Human Trafficking: Oversight of Contractors' Use of Foreign Workers in High-Risk Environments Needs to Be Strengthened
Published: 2014-11-18T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Since the 1990s, there have been allegations of abuse of foreign workers on U.S. government contracts overseas, including allegations of TIP. In 2002, the United States adopted a zero tolerance policy on TIP regarding U.S. government employees and contractors abroad and began requiring the inclusion of this policy in all contracts in 2007. Such policy is important because the government relies on contractors that employ foreign workers in countries where, according to State, they may be vulnerable to abuse.
GAO was mandated to report on the use of foreign workers. This report examines (1) policies and guidance governing the recruitment of foreign workers and the fees these workers may pay to secure work on U.S. government contracts overseas and (2) agencies' monitoring of contractor efforts to combat TIP. GAO reviewed a nongeneralizable sample of 11 contracts awarded by DOD, State, and USAID, composing nearly one-third of all reported foreign workers on contracts awarded by these agencies at the end of fiscal year 2013. GAO interviewed agency officials and contractors about labor practices and oversight activities on these contracts.
section_title: What GAO Found
paragraphs: Current policies and guidance governing the payment of recruitment fees by foreign workers on certain U.S. government contracts do not provide clear instructions to agencies or contractors regarding the components or amounts of permissible fees related to recruitment. GAO found that some foreign workers—individuals who are not citizens of the United States or the host country—had reported paying for their jobs. Such recruitment fees can lead to various abuses related to trafficking in persons (TIP), such as debt bondage. For example, on the contract employing the largest number of foreign workers in its sample, GAO found that more than 1,900 foreign workers reported paying fees for their jobs, including to recruitment agencies used by a subcontractor. According to the subcontractor, these fees were likely paid to a recruiter who assisted foreign workers with transportation to and housing in Dubai before they were hired to work on the contract in Afghanistan (see figure). Some Department of Defense (DOD) contracting officials GAO interviewed said that such fees may be reasonable. DOD, the Department of State (State), and the U.S. Agency for International Development (USAID) have developed policy and guidance for certain contracts addressing recruitment fees in different ways. However, these agencies do not specify what components or amounts of recruitment fees are considered permissible, limiting the ability of contracting officers and contractors to implement agency policy and guidance.
GAO found that agency monitoring, called for by federal acquisition regulations and agency guidance, did not always include processes to specifically monitor contractor efforts to combat TIP. For 7 of the 11 contracts in GAO's sample, DOD and State had specific monitoring processes to combat TIP. On the 4 remaining contracts, agencies did not specifically monitor for TIP, but rather focused on contractor-provided goods and services, such as building construction. In addition, some DOD and State contracting officials said they were unaware of relevant acquisitions policy and guidance for combating TIP and did not clearly understand their monitoring responsibilities. Both DOD and State have developed additional training to help make contracting officials more aware of their monitoring responsibilities to combat TIP. Without specific efforts to monitor for TIP, agencies' ability to implement the zero tolerance policy and detect concerns about TIP is limited.
section_title: What GAO Recommends
paragraphs: GAO recommends that agencies (1) develop a more precise definition of recruitment fees and (2) ensure that contract monitoring specifically includes TIP. DOD concurred with the first recommendation, while State and USAID noted that forthcoming regulations would prohibit all recruitment fees. Agencies concurred with the second recommendation.

section_title: Letter
paragraphs: The U.S. government relies on contractors to provide services overseas,  such as construction, security, and facilities maintenance. In some  countries, such as the Gulf countries, where the local labor force is small,  or in countries such as Iraq and Afghanistan, where the employment of  local labor poses security risks, these contractors rely on foreign  workers—individuals who are citizens of neither the United States nor the  host country—to perform this work. According to the Commission on  Wartime Contracting in Iraq and Afghanistan, the U.S. government’s  reliance on local nationals and foreign workers leads to considerable cost  savings compared with the employment of U.S. military personnel or  civilians. Many foreign workers come from developing countries such as  India, Bangladesh, and the Philippines, where job opportunities and  wages compare poorly with those in destination countries. The disparities  in income levels and the methods used to recruit these workers often  make them vulnerable to a variety of labor abuses.
There have been allegations of abuse of foreign workers on government  contracts overseas since at least the 1990s. In 2000, Congress enacted  the Trafficking Victims Protection Act of 2000 (TVPA) to combat trafficking  in persons, and in 2002, the United States adopted a zero tolerance  policy regarding government employees and contractors engaging in  trafficking in persons (TIP) abroad. Since then, Congress and the  President have taken further steps to address the issue of trafficking in  persons, including through amendments to the TVPA. In 2007, federal  acquisition regulations related to combating TIP were amended to require  the inclusion of the U.S. government’s zero tolerance policy in all  government contracts.
In the Violence Against Women Reauthorization Act of 2013, Congress  included a requirement for GAO to report on the use of foreign workers  both overseas and domestically—including those employed on U.S.  government contracts. This report examines (1) policies and guidance  governing the recruitment of foreign workers and the fees these workers  may pay to secure work on U.S. government contracts overseas and (2)  agencies’ monitoring of contractor efforts to combat TIP.
This report focuses on Department of Defense (DOD), Department of  State (State), and U.S. Agency for International Development (USAID)  contracts with performance in countries with large percentages of foreign  workers as compared with local nationals, and in Afghanistan and Iraq,  where U.S. government contractors employ significant numbers of foreign  workers. We focused on contractor practices related to the recruitment of  foreign workers, as well as labor practices such as housing, wages and  hours, access to identity documents, and return travel. We selected these  practices because they were mentioned explicitly in both recent  legislation and an executive order on combating trafficking in persons,  and because the International Labour Organization (ILO) has identified  potential indicators of TIP related to these practices.
To examine the recruitment of foreign workers and agencies’ monitoring  of contractor labor practices, we reviewed acquisition regulations,  policies, and guidance. We selected a sample of 11 contracts that were  active at the end of fiscal year 2013, based on the contracts’ place of  performance, value, type of service provided, and the number of foreign  workers employed to reflect a range of agencies, countries, and services.  We conducted structured interviews with agency contracting officials,  contractors, and, in some cases, interviewed the subcontractors  responsible for these contracts. The contracts in our sample represent  nearly one-third of all reported foreign workers employed on contracts  awarded by these three agencies as reported in the Synchronized Pre- deployment and Operational Tracker (SPOT) database at the end of fiscal  year 2013. The results of our structured interviews are not generalizable  but provided us with insights about contractor recruitment practices and  efforts to combat TIP, as well as agencies’ monitoring of these efforts.  Table 1 provides basic information on these contracts. In addition, we  conducted fieldwork in Afghanistan, Kuwait, and Qatar, where we spoke  with contracting officials, contractors, and subcontractors regarding  contracts in our sample, and in Jordan, where we spoke with State and  USAID officials to inform our research design and methodology. We also  spoke with other DOD, State, and USAID officials; host government  officials; and local nongovernmental organizations to obtain a broader  view about labor practices and efforts to combat TIP in these countries.  We chose these countries based on the range of U.S. government  activities in these countries, the prevalence of foreign workers, and  State’s assessment of the host government’s efforts to combat TIP.  Furthermore, we interviewed contracting officials, acquisition policy  officials, and officials responsible for coordinating agencies’ efforts to  combat TIP in the United States. The contract employing the largest  number of foreign workers in our sample included a requirement for the  contractor to report certain data related to alleged violations of the  government’s zero tolerance policy on TIP; we analyzed these data,  including reports of foreign workers paying for their jobs, to demonstrate  the prevalence and relative amounts of these payments. Appendix I  provides more information on our scope and methodology.
We conducted this performance audit from June 2013 to November 2014  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
subsections: section_title: Definition of Trafficking in Persons
paragraphs: Human trafficking—the worldwide criminal exploitation of men, women,  and children for others’ financial gain—is a violation of human rights.  Victims are often lured or abducted and forced to work in involuntary  servitude. Although the crime of human trafficking can take different forms  in different regions and countries around the world, most human  trafficking cases follow a similar pattern. Traffickers use acquaintances or  false advertisements to recruit men, women, and children in or near their  homes, and then transfer them to and exploit them in another city, region,  or country. The U.S. government defines severe forms of trafficking in  persons to include the recruitment, harboring, transportation, provision, or  obtaining of a person for labor or services, through the use of force, fraud,  or coercion for the purpose of subjection to involuntary servitude,  peonage, debt bondage, or slavery. International organizations have  also defined trafficking in persons and developed a list of indicators of  trafficking for labor exploitation. Appendix II describes these efforts in  more detail.
