply the above requirements in a manner 
that will ensure effective compliance by the contractor community, and 
is reasonably limited in certain circumstances to minimize the burden 
on participants in the Federal procurement process.

Changes Adopted in the Final Rule

    Below is a summary of changes made to the final rule:
    1. Significantly Extended Timelines--The final rule amends the 
proposed rule to permit Federal contractors participating in the E-
Verify program for the first time a longer period--90 calendar days 
from enrollment instead of 30 days as initially proposed--to begin 
using the system for new and existing employees. The final rule also 
provides a longer period after this initial enrollment period--30 
calendar days instead of 3 business days--for contractors to initiate 
verification of existing employees who have not previously gone through 
the E-Verify system when they are newly assigned to a covered Federal 
contract. Contractors already enrolled and using the program as Federal 
contractors will have the same extended timeframe to initiate 
verification of employees assigned to the contract, but the time limits 
will be measured from contract award date instead of from the 
contractor's E-Verify enrollment date. With regard to verification of 
new hires, a contractor that has already been enrolled as a Federal 
contractor for 90 calendar days or more will have the standard 3 
business days from the date of hire to initiate verification of new 
hires. Those contractors that have been enrolled in the program for 
less than 90 calendar days will have 90 calendar days from the date of 
enrollment as a Federal contractor to initiate verification of new 
hires.
    2. Covered Prime Contract Value Threshold--The final rule requires 
the insertion of the E-Verify clause for prime contracts above the 
simplified acquisition threshold ($100,000) instead of the micro-
purchase threshold ($3,000).
    3. Contract Term--The final rule clarifies that the E-Verify clause 
need not be inserted into prime contracts with performance terms of 
less than 120 days.
    4. Institutions of Higher Education--The final rule modifies the 
contract clause so that institutions of higher education need only 
verify employees assigned to a covered Federal contract.
    5. State and Local Governments and Federally Recognized Indian 
Tribes--Similarly, under the final rule, State and local governments 
and Federally recognized Indian tribes need only verify employees 
assigned to a covered Federal contract.
    6. Sureties--Under the final rule, sureties performing under a 
takeover agreement entered into with a Federal agency pursuant to a 
performance bond need only verify employees assigned to the covered 
Federal contract.
    7. Security Clearances and HSPD-12 credentials--The final rule 
exempts employees who hold an active security clearance of 
confidential, secret or top secret from verification requirements. The 
rule also exempts employees for which background investigations have 
been completed and credentials issued pursuant to the Homeland Security 
Presidential Directive (HSPD)-12, ``Policy for a Common Identification 
Standard for Federal Employees and Contractors,'' which the President 
issued on August 27, 2004.
    8. All Existing Employees Option--The final rule provides 
contractors the option of verifying all employees of the contractor, 
including any existing employees not currently assigned to a Government 
contract. A contractor that chooses to exercise this option must notify 
DHS and must initiate verifications for the contractor's entire 
workforce within 180 days of such notice to DHS.
    9. Expanded COTS-related exemptions for:
     Bulk cargo--The rule will not apply to prime contracts for 
agricultural products shipped as bulk cargo that would otherwise have 
been categorized as COTS; and
     Certain services associated with the provision of COTS 
items or items that would be COTS items but for minor modifications.
    10. Allows the Head of the Contracting Activity to waive E-Verify 
requirements after contract award,

[[Page 67655]]

either temporarily or for the period of performance.
    11. Definitions:
     Employee assigned to the contract--The final rule 
clarifies that employees who normally perform support work, such as 
general company administration or indirect or overhead functions, and 
that do not perform any substantial duties applicable to an individual 
contract, are not considered to be directly performing work under the 
contract.
     Subcontract and subcontractor--Adds definitions derived 
from FAR 44.101.

