February 04, 2019 Public Contract Law Journal

Utilizing Supply Chain Transparency Measures to Combat Trafficking in Persons: A Comparative Analysis of the U.S. and Swedish Systems

by Tara Woods

Tara Woods (twoods@law.gwu.edu) is a J.D. candidate at The George Washington University Law School and is a member of the Public Contract Law Journal.

I.  Introduction

In October 2007, Vinnie Tuivaga, a Fijian national, boarded a flight for Dubai.1 Chasing the promise of a significant salary increase, Ms. Tuivaga was unaware that she had been misled about her true final destination.2 Ms. Tuivaga and the ten other women she traveled with expected to begin working as beauticians at a luxury hotel in the United Arab Emirates shortly after landing in Dubai.3 Instead they received body armor and training on surviving rocket attacks, before being transported to various U.S. military bases throughout Iraq.4 Despite being employed by a U.S. government subcontractor, Vinnie found herself working twelve hours a day, seven days a week for a measly salary of $350 per month.5 She had initially been promised a monthly salary between $1,500 and $3,800.6 The Army and Air Force Exchange Service inspected Vinnie’s working situation on the tip of a private contractor, but determined it was not exploitative because she had been informed of the true nature of her job — after arriving in Dubai.7 Fortunately, in April 2008, Vinnie was allowed to return to Fiji.8 Vinnie’s story is an example of how complex supply chains in government contracts can lead to fraud and human rights abuses.

More than a decade later, despite the United States’ professed longstanding zero tolerance policy on trafficking in persons, the horrors faced by Vinnie have not been eradicated from U.S. public procurement. This is because the United States’ regulatory structure around supply chain management still does not properly control for trafficking in persons. This Note analyzes how supply chain transparency measures can serve as an effective tool for combating trafficking in persons and argues for the adoption of additional policies based on Sweden’s model. First, this Note defines trafficking in persons and supply chains. Second, it analyzes the efforts and challenges of combating trafficking in persons in United States public procurement supply chains. Finally, this Note provides an overview of the Swedish public procurement system and advocates for the adoption of specific policies. Sweden serves as a particularly effective country for comparison because its public procurement system has complex and globalized supply chains, which present many of the same risks as the United States.9

II.  Background & Definitions

A. Trafficking in Persons

The International Labour Office reports that 24.9 million people were victims of human trafficking in 2016.10 Human trafficking is a global blight that affects both the public and private sectors.11 Yet, human trafficking is difficult to define. Depending on the organization or government, a variety of different definitions are used. These differences pose challenges for data collection, policy initiatives, and comparative efforts. This section will explore the different definitions of trafficking in persons.

B. The Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women and Children (“Trafficking Protocol”)

Adopted by the United Nations National Assembly in 2000, the Trafficking Protocol defines “trafficking in persons” as:

[T]he 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. Exploitation shall include, at a minimum, the exploitation of the prostitution of others or other forms of sexual exploitation, forced [labor] or services, slavery or practices similar to slavery, servitude or the removal of organs.12

The Trafficking Protocol supplements the United Nations Convention against Transnational Organized Crime.13

1.  Trafficking Victims Protection Act (“TVPA”)

The TVPA was passed in 2000 with the goal of combating human trafficking on a global scale.14 The TVPA utilizes the term “severe forms of trafficking” in persons for data collection purposes.15 This is defined as:

(A)  sex trafficking in which a commercial sex act is induced by force, fraud, or coercion, or in which the person induced to perform such act has not attained 18 years of age; or

(B)   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.16

This definition is not inclusive of sex trafficking, which is separately defined as “the recruitment, harboring, transportation, provision, obtaining, patronizing, or soliciting of a person for the purpose of a commercial sex act.”17

The Federal Acquisition Regulations (FAR) uses the same definition as the TVPA in defining severe forms of trafficking in persons.18 However, for purposes of consistency, this Note will use the term “trafficking in persons” when describing human trafficking and forced labor. This term is broader in scope than the more narrow “severe forms of trafficking in persons” provided by the TVPA and FAR.19

2.   Supply Chains

Public procurement is an increasingly global field with a complex network of supply chains.20 A supply chain is “a network of people and organizations that collaborate to bring products from concept creation, research and development, design, and manufacture through to the sale and delivery to end users.” 21 These individuals and entities are linked together through various activities such as supplying materials or services, processing materials or services, and delivering the final product.22 Supply chains can be quite complex, with a complicated system of direct and indirect suppliers.23

It is unsurprising that as supply chains become more complex and globalized, it becomes increasingly difficult to obtain a complete and transparent overview of vendors and suppliers. Supply chain transparency is difficult to achieve.24 It is also not always a top priority. A 2011 Chief Supply Chain Officer Report revealed that while eighty percent of the 750 global executives polled monitored internal environmental and social violation, only twenty to twenty-nine percent monitored these issues in their supply chains.25 Even when companies prioritize supply chain transparency, the “vast ecosystems” of global supply chains means they are still difficult to track.26

III.  Measures Taken to Combat Trafficking in Persons in United States Public Procurement

A.  History of Measures to Combat Trafficking in Persons in the United States

The United States’ “zero tolerance” policy for trafficking in persons can be traced to President George W. Bush’s Trafficking in Persons National Security Presidential Directive.27 While a zero tolerance policy has yet to be fully achieved, there has been an increased focus on combating trafficking in persons in government procurement. In recent years, laws and regulations attempting to curb trafficking in persons in the United States have focused increasingly on supply chains in government procurement.28 This system places an added onus on government contractors to monitor and police their supply chains.