Congress and others have highlighted the role that deceptive recruitment  practices can play in contributing to trafficking in persons. Workers who  pay for their jobs are at an increased risk for human trafficking and other  labor abuses. State’s Inspector General has reported that such  recruitment fees, which can amount to many months’ salary, are a  possible indicator of coercive recruitment and may indicate an increased  risk of debt bondage, as some workers borrow large sums of money to  pay the recruiter. A 2011 ILO survey of workers in Kuwait and the  United Arab Emirates found that the recruitment fees and interest on  loans may limit workers’ ability to negotiate the terms of their work  contracts. This debt burden can result in involuntary servitude through  excessive work hours or virtually no pay for months to recover the  advance payments of fees and interest.
section_title: U.S. Government Approach to Trafficking in Persons in Acquisitions Policy
paragraphs: Since 2007, the Federal Acquisition Regulation (FAR) has required all  U.S. government contracts to include a clause citing the U.S.  government’s zero tolerance policy regarding TIP. This clause prohibits  contractors from engaging in severe forms of trafficking, procuring  commercial sex acts, or using forced labor during the period of  performance of the contract. In addition, this clause establishes several  contractor requirements to implement this policy, such as notifying the  contracting officer of any information that alleges a contractor employee,  subcontractor, or subcontractor employee has engaged in conduct that  violates this policy and adding this clause in all subcontracts.
In 2012, Congress and the President took further steps to reduce the risk  of trafficking on U.S. government contracts. The TVPA, as amended,  and an executive order both address acts related to TIP, such as  denying foreign workers access to their identity documents and failing to  pay for return travel for foreign workers. In September 2013, amendments  to the FAR were proposed to implement the requirements of the 2013  amendments to the TVPA and the executive order related to  strengthening protections against trafficking in persons. As of October  2014, these proposed amendments to the FAR are still under review.
Agencies also have developed their own acquisition policies and  guidance to augment the FAR that aim to protect foreign workers on  specific contracts. Many of these policies and much of this guidance  include requirements related to recruitment and other labor practices,  including housing, wages, and access to identity documents.
DOD policy is intended to deter activities of a variety of actors,  including contractor personnel, that would facilitate or support TIP. A  region-specific DOD acquisition policy that addresses combating TIP  has evolved in recent years and has applied to different places of  performance at different times. Currently, this policy requires the  insertion of a clause to combat TIP into certain service and  construction contracts that require performance in Iraq or Afghanistan.  In 2011 and 2012, State issued acquisition guidance, applicable to all  domestic and overseas contracting activities, on how to monitor  contracts for TIP compliance and to provide a clause and procedures  to reduce the risk of abusive labor practices that contribute to the  potential for TIP. Among other things, this guidance requires  contracting officers to require offerors to include information related to  the recruitment and housing of foreign workers in their proposals for  certain contracts.
In 2012, USAID issued guidance reminding contracting officials of  their responsibilities to implement TIP requirements and requiring  officials to, among other things, discuss issues such as access to  certain documents and understanding local labor laws with  contractors following contract award.
section_title: Use of Subcontractors
paragraphs: Subcontracting is an acquisition practice in which the vendor with the  direct responsibility to perform a contract, known as the prime contractor,  enters into direct contracts with other vendors, known as subcontractors,  to furnish supplies or services for the performance of the contract. This  practice can help contractors to consider core competencies and supplier  capabilities to achieve efficiencies from the marketplace. In some cases,  prime contractors use subcontractors to supply labor on government  contracts, and these subcontractors may use second-tier subcontractors  or recruitment agencies to identify prospective employees. Our prior work  has shown that government visibility into subcontracts is generally  limited. Government agencies have a direct relationship only with the  prime contractor, and generally “privity of contract” limits the  government’s authority to direct subcontractors to perform tasks under  the contract.  As a result, agencies generally do not monitor  subcontractors directly, as they expect the prime contractor to monitor its  subcontractors. Further, the FAR notes the prime contractor’s  responsibility in managing its subcontractors, and officials have  underscored the limited role of the government in selecting and managing  subcontracts.
section_title: Foreign Workers on U.S. Government Contracts Overseas
paragraphs: Contractors performing U.S. government contracts overseas operate  under local conditions and in accordance with local labor practices. In  Gulf countries, contractors employ large numbers of foreign workers, who  make up a significant portion of the local labor force. These workers  typically come from countries such as India, Bangladesh, and the  Philippines for economic reasons. According to State and the ILO, several  common and restrictive labor practices in Gulf countries stem from these  countries’ sponsorship system, which limits workers’ freedom of  movement. Appendix III provides further detail on the prevalence of  foreign workers in Gulf countries, as well as efforts to regulate this  migration of workers in home and destination countries. State’s 2014  Trafficking in Persons Report found that certain labor practices in the  Middle East, including Kuwait, Qatar, and Bahrain, can render foreign  workers susceptible to severe forms of trafficking in persons.
In addition, U.S. government contractors in Iraq and Afghanistan often  employ foreign workers for cost and security reasons. As of July 2014,  DOD reported nearly 17,000 foreign workers on contracts in Afghanistan,  approximately one-third of the department’s total contractor workforce in  that country. Although DOD reports that it no longer has foreign workers  in Iraq, it reported more than 40,000 foreign workers on DOD contracts in  Iraq—nearly 60 percent of its total contractor workforce in the country—as  of January 2011. State contractors currently employ foreign workers in  Iraq for security and operations and maintenance services. GAO and  others have reported that operating in insecure environments can hinder  agencies’ ability to monitor contracts, including efforts to combat TIP,  because of the general absence of security, among other factors. Table  2 shows the prevalence of migrants in Gulf countries, Afghanistan, and  Iraq, as well as State’s Trafficking in Persons Report tier placement for  2014, which illustrates areas where the risk of TIP is high.
section_title: Current Agency Policy and Guidance on the Payment of Recruitment Fees Do Not Provide Clear Instructions
paragraphs: Agency policy and guidance on combating trafficking in persons has  attempted to address the payment of recruitment fees by foreign workers  on certain U.S. government contracts. However, current policy and  guidance does not specifically define the components or amount of  permissible fees related to recruitment. Agency officials and contractors  said that without an explicit definition of what constitutes a recruitment  fee, they may not be able to effectively implement existing policy and  guidance on this issue. Despite efforts to prohibit or restrict the payment  of recruitment fees, we found that some foreign workers on U.S.  government contracts have reported paying for their jobs. Prime  contractor reliance on subcontractors for recruitment of foreign workers  further limits visibility into recruitment fees.
subsections: section_title: The FAR and Agency Policy and Guidance Lack Specificity Regarding Recruitment Fees
paragraphs: The FAR provides broad prohibitions against contractors engaging in  trafficking but does not explicitly address the payment of recruitment fees.  The FAR prohibits contractors from engaging in severe forms of  trafficking, including recruitment of a person for labor or services through  the use of force, fraud, or coercion for the purposes of subjection to debt  bondage, but it does not address more specific issues related to how  contractors recruit foreign workers, such as recruitment fees.
Some agencies have developed policy and guidance that address certain  recruitment issues more specifically. Although DOD’s department-wide  guidance on combating TIP does not explicitly address recruitment, its  current region-specific policy requires certain services and construction  contracts in Afghanistan to include a clause requiring contractors to avoid  using unlicensed recruitment firms or firms that charge illegal recruitment  fees. However, this policy does not define “illegal” recruitment fees.  State’s 2012 guidance required certain contracts to include a clause  requiring contractors to submit, as part of their proposals, recruitment  plans that must state that employees will not be charged any recruitment  or similar fees and that contractors and subcontractors will use only bona  fide licensed recruitment companies. USAID’s 2012 guidance on  combating trafficking in persons reminds officials of the FAR  requirements, but it provides no further guidance on the recruitment of  foreign workers for work on USAID contracts. Table 3 illustrates how the  FAR and agency policy and guidance address recruitment fees with  varying levels of specificity.