B. Response to Comments Received on the Notice of Proposed Rulemaking 
Docket

    The Department of Defense (DoD), General Services Administration 
(GSA) and National Aeronautics and Space Administration (NASA) 
published a notice of proposed rulemaking (NPRM) in this action on June 
12, 2008. (See 73 FR 33374.) The NPRM directed the submission of 
comments to the Federal eRulemaking portal, https://www.regulations.gov, 
as well as by facsimile and by mail to the FAR Secretariat, with 
reference to FAR Case 2007-013, Docket 2008-0001; Sequence 1, on or 
before August 11, 2008. The agencies received more than 1,600 public 
comments on the proposed rulemaking from individuals, organizations, 
corporations, trade associations, chambers of commerce and Government 
entities.
    Comments submitted to the docket for this rulemaking were 
distributed relatively evenly among various issues, with concerns about 
the Government's authority to promulgate the rule and questions about 
the DHS's and SSA's collective ability to administer the rule receiving 
the greatest number of comments. Eleven commenters stated that the 60-
day public comment period was inadequate to evaluate, research, and 
prepare responses to a complex proposed rule. Those commenters asked 
the Councils to extend the comment period to allow more time to 
research and respond to the proposed rule.
    The Councils declined to extend the public comment period after 
concluding that the period was adequate. The current web-based E-Verify 
system, which has been active and available to employers since 2004, 
has been the subject of significant public scrutiny, including in 
public hearings before Congress. This has, over time, disseminated 
considerable information about the program to the public. As a result, 
most commenters did not request additional time to gather information 
and submit comments, and those that did request additional time failed 
to raise novel or difficult issues that could have justified an 
extension. Moreover, the comments received more than adequately 
provided substantial information on which the Councils could make a 
final decision. Accordingly, the Councils do not believe that there is 
a basis for extending the comment period related to this rule.

Support for the Rule

    Comment: More than 600 commenters wrote in support of the proposed 
rule and strongly urged its adoption. One commenter noted that it has 
been illegal for more than 20 years, i.e., since 1986, to hire an 
individual who is not authorized to work in the United States. Another 
commenter, who identified himself as a 30-year Human Resources 
professional, stated that this E-Verify system is not too burdensome 
for employers. A third commenter said that the ``E-Verify program 
WORKS!'' and that he has found it to work accurately 100 percent of the 
time.
    The majority of these commenters expressed overall support for the 
Executive Order's instruction for Federal agencies to contract with 
employers that use E-Verify to check the employment eligibility of all 
persons performing work on Federal contracts and of all persons hired 
by the contractor. Some commenters applauded E-Verify because it will 
establish a level playing field and prevent some employers from 
obtaining a competitive advantage by exploiting unauthorized workers 
for lower pay. Many commenters noted that--for 22 years--it has been 
against the law to hire workers who are not authorized to work in the 
U.S. This is not a new requirement, they say; it merely puts some teeth 
into the existing law. Other commenters observed that E-Verify will 
help stem the problem of identity theft by requiring employers to check 
photo identification.
    Response: The Councils appreciate these supportive comments for use 
of E-Verify in the Federal Government procurement system, but note that 
application of the system in this context is not meant to regulate 
immigration, but to provide the Federal Government with stable and 
dependable contractors which, ultimately, results in a more economical 
and efficient procurement system.

Requests for a More Comprehensive Solution

    Comment: A number of commenters suggested that merely requiring the 
use of the E-Verify system by Federal contractors was not a 
comprehensive solution. They strongly advocate ``fixing'' the 
``broken'' immigration system. Some commenters see the solution as 
giving people a path to legal status, others see it as providing 
``tangible solutions for the over 7 million undocumented workers in our 
economy,'' some see it as enabling swifter and earlier access to work 
permits, and still other commenters advocate improved ICE auditing 
teams. One commenter claims that, ``[w]hile employer sanctions and a 
mandatory employment document verification system may be an appropriate 
part of an effective immigration reform package, standing alone they 
only exacerbate the problems they are ostensibly designed to address.''
    Response: Comprehensive immigration reform is beyond the scope of 
this rulemaking and was not the purpose of Executive Order 12989, as 
amended. The mandate given to the FAR Councils was to implement the 
President's Executive Order of June 6, 2008, as a means of creating a 
more economical and efficient Federal Government procurement system. 
The employment of persons unauthorized to work in the U.S. has been 
against the law for 22 years. Completion of the Form I-9 is still 
required of all employers and this rule does not change that 
requirement. This rule merely provides a more convenient, faster, and 
more consistent means of determining whether an individual is, or is 
not, authorized to work in the U.S. to establish greater stability and 
dependability among the Federal contractor workforce.