1.   Executive Order 13,627 “Strengthening Protections Against Trafficking in Persons in Federal Contracts”

President Barack Obama issued Executive Order 13,627 on September 25, 2012, to further combat trafficking in persons in the government procurement field.29 The Executive Order prohibits government contractors from “engaging in human trafficking . . . , denying employees access to immigration documents, and engaging in misleading recruiting practices.”30 It further requires that the contractor offer transportation back home for foreign nationals, provide work documentation in the employees’ language, and comply with housing and disclosure standards.31 Lastly, the Executive Order requires compliance plans and certifications for contracts performed outside the United States that exceed $500,000.32 The Executive Order sought to “ensure that taxpayer dollars do not contribute to trafficking in persons.”33

2.  FAR 22.17 and FAR 52.222-50

Executive Order 13,627 resulted in updates to FAR provisions that pertain to supply chain oversight. FAR 22.17 originally was enacted on April 19, 2006, to combat trafficking in persons.34 Currently, FAR 22.17 serves as a means of implementation for Executive Order 13,627.35 To comply with Executive Order 13,627, the FAR now includes the following updates to supply chain transparency and oversight:

(1)  It prohibits a range of activities related to trafficking in persons that are applicable to all government contracts and subcontracts, including commercially available off-the-shelf (COTS) items. (2) It creates an expanded reporting and enforcement mechanism for expanded prohibitions applicable to all contractors. (3) It imposes a broad set of compliance plan, due diligence and certification requirements for overseas contracts and subcontracts valued over $500,000.36

These regulatory and compliance factors allow for the increased monitoring of government contracts. It also creates a greater incentive for government contractors to review their policies and compliance structures revolving around trafficking in humans. The regulation also requires that FAR 52.222- 50 (which provides definitions, requirements, and remedies for trafficking in persons) be included in all public procurement solicitations and contracts.37

B.  Remedies for Combating Trafficking in Persons in United States Public Procurement

1.   False Claims Act Violations and Universal Health Services, Inc. v. United States

In 2016 the Supreme Court ruled that, under the False Claims Act, contractors could be charged under the implied false certification theory.38 It applies when a contractor “makes representations in submitting a claim but omits its violations of statutory, regulatory, or contractual requirements.”39 Thus, failing to comply with FAR regulations pertaining to supply chain oversight could result in charges filed under the False Claims Act.

2.   Suspension and Debarment of Contractors

President Obama’s Executive Order 13,627 mandated that Contracting Officers must contact their agency official overseeing suspension and debarment when they become aware of human trafficking violations.40 This man- date is reflected in FAR 22.1704(b), which empowers Contracting Officers with a list of available remedies for human trafficking violations.41 The Contracting Officer can pursue these remedies after credible information about a violation.42 Suspension and debarment are one such remedy.43

FAR Subpart 9.4 and the Nonprocurement Common Rule, 2 C.F.R. Part 180, guide the suspension and debarment process.44 However, agencies rarely have utilized suspension and debarment as a tool in the fight against human trafficking in government contracts.45 It is up to the agency overseeing suspension and debarment to make a determination that pursuing this remedy is necessary to protect the United States government’s interests.46 In a 2011 House Oversight and Government Reform Subcommittee hearing, Representative Gerald Connolly admonished the Department of Justice for failing to use suspension and debarment to combat human trafficking.47 Representative Connolly further stated his perspective on why there had not been any suspension or debarment cases:

Because I guess it is inconvenient or — other than, bureaucratically, debarments and suspensions are messy and complicated and people don’t like them, but, I mean, your testimony is it could be tens of thousands, maybe even hundreds of thousands of individuals we are talking about in this victim pool serving the U.S. Government and its prime contractors, and we have not had, to our knowledge, this panel, not a single prosecution. The laws are all in place, the policies are all in place. We have zero tolerance. And what that system has produced is zero reporting.48

Between 2008 and April 2014, only one case was referred for suspension and debarment for human trafficking violations from the Special Inspector General for Afghanistan Reconstruction.49 This case was the first human trafficking violation debarment referral to the Army.50 No human trafficking violations were reported to the Special Inspector General for Iraq Reconstruction during the same time period.51 Similarly, a Department of Defense Office of Inspector General report noted that. between October 2010 and November 2011, only two criminal human trafficking violation investigations occurred.52 

Thus, despite the existence of a proper mechanism for suspension and debarment for trafficking in persons violations in government contracts, the process seldom is utilized. There may be several reasons for this, including “difficulties associated with investigating and prosecuting human trafficking in a combat/ contingency environment . . . [such as] significant security concerns, limited transportation resources, frequent personnel rotations, difficulty gathering evidence, and questions concerning legal jurisdiction.”53 Given the severity of suspension and debarment, this remedy also could serve as an incentive to hide instances of trafficking in persons for fear of punishment.

3.  Other FAR Remedies

Several other possible remedies — in addition to the suspension and debarment measures — are available to Contracting Officers who determine there has been a trafficking in persons violation. For example, the Contracting Officer can enter the violator into the Federal Awardee Performance and Integrity Information System (FAPIIS).54 FAPIIS collects data on government contractors and serves as a means of evaluating a contractor’s level of integrity before a contract is awarded.55 Thus, the threat of having a trafficking in persons violation entered in FAPIIS serves as an incentive to ensuring there are no instances of trafficking in persons in a contractor’s supply chain. When trafficking in persons violations occur, Contracting Officers may also require that an employee be removed from the contract, require that a contractor terminate a subcontract, suspend contract payments until appropriate remedial actions have been taken, implement non-payment for the period of non-compliance, decline to exercise available contract options, or terminate the contract for default or cause.56

As noted above, the United States government has specific, defined measures in place to combat trafficking in persons. However, these systems are not used effectively, and violators are rarely prosecuted. One issue is the difficulties associated with detecting and investigating trafficking in persons. Another is determining how to handle violations once detected. Regulations are in place, but they are not implemented fully. By looking to other countries facing similar issues, potential solutions can be identified. Sweden has implemented policies to help detect and ameliorate trafficking in persons violations. It serves as an example of how the United States system can be improved.