We found that some agency officials, both on contracts in our sample and  on others, and contractors in our sample did not have a common  understanding of what constitutes a permissible fee related to  recruitment—in terms of components or amount—or whether contractors  or subcontractors at any level were permitted to charge such fees to  recruited employees. According to GAO’s standards for internal control,  information should be recorded and communicated to management and  others in a form that enables them to carry out their internal control and  other responsibilities. Currently, agency contracting officials lack policy  or guidance that specifies what components are considered to be  recruitment fees and may not be able to determine which fees are  permissible, hindering their ability to carry out their responsibilities. For  example, neither the FAR nor agency policy or guidance specifies what  components are considered to constitute recruitment fees, but these fees  could include air tickets, lodging, passport and visa fees, or medical  screening, among other expenses. One subcontractor who hires foreign  workers in Dubai for work in Afghanistan said that the definition of  recruitment fees is imprecise and varies widely within the contracting  community. He added that he believed every foreign worker hired in  Dubai for this contract had paid someone some type of fee for his or her  job, but the fee could have included airfare from the home country to  Dubai, housing and food in Dubai, or a commission for the recruiter, any  of which may be legal. In addition, the Qatari Under Secretary of Labor  noted that Qatari law prohibits recruitment fees, but he and State and  DOD officials in Qatar acknowledged that most foreign workers are  initially recruited in their home countries, where such fees may or may not  be allowed. Without explicit definitions of what, if anything, constitute  permissible fees related to recruitment, contractors said that they could  not ensure that they were in compliance with contractual requirements.  DOD contracting officials in Kuwait said that a definition of recruitment  fees would improve their ability to implement the government’s  antitrafficking policy.
The President and Congress have both directed that the FAR be  amended to address several issues related to trafficking, including the  payment of recruitment fees. The 2012 executive order directed  amendments to the FAR that would expressly prohibit federal contractors  from charging employees any recruitment fees, while amendments to  the TVPA in 2013 allow the government to terminate a contract if  contractors, subcontractors, labor brokers, or other agents charge  unreasonable placement or recruitment fees. Public comments on the  proposed FAR rule have noted that the FAR Council will have to reconcile  these prohibitions, deciding whether to prohibit all recruitment fees or only  unreasonable ones and defining what is considered unreasonable.
section_title: Other Entities Provide Definitions of Permissible Recruitment Fees
paragraphs: The TVPA states that unreasonable placement or recruitment fees  include fees equal to or greater than the employee’s monthly salary, or  recruitment fees that violate the laws of the country from which an  employee is recruited. The Department of Labor and foreign  governments have also defined permissible fees paid by workers to their  employers.
A Department of Labor regulation relating to assurances that  employers must provide in seeking to employ certain temporary  foreign workers in the United States allows for reimbursements from  workers for costs that are the responsibility and primarily for the  benefit of the worker, such as government-required passport fees.
The government of India permits recruiting agents to recover service  charges from workers of up to the equivalent of 45 days’ wages,  subject to a maximum of 20,000 rupees (currently about $325),  according to India’s Ministry of Overseas Indian Affairs.
The government of the Philippines permits recruiters to charge its  hired workers a placement fee in an amount equivalent to 1 month’s  salary, excluding documentation costs such as expenses for  passports, birth certificates, and medical examinations, according to  the Philippine Overseas Employment Administration.
The International Organization for Migration, with others, has  established the International Recruitment Integrity System (IRIS),  which is a voluntary consortium of stakeholders including recruitment  and employment agents. Members of IRIS are prohibited from  charging any recruitment fees to job seekers.
Senior acquisition officials expressed conflicting views regarding the  feasibility of prohibiting recruitment fees. Senior officials in State’s Office  of the Procurement Executive stated that they would prefer that all  recruitment fees be prohibited, in line with the executive order, to  eliminate any uncertainty or ambiguity among contracting officials. They  said that they had consulted State’s Office to Monitor and Combat  Trafficking in Persons, which took the same position of the Office of the  Procurement Executive given that such fees create vulnerability among  workers and often are the precursor to debt bondage. These officials  further stated that the term “reasonable recruitment fees” was difficult to  define and apply in practice. In public comments on the proposed FAR  rule, one nongovernmental organization noted that “the definition of  reasonableness is amorphous and is unduly burdensome on private  industry to enforce.” Other officials, including DOD contracting officials in  Kuwait, stated that it may be reasonable for employees to pay a fee for a  job in some cases, echoing the recent amendment to the TVPA. They  noted that eliminating these fees would be nearly impossible, and that  recruiters would pass these fees on to workers in some other form if  recruitment fees were explicitly banned. DOD Joint Staff officials added  that the elimination of recruitment fees will cause contractors to change  the name from recruitment fees to travel or per diem fees to cover air  travel, housing and food, thus a precise definition of these fees that  specifically addresses travel costs is needed. A subcontractor supplying  foreign workers on the largest contract in our sample said that its  recruitment agencies likely charge fees to recruits for services such as air  tickets, housing, and food, which the subcontractor deemed reasonable.  However, according to senior State, DOD, and contractor officials,  regardless of whether recruitment fees are banned in their entirety or only  when unreasonable, the ability of contracting officers and contractors to  implement this restriction will be limited until recruitment fees, including  what is considered permissible, are defined in regulation, guidance, or  policy.
section_title: Some Foreign Workers Employed on U.S. Contracts Paid Recruitment Fees to Subcontractors or Recruitment Agencies
paragraphs: On at least two contracts in our sample, including the one employing the  largest number of foreign workers, contractors reported that workers have  paid for their jobs. We found that, on the largest contract in our sample,  employing nearly 10,000 foreign workers in Afghanistan, recruitment  agencies have likely charged fees to some foreign workers. On this  contract, the prime contractor uses several subcontractors to supply  labor, including one that hires workers through more than 10 recruitment  agencies in Dubai. We found that from September 2012 through April  2014, more than 1,900 subcontractor employees reported to the prime  contractor that they had paid fees for their jobs, including to recruitment  agencies with which the subcontractor had a recruitment agreement. For  2012 and 2013, recruitment agencies used by this subcontractor signed  statements acknowledging that they would not charge any recruitment  fees to candidates facilitated as part of their agreements with the  subcontractor. In April 2014, the last month for which data were available,  82 workers reported having paid an average of approximately $3,000 to  get their jobs. The fees that these workers reported paying averaged  approximately 5 months’ salary and, in one case, amounted to more than  1 year’s salary. According to the subcontractor who employed all 82 of  these workers, these fees were likely paid to an agent who assisted  foreign workers with transportation and housing prior to being hired for  work on the U.S. government contract. Although the prime contractor  provided DOD information about reported fees, neither DOD nor the  prime contractor took further action because the allegations did not  involve the prime contractor or its subcontractor.
On another DOD services contract in Afghanistan, we found that the  contractor modified its subcontract with a recruiter in January 2014 to  clarify that the contractor would pay recruitment fees previously charged  to foreign workers—$670 per worker. The contractor reported that this  modification to the subcontract was a result of its interpretation of the  FAR clause prohibiting TIP. According to the contractor, the contracting  agency had not directed it to make this modification; it made this change  on its own initiative to prevent potential TIP abuses in the performance of  the contract.
These practices may be long-standing and widespread in Gulf countries.  In January 2011, the State Inspector General reported in an evaluation of  efforts to combat TIP on contracts in four Gulf countries that a substantial  portion of the workers they interviewed had obtained their jobs by paying  a recruitment agency in their country of origin. Some of these workers  reported paying more than 1 year’s salary in such fees.
section_title: Prime Contractors Used Subcontractors to Recruit Foreign Workers, and Some Did Not Know if Recruitment Fees Were Paid
paragraphs: Nearly all prime contractors in our sample reported that they generally  used subcontractors or recruitment agencies to recruit foreign workers,  and some reported that their knowledge about the payment of recruitment  fees is limited. These subcontractors generally recruited foreign workers  either from their home countries or in host countries where they may have  lived and worked for an extended period of time. In other cases,  subcontractors recruited workers in a third country, neither their home  country nor the host country, and then transported them to the contract  location. Figure 1 illustrates a variety of potential paths a foreign worker  may take to be recruited for work on a U.S. government contract  overseas.
For foreign workers recruited in their home countries, prime contractors in  our sample reported that they often used subcontractors who relied on  recruitment agencies to identify workers. Since prime contractors do not  have a direct relationship with these recruitment agencies, their visibility  into these agencies’ practices, including whether the agencies charged  workers recruitment fees, was limited. For foreign workers recruited in  host countries, prime contractors in our sample reported that they  typically also used subcontractors to identify workers. When foreign  workers are already living in the host country, prime contractors may not  know whether these workers paid recruitment fees when they first came  to the host country. For example, one subcontractor that employs more  than 2,500 foreign workers in Afghanistan said that it hired foreign  workers from the previous contractor and did not know whether these  workers had paid recruitment fees previously.