Authority

1. Immigration Statutes
a. Voluntary Participation in E-Verify
    1. Comment. Many commenters challenge the Councils' authority to 
promulgate the Rule, arguing that the insertion of a clause into 
Federal contracts that commits Federal contractors to use E-Verify 
conflicts with the congressional intent expressed in the IIRIRA that 
participation in E-Verify be ``voluntary.'' Some commenters further 
argue that the E-Verify program is de facto mandatory because 
contractors who elect not to enter into Federal contracts on account of 
E-Verify will go out of business.
    Response: The Councils disagree. Section 402(a) of IIRIRA states, 
in relevant part, that ``the Secretary of Homeland Security may not 
require any person or other entity to participate in a pilot program.'' 
8 U.S.C. 1324a note,

[[Page 67656]]

Section 402(a). On its face, this statutory limitation applies only to 
the Secretary of Homeland Security and does not apply to the President 
or the Councils. Because the requirement to insert the contract clause 
set forth in this rule comes from a presidential action, Executive 
Order 12989, as amended, and from this rulemaking undertaken by the 
Councils, it is not a requirement imposed by the Secretary of Homeland 
Security and therefore does not run afoul of section 402(a) of IIRIRA.
    Moreover, acceptance of a Federal procurement contract is, by 
definition, a voluntary act. The rule sets forth a performance 
requirement to be included as a contract clause in contracts entered 
into or negotiated anew after the effective date of the rule. In AFL-
CIO v. Kahn, the D.C. Circuit Court of Appeals, sitting en banc, 
rejected the claim that the Carter Administration's insistence that 
Federal contractors agree to comply with wage and price controls 
rendered those controls ``mandatory'' in violation of the Council on 
Wage and Price Stability Act (COWPSA). 618 F.2d 784 (D.C. Cir. 1979). 
The Kahn Court analogized the procurement requirement at issue to 
``those Federal programs that offer funds to State and local 
governments on certain conditions. The Supreme Court has upheld such 
conditional grants, observing on one occasion through Justice Cardozo 
that `to hold that motive or temptation is equivalent to coercion is to 
plunge the law in endless difficulties.' '' AFL-CIO v. Kahn, 618 F.2d 
at 794 (quoting Steward Machine Co. v. Davis, 301 U.S. 548, 589-590 
(1937)). According to the D.C. Circuit:

    Any alleged mandatory character of the procurement program is 
belied by the principle that no one has a right to a Government 
contract. As the Supreme Court ruled in Perkins v. Lukens Steel Co., 
``[The] Government enjoys the unrestricted power * * * to determine 
those with whom it will deal, and to fix the terms and conditions 
upon which it will make needed purchases.'' Those wishing to do 
business with the Government must meet the Government's terms; 
others need not.