IV.  Measures to Combat Trafficking in Persons in Sweden

This section provides an overview of Sweden’s public procurement policies addressing trafficking in persons. Before analyzing how Swedish policies can be used to improve United States measures to combat trafficking in persons in supply chains, it is important to understand how the Swedish system functions. Sweden is a member of both the United Nations (UN) and European Union (EU). As such, each entity shapes Sweden’s policies on trafficking in persons.

A.  United Nations Guiding Principles on Business and Human Rights

The UN Human Rights Council adopted the UN Guiding Principles on Business and Human Rights in 2011.57 The main elements of the Guiding Principles are:

(1)   [t]he State duty to protect human rights; (2) [t]he corporate responsibility to respect human rights, which means that the activities of business enterprises should not infringe on human rights and that enterprises should act to prevent adverse human rights impacts; and (3) [a]ccess to remedy if these rights are not respected.58

The guiding principles implore countries to create a National Action Plan to promote human rights in business.59 The guiding principles are not legally binding, but serve as a means of encouraging ethical business practices that promote human rights. Many of the countries that have issued reports included very little on public procurement. However, it is important for countries to hold not only businesses responsible for human rights violations, but also their own public procurement systems.

B.  EU Directives on Public Procurement

In 2014, the European Parliament adopted three new directives on public procurement: Directive 2014/24/EU on public procurement; Directive 2014/25/EU on procurement by entities operating in the water, energy, trans- port, and postal services sectors; and Directive 2014/23/EU on the award of concession contracts.60 European Union countries were obligated to comply with the directives.61

The new directives focused on social and environmental sustainability measures.62 The preamble to the new directives even notes that the public procurement directives are “market-based instruments to be used to achieve smart, sustainable and inclusive growth while ensuring the most efficient use of public funds.”63 With the implementation of the new directives, social sustainability measures can be incorporated into all stages of the public procurement process.

1.  Technical Specifications

Under Article 60 of the new directives,

The technical specifications shall lay down the characteristics required of a works, service or supply. Those characteristics may also refer to the specific process or method of production or provision of the requested works, supplies or services or to a specific process for another stage of its life cycle even where such factors do not form part of their material substance, provided that they are linked to the subject-matter of the contract and proportionate to its value and its objectives.64

Thus, a link must exist between the technical specification and the subject matter, but it does not need to be the most prevalent attribute.65 These specifications must be established in the contract documents.66 Through this directive, Sweden can request details on trafficking in persons in supply chains from contractors.

2.   Exclusion

The new directives also permit government agencies to exclude suppliers who violate social standards.67 In accordance with Article 80, exclusions can apply to multiple areas.68 Thus, Sweden can exclude contractors for trafficking in persons violations in supply chains.

3.   Award Criteria

Social requirements also can be included in award criteria under the new directives. In accordance with the new directives, the most economically advantageous tender (“MEAT”) can be implemented when awarding a contract.69 The MEAT must “be identified on the basis of the price or cost, using a cost effectiveness approach, such as whole-life costing . . . , and may include the best price-quality ratio, which shall be assessed on the basis of criteria. ”70

When the social criteria are related to the public contract’s subject matter, the winning bidder can be chosen, in part, on social responsibility factors as long as price or cost criterion also is considered. Under MEAT, the winning bidder can be chosen based on the lowest price, the lowest cost, or the best price-quality ratio (“BPQR”).71 This system thus allows Sweden to give an advantage to bidders who have strong anti-trafficking in persons compliance programs in place.

4.   Contract Performance Clauses

The directives permit the government agents to incorporate social requirements into solicitations and contract clauses.72 Although the inclusion of social requirements in a contract clause is optional, the clauses would become mandatory as part of the contract once included.73 This is also where the suppliers’ compliance with these requirements will be verified.74 It is not an issue to take social measures into consideration75 but promotes social responsibility among potential bidders and encourages them to adopt policies that address social issues, such as trafficking in persons.

5.  Abnormally Low Tender

The contracting agent also should reject tenders that are abnormally low due to a social requirements violation.76 Thus, Swedish county councils must reject bids that are low due to human rights violations, such as trafficking in persons.

6.   Labels

Labels also now can be utilized to ensure social responsibility in public procurement in EU Member States. Pursuant to the directives,

[w]here contracting entities intend to purchase works, supplies or services with specific environmental, social or other characteristics they may, in the technical specifications, the award criteria or the contract performance conditions, require a specific label as means of proof that the works, supplies or services correspond to the required characteristics.77

This allows suppliers to establish more easily that they are in compliance with social responsibility laws. Equivalent labels also may be accepted as a showing of compliance in addition to those specified in a solicitation.78

3.   Implementation in Sweden

Sweden was given until April 2016 to implement the directives.79 Sweden did not meet the deadline; however, “only [thirteen] of [twenty-eight] Member States had correctly implemented the new [d]irectives on time.”80 Sweden introduced the bill to implement the new directives in June 2016.81 On January 1, 2017, the new directives were transposed fully into Sweden’s national laws.82 Sweden must comply with the directives, but as a European Union Member state, the country can add additional requirements. Sweden has done this through the country’s County Councils.