The following examples illustrate how contractors use subcontractors to  recruit foreign workers and their limited knowledge about recruitment  fees:
On a DOD services contract in Kuwait, a local subcontractor recruited,  employed, and housed foreign workers supporting the prime contract.  According to the subcontractor, some employees were recruited from  an existing pool of foreign workers living in Kuwait. The prime  contractor reported that it did not monitor the subcontractor’s  recruitment practices, including if recruitment fees were paid by  foreign workers in this existing pool (see scenario 1, fig. 1).
On a DOD services contract in Afghanistan, the prime contractor used  a subcontractor to supply labor. This subcontractor recruited workers  in Dubai using several recruitment agencies. In some instances, these  agencies identified workers in countries such as India and Nepal and  transported them to Dubai. As noted above, many workers on this  contract reported having paid for their jobs, but the prime contractor  did not investigate these reports because they did not involve the  prime contractor or its subcontractors (see scenario 2, fig. 1).
On a DOD construction contract in Qatar, the prime contractor used a  subcontractor that maintained a pool of foreign workers in Qatar who  were originally identified by recruitment agencies in source countries  such as Sri Lanka, Nepal, India, and Jordan. The prime contractor  reported that it had no way of knowing how these workers had been  initially recruited, including if they had paid any recruitment fees (see  scenario 3, fig. 1).
On a State services contract in Iraq, the prime contractor said that it  did not use subcontractors. Instead, it transferred workers from  another contract it was supporting in Djibouti and also employed  several foreign workers from the contractor that had previously  performed this work for DOD. Consequently, most workers had  already been recruited before contract award.
On a State security contract in Iraq, the prime contractor used  subcontractors in Kenya and Uganda to recruit foreign workers.  According to the prime contractor, subcontractors were paid a fixed  fee for each worker it hired and the prime contractor did not believe  workers paid a separate fee for these services.
section_title: Agencies’ Monitoring of Contractor Labor Practices in Our Sample Varied, but Contractors’ Labor Practices Reflect Efforts to Combat TIP
paragraphs: The FAR and DOD, State, and USAID guidance outline requirements for  monitoring contractor labor practices, and DOD and State had processes  for monitoring these practices and efforts to combat TIP on some  contracts in our sample. However, we found that DOD, State, and USAID  did not specifically monitor these practices on other contracts, hindering  their ability to detect potential TIP abuses and implement the U.S.  government’s zero tolerance policy. For example, we found that agencies  did not specifically monitor for labor practices on some contracts, but  rather focused on contractor-provided goods and services, such as  building construction. The FAR and agency policy and guidance require  the use of contract clauses that outline contractor responsibilities related  to labor practices in areas such as wages and hours, housing, access to  identity documents, and return travel, which have been linked to TIP  abuses by the U.S. government and international organizations. All  contractors in our sample reported to us that their practices reflect efforts  to combat TIP.
subsections: section_title: Agencies Monitored Contractor Labor Practices on Some Contracts in Our Sample but Not on Others
paragraphs: The FAR and agency policy and guidance outline requirements for DOD,  State, and USAID to monitor contractor labor practices. For some  contracts in our sample, DOD and State had specific processes to  monitor efforts to combat TIP. On other contracts, however, neither DOD,  nor State, nor USAID had such specific processes and focused their  monitoring on contractor-provided goods and services. In addition, some  agency contracting officials indicated that they were unaware of their  monitoring responsibilities to combat TIP.
subsections: section_title: Federal Acquisition Regulations and Agency Guidance Include Instructions on Monitoring Contractor Labor Practices
paragraphs: Federal acquisition regulations and agency guidance provide instructions  for agencies to monitor contractor labor practices. The FAR requires that  agencies conduct contract quality assurance activities as necessary to  determine that supplies or services conform to contract requirements,  which would include requirements related to efforts to combat TIP. In  addition, DOD guidance states that quality assurance surveillance plans  should describe how the government will monitor a contractor’s  performance regarding trafficking in persons. State’s guidance requires  contracting officials to document a monitoring plan to combat TIP, obtain  information on employer-furnished housing and periodically visit to ensure  adequacy, and verify that the contractor does not hold employee  passports or visas. Finally, USAID guidance requires contracting officials  to monitor all awards to ensure compliance with TIP requirements.  Specifically, the guidance states that officials should conduct appropriate  site visits and employee interviews to verify that the contractor does not  hold employee passports, among other things.
section_title: DOD and State Have Developed Specific Processes for Monitoring Contractor Labor Practices on Some Contracts
paragraphs: DOD and State have developed specific processes for monitoring  contractor labor practices, including efforts to combat TIP, for some  contracts in our sample. Specifically, DOD developed a process for  monitoring efforts to combat TIP for five of the seven DOD contracts  included in our sample, all of which were awarded by the Army  Contracting Command, and State had a TIP-specific process for two of  the three State contracts in our sample. On the other four contracts in our  sample, DOD, State, and USAID did not monitor specifically for TIP  because of a focus on contractor provided goods and services, as  discussed in the next section.
For DOD, the Defense Contract Management Agency (DCMA)  administered four contracts in Afghanistan, Kuwait, and Qatar and used a  checklist to help it conduct systematic audits of contractor compliance  with certain requirements related to labor practices and efforts to combat  TIP. (See app. V for a sample checklist used by DCMA in Afghanistan.)  DCMA’s checklist included questions about foreign worker housing,  employment contracts, and policies and procedures for reporting potential  TIP abuses. DCMA also interviewed a sample of foreign workers to  further validate contractor compliance with requirements related to  combating TIP. For example, in Kuwait, DCMA inspectors asked workers  about wages, hours, overtime, identity documents, and return travel. The  inspectors asked workers how the contractor paid their wages, if the  contractor held their passports, and if the contractor paid for their return  travel. DCMA documented contractor noncompliance with contract  requirements related to labor practices and efforts to combat TIP through  corrective action requests. DCMA issued such requests related to  contractor labor practices—including housing, wage, and TIP issues—on  three out of the four contracts it was responsible for administering in our  sample. According to agency officials, none of these requests was issued  in response to a serious or unacceptable contract violation. For example,  on a facilities support contract in Afghanistan, the contractor was issued a  corrective action request in January 2012 for not providing foreign  workers an employment contract in their native language. This request  was closed in December 2012 after the contractor provided DCMA a  corrective action plan.
DCMA officials stated that it is transitioning its contract administration  responsibilities, including its process for monitoring efforts to combat TIP  in Iraq and Afghanistan, to the military services. In 2009, DOD directed  selected contract administration service tasks to be transferred from  DCMA to the military services. Although DCMA continued to administer  selected contracts until after the beginning of fiscal year 2014, DCMA  officials said that it is currently developing a plan to transition contract  administration responsibilities to the military services, including the  Army’s contracts in Kuwait, Qatar, and Afghanistan.
State monitored contract requirements related to labor practices and  efforts to combat TIP for two contracts in our sample in Iraq. For a  security contract, State used an inspection checklist to help it monitor  contractor compliance with these requirements. This checklist included  verification of wages and access to identity documents, as well as other  labor practices. State officials responsible for monitoring this contract  conducted monthly foreign worker housing inspections and verified that  workers (1) willingly accepted their living and working conditions, (2) were  paid in accordance with the terms of their employment contracts, (3) had  access to their passports, (4) had access to their employment contracts  and fully understood them, and (5) were free to end their employment  contracts at any time, acknowledging that certain penalties may apply. On  another services contract, State’s Contract Management Office—a  regional office established in August 2013 to improve management and  oversight of contract performance of major contracts in Iraq—used in- country interviews of foreign workers to monitor contractor labor  practices, including access to identify documents and return travel.