AFL-CIO v. Kahn, 618 F.2d at 794. If a contractor chooses to do 
business with the Federal Government, then the Federal Government can, 
and routinely does, impose contract performance requirements. Where, as 
with this rule, such requirements are imposed through contract terms 
included in contracts, a contractor's agreement to abide by those terms 
of the agreement is not ``involuntary.''
    2. Comment: Many commenters suggested that IIRIRA and the INA limit 
the types of employers which can be required to participate in the 
Basic Pilot Program. These commenters asserted that the proposed rule's 
promulgation of a contract clause committing Federal contractors to use 
E-Verify violates the congressional intent behind IIRIRA, because 
Federal contractors are not one of the classes of employers which can 
be required to participate in Basic Pilot. Some commenters suggested 
that Congress consciously chose to exclude Government contractors from 
the subset of employers for which participation in Basic Pilot would be 
mandatory. Many commenters also asserted that, because of this alleged 
violation of congressional intent, the Administration lacks the 
constitutional authority to promulgate this policy through Executive 
Order or through this rulemaking.
    Response: The Councils disagree. IIRIRA requires participation in 
E-Verify by certain employers, including Executive departments and the 
legislative branch, as well as employers found to have violated INA 
section 274A. There is nothing in the text of IIRIRA that prohibits the 
President, acting pursuant to separate statutory authority, from 
requiring additional classes of employers to participate in E-Verify as 
a condition of contracting with the Federal Government. Nor is there 
any indication in the legislative history to suggest that Congress ever 
specifically considered and rejected a proposal to include Federal 
contractors in the E-Verify program. Here, the President has acted 
within his authority under FPASA and 3 U.S.C. 301 and issued an 
Executive Order to improve the dependability and stability of the 
Federal contractor workforce by requiring Federal agencies to contract 
with businesses that electronically verify the employment eligibility 
of their employees. In his Executive Order, the President tasked the 
Secretary of Homeland Security with designating an appropriate 
electronic verification tool and charged the FAR Councils with the 
responsibility to promulgate a rule to implement the requirements of 
the Executive Order. The Secretary of Homeland Security and the FAR 
Councils have acted in accordance with the President's directive, 
issued as an exercise of his authority under FPASA, and in so doing, 
neither the Secretary nor the Councils have taken any action in 
conflict with IIRIRA. Congress merely prohibited the Secretary of 
Homeland Security from requiring participation in E-Verify by other 
persons or entities, and this rule does not violate that prohibition, 
as described above.
b. Existing Employees
    Comment: Many commenters asserted that because IIRIRA created the 
Basic Pilot program as a tool to confirm employment eligibility of 
newly hired employees, the contractual requirement--announced by 
Executive Order and implemented through this rulemaking--that existing 
employees assigned to Government contracts be verified (or re-verified) 
through E-Verify is contrary to law.
    Response: The Councils disagree. Executive Order 12989, as amended, 
instructs executive departments and agencies to require, as a condition 
of contracting, that the contractor agree to use an electronic 
employment eligibility verification system ``to verify the employment 
of * * * all persons assigned by the contractor to perform work within 
the United States on the Federal contract.'' This Executive Order is 
based on the President's exercise of his authority under FPASA to 
prescribe policies that promote economy and efficiency in federal 
contracting. 40 U.S.C. 101, 121.
    The Basic Pilot statute does not prohibit the verification of 
existing employees' work eligibility called for by this presidential 
directive. The Basic Pilot statute lays out a set of procedures that 
employers using the system must follow ``in the case of the hiring (or 
recruitment or referral) for employment in the United States. * * *'' 
IIRIRA section 403(a). The statute also sets out the parameters for the 
``employment eligibility confirmation system'' that the Secretary of 
Homeland Security must establish. IIRIRA section 404. Nothing in either 
of these sections, however--or in any other part of the Basic Pilot 
statute--prohibits the use of the confirmation system for existing 
employees or prohibits the President, acting pursuant to separate 
statutory authority, from requiring federal contractors to use the 
confirmation system for existing employees as a condition of 
contracting with the federal government.
c. Congressional Notification
    Comment: Commenters noted that IRCA requires the Administration to 
notify Congress before implementing any changes to the employment 
verification system ``established under subsection (b) of [INA section 
274A].'' INA section 274A(d)(1), (d)(3). These commenters suggest that 
this rulemaking amounts to such a change, and that it may not be 
implemented without notice to Congress called for in section 
274A(d)(3).