C.  Swedish County Councils’ Measures to Combat Trafficking in Persons

Sweden is comprised of 340 national-level government agencies, 290 municipalities, and 21 County Councils.83 Together, they comprise the three types of contracting authority in Sweden.84 The county councils have the latitude to make many governmental decisions so long as they remain in compliance with the national legislature.85 In this regard, the 21 County Councils have autonomy over the public procurement of supplies for “health care, dental care, and public transportation,” among other areas.86 The 21 County Councils procure goods and services valued at more than 120 billion SEK annually.87 This spending power gives the County Councils the ability to affect social causes through procurement regulations.

1.   History of the County Councils’ Utilization of Public Procurement to Influence Social Causes

Sweden is not unique in facing human rights violations in its public procurement supply chains. Like many other nations, the country’s supply chain is complex and globalized, creating a risk for human rights violations.88 Social criteria were implemented first into County Council public procurement measures in 2007.89 Although each County Council originally had its own set of social criteria, it became clear that policies could be more efficiently and effectively utilized as a single block.90

The County Councils determined that the most appropriate structure would consist of “a steering committee, a national coordinator for social responsibility, an expert group and point of contact in each county council” in order to carry out their initiatives.91 Each County Council’s appointed point of contact is responsible for implementing the social causes in their county’s public procurement, ensuring the County Council’s data and information is shared with other members, and incorporating the social responsibility measures in public procurement that the committee agrees upon.92

In 2012, the structure was formalized, and the first National Coordinator was selected.93 The National Coordinator reports to the five-member national steering committee, who report back to the chief procurement officers and environmental managers of each County Council. The network provides training to ensure suppliers can be evaluated properly at the solicitation stages as well as throughout the life of the contracts.94

It is important to note that each County Council still procures its own goods and services; however, the new system allows councils to cooperate and collaborate with each other.95 This option increases the leverage that the councils collectively have against potential and current suppliers. The County Councils also established a means of funding the initiative. The funding system is based on population, with each of the twenty-one County Councils allocating €0.04, per capita.96

2. The County Councils’ Current Role in Regulating Public Procurement

The Swedish County Councils have taken a product-specific approach to regulating social causes in government contracts. Specifically, the above- mentioned code of conduct and contract clauses apply to eight items: textiles, surgical instruments, disposable surgical products, rubber gloves, dressings, IT and communication (ITC), pharmaceuticals, and food.97 These categories represent a limited section of the total public procurement, but they were chosen in part because of their high risk for human rights violations.98

When procuring any of these eight goods, social criteria must be considered.99 Each County Council has responsibility to ensure such consideration occurs.100 The County Council does not need to make this decision independently, however. The National Coordinator can assist the councils with the implementation and monitoring process.101

i.  Code of Conduct

The Code of Conduct incorporates social criteria throughout contract performance.102 The Code of Conduct references several international instruments aimed at preventing human rights violations.103 Contract clauses implement the Code of Conduct.

ii.  Contract Clauses

As part of their public procurement agreement, contractors must meet human rights due diligence requirements that comply with the Code of Conduct.104 Suppliers also must establish that they have procedures in place that guarantee contract performance is within the Code of Conduct requirements.105 Suppliers must establish at a minimum that they have the following procedures in place:

(1)  A division of responsibilities regarding social consideration in the supply chain;

(2)   A description of how producing subcontractors are assessed based on social aspects; (3) An outline of requirements placed on subcontractors in terms of social responsibility. Requirements must at a minimum correspond to those that the county council imposes on the supplier; (4) A description of how monitoring and dialogue with the subcontractors is conducted. The issues monitored and discussed must be relevant to the requirements; (5) A timetable for monitoring and for dialogue with the subcontractor; and (6) How deviations from the requirements are handled.106

After the contract award, the supplier must then complete a self-assessment questionnaire (SAQ), which requests details about the supply chain and how suppliers address human rights risks.107 In addition, the County Councils have developed a national network on Social Responsibility in Public Procurement.108 These requirements apply to the above-mentioned eight product categories.109 Questionnaires and audits are used to monitor these standards.110

iii.  Corrective Action

Appraisals are performed annually to ensure the required social criteria are implemented and shared among the councils. Audits can be conducted by city councils throughout the supplier’s supply chain.111 If the contractor breaches the contract, the County Council can set up a corrective action plan, impose a price penalty, or terminate all or part of the contract.112

D.  The Dell Case Study: Swedish Public Procurement Policies Were Able to Effectively Address Trafficking in Persons in Supply Chains

The Swedish County Councils’ public procurement contract with Atea, and its subcontractor Dell, provides a useful insight into the importance of supply chain transparency. Spanning over two years, the events provide useful lessons for countries seeking to improve their response to trafficking in persons violations. In particular, the case serves as an example of how requesting compliance measures before jumping to termination or suspension can serve as an effective measure of combating trafficking in persons.

1.  Overview of Events

The Stockholm County Council awarded a public procurement contract to Dell to supply computers to government employees from September 20, 2010, to September 14, 2014.113 When the initial award ended, the Stockholm County Council signed a new contract with Atea, a Norwegian company that supplied Dell computers, among other brands.114 The value of the contract with Atea was 156 million SEK.115

In November 2013, DanWatch released an explosive report, titled IT Workers Still Pay the Price for Cheap Computers, on human rights violations at four electronics factories in China.116 One of the factories covered in the report was a supplier for Dell, and the report detailed severe forced labor and safety violations.117 After receiving the report, the Stockholm County Council — in conjunction with the Social Responsibility in Public Procurement network of twenty-one Swedish County Councils — contacted Dell about potential Code of Conduct violations and requested a meeting to discuss the matter.118