section_title: On Some Contracts, Agencies’ Monitoring Efforts Were Limited to Contractor-Provided Goods and Services
paragraphs: For 4 of the 11 contracts in our sample, agency officials stated that they  did not specifically monitor contractor labor practices or efforts to combat  TIP, as their monitoring processes were primarily focused on contractor-  provided goods and services. First, on a construction contract in Qatar,  DOD officials reported that they focused their monitoring on areas such  as building design and quality of materials and that they did not  specifically monitor for potential TIP abuses. As a result, according to an  agency official, they have no ability to monitor the treatment of foreign  workers once they step off the work site and thus might not be able to  detect potential abuses. Second, on a DOD food services contract in  Kuwait, agency officials said that they did not specifically monitor  recruitment practices or have an audit program or checklist designed to  combat TIP. Third, on a State security contract in Qatar, an official  responsible for contract monitoring reported that monitoring efforts were  focused on technical issues such as personnel qualifications and  performance of duties, not on contractor labor practices or efforts to  combat TIP. Finally, on a USAID construction contract in Afghanistan, an  agency official stated that the agency monitored only for quality  assurance and technical specifications and did not monitor specifically for  TIP abuses. In addition, the contractor on this contract said it did not  monitor subcontractors’ labor practices. Agency officials reported that  they had not documented any concerns regarding recruitment or labor  practices on any of these 4 contracts. However, without efforts to  specifically monitor labor practices or efforts to combat TIP, agencies’  ability to detect such concerns is limited, and they cannot ensure that  foreign workers are being treated in accordance with the U.S.  government’s zero tolerance policy regarding trafficking in persons.
section_title: Some Contracting Officials Were Unaware of Their Monitoring Responsibilities to Combat TIP
paragraphs: Some DOD and State contracting officials were unaware of relevant  acquisitions policy and guidance for combating TIP and did not clearly  understand their monitoring responsibilities. For example, DOD officials  responsible for monitoring a construction contract in Qatar expressed  uncertainty about their authorities for combating TIP. As a result, these  officials indicated that they conducted little monitoring of labor practices or  other efforts to combat potential TIP abuses. Furthermore, a State official  in Qatar responsible for contract monitoring stated that he had only  recently become aware of State’s 2012 acquisition guidance on  combating TIP and his monitoring activities did not specifically include  efforts to combat TIP. In addition, a State official in Afghanistan with  monitoring responsibilities for a services contract said that he was not  aware of State’s current guidance on combating TIP in contracts. This  official noted that some State officials responsible for contract monitoring  may need refresher training because their initial training occurred prior to  the issuance of this guidance. Finally, State’s Inspector General found, in  a recent inspection of the U.S. embassy in Afghanistan, that embassy  officials involved in contract administration were unaware of their  responsibilities for monitoring grants and contracts for TIP violations.
Agencies have developed training to help contracting officials become  more aware of their monitoring responsibilities. DOD has developed new  training for contracting officials that, according to a senior official, will help  ensure that these officials are knowledgeable, qualified, and authorized to  complete their TIP monitoring responsibilities. In October 2014, DOD  made this training mandatory for all DOD personnel with job  responsibilities that require daily contact with DOD contractors, foreign  national personnel, or both. State officials noted that required training  for officials responsible for contract monitoring includes a module on  combating TIP, and State recently conducted a series of web-based  seminars for acquisition personnel on how to monitor contracts for TIP  abuses.
section_title: Contractors Reported to Us that Their Labor Practices Reflect Efforts to Combat TIP
paragraphs: The FAR and agency policy and guidance recognize that contractors  should follow various labor practices. For example, for certain contracts,  State requires the inclusion of a clause that prohibits contractors from  denying employees access to their passports, which helps to ensure that  workers have freedom of movement. In addition, both DOD and State  generally require the inclusion of clauses in certain contracts that speak  to a minimum of 50 square feet of space per employee in contractor- provided housing. Contractors in our sample reported to us that their  practices related to wages and hours, housing, access to identity  documents, and the provision of return travel reflected efforts to combat  TIP. Appendix IV provides more detailed information about requirements  in the FAR and agency policy and guidance related to these practices.
subsections: section_title: Contractors Reported that Practices Related to Wages, Hours, Leave and Overtime Generally Complied with Host Country Labor Laws
paragraphs: In general, the FAR and DOD’s FAR supplement require the inclusion of  clauses in certain contracts that require contractors to comply with the  labor laws of the host country, which, according to officials, govern  practices related to wages, hours, leave, and overtime for the contracts in  our sample. State and USAID guidance directs contracting officials to  discuss the observance of local labor laws with contractors after awarding  the contract.
According to agency and contractor officials, local labor laws in Kuwait,  Qatar, Bahrain, and Iraq governed wages, hours, leave, and overtime for  foreign workers on U.S. government contracts in these countries. All  eight of the contractors in our sample operating in Gulf countries or Iraq  reported that their practices for foreign workers’ hours, wages, leave, and  overtime were generally established in accordance with the labor laws of  the country in which they were performing their U.S. contract. According  to agency officials and contractors, foreign workers employed on six  contracts in our sample in these countries worked 8 to12 hours per day  and 6 days per week. On the contracts for which overtime was permitted,  contractors reported that workers often earned overtime wage rates of  125 to 150 percent of their base pay for any hours worked in excess of  their regularly scheduled shifts. Furthermore, employers generally  provided these workers with 1 day off per week and 3 to 4 weeks of leave  per year.
section_title: Contractors Reported that Housing Practices Reflect Efforts to Combat TIP
paragraphs: Both DOD and State generally require the inclusion of clauses in certain  contracts that speak to a minimum of 50 square feet of space per  employee in contractor-provided housing. Contractors in our sample  reported to us that housing practices for contracts in our sample generally  fell into the following categories, which reflect efforts to combat TIP:
Foreign workers were provided housing by the U.S. government on  U.S. installations. All of the DOD and State contractors in our sample  that were operating in Iraq or Afghanistan reported that their foreign  workers lived on-site at U.S. installations in U.S. government-provided  housing.
Foreign workers lived in contractor-provided housing facilities that  included at least 50 square feet of living space per person, according  to the contractors. For example, on a DOD services contract in Qatar,  the contractor reported that its subcontractors provided housing for  foreign workers. See figure 2 for examples of subcontractor-provided  housing on this contract.
Foreign workers were provided a housing stipend by the contractor,  which workers used to secure their own housing. For instance, on the  same DOD services contract in Qatar, the contractor reported that  foreign workers who did not live in subcontractor-provided housing  were given a housing stipend by the subcontractor and found their  own housing. According to a DOD official associated with this  contract, foreign workers who had families living in Qatar often choose  to take the stipend to find housing that would accommodate their  families.
Foreign workers received no housing support from the contractor and  had to secure and pay for their housing themselves. For example, on  a DOD services contract in Bahrain, most foreign workers secured  their own housing at their own expense, according to the contractor.
DOD and State require the inclusion of clauses in certain contracts that  require contractors to provide workers with access to their identity  documents. DOD’s contract clause generally allows contractors to hold  employee passports only for the shortest time reasonable for  administrative processing, and State’s contract clause prohibits  contractors from destroying, concealing, confiscating, or otherwise  denying employees’ access to identity documents or passports.
Contractors reported that foreign workers on the 11 contracts in our  sample generally had access to their identity documents, such as  passports. In general, workers either maintained personal possession of  their documents or were guaranteed access to documents that they  voluntarily submitted to the contractor for safekeeping. For the majority of  contracts in our sample, the contractor reported that workers maintain  possession of their identity documents and therefore had access to them.  A DOD services contractor in Kuwait, for instance, reported that all of its  foreign workers kept possession of their identity documents, including  passports, work permits, driver’s licenses, and insurance cards. For other  contracts in our sample, contractors offered foreign workers the option to  voluntarily submit their identity documents to the contractor for  safekeeping and gave them access to their documents upon request. For  example, on a DOD services contract in Bahrain, the contractor reported  that it would hold foreign workers’ identity documents for safekeeping if  requested, but required them to sign a waiver that stated they had  voluntarily submitted the documents.
Contractors included in our sample did not report any instances of  withholding or restricting employees’ access to identity documents;  however, agency officials at two State posts we visited said that some  contractors performing smaller-scale contracts for the U.S. government  restricted access to identity documents. According to State’s 2014  Trafficking in Persons Report, withholding employees’ passports is a  common practice in these countries. State officials in Kuwait, for instance,  said that a Kuwaiti company providing janitorial services for the embassy  was found to have withheld employee passports against the employees’  will. These officials said that they removed the employees’ supervisor  from the contract when they learned of these allegations. State officials  we spoke to in Jordan reported similar allegations of passport withholding  against the embassy’s janitorial services contractor. These officials  reported that they took corrective action against the contractor that  partially addressed this concern.
section_title: Contractors Reported that They Provided Foreign Workers with Return Travel
paragraphs: Under certain circumstances, DOD policy and State guidance require the  inclusion of contract clauses in certain contracts that require contractors  to provide workers with return travel upon completion of their employment  contract. Certain DOD contracts in Afghanistan are to include a clause  generally requiring contractors to return their employees to their point of  origin or home country within 30 days after the end of the contract’s  period of performance. State’s contract clause notes that contractors are  generally responsible for repatriation of workers imported for contract  performance.
