E-Verify for Government Contractors? Three Compliance Gaps Emerge

By David North on November 12, 2013

I think most people concerned with the issue assume that the E-Verify program to identify illegal-alien workers covers all firms with federal contracts. I know I did.

But a recent decision by the Government Accountability Office (GAO) in a contract dispute indicates that E-Verify coverage of federal contractors is, in fact, full of holes.

Let's back up a minute. E-Verify is a database system that lists the Social Security numbers of workers known to have the right to work in the United States. Employers are supposed to check their workforce against this dataset to make sure each worker has legal status and, after an appeals process, to dismiss anyone without that status.

The system, which should be mandatory nationwide, is currently widely used on a volunteer basis; it is, however, mandatory for those corporations that do business with the federal government, or so I thought.

A specific instance appeared recently. It involved a garment factory in North Carolina, one of the few left in the nation, and one that produces military clothing for the Defense Department. That's Creighton AB, Inc. of Reidsville, N.C.

It won a competitive bid, based on the lowest price, to supply the Defense Department with more than $1 million worth of lightweight jackets for the Air Force. The next lowest bidder, Ashland Sales & Service Company, of Olive Hill, Ky., (another Appalachian location) appealed the award, saying that Creighton had not joined E-Verify at the time of the bidding.

Ashland lost the appeal to GAO in a three-part process described below, in which the administration (through DoD) displayed its regrettable, but all too-typical, tendency to not enforce the immigration laws.

The Executive Makes a Bad Policy Decision. One of the reasons GAO used in rejecting the appeal was that it did not matter that the contractor had not joined E-Verify at the time of the bid because federal regulations say that if a contractor is not covered by E-Verify when the award is made it can comply within the following 30 calendar days. For the Code of Federal Regulations cite, see here.

That exception — it says you can have your cake (your fat federal contract) if you eat your spinach later — is a tiny provision in the regulations, but a major mistake. It means that only contractors with current federal contracts must use E-Verify. It leaves out a big population of would-be federal contractors who should, in my eyes, have to join the system before they can be even considered for a federal contract.

The GAO decision said that Creighton won the bid on September 19 and joined E-Verify the next day, but only after the challenge had been filed.

DoD Ignores the Law. The major culprit in the story is the Defense Department. Ashland, the victim company, argued through its lawyer, Ruth Ganister of West Chester, Pa., that Creighton had earlier been given multi-million dollar contracts by the same piece of DoD, the Defense Logistics Agency, and had not joined E-Verify subsequently as it was supposed to do. DoD shrugged off an administrative appeal on that point and the case went to GAO.

GAO Does Not Correct Matters. GAO was no help, rejecting Ashland's appeal on the grounds not only of the you-can-join-later provision, but also because "it raises a matter of contract administration over which we do not exercise jurisdiction."

Maybe GAO is right on the second point, but it sounds like hairsplitting to me; you can judge matters of government contract awards, but not the administration of those government contract awards?

That's where the matter rests. Ms. Ganister told me that it would not make economic sense in this case for Ashland to appeal to the Federal Claims Court, the next appellate body. And my sense is that if that firm does not appeal no one else can.

So here we have a government regulation that says that government contractors must join E-Verify, but there's a specific case in which the contractor did not do so and got away with it, at least for a while. On multi-million dollar contracts.

It is not very encouraging.


Topics: E-Verify