On March 4, 2014, the Swedish County Council network had a telephone call with Dell and requested additional details on the factory working conditions.119 Furthermore, due to a lack of supply chain transparency, the County Council network requested Dell confirm if Sweden even was receiving products from the Chinese factories highlighted in the DanWatch report.120 Dell subsequently responded that it had developed action plans to address the labor and safety violations but that some violations were simply inherent to the industry. Therefore, as an industry-wide plight, Dell argued they could not change some of the trafficking in persons issues, such as excessive hours.121 Relying on the Code of Conduct in Dell’s contract, the County Councils once again requested that Dell provide more details on its supply chains and discovered that Sweden was in fact receiving products from the Chinese factories mentioned in the DanWatch report.122 Enforcing their ability to request compliance and performance measures under the contract, the County Councils network continued to request an action plan from Dell over the next several months.123

Finally, in October 2014, Dell provided the County Council network with an overview of its audits.124 In keeping with its prior statements, Dell claimed “problems like excessive working hours in China will not be solved by one company or even by one industry, but rather by a committed and hard-working multi-stakeholder group that includes governments, industry and [non-governmental organizations].”125 Unpersuaded, the County Council network criticized Dell’s inability to take responsibility and gave the company a deadline of November 28, 2014, to provide a corrective action plan.126

On December 7, 2014, the County Councils received Dell’s report.127 It disclosed that “more than [seventy-five percent] of the issues from all four suppliers have been closed, [sixteen percent] downgraded, and only [nine percent] remain open.”128 Dell once again reiterated that some of the labor violations were industry-wide issues that they could not resolve.129 The County Council’s National Coordinator for Social Responsibility in Public Procurement to the Steering Committee announced that a lack of transparency and details were the report’s biggest issues.130 The National Coordinator reported that, based on Dell’s report, it was not possible to determine if the issues had been remedied and concluded that, “I do not believe that Dell can ensure that they comply with the contractual obligations . . . and that we can guarantee that Dell is manufacturing products responsibly at these four factories one year after the discovery of violations.”131

In January 2015, the Stockholm County Council decided to conduct an independent study due to the lack of useful information provided by Dell.132 Dell subsequently was notified that the County Councils’ Steering Committee would be carefully monitoring Atea and Dell, specifically in regard to social responsibility.133 On April 20, 2015, the Stockholm County Council requested Atea provide additional details about Dell’s compliance standards.134 Atea promptly responded that there was “significant risk of violations in Dell’s supply chain.”135

Subsequently, the Stockholm County Council publicly announced Atea had been instructed to drop Dell from all of its Swedish public procurement matters.136 While searching for a new provider, the Stockholm County Council continued to monitor Dell’s social responsibility compliance.137 The possibility of using Dell again as a future supplier was left open, given that Dell was able to make improvements.138

Over the next few months, the Stockholm County Council and Dell continued to meet to discuss human rights due diligence procedures.139 On June 18, 2015, Atea informed the Stockholm County Council that it believed Dell had properly addressed its supply chain violations.140 Finally, on September 9, 2015, the Stockholm County Council determined Dell was once again in compliance with the Code of Conduct and eligible to be an ITC supplier in Sweden.141

2.   Analysis and Lessons from the Dell Case Study

The process of uncovering and resolving the issues at the Chinese factories spanned eighteen months.142 By the end, the Stockholm County Council held that Atea’s due diligence and supply chain transparency measures complied with the Code of Conduct.143 The County Councils also found that Dell eventually was able to provide more detailed reports.144 Instead of providing unhelpful general details, Dell committed to conducting more thorough investigations of its supply chains.145

The Dell case study reveals several lessons for governments facing supply chain transparency issues in public procurement. First, the study shows the importance of having specific contract language relating to supply chain transparency and anti-trafficking in persons measures. The contract performance clause was a key component in holding Dell and Atea responsible for the trafficking in persons violations.146

The County Councils struggled with Dell’s initial lack of accountability and responsibility for the labor violations. The issue also extended to Atea because it needed to enforce the contract terms and was also in violation as the prime contractor. As the County Council explained, “Despite the fact that Atea does not produce its own products, but delivers ready-made products to the County the company must be able to ensure that the County Council’s requirements for socially responsible production are communicated up the supply chain.”147 Due to the contract clauses, the County Council was able “to require contractually enforceable compliance conditions to improve their risk assessment, transparency, and audit methodology, and to account for their use of leverage and pricing and delivery practices to address persistent violations.”148 The clauses ended up being an effective tool in Dell’s eventual compliance with human rights and social responsibility matters.

Another important lesson from the Dell case study is that “long-term contractor engagement may be necessary to improve human rights due diligence.”149 After first discovering the violations, Dell consistently held that some of the trafficking in persons violations could not be remedied because they were part of the industry.150 Instead of terminating Dell’s contract, the Stockholm County Council continued to work with Dell to resolve the issues. By doing this, the county councils were able to effect social change in the Chinese factories. If the contract had simply been terminated, it is possible nothing would have changed for the workers. It is also possible that the next contractor the County Councils utilized would have the exact same problems since the issue was industry-wide. Working with Dell on their compliance plan allowed the factory conditions to improve.

These efforts taken by the Swedish County Councils, Dell, and Atea demonstrate how governments and suppliers can work together to improve human rights through supply chain transparency compliance practices. Thus, the Dell case can serve as an example to other companies and governments who wish to improve anti-trafficking in persons efforts through supply chain transparency.

V.  Analysis: Swedish County Coucil Supply Chain Policies the United States Can Adopt in Furtherance of Anti-Trafficking In Persons Measures

A.  Audits and Compliance

Contracting officers have the ability to conduct audits pursuant to the FAR “Combating Trafficking in Persons” rules. These audits could adopt a similar structure to the Dell case and could be even more effective with the emergence of blockchain technology capabilities.151 Contracting Officers have the ability to request questionnaires, hold compliance meetings, and conduct site visits. This solution would be easy to implement as the United States government already has several supply chain transparency and trafficking in persons systems in place.