[[Page 67657]]

    Response: The Councils disagree. This rule instructs Federal 
contracting officers to insert the specified clause into future Federal 
contracts, thereby committing Federal contractors to use the E-Verify 
system as specified in the rule. It does not, however, constitute a 
change to ``the requirements of subsection (b)'' of INA section 274A, 
which established the paper-based Form I-9 employment verification 
process. The I-9 process that all employers must follow at the time of 
hire continues to apply to Federal contractors without any change. This 
rule, and the Executive Order on which it is based, promotes economy 
and efficiency in Federal contracting by assisting employers to avoid 
employment of unauthorized workers and by limiting the risk that 
Federal contracts performed in the United States will be staffed by 
persons unauthorized to work in the United States.
2. Executive Order Authority
    Comment: As noted above, many commenters challenged the President's 
authority to issue the Executive Order under FPASA. These commenters 
suggested that Executive Order 12989 does not promote ``economy'' and 
``efficiency'' in Government contracting, and that the Executive Order 
is therefore not supported by FPASA's statement that the President may 
enact procurement regulations which further those two ends. Commenters 
also contended that the main purpose of the Executive Order is to 
advance a social policy--a strengthening of the immigration enforcement 
relating to employment in the United States--in a way that is contrary 
to congressional intent, and that the President's power recognized by 
FPASA cannot be employed by the Executive Branch to advance policies 
that conflict with the statutes passed by Congress.
    Response: These challenges to the legal authority for Executive 
Order 12989 are outside the scope of this rulemaking. The Councils 
note, however, that Executive Order 12989 falls well within the 
established legal bounds of presidential directives regarding 
procurement policy. FPASA authorizes the President to craft and 
implement procurement policies that further the Act's statutory goals 
of promoting ``economy'' and ``efficiency'' in Federal procurement. 
See, e.g., UAW-Labor Employment & Training Corp. v. Chao, 325 F.3d 360, 
366 (D.C. Cir. 2003) (affirming authority of the President under FPASA 
to require federal contractors, as a condition of contracting, to post 
notices informing workers of certain labor law rights); Kahn, 618 F.2d 
at 792-793 (upholding an Executive Order implementing procurement wage 
and price controls, noting need for a ``nexus'' between those wage and 
price controls and procurement economy and efficiency). The fundamental 
``economy and efficiency'' principles underlying the Executive Order 
were first articulated in the original Executive Order 12989, issued in 
February 1996, which concluded that contracting with employers who hire 
unauthorized workers in violation of the INA undermines the economy and 
efficiency of the Federal procurement system. The 1996 Executive Order 
imposed debarment penalties on contractors found to have violated the 
immigration laws, and was never found by a court to be inconsistent 
with FPASA, the INA, or IRCA. Executive Order 13465 amends Executive 
Order 12989 to use new employment verification technology in order to 
advance the same goal of ensuring a stable and dependable Federal 
contractor workforce and more economical and efficient Federal 
Government contracting. See 73 FR 33285 (``This order is designed to 
promote economy and efficiency in Federal Government procurement. * * * 
I find * * * that adherence to the general policy of contracting only 
with providers that do not knowingly employ unauthorized alien workers 
and that have agreed to utilize an electronic employment verification 
system designated by the Secretary of Homeland Security to confirm the 
employment eligibility of their workforce will promote economy and 
efficiency in Federal procurement.'') The President has determined that 
this rule will produce net economy and efficiency gains in Federal 
procurement.
    The Councils also disagree with assertions that the proposed rule 
is a veiled attempt to modify immigration policy under the guise of 
procurement regulation. This rule implicates immigration, but does so 
in a permissible manner. The President may, under FPASA, promulgate 
procurement policies and directives touching upon policy matters beyond 
Government contracting, so long as there is a sufficiently close 
``nexus'' between the policy or directive and the promotion of economy 
and efficiency in Federal procurement. See Chao, 325 F.3d at 366-67; 
Kahn, 618 F.2d at 792; Chamber of Commerce v. Reich, 74 F.3d 1322, 1337 
(D.C. Cir. 1996) (``[T]he President, in implementing the Procurement 
Act, may * * * draw upon * * * secondary policy views * * * that are 
directed beyond the immediate quality and price of goods and services 
purchased.''). In this case, the ``nexus'' is explained at some length 
in the text of Executive Order 13465. (See 73 FR 33285.)
3. The MOU Requirement
    Comment: One commenter specified that ``[t]he inclusion of an MOU 
in addition to, or as a supplement to, the contract performance 
requirements, is contrary to contract formation law in that it might 
create a separately enforceable (and potentially conflicting) 
obligation between the parties beyond the scope of the contract and 
could create confusion and result in problems with contract 
administration and/or lead to the submission of contract claims.''
    Response: The Councils do not concur with these comments. The 
requirement in this clause for the contractor to comply with the 
requirements of a secondary agreement is no different than any other 
contract term that requires adherence to a standard or a specification. 
The clause merely requires adherence to the conditions of the MOU as 
part of the contractor's performance duties. The terms of the E-Verify 
MOU are readily available to the public, and were included in the 
docket of this rulemaking on the www.regulations.gov Web site so that 
commenters on this rule would have the opportunity to review and take 
into consideration the proposed terms of that agreement in providing 
comments on this rulemaking. Potential contractors have adequate 
advance notice of the ancillary agreement with which they must comply.
4. Consistency With Other Federal Regulations
a. FAR Guiding Principles
    Comment: Several commenters claim that the proposed rule 
contradicts many of the guiding principles used in the creation of the 
FAR, including (1) minimizing administrative operating costs, (2) 
conducting business with integrity, fairness, and openness, and (3) 
promoting competition.
    Response: Commenters claim that administrative operating costs can 
include start-up, implementation, training, and maintenance costs; and 
the Councils agree. All of these costs were included, and evaluated, in 
the Regulatory Impact Analysis (RIA) released with the proposed rule. 
Some adjustments have been made to the RIA as a result of comments 
received in response to the proposed rule, and they are addressed in 
the Regulatory Flexibility Analysis section of this rule. Commenters 
claim that there are also