Contractors reported that they provide transportation to foreign workers to  their home countries at the conclusion of their employment on all 11  contracts in our sample. For example, on a USAID construction contract  in Afghanistan, the contractor provided return travel for all of the foreign  workers on its contract by purchasing one-way plane tickets for the  workers back to their home countries. In Bahrain, a DOD services  contractor provided each foreign worker with a range of return travel  options, including transportation to their home country, to a new  employment location, or to any other desired location, or allowed them to  stay in Bahrain and seek new employment arrangements.
On 6 of the contracts in our sample, officials stated that foreign worker  repatriation was explicitly addressed in the terms of the contract. For  example, State officials reported that a security contract in Iraq required  the contractor to provide return travel for its foreign workers and that this  requirement was discussed with the contractor at the end of the  contract. On 5 of these 6 contracts, officials reported that the contract  also included provisions for repatriation expenses incurred by the  contractor to be reimbursable by the U.S. government. For instance,  State officials associated with a services contract in Iraq explained that  State reimbursed the contractor for repatriation expenses because Iraqi  law required all foreign workers to leave the country immediately following  the conclusion of their employment, and State wanted to ensure that  these workers returned to their home countries.
section_title: Conclusions
paragraphs: Human trafficking victimizes hundreds of thousands of men, women, and  children worldwide, including workers who move from their home  countries to seek employment overseas and improve their own and their  families’ well-being. The United States conducts diplomatic, defense, and  development activities throughout the world, including in countries with  restrictive labor practices and poor records related to trafficking in  persons. The United States has an obligation to prevent entities working  on its behalf from engaging in trafficking in persons, and when it uses  contractors to support its activities in such countries, it bears an even  greater responsibility to protect workers given the increased risk of abuse.  Accordingly, it has taken several steps to eliminate trafficking in persons  from government contracts and strengthened these efforts in 2007 with  amendments to a contract clause required on all contracts that prohibits  contractors from engaging in a variety of trafficking-related activities.  Recognizing the need for further guidance on how to implement these  regulations, agencies developed their own guidance and policy to  augment worker protections and to clarify agency and contractor  responsibilities.
The President and Congress both signaled the need for further clarity in  reducing the risk of TIP on government contracts by directing  amendments to existing regulations in 2012. While improving the  government’s ability to oversee its contractors’ labor practices is a step in  the right direction, ambiguity regarding the components and amounts of  permissible fees related to recruitment can limit the effectiveness of these  efforts. Many contractors acknowledge that their employees may have  been charged a fee for their jobs, a common practice in many countries,  but they do not know if these fees are acceptable, given the existing  guidance and policy. Some fees may appear reasonable, but others could  be exploitative or lead to debt bondage and other conditions that  contribute to trafficking. Without a more precise definition of what  constitutes a recruitment fee, agencies are hindered in effectively  determining which fees are allowed, and therefore developing effective  practices in this area.
Some agencies have established systematic processes for monitoring  efforts to combat TIP on some contracts but do not monitor other  contracts for TIP, focusing rather on contractor-provided goods and  services. The lack of monitoring could inhibit agencies’ ability to detect  potential abuses of foreign workers and reflects the limited utility of  existing guidance on monitoring. Further, without consistent monitoring of  contractors’ labor practices, the U.S. government is unable to send a  clear signal to contractors, subcontractors, and foreign workers that the  U.S. government will follow through forcefully on its zero tolerance human  trafficking policy.
section_title: Recommendations for Executive Action
paragraphs: To help ensure agencies can more fully implement their monitoring policy  and guidance related to recruitment of foreign workers, the Secretaries of  Defense and State and the Administrator of the U.S. Agency for  International Development should each develop, as part of their agency  policy and guidance, a more precise definition of recruitment fees,  including permissible components and amounts.
To help improve agencies’ abilities to detect potential TIP abuses and  implement the U.S. government’s zero tolerance policy, the Secretaries of  Defense and State and the Administrator of the U.S. Agency for  International Development should each take actions to better ensure that  contracting officials specifically include TIP in monitoring plans and  processes, especially in areas where the risk of trafficking is high. Such  actions could include developing a process for auditing efforts to combat  TIP or ensuring that officials responsible for contract monitoring are  aware of all relevant acquisition policy and guidance on combating TIP.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this product to DOD, State, and USAID for  comment. These agencies provided written comments, which are  reproduced in appendices VI through VIII.
Regarding our recommendation for agencies to develop a more precise  definition of recruitment fees as part of their policy and guidance, DOD  concurred, while State and USAID neither agreed nor disagreed. DOD  indicated that it would define recruitment fees during the next review of its  policy related to combating TIP and incorporate this requirement in  agency acquisition regulations as necessary. Such actions, if  implemented effectively, should address the intent of our  recommendation to DOD. State commented that it prohibits charging any  recruitment fees to foreign workers, and both State and USAID noted that  the proposed FAR rule on combating TIP would prohibit charging  employees any recruitment fees. However, even if the final FAR rule  prohibits all recruitment fees, it remains unclear whether the term  “recruitment fees” includes components such as air tickets, lodging,  passport and visa fees, and other fees that recruited individuals may be  charged before being hired. Contracting officers and agency officials with  monitoring responsibilities currently rely on policy and guidance that do  not define recruitment fees, resulting in ambiguity over what constitutes  such a fee. Without an explicit definition of what components constitute  recruitment fees, prohibited fees may be renamed and passed on to  foreign workers, increasing the risk of debt bondage and other conditions  that contribute to trafficking. State also commented that, to ensure  consistent treatment of recruitment fees across government, we should  recommend that the Office of Management and Budget draft a FAR  definition of recruitment fees. However, we believe that each agency  should have the flexibility to determine, within its implementing  regulations or policy, which components it considers to be included in the  term “recruitment fees” to address each agency’s contracting practices.  Thus we continue to believe our recommendation is valid and should be  fully implemented by State and USAID.
DOD and State concurred with our recommendation to better ensure that  contracting officials specifically include TIP in monitoring plans and  processes in areas where the risk of trafficking is high. DOD said that it  would update its FAR supplement following the publication of the final  FAR rule on combating TIP to improve the government’s oversight of  contractor compliance with TIP. State noted that it would add a  requirement to the process that contracting officer’s representatives use  to certify that they are familiar with requirements for TIP monitoring and  include verification of TIP monitoring in reviews of contracting operations.  USAID stated that all USAID staff would be required to take training in  TIP, which will be released by the end of 2014. Further, USAID said that it  will develop training for contracting officer’s representatives on how to  include combating TIP in monitoring plans, as well as training for  contracting officers to verify that efforts to combat TIP have been  appropriately included in the monitoring plans. These actions, if fully  implemented, may address the intent of our recommendation, but we  continue to believe that DOD, State, and USAID should ensure that  contracting officials specifically include TIP in monitoring plans and  processes, especially in areas where the risk of trafficking is high.
In addition, USAID stated that it would be useful to obtain further  guidance to help it and other agencies consistently determine what areas  are considered high risk for TIP. One useful source of guidance is State’s  annual Trafficking in Persons Report, which places countries into tiers  based on the extent of their governments’ efforts to comply with the  TVPA’s minimum standards for the elimination of human trafficking. In  addition, in its written comments, State noted that it is developing a tool  for procurement and contracting officers and federal contractors to assess  the risk of TIP, expected to be completed in spring 2015.
We also received technical comments from DOD and State, which we  incorporated as appropriate.
We are sending copies of this report to the appropriate congressional  committees, the Secretary of the Department of Defense, the Secretary of  the Department of State, the Administrator of the U.S. Agency for  International Development, and other interested parties. In addition, the  report is available at no charge on the GAO website at  http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-9601 or melitot@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix IX.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: This report responds to a requirement included in the Violence Against  Women Reauthorization Act of 2013 for GAO to report on the use of  foreign workers both overseas and domestically, including those  employed on U.S. government contracts. Our objectives were to  examine (1) policies and guidance governing the recruitment of foreign  workers and the fees these workers may pay to secure work on U.S.  government contracts overseas and (2) agencies’ monitoring of contractor  efforts to combat TIP.
