On June 17, 2008, we wrote to you regarding Executive Order ("E.O.") 12989, which instructs federal agencies to require federal contractors to participate in E-Verify (an Internet-based system operated by the U.S. Department of Homeland Security ("DHS") and the Social Security Administration) to electronically verify the immigration status/employment eligibility of new employees. Having received client questions regarding federal contractors' immediate obligations under E.O. 12989, we thought it would be helpful to provide some additional guidance on this issue.

E.O. 12989 specifically directs all federal departments and agencies to require contractors, as a condition of each future federal contract, to agree to use an electronic employment eligibility verification system — designated by the Secretary of Homeland Security — to verify the employment eligibility of all persons hired during the contract term and all persons performing work within the United States on the federal contract.

Although E.O. 12989 was effective immediately, federal contractors do not need to take any immediate action as the DHS is currently accepting comments on proposed rules dictating how the new E-Verify requirement for federal contractors will be implemented. Written comments will be accepted through August 11, 2008, and we expect that a final rule will be issued thereafter.

If the proposed rules are implemented as written, they will:

• Require the insertion of the E-Verify clause into those government prime contracts "that include work in the United States, other than those that do not exceed the micro-purchase threshold (generally $3,000), or that are for commercially available off-the-shelf ("COTS") items or items that would be COTS items but for minor modifications." (The rule adopts the statutory definition of COTS.)
• Require the "inclusion of the clause in subcontracts over $3,000" for services or construction.
• Require "a contractor or subcontractor to enroll in the E-Verify program within 30 days of the contract award, begin verifying the employment eligibility of all new employees of the contractor or subcontractor that are hired after enrollment in E-Verify, and continue to use the E-Verify program for the life of the contract."
• Require "contractors and subcontractors to use E-Verify to confirm the employment eligibility of all existing employees who are directly engaged in the performance of work under the covered contract."
• Apply "to solicitations issued and contracts awarded after the effective date of the final rule...." Under the final rule, "existing indefinite-delivery/indefinite-quantity contracts will be amended 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 and the amount of work or number of orders expected under the remaining performance period is substantial."

See 73 FR DOC 33374-33381.

As currently written, the proposed rule will insert a clause into federal contracts committing government contractors to using the United States Citizenship and Immigration Service ("USCIS") E-Verify System to verify that all of the contractors' new hires, and all employees (existing and new) directly engaged in the performance of work under federal contracts, are authorized to work in the United States.

USCIS is currently in the process of revising the Memorandum of Understanding ("MOU") that federal contractors must sign, its program manual, training materials, Web site and other E-Verify System materials, to reflect the duties that federal contractors will assume when they sign a contract containing the clause promulgated by the proposed rule. A revised MOU reflecting the program participation requirements for federal contractors should be available online at http://www.regulations.gov after the rule is final. We will keep you updated on the progress of the rule and MOU.