[[Page 67658]]

other direct and indirect costs to employers who use E-Verify--
employers may perceive foreign-born workers as more expensive to employ 
than native-born workers due to the database inaccuracies. Commenters 
claim that resolving tentative nonconfirmations and correcting employee 
records costs time and money and affects other resources. In claiming 
that the costs associated with the proposed rule do not minimize 
administrative costs, however, the commenters overlook the costs 
already incurred by contractors as a result of the I-9 process mandated 
by the INA, and they overlook the gains in stability and reliability of 
the Federal contractor workforce that contractors' use of E-Verify will 
produce.
    The Councils also disagree with the claim by some commenters that 
the proposed rule fails to advance integrity, fairness, and openness in 
the way business is conducted. While Government-commissioned reports 
have found some employer abuse of the program, discriminatory behavior 
and other such prohibited employment practices is not encouraged by the 
E-Verify system. Use of E-Verify cannot prevent all such illegal 
action, but the record created by use of the system does make it more 
difficult for an employer engaged in discrimination to conceal its 
unlawful behavior. If any employer engages in discriminatory practices, 
such abuses should be reported to the appropriate Federal and State 
agencies responsible for enforcement of the anti-discrimination laws.
    Commenters claim that the proposed rule does not encourage 
competition because the harmful impact on small businesses (many of 
which are minority-, immigrant-, or family-owned) is disproportionate 
and makes the playing field for small businesses more uneven. The claim 
of a disproportionate impact on small businesses is addressed elsewhere 
in this rule (see the Regulatory Flexibility Analysis section of this 
rule). However, the Councils believe that there is an impact on 
competition, and it believes that the impact is positive rather than 
negative. Use of the E-Verify system will make it more difficult for 
firms to gain a competitive edge by hiring unauthorized workers at 
lower pay.
b. DHS Regulations
    Comment: One commenter asserted that the proposed rule's 
requirement to re-verify certain employees violates existing DHS 
regulations.
    Response: As the commenter did not identify the specific DHS 
regulations allegedly violated, this comment is not susceptible to a 
response. Other commenters have made similar assertions that E-Verify 
is contrary to law and the Councils have addressed these specific 
concerns. The Councils are not aware of any DHS regulation violated by 
this final rule.
c. Verification of Federal Employees
    Comment: Several commenters noted that OMB has directed all Federal 
departments and agencies to use E-Verify on their newly-hired 
employees, but not on their existing employees. These commenters 
asserted that the proposed rule is inconsistent with that OMB decision, 
because the rule requires Federal contractors to use E-Verify on not 
only new hires but also on existing employees working on Federal 
contracts, and argue that Federal contractors should not be held to a 
higher verification standard than is applied to the Executive branch.
    Response: The Councils disagree. The rule is consistent with the 
policy announced in Executive Order 12989 requiring the Executive 
branch to contract with employers that agree to use E-Verify for their 
employees who are working on a covered Federal contract. The aim of the 
Executive Order is to promote economy and efficiency in Federal 
procurement by ensuring stable and dependable Federal contractors.
    Furthermore, Federal employees are required to undergo background 
checks pursuant to HSPD-12, which mandates that a person must be 
suitable (minimum of a national agency check with inquiries (NACI)) in 