1.  Verité Report and Responsible Sourcing Tool

One such system that the United States public procurement system could utilize is the Verité Report and Responsible Sourcing Tool. In 2015, pursuant to an award from the United States Department of State, Verité released a report, “Strengthening Protections Against Trafficking in Persons in Federal and Corporate Supply Chains.”152 The United States Department of State’s Office to Monitor and Combat Trafficking in Persons requested that Verité map out and investigate the risks of trafficking in persons in government contract supply chains.153 The report details “the main factors that contribute to the risk of human trafficking in global supply chains.”154 Specifically, the report noted the key risk factors for trafficking in persons in supply chains include the “[p]resence of labor contractors, recruiters, agents, or other middlemen in labor supply chains; [l]ong, complex, and/ or non-transparent product supply chains; [and] [s]ubstantial sourcing or subcontracting in high-risk countries.”155

In addition, the report identified key economic sectors with significant federal procurement that proved to be a high risk of trafficking in persons.156 These sectors are agriculture, construction, electronics and electrical products manufacturing, extractives/ mining and basic metal production, fishing and aquaculture, forestry, healthcare, hospitality, housekeeping/ facilities operation, textile and apparel manufacturing, and transportation and warehousing.157 This report can provide a framework to implement compliance measures to combat trafficking in persons in government contract supply chains while also hone in on the economic sectors most at risk. Similar to the Swedish regulations, the United States could implement a program that high- lights these risk areas as a requirement for government contracts. Heightened scrutiny and certification requirements could be applied to government contracts in these areas given the heightened instance of trafficking in persons.

2.  Child Labor Example

In addition, supply chain tools for government contracting are utilized already by Contracting Officers; however, these tools are required only for potential child labor violations for foreign-sourced contracts.158 Current FAR rules require the United States Department of Labor to prepare a list of forced or child labor violations.159 For example, items on the list include bricks from Afghanistan, electronics from China, and carpets from Pakistan.160 The fact that a product is on the list does not bar the item from public procurement in the United States.161 The purpose of the list is to flag potential instances of child labor for the Contracting Officer.162 Any contract that surpasses the micro-purchase threshold requires the Contractor certify that (1) they will not sell a product on the list, or (2) they have made a good-faith effort to determine whether forced child labor was used.163 It should be noted, however, that the certification of knowledge requirement is inapplicable to parties of the Agreement on Government Procurement as well as other countries that have free trade agreements with the United States.164 Per the FAR, remedies for failure to comply with the child labor regulations can result in contract termination.165 It can also result in suspension or debarment.166

There is already a framework for child trafficking that could be broadened to include other areas, such as sex trafficking and forced labor. This new system could be implemented by utilizing the Verité report. In addition, trafficking in persons is an issue that continues to gain awareness by NGOs, the media, and other governments. Therefore, it is possible that, similar to the Swedish case study, another entity might do an initial audit to discover violations independent of the United States government and identify key risk areas for government contracts. As with the Dell case study, the United States government could then use the reports as a starting point to cut down on time and cost. These reports could then be the basis for a website list tracking system similar to the one used for child labor violations.

B.  Action Plan Grace Periods

As the Dell case study showed, grace periods for suppliers can be a useful tool, especially when the violation is common to the industry. It makes little sense to terminate a contract if no suppliers are in compliance. In this instance, it would be more efficient to work with the supplier to create an action plan and to give the supplier reasonable time to implement it. This would be more effective than a suspension or disbarment system, which are not used frequently to solve the problem.167

FAR rules are in place to facilitate this process. When trafficking in persons violations occur, Contracting Officers may suspend contract payments until appropriate remedial actions have been taken.168 This remedy could be used to implement better supply chain transparency and combat instances of trafficking in persons. Suppliers could also be held accountable under FAR 42.15, which states that fees paid to contractors “should be reflective of the contractor’s performance and the past performance evaluation should closely parallel and be consistent with the fee determinations.”169 Thus, Contracting Officers could utilize current and future payments as an incentive for complying with supply chain transparency measures.

C.  Challenges

Implementing these programs should be balanced against potential challenges that may arise. It is important that the addition of new regulations is not so burdensome as to dissuade companies from submitting bids or continuing to contract with the United States government. Nor should they be so cumbersome that they distort competition in public procurement. Lastly, there would need to be a balance in the public nature of dealing with violations. Although media pertaining to public procurement violations could serve as a useful example to other suppliers (and also serve as a potential model for other countries), it is important that suppliers are not scared away from contracting with the government due to a potential fear of bad press.

VI.  Conclusion

Trafficking in persons is a global issue. As such, it makes sense to look to other countries for valuable insights and lessons in implementing effective anti-trafficking in persons measures, especially when those countries are facing similar challenges. The United States government could adopt policies developed by Sweden’s County Councils in combating trafficking in persons in public procurement. Specifically, the United States could increase FAR “Combating Trafficking in Persons” rule audits and compliance measures and provide action plan grace periods when supply chain transparency violations are discovered. These supply chain transparency-based methods could prove to be useful tools in the United States’ battle against trafficking in persons.

