May 15, 2020 Procurement Lawyer

Navigating the Kuwaiti Sponsorship System: A How-to Guide for US Government Contractors

by Jonathan M. Persons

Jonathan M. Persons is a major in the U.S. Army. He is currently assigned as Chief, Contract and Fiscal Law, U.S. Army Contracting Command, Overseas Contracting Branch, Redstone Arsenal, Alabama.

On November 19, 2018, an article with the headline “Kuwaiti, 4 Expats from U.S. Base in Camp Arifjan Accused of Human Trafficking” appeared on the Arab Times Online website.1 According to the article, the Office of Public Prosecution was investigating the five people for receiving “about $10,000 from” each of some 1,500 Asian workers “for facilitating the issuance of their residency visas, and 1,000 Kuwaiti Dinar (approximately $3,000) for facilitating the issuance of each of their driving licenses.”2 The reported scam involved exaggerating the number of workers needed under U.S. contracts for projects on the base, without the knowledge of the contractors involved.3 An example identified in the article involved hiring workers for the “[Central] Texas College Technology Building.” While the building does not exceed the size of two rooms, and reportedly needs 13 or fewer workers, the suspects estimated that about 1,250 workers were required.4

In order for American companies, and other non-Kuwaiti- national enterprises, operating in Kuwait to avoid being victimized as Central Texas College allegedly was, it is important to understand the legal regime governing U.S. and other foreign companies operating in Kuwait, including Kuwait’s requirement that non-Kuwaiti companies have local sponsors.

A good place to start is the general responsibility standard in Federal Acquisition Regulation (FAR) 9.104-1(g), which requires that a contractor “[b]e otherwise qualified and eligible to receive an award under applicable laws and regulations.”5 For a contract being performed outside of the United States, this presumably means that the contractor must comply with the laws that allow it to operate in the foreign country. This point is reiterated in FAR 52.225-19(d), Compliance with laws and regulations, which states, in relevant part:

The Contractor shall comply with, and shall ensure that its personnel in the designated operational area or supporting the diplomatic or consular mission are familiar with and comply with, all applicable —

  1. United States, host country, and third country national laws;
  2. Treaties and international agreements. . . .6

Based on the inclusion of this contract clause, contractors operating in Kuwait are required to comply with all Kuwaiti laws, to include Kuwaiti Law 6 of 2010, The Law of Labor in the Private Sector, which states in Article 10 that an “employer shall be prohibited from employing foreign manpower unless the competent authority has granted them a permit to work for him.”7 Consequently, in order to comply with FAR 52.225-19(d), a contractor must obtain work visas from the Kuwaiti Ministry of Social Affairs and Labor for each non-Kuwaiti employee.

Additionally, FAR 52.222-50, Combating Trafficking in Persons — which prohibits U.S. contractors, subcontractors, and their employees from engaging in any form of trafficking in persons — defines some of these prohibited practices with reference to host-nation law. For example, the clause prohibits contractors or their agents from providing or arranging “housing that fails to meet the host country housing and safety standards.”8 The FAR also states that contractors must have a recruitment and wage plan that ensures wages meet applicable host-nation legal requirements or that explains any variance.9 Similarly, Department of Defense FAR Supplement (DFARS) 252.225-7040, Contractor Personnel Supporting U.S. Armed Forces Deployed Outside the United States, requires that contractors pay their employees according to the host-nation rate and provide host-nation-quality housing.10

Consequently, American companies and other non-Kuwaiti-national enterprises performing in Kuwait under U.S. government contracts must not only obtain proper visas and work permits for all foreign workers in Kuwait, they must also remain in compliance with the Kuwaiti labor law. As the following analysis of applicable Kuwaiti laws will show, the foregoing is easier said than done.

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