order to be issued an HSPD-12 card. HSPD-12 requires certain 
credentialing standards prior to issuing personal identity verification 
cards. These standards include verification of name, date of birth, and 
social security number (among other data points) against Federal and 
private data sources. The Councils agree that the degree of scrutiny 
applied to individuals granted HSPD-12 credentials provides sufficient 
confidence that any such person is likely truthful about his or her 
authorization to work in the United States that additional 
investigation through E-Verify is not necessary.
d. Appropriate Scope of Regulations
    Comment: One commenter suggested that the proposed rule's goal was 
to ``protect U.S. workers''--one that is beyond the scope of that which 
can rightfully be pursued under procurement authorities.
    Response: The Councils do not agree with the premise of this 
comment. The goal of the proposed rule is not to ``protect U.S. 
workers.'' Rather, the goal of the rule is to implement Executive Order 
12989, which aims to promote economy and efficiency in the Federal 
procurement system by ensuring that the Federal Government does not do 
business with contractors that hire or employ unauthorized aliens, 
thereby promoting the stability and dependability of contractor 
workforces and minimizing the potential for disruption to federal 
contracts. The President is well within his authority under FPASA to 
require the agencies to promulgate this rule, which has a clear nexus 
to promotion of economy and efficiency in Federal contracting, even if 
it might also have other impacts. Chao, 325 F.3d at 366 (affirming 
authority of the President under FPASA to require federal contractors, 
as a condition of contracting, to post notices informing workers of 
certain labor law rights.)

Relationship With States

1. States Prohibiting Mandatory Use
    Comment: Several commenters requested that the Administration 
clarify the effects of the proposed rule on employers conducting 
Federal Government contracting business in locations where State and/or 
local law prohibits the use of E-Verify. One of these commenters 
specifically asked if the requirements of the proposed rule would 
function as an affirmative defense in actions brought against employers 
which use E-Verify in contravention of State/local law. Two other 
commenters suggested that the proposed rule be modified to provide E-
Verify participation waivers to employers located in States prohibiting 
E-Verify enrollment, to allow such employers to participate in 
Government contracting without violating State law.
    Response: The Councils decline to provide an exemption to the E-
Verify term in contracts covered by this rule for employers located in 
States that prohibit E-Verify enrollment, because such state and local 
laws would be preempted by Executive Order 12989, as amended, and by 
these rules implementing the Order. The Councils note that an Illinois 
state statute prohibiting use of E-Verify by employers within that 
state is currently in litigation, as a result of a lawsuit filed by DHS 
arguing that the state statute is preempted by Federal law. The state 
has agreed not to enforce its statute pending the final resolution of 
the litigation.
2. Other States
    Comment: Two commenters noted that they are concerned that the 
proposed rule's requirement that certain existing employees undergo E-
Verify

[[Page 67659]]

verification could ``embolden'' States and localities to require the 
same type of verification for employees working under State/local 
contracts. These commenters fear that such an expansion would 
complicate employment verification legal requirements, to the detriment 
of both employers and employees.
    Response: The commenters concerns are speculative and, in any case, 
State and local government action is outside the scope of this case.