Entity:
Topic:
  1. See Sarah Stillman, The Invisible Army: For Foreign Workers on U.S. Bases in Iraq and Afghanistan, War Can Be Hell, New Yorker, June 6, 2011, at 56.
  2. See id.
  3. See id.
  4. See id.
  5. Id.
  6. Are Government Contractors Exploiting Workers Overseas? Examining Enforcement of the Trafficking Victims Protection Act: Before the Subcomm. on Tech., Info. Policy, Intergovernmental Relations and Procurement, 112th Cong. 56 (2011) (statement of Nick Schwellenbach, Director of Investigations, Project on Government Oversight).
  7. Stillman, supra note 1.
  8. Id.
  9. See generally Therese Sjöström & Linda Scott Jakobsson, Swedwatch, Agents for Change: How Public Procurers Can Influence [Labor] Conditions in Global Supply Chains. Case Studies from Brazil, Pakistan and Thailand (2016), available at http://www.swedwatch.org/wp-content/uploads/2016/11/82_agents_for_change_enkelsidor.pdf.
  10. International Labour Office, Global Estimates of Modern Slavery: Forced Labour and Forced marriage 9 (2017).
  11. See generally id.
  12. Protocol to Prevent, Suppress, and Punish Trafficking in Persons, Especially Women and Children, Supplementing the United Nations Convention Against Transnational Organized Crime, G.A. Res. 55/25, Annex II, at 55, U.N. GAOR, 55th Sess., Supp. No. 49, U.N. Doc. A/RES/55/25 (Jan. 8, 2001).
  13. See U.S. Dep’t of State, Trafficking in Persons Report 1 (2017).
  14. See Trafficking Victims Protection Act (TVPA), 22 U.S.C. § 7101(a) (2008).
  15. Id. § 7102(9).
  16. Id.
  17. Id. § 7102(10).
  18. See FAR 22.1702.
  19. See id.
  20. See generally Business and Human Rights Resource Center, Modern Slavery in Company Operation and Supply Chains 3 (2017), available at http://www.l20argentina.org/pdf/modern_slavery_in_company_operation_and_supply_chain_final.pdf.
  21. Supply Chain Overview Practice Note ¶ 1,available at Westlaw Practical Law 0-523-6390.
  22. Supply Chain, Business Dictionary, http://www.businessdictionary.com/definition/supply-chain.html.
  23. See Supply Chain Overview Practice Note, supra note 21, ¶ 18.
  24. See generally David Linich, The Path to Supply Chain Transparency 4 (2014), available at https://www2.deloitte.com/content/dam/insights/us/articles/supply-chain-transparency/DUP785_ThePathtoSupplyChainTransparency.pdf.
  25. Hau Lee & Kevin O’Marah, SCM World, The Chief Supply Chain Officer Report 2011, at 27 (2011).
  26. See Paul Brody, How Blockchain Is Revolutionizing Supply Chain Management, EY D!gitalist Mag., Aug. 23, 2017, at 2, available at https://www.ey.com/Publication/vwLUAssets/ey-blockchain-and-the-supply-chain-three/$FILE/ey-blockchain-and-the-supply-chain-three.pdf.
  27. John G. Bradbury, Human Trafficking and Government Contractor Liability: Is FAR 22.17 a Step in the Right Direction?, 37 Pub. Cont. L.J. 907, 912 (2008).
  28. See Steptoe & Johnson LLP, The Government Contractor Supply Chain Toolkit 2.0, at 1 (2016), available at https://www.steptoe.com/assets/htmldocuments/GovCon_SupplyChain_2017.pdf#page=64.
  29. See Exec. Order No. 13,627, 3 C.F.R. 309 (2012).
  30. Labor and Employment Statutes, Regulations, and Executive Orders Governing Federal Contractors Chart: Overview Practice Note § 5, available at Westlaw Practical Law 7-605-0226.
  31. Id.
  32. Id.
  33. Exec. Order No. 13,627, 3 C.F.R. 309 (2012).
  34. FAR Case 2005-012, Combating Trafficking in Persons (Revised Interim Rule), 72 Fed. Reg. 46335-01.
  35. See FAR 22.1700.
  36. Steptoe & Johnson, supra note 29, at 60.
  37. FAR 22.1705.
  38. See Universal Health Servs., Inc. v. United States, 136 S. Ct. 1989, 1999 (2016).
  39. Id.
  40. See Exec. Order No. 13,627, 3 C.F.R. 309 (2012).
  41. FAR 22.1704(b).
  42. Id.
  43. FAR 52.222-50(e)(7).
  44. See Michael J. Davidson & Randolph Sawyer, Suspension and Debarment as a Tool to Combat Human Trafficking, 50 Procurement Law 22 (2015).
  45. Id. at 23.
  46. Exec. Order No. 13,627, 3 C.F.R. 309 (2012).
  47. Joe Davidson, House Panel Hearing Explores U.S. Government Contractor’s Exploitation of Workers Overseas, Wash. Post (Nov. 2, 2011), https://www.washingtonpost.com/politics/house-panel-hearing-explores-us-government-contractors-exploitation-of-workers-overseas/2011/11/02/gIQAImMggM_story.html?utm_term=.75d51ecde515.
  48. Are Government Contractors Exploiting Workers Overseas? Examining Enforcement of the Trafficking Victims Protection Act: Before the Subcomm. on Tech., Info. Policy, Intergovernmental Relations and Procurement, 112th Cong. 82 (2011) (statement of Del. Gerald Connolly, Ranking Member, S. Comm. on Tech., Info. Policy, Intergovernmental Relations & Procurement).
  49. Davidson & Sawyer, supra note 44, at 23.
  50. Id.
  51. Id.
  52. U.S. Dep’t of Defense, Office of Inspector Gen., Rep. No. DoDIG-2012-086, Evaluation of DoD Contracts Regarding Combating Trafficking in Persons: Afghanistan 11 (2012).