This report focuses on Department of Defense (DOD), Department of  State (State), and U.S. Agency for International Development (USAID)  contracts with performance in countries with large percentages of  migrants as compared with local nationals, and in Afghanistan and Iraq,  where U.S. government contractors employ significant numbers of foreign  workers. We selected a nongeneralizable sample of 11 contracts based  on the contracts’ place of performance, value, type of service provided,  and the number of foreign workers employed. Specifically, we obtained a  list of all contracts in the Federal Procurement Data System based on the  following criteria:
The contract was awarded by DOD, State, or USAID.
The contract’s completion date was on or after October 1, 2013.
The contract’s place of performance was in a country with a large  portion of migrants, according to data from the United Nations, or was  in Afghanistan or Iraq.
The contract’s product or service code indicated that the contract was  for services, construction, or security—areas that were likely to  include low-wage, low-skilled labor, because these types of jobs may  be associated with a higher risk of TIP.
We narrowed this list to reflect a range of agencies, countries, and  services. We compared this list with data provided by DOD, State, and  USAID through the Synchronized Pre-deployment and Operational  Tracker (SPOT) database at the end of fiscal year 2013 to identify  contracts that employed large numbers of foreign workers. On the basis  of this comparison, we selected 11 contracts that represent nearly one- third of all reported foreign workers employed on contracts awarded by  these three agencies as reported in SPOT. Our previous work has  described several data limitations related to SPOT, but we determined  that these data were sufficiently reliable for the purposes of identifying  and selecting contracts employing large numbers of foreign workers for  in-depth review. Table 4 provides basic information on the selected  contracts.
To examine the recruitment of foreign workers and the fees they might  pay to secure work on U.S. government contracts overseas, we  conducted structured interviews with agency officials and contractors  responsible for the contracts in our sample to identify, among other  things, the relevant laws, regulations in the Federal Acquisition  Regulation (FAR), agency acquisition policies, and agency acquisition  guidance related to contractor recruitment practices. We reviewed these  laws, regulations, policies, and guidance, as well as the Trafficking  Victims Protection Act and Executive Order 13627—Strengthening  Protections Against Trafficking in Persons in Federal Contracts—which  include additional requirements related to the recruitment of workers on  U.S. government contracts. We also obtained detailed information from  contractors performing the contracts in our sample about their recruitment  practices through structured interviews, and, in some cases, we  interviewed subcontractors who recruited and employed foreign workers  regarding their practices. In addition, we reviewed DOD and State  Inspector General reports to identify instances where foreign workers  have reported paying recruitment fees. We conducted site visits in  Afghanistan, Kuwait, and Qatar to interview DOD, State, and USAID  officials, including personnel responsible for contract monitoring,  contractors, subcontractors, host government officials, and  nongovernmental organizations about the recruitment of foreign workers  in these countries. We chose these countries based on the range of U.S.  government activities in these countries, the prevalence of foreign  workers, and State’s assessment of the host government’s efforts to  combat TIP as indicated by State’s annual Trafficking in Persons Report  tier placement. We also spoke with State and USAID officials in Jordan  during preliminary fieldwork to inform our research design and  methodology.
On the contract employing the largest number of foreign workers in our  sample, we obtained data from the contractor detailing cases of workers  reporting that they had paid for their job. These data, collected from  September 2012 through April 2014, included 2,534 reports of workers  having paid for their jobs, and to whom, when, and where these reported  payments were made. We analyzed these data to determine the number  of unique individuals who had reported paying for their jobs. We then  compared the data on who received these payments with a list of  recruitment agencies provided by the subcontractor to determine if  workers reported paying fees to recruitment agencies with which the  subcontractor had agreements. We also obtained data from the  contractor listing the monthly salaries in April 2014 of workers who had  reported, in April 2014, having paid for their job at some point in the past.  We then compared these data with the amount these workers reported  having paid to determine the range and average number of months  required for workers to earn the amount they reported having paid for  their job. We analyzed these data to calculate the mean, median, and  mode of the reported fees for April 2014. We assessed the reliability of  the survey data by interviewing knowledgeable officials, including the  contractor and subcontractor, and analyzing the data for outliers and  duplicate records. We found these data sufficiently reliable to show that  workers reported having paid for their jobs and that these payments were  made to several recruitment agencies that supplied workers for this  contract; and to calculate the number of months’ reported salary required  to pay for the reported fee.
To assess agencies’ monitoring of contractor labor practices affecting  foreign workers, we obtained information through our structured  interviews regarding housing, wages and hours, access to identity  documents, and return travel for foreign workers on contracts in our  sample. We selected these practices because they were mentioned  explicitly in either or both an amendment to the Trafficking Victims  Protection Act, contained in the National Defense Authorization Act for  Fiscal Year 2013, and Executive Order 13627—Strengthening  Protections Against Trafficking in Persons in Federal Contracts—and  were included in a list of potential indicators of trafficking in persons (TIP)  by the International Labour Organization (ILO). We analyzed information  from DOD and State officials regarding their monitoring processes for  these practices, including monitoring checklists and audit procedures for  combating TIP provided by the Defense Contract Management Agency.  We conducted site visits to contractor-provided housing for foreign  workers on 2 contracts in our sample during our fieldwork in Kuwait and  Qatar. In these countries and in Afghanistan, we interviewed DOD and  State officials; contractors; and, in some cases, subcontractors about  labor practices related to foreign workers on the contracts in our sample.  We also met with DOD and State officials responsible for monitoring  contracts to discuss their efforts to monitor contracts in our sample for  potential TIP abuses. We reviewed relevant laws, regulations in the FAR,  agency acquisition policies, and agency acquisition guidance related to  contractor labor practices and agencies’ responsibilities for monitoring  these practices. We also reviewed training requirements for acquisition  personnel related to monitoring for TIP abuses and discussed existing  and planned training with DOD and State officials.
We also reviewed relevant studies and reports on TIP and foreign  workers, including reports by DOD’s and State’s Inspectors General, the  United Nations, the International Labour Organization, and  nongovernmental organizations. We reviewed the methodologies used to  conduct these studies and, for those that we used to corroborate our  findings, we determined that they were sufficiently reliable for that  purpose.
We conducted this performance audit from June 2013 to November 2014  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix II: International Definitions and Indicators of Trafficking in Persons
paragraphs: In the United Nations’ Protocol to Prevent, Suppress and Punish  Trafficking in Persons, Especially Women and Children, Supplementing  the United Nations Convention Against Transnational Organized Crime,  trafficking in persons is defined as the recruitment, transportation,  transfer, harboring, or receipt of persons, by means of the threat or use of  force or other forms of coercion, of abduction, of fraud, of deception, of  the abuse of power or of a position of vulnerability or of the giving or  receiving of payments or benefits to achieve the consent of a person  having control over another person, for the purpose of exploitation.
In addition, the ILO has developed a list of indicators of trafficking for  labor exploitation. These indicators specify several indicators of  deceptive or coercive recruitment, recruitment by abuse of vulnerability,  exploitation, and coercion or abuse of vulnerability at the destination. For  example, these indicators include deception about travel and recruitment conditions, confiscation of documents, debt bondage, excessive working days or hours, and no respect for labor laws or signed contracts.
section_title: Appendix III: Migrant Workers in Gulf Countries
subsections: section_title: Migrants from Source Countries in Asia and Africa Move to Gulf Countries for Economic Reasons
paragraphs: Migrants, such as foreign workers, from many countries seek employment  in the Gulf region. In 2013, the top five source countries of international  migrants to Gulf countries were India, Bangladesh, Pakistan, Egypt, and  the Philippines (see table 5). Growing labor forces in source countries  provide an increasing supply of low-cost workers for employers in the Gulf  and other host countries where, according to the International Labour  Organization (ILO), demand for foreign labor is high.
Economic conditions and disparities in per capita income between source  and host countries encourage foreign workers to leave their countries to  seek employment. In 2012, average per capita income in the six Gulf  countries was nearly 25 times higher than average income per capita in  the top five source countries, and some differences between individual  countries were even more dramatic, according to the World Bank. For  example, in 2012, annual per capita income in Qatar was more than  $58,000, nearly 100 times higher than in Bangladesh, where per capita  income was almost $600. Foreign workers in Gulf countries send billions  of dollars in remittances to their home countries annually. For example, in  2012 the World Bank estimated that migrant workers from the top five  source countries sent home almost $60 billion from the Gulf countries,  including nearly $33 billion to India, nearly $10 billion to Egypt, and nearly  $7 billion to Pakistan.
section_title: Source Country Regulation of Overseas Employment
paragraphs: Source countries regulate the recruitment of their nationals for overseas  employment in a variety of ways. According to relevant regulatory  agencies in their countries, some source countries, such as India and the  Philippines, have a licensing process for recruitment agencies and require  potential overseas employers to use only licensed recruiters. According to  these agencies, these countries also permit recruiters to charge  prospective migrant workers a fee in specified circumstances but limit the  amount of this fee. For example, according to the Indian Ministry of  Overseas Indian Affairs, India’s Emigration Act and Rules detail  requirements for the registration of recruiters, prohibit the use of  subagents, prescribe the emigration clearance process, and permit  registered recruiters to charge migrant workers fees up to 20,000 rupees,  currently about $325, for their services. Similarly, according to the  Philippines Overseas Employment Administration, the government of the  Philippines facilitates the emigration of Filipino workers employed abroad  and provides standards and oversight through licensing, required contract  provisions, and placement fees. Filipino embassies in host countries also  provide services for its citizens in those countries, such as assistance  establishing bank accounts and wiring money home and information  regarding worker rights in the host country, according to the Filipino Labor  Attaché in Qatar. According to the Bangladeshi Ministry of Expatriates’  Welfare and Overseas Employment, the ministry was established in 2001  to ensure the overall welfare of migrant workers and has established a  process for licensing recruitment agents. Other countries, such as Egypt,  do not regulate overseas recruitment, lacking a licensing process for  recruiters and regulations on the amount of fees that these recruiters may  charge, according to the Egyptian Ministry of Manpower and Emigration.
section_title: Host Country Labor Practices
paragraphs: The ILO has reported that in Gulf countries, several common and  restrictive labor practices stem from the Kafala sponsorship system of  foreign workers. According to the ILO, the Kafala system is a  sponsorship system whereby a foreign worker is employed in a Gulf  country by a specific employer that controls the worker’s residency,  immigration, and employment status. Under this system, employers meet  their demand for labor either by direct recruitment or through the use of  recruitment agents who find foreign workers. The system generally ties  workers’ residency and immigration status to the employer, which can  prevent workers from changing employers and limit their freedom of  movement, according to the ILO. The ILO further stated that sponsors  can also prohibit workers from leaving the country and have the right to  terminate workers’ employment contracts and have residency permits  canceled. According to State’s Qatar 2013 Human Rights Report,  international media and human rights organizations alleged numerous  abuses against foreign workers, including a sponsorship system that gave  employers an inordinate level of control over foreign workers.
In addition to the labor practices associated with the Kafala system, the  withholding of workers’ passports is an additional restrictive labor practice  common in many Gulf countries. For example, State reported that in  Qatar, despite laws prohibiting the withholding of foreign workers’ identity  documents, employers withheld the passports of a large portion of their  foreign workers in that country. According to State’s most recent  Trafficking in Persons Report, the withholding of foreign workers’  passports contributes to the potential for trafficking in persons (TIP).  Furthermore, the ILO has reported that employers in Gulf countries may  refuse to release workers or may charge high fees for release, withhold  wages as security to prevent workers from running away, and withhold  personal travel documents. The ILO also found that workers in these  countries may be subjected to forced overtime, limited freedom of  movement, degrading living and working conditions, and physical  violence and threats. Overall, the ILO estimated that there were 600,000  victims of forced labor in the Middle East at any given point in time  between 2002 and 2011.
section_title: Appendix IV: Federal Acquisition Regulations and Agency Policy and Guidance Related to Contractor Recruitment and Labor Practices
paragraphs: The Federal Acquisition Regulation (FAR) requires all solicitations and  contracts to include Clause 52.222-50, Combating Trafficking in Persons  (TIP). This clause includes a prohibition on contractors engaging in  severe forms of TIP, which includes the recruitment, harboring,  transportation, provision or obtaining of a person for labor or services,  through the use of force, fraud, or coercion for the purpose of subjection  to involuntary servitude, peonage, debt bondage, or slavery. However,  the clause contains no further provisions related to recruitment or other  labor practices discussed in this report. The Department of Defense  (DOD), Department of State (State), and the U.S. Agency for International  Development (USAID) have developed policy and guidance that provides  more specificity on these practices, as outlined in table 6.
section_title: Appendix V: Sample Defense Contract Management Agency Universal Examination Record for Combating Trafficking in Persons, May 2011
section_title: Appendix VI: Comments from the Department of Defense
section_title: Appendix VII: Comments from the Department of State
subsections: section_title: GAO Comments
paragraphs: 1.  State said that we should direct our recommendation to develop a more precise  definition of recruitment fees to the Office of Management and Budget. We  believe that each agency should have the flexibility to determine, within its  implementing regulations, which items it considers to be included in the term  “recruitment fees” to address each agency’s contracting practices.  2.  State noted that the new regulations that will amend the Federal Acquisition  Regulation will prohibit charging employees recruitment fees. As our report  notes, even if the final FAR rule prohibits all recruitment fees, it remains unclear  whether the term “recruitment fees” includes items such as air tickets, lodging,  passport and visa fees, and other fees that recruited individuals may be charged  before being hired. Contracting officers and agency officials with monitoring  responsibilities currently rely on policy and guidance regarding recruitment fees  that are ambiguous. Without an explicit definition of the components of  recruitment fees, prohibited fees may be renamed and passed on to foreign  workers, increasing the risk of debt bondage and other conditions that contribute  to trafficking.
section_title: Appendix VIII: Comments from the U.S. Agency for International Development
subsections: section_title: GAO Comments
paragraphs: 1.  USAID stated that the final draft Federal Acquisition Regulation rule contained  language that would prohibit charging contractor employees any recruitment fees  and therefore USAID did not see any need to establish any policy or guidance  that provides a "more precise definition of recruitment fees, including permissible  components and amounts." As our report notes, even if the final FAR rule  prohibits all recruitment fees, it remains unclear whether the term “recruitment  fees” includes items such as air tickets, lodging, passport and visa fees, and  other fees that recruited individuals may be charged before being hired.  Contracting officers and agency officials with monitoring responsibilities currently  rely on policy and guidance regarding recruitment fees that are ambiguous.  Without an explicit definition of the components of recruitment fees, prohibited  fees may be renamed and passed on to foreign workers, increasing the risk of  debt bondage and other conditions that contribute to trafficking.  2.  USAID said that it would be useful to obtain further guidance on the  recommendation to take actions to better ensure that contracting officials  specifically include TIP in monitoring plans and processes in areas where the  "risk of trafficking is high." One useful source of guidance is State’s annual  Trafficking in Persons Report, which places countries into tiers based on the  extent of their governments’ efforts to comply with the TVPA’s minimum  standards for the elimination of human trafficking. In addition, in its written  comments, State noted that it is developing a tool for procurement and  contracting officers and federal contractors to assess the risk of TIP, expected to  be completed in the spring of 2015.
section_title: Appendix IX: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Leslie Holen, Assistant  Director; J. Robert Ball; Gergana Danailova-Trainor; Brian Egger; Justine  Lazaro; Jillian Schofield; and Gwyneth Woolwine made key contributions  to this report. Lynn Cothern, Etana Finkler, Grace Lui, Walter Vance,  Shana Wallace, and Alyssa Weir provided technical assistance.
section_title: Related GAO Products
paragraphs: International Labor Grants: DOL’s Use of Financial and Performance  Monitoring Tools Needs to Be Strengthened. GAO-14-832. Washington,  D.C.: September 24, 2014.
International Labor Grants: Labor Should Improve Management of Key  Award Documentation. GAO-14-493. Washington, D.C.: May 15, 2014.
Human Rights: U.S. Government’s Efforts to Address Alleged Abuse of  Household Workers by Foreign Diplomats with Immunity Could Be  Strengthened. GAO-08-892. Washington, D.C.: July 29, 2008.
Human Trafficking: Monitoring and Evaluation of International Projects  Are Limited, but Experts Suggest Improvements. GAO-07-1034.  Washington, D.C.: July 26, 2007.
Human Trafficking: Better Data, Strategy, and Reporting Needed to  Enhance U.S. Antitrafficking Efforts Abroad. GAO-06-825. Washington,  D.C.: July 18, 2006.