E-Verify System

1. E-Verify Procedural Issues
a. Burdensome
    Comment: One commenter stated that the E-Verify enrollment process 
is cumbersome and difficult and that USCIS support for employers trying 
to enroll has been inconsistent and ineffective. Three commenters felt 
that tentative nonconfirmations and the subsequent efforts to resolve 
them place additional burdens on employers and employees alike. Two 
other commenters state that costs associated with E-Verify are 
burdensome to employers. One commenter considered that the vast scope 
of coverage in the proposed rule is contrary to the ``economy and 
efficiency'' argument that justified issuance of the rule, as compared 
to other labor requirements attached to procurement.
    Response: The Councils have narrowed the coverage to the extent 
possible yet still meeting the purpose of the Executive Order. The 
Councils are not charged with administration of the E-Verify program 
and this process is not within its rulemaking authority or the scope of 
this final rule. The Councils have considered the burdens and costs 
associated with E-Verify in the RIA and Regulatory Flexibility 
Analysis.
    The E-Verify registration process is an automated process that uses 
a registration wizard to assist employers in determining which access 
method will best suit their company needs. Once that is decided, the 
individual registering the company is required to enter the company 
contact information, including the number of company locations for 
which E-Verify will be used and the address of these locations. Within 
24 hours, that individual will receive an email from E-Verify that 
includes their username and password which they will use to log on to 
the system. In mid-FY08, the E-Verify program launched a registration 
reengineering effort aimed to streamline the E-Verify registration 
process and shift to a profile based registration system. The program 
has been working with various stakeholders to determine and address the 
biggest concerns with the process, and hopes to conduct focus groups on 
ideas for improvement. The program has also undertaken a Plain Language 
Initiative, designed to simplify the language associated with the 
program and to update the materials associated with the program once 
the new verbiage has been finalized. Within this effort, the program 
also intends to conduct focus groups to determine the best response to 
various word choices.
    With regard to the burdens or costs to employers to register and 
participate in E-Verify, DHS has informed the Councils of a report 
entitled the ``Findings of the Web Basic Pilot Evaluation'' that was 
prepared by Westat in September 2007. The report may be found at http:/
/www.uscis.gov/files/article/WebBasicPilotRprtSept2007.pdf. The report 
found that 96 percent of long-term users indicated that E-Verify was 
not burdensome. The Westat report also stated that approximately 97 
percent of long-term users reported that the indirect set-up and system 
maintenance costs were either no burden or only a slight burden and 
that the majority of employers reported that they spent $100 or less in 
initial set-up costs. The Councils recognize that costs to employers 
will vary depending on employer characteristics and practices.
b. Data Accuracy
    Comment: Numerous commenters focused their concerns primarily on 
the reliance of the E-Verify system on DHS and SSA databases that 
contain high percentages of errors. Many commenters, in particular, 
specifically call out the reported 4.1 percent error rate of the Social 
Security Administration's database as a large source of inaccurate 
data. Several commenters stated concern that DHS databases are not 
updated in real-time.
    Many commenters also believe the inaccurate data in the database 
leads to the misidentification of workers and to denial of employment 
for work-authorized individuals, especially naturalized citizens and 
foreign-born authorized workers. Many commenters stated concerns that 
naturalized citizens or foreign-born authorized workers are 
considerably more likely to receive erroneous tentative 
nonconfirmations than native-born U.S. citizens. One commenter 
questions the 0.5 percent ``error rate'' claimed by E-Verify when the 
system is based on SSA databases with a 4 to 5 percent error rate.
    One commenter feels data entry or ``human'' errors on the part of 
employers are of concern as well since they cannot be completely 
eliminated. Many commenters feel this issue especially affects 
employees with nontraditional or complex names.
    Response: The improvements made to E-Verify over the last few years 
have decreased the incidence of data mismatches, which is referred to 
as a ``tentative nonconfirmation'' in the E-Verify program, and often 
referred to as the ``error rate'' by the public. DHS and SSA continue 
to