  53. Davidson & Sawyer, supra note 44, at 24.
  54. FAR 22.1704(d)(1).
  55. 48 CFR § 22.1704 (2014).
  56. FAR 52.222-50(e).
  57. Gov’t of Sweden Ministry for Foreign Affairs, Action Plan for Business and Human Rights 3 (2015) [hereinafter Gov’t of Sweden Action Plan], available at http://www.government.se/contentassets/822dc47952124734b60daf1865e39343/action-plan-for-business-and-human-rights.pdf.
  58. Id. at 5.
  59. Id. at 7.
  60. Sjöström & Jakobsson, supra note 9, at 13.
  61. See Council of the European Union Press Release 6337/14, Council Adopts Directives for the Reform of Public Procurement 2 (Feb. 11, 2014), availabel at http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/intm/140975.pdf.
  62. Sjöström & Jakobsson, supra note 9, at 13.
  63. Council Directive 2014/25/EU 2014, O.J. (L 94/243).
  64. Id.
  65. See id.
  66. Id.
  67. Id.
  68. Id.
  69. Id.
  70. Id.
  71. See id.
  72. See id.
  73. Id.
  74. See id.
  75. See id.
  76. See id.
  77. Id.
  78. Id.
  79. Sjöström & Jakobsson, supra note 9, at 13.
  80. Andrea Sundstrand, 2017 Gov’t Contracts Year in Review Covering 2016 Briefs, International Procurement Developments in 2016—Part III: The European Union’s New Procurement Rules (2017).
  81. Sjöström & Jakobsson, supra note 9, at 55.
  82. Sundstrand, supra note 80.
  83. Sjöström & Jakobsson, supra note 9, at 15.
  84. Id. at 16.
  85. See Gov’t of Sweden Action Plan, supra note 57, at 9.
  86. Swedish County Councils, International Learning Lab on Public Procurement and Human Rights, http://www.hrprocurementlab.org/blog/speaker-statements/swedish-county-councils.
  87. Electronicswatch, Public Procurement and Human Rights Due Diligence to Achieve Respect for [Labor] Rights Standards in Electronics Factories: A Case Study of the Swedish County Councils and the Dell Computer Corporation 4 (2016), available at http://electronicswatch.org/en/public-procurement-human-rights-due-diligence-a-case-study-of-the-swedish-county-councils-and-the-dell-computer-corporation-february-2016_2456642.pdf.
  88. See generally Sjöström & Jakobsson, supra note 9.
  89. Id. at 16.
  90. See id. at 17.
  91. Id. at 16.
  92. Electronicswatch, supra note 87, at 5.
  93. Amol Mehra et al., Public Procurement and Human Rights: A Survey of Twenty Jurisdictions 38 (2016), available at http://www.hrprocurementlab.org/wp-content/uploads/2016/06/Public-Procurement-and-Human-Rights-A-Survey-of-Twenty-Jurisdictions-Final.pdf.
  94. Electronicswatch, supra note 87, at 5.
  95. See id. at 4.
  96. Id. at 5.
  97. Swedish County Councils, supra note 86.
  98. See Sjöström & Jakobsson, supra note 9, at 17.
  99. Id.
  100. Id.
  101. See id.
  102. Mehra et al., supra note 93, at 38.
  103. Sjöström & Jakobsson, supra note 9, at 17.
  104. Swedish County Councils, supra note 86.
  105. Sjöström & Jakobsson, supra note 9, at 17–18.
  106. Id. at 18.
  107. Id.
  108. See id. at 16.
  109. Id. at 18.
  110. Swedish County Councils, supra note 86.
  111. Id.
  112. Electronicswatch, supra note 87, at 5.
  113. Id. at 3.
  114. Id.
  115. Id.
  116. Id.
  117. Id.
  118. See id.
  119. Id. at 6.
  120. Id. at 7.
  121. Id.
  122. See id.
  123. Id.
  124. Id. at 8.
  125. Id.
  126. Id.
  127. Id.
  128. Id. at 8–9.
  129. See id.
  130. See id.
  131. Id. at 10.
  132. Id.
  133. Id.
  134. Id.
  135. Id.
  136. Id. at 11.
  137. See id.
  138. See id.
  139. See id.
  140. Id.
  141. Id.
  142. See id. at 14.
  143. Id. at 11.
  144. See id.
  145. Id.
  146. Id. at 16.
  147. Id. at 12.
  148. Id. at 16.
  149. Id. at 17.
  150. See id. at 8–9.
  151. See Alex Capri, How Blockchain Could Help End Modern Day Slavery in Asia’s Exploitative Seafood Industry, Forbes (Feb. 14, 2018), https://www.forbes.com/sites/alexcapri/2018/02/14/how-blockchain-could-help-end-modern-day-slavery-in-asias-exploitative-seafood-industry/#50b2408d4b65.
  152. See generally Verité, Strengthening Protections Against Trafficking in Persons in Federal and Corporate Supply Chains (2015), available at https://2009-2017.state.gov/documents/organization/237137.pdf.
  153. See id. at 6.
  154. Id. at 7.
  155. Id. at 19.
  156. See id. at 7.
  157. Id. at 3–4.
  158. FAR 22.1503.
  159. Additional Activities To Monitor And Combat Forced Labor And Child Labor, 22 U.S.C.A. § 7112 (2013).
  160. Dep’t of Labor, List of Products Produced by Forced or Indentured Child Labor 5, 8, 15 (2014), available at https://www.dol.gov/ilab/reports/child-labor/list-of-products/index--country.htm.
  161. See generally FAR 22.1503 (Procedures for acquiring end products on the List of Products Requiring Contractor Certification as to Forced or Indentured Child Labor).
  162. See id.
  163. Id.
  164. See id.
  165. FAR 22.1504(b).
  166. See id.
  167. See generally Davidson & Sawyer, supra note 44; Sjöström & Jakobsson, supra note 9, at 24.
  168. See FAR 52.222-50(e).
  169. FAR 42.1500.