May 25, 2010

Employment Eligibility Verification

Proposed Rule
Summary

Score: 24 / 60

Additional details
Agency
General Services Administration
Regulatory Identification Number
9000-AK91
Agency Name
General Services Administration
Rule Publication Date
06/12/2008

RULE SUMMARY

The rule proposes to amend the Federal Acquisition Regulation (FAR) to require that certain contracts contain a clause requiring that the contractor and subcontractor utilize the E-Verify System to verify employment eligibility of all newly hired employees of the contractor or subcontractor and all employees directly engaged in the performance of work in the United States under those contracts.

METHODOLOGY

There are twelve criteria within our evaluation within three broad categories: Openness, Analysis and Use. For each criterion, the evaluators assign a score ranging from 0 (no useful content) to 5 (comprehensive analysis with potential best practices). Thus, each analysis has the opportunity to earn between 0 and 60 points.

Criterion Score

Openness

1. How easily were the RIA , the proposed rule, and any supplementary materials found online?
The NPRM and RIA are not available on the FAR home page. Under the "proposed regulations" button, FAR refers the reader to regulations.gov for proposed regulations since 2006. The proposed rule is available at regulations.gov. The RIA is buried among 2,300 public submissions.
3/5
2. How verifiable are the data used in the analysis?
Most data for cost analysis are documented and sourced, usually with links. A number of assumptions are "based on experience" with no further explanation.
3/5
3. How verifiable are the models and assumptions used in the analysis?
Some assumptions and models are justified with argument and citations, others are not.
3/5
4. Was the analysis comprehensible to an informed layperson?
The analysis does not use much jargon, and the e-verify system is explained very well. The cost analysis showed most work.
4/5

Analysis

5. How well does the analysis identify the desired outcomes and demonstrate that the regulation will achieve them?
2/5
Does the analysis clearly identify ultimate outcomes that affect citizens’ quality of life?
The analysis identifies lower costs for firms and government due to a more stable workforce and less disruption from enforcement activity; improved security for sensitive contracts.
5/5
Does the analysis identify how these outcomes are to be measured?
The analysis provides no measurement, even for the benefits characterized as "quantitative."
0/5
Does the analysis provide a coherent and testable theory showing how the regulation will produce the desired outcomes?
The cost theory might be plausible if the analysis had explained why firms do not bear full costs of workforce instability when they hire illegal workers. Firms that choose the lowest-cost option (weighing disruption costs against e-verify costs) should be able to win contracts. Security theory is more obvious; e-verify seems to catch more illegal workers.
2/5
Does the analysis present credible empirical support for the theory?
There is some evidence that e-verify is more effective than paper forms. No evidence is presented that firms do not fully internalize costs of e-verify and increased risk of enforcement disruption due to failure to use e-verify.
2/5
Does the analysis adequately assess uncertainty about the outcomes?
The size of the outcome is not measured at all.
0/5
6. How well does the analysis identify and demonstrate the existence of a market failure or other systemic problem the regulation is supposed to solve?
1/5
Does the analysis identify a market failure or other systemic problem?
The analysis asserts that contractors do not internalize all costs associated with less stable labor force.
1/5
Does the analysis outline a coherent and testable theory that explains why the problem (associated with the outcome above) is systemic rather than anecdotal?
The analysis asserts that contractors do not internalize all costs associated with disruptions caused by less stable labor force. It does not present a theory. Perhaps the problem is due to some deficiency in how federal contracts are written, but the reader is left to speculate about this on his own.
1/5
Does the analysis present credible empirical support for the theory?
The problem is simply asserted.
0/5
Does the analysis adequately assess uncertainty about the existence or size of the problem?
The analysis does not address this topic.
0/5
7. How well does the analysis assess the effectiveness of alternative approaches?
2/5
Does the analysis enumerate other alternatives to address the problem?
It considers one other option: requiring contractors to use e-verify only for new employees. The alternative isn't considered with as much detail, however.
2/5
Is the range of alternatives considered narrow (e.g., some exemptions to a regulation) or broad (e.g., performance-based regulation vs. command and control, market mechanisms, nonbinding guidance, information disclosure, addressing any government failures that caused the original problem)?
Narrow—it offers one tweak on the proposed approach. Plausible alternatives might be to change federal contracting so that contractors bear full costs of their choice to use e-verify or run the risk of enforcement actions later, or to step up enforcement so that it is a more credible deterrent under the current system.
1/5
Does the analysis evaluate how alternative approaches would affect the amount of the outcome achieved?
Only cost reductions are calculated. Requiring verification for all outcomes would be more effective.
2/5
Does the analysis adequately address the baseline? That is, what the state of the world is likely to be in the absence of federal intervention not just now but in the future?
It assumes that the baseline is that no federal contractors would use e-verify. No data is presented on whether any do so now. This is an especially serious omission since the analysis implies elsewhere that e-verify will reduce one type of cost for employers.
1/5
8. How well does the analysis assess costs and benefits?
2/5
Does the analysis identify and quantify incremental costs of all alternatives considered?
Incremental costs appear to be thoroughly analyzed for the two options considered.
5/5
Does the analysis identify all expenditures likely to arise as a result of the regulation?
Yes; the RIA has done an excellent job of quantifying all costs down to some very detailed and often overlooked expenditures.
5/5
Does the analysis identify how the regulation would likely affect the prices of goods and services?
It asserts that the federal government will pay more or suffer from disruptions in work if contractors are not required to use e-verify, but does not offer follow-up explanation or data. There is no discussion of whether costs of e-verify will ultimately be borne by firms or the government.
1/5
Does the analysis examine costs that stem from changes in human behavior as consumers and producers respond to the regulation?
The cost analysis assumes 100% compliance with e-verify, and these costs are calculated. Price effects are not considered.
1/5
If costs are uncertain, does the analysis present a range of estimates and/or perform a sensitivity analysis?
Yes; it uses a Monte Carlo analysis to examine multiple variations in cost assumptions.
5/5
Does the analysis identify the alternative that maximizes net benefits?
Benefits are not quantified, and there is no discussion of net benefits.
0/5
Does the analysis identify the cost-effectiveness of each alternative considered?
Since benefits are not quantified, cost-effectiveness cannot be calculated.
0/5
Does the analysis identify all parties who would bear costs and assess the incidence of costs?
Yes, the parties bearing the costs appear to be the contractors and the government (and implicitly the taