Advocacy office says small firms deserve break on E-Verify

Rule requiring contractors to vet workers through Homeland Security employee identification system could place a heavy financial burden on smaller companies.

The Small Business Administration's Office of Advocacy is urging federal acquisition councils to consider exempting small firms from a regulation that would force contractors to verify workers' employment eligibility using a Homeland Security database.

The controversial rule, proposed June 12, would insert a clause into all future federal contracts requiring companies to vet employees through the Homeland Security Department's E-Verify system within 30 days of winning government business.

The SBA advocacy office said the councils' assessment of the rule's financial implications was inadequate. The potential burden, already disproportionate for small firms, would be magnified because the E-Verify database duplicates other government clearance programs, the office stated in comments on the proposal.

The office also echoed other organizations' concerns about the accuracy of information in E-Verify. In December 2006, the Social Security Administration's inspector general found that the database had an error rate of 4.1 percent.

Homeland Security Secretary Michael Chertoff said in June that glitches had been fixed and the rate of mistakes was down to 0.5 percent.

Nevertheless, the advocacy office urged the defense and civilian acquisition councils to delay implementing mandatory compliance with E-Verify for contractors until improvements are made. If the councils are unable or unwilling to delay implementation, then they should exempt small businesses until there is a better review of the potential economic impact, the office stated.

The proposal, issued in response to a June 9 executive order, already contains a number of exemptions. Companies holding contracts with a value of less than $3,000 would not have to comply. Employees working on contracts outside the United States or hired before Nov. 6, 1986, and subcontracts for materials for commercially available products would also be exempt.

More than 120 interested parties have submitted comments.

The Professional Services Council, a group representing contractors, opposes the rule. The association stated that it strongly encourages voluntary use of E-Verify, but "contractors should not be subjected to any greater requirement than federal employees and today, only new federal employees are required to be verified through the E-Verify system."

PSC also recommended that the regulation include a more specific timeline for confirming employees' status, a phase-in period for the requirement and a broader definition of commercial items.

"All of these issues must be addressed before any FAR rule is put into place," said Alan Chvotkin, the group's vice president.

Comments in favor of the proposal stressed the importance of ensuring taxpayer dollars go to companies hiring only legal workers.

"It is clear that the federal government should lead the way in using this new technology that protects American workers and employers," wrote Melanie Gray of Santa Barbara, Calif. "This executive order is at least a start towards re-imposing the rule of law in an increasingly unlawful employment environment."

The Federal Register announcement touted the potential requirement as a benefit to companies.

"Contractors that use E-Verify to confirm the employment eligibility of their workforce are much less likely to face immigration enforcement actions, and are generally more efficient and dependable procurement sources than contractors that do not use that system to verify the work eligibility of their workforce," the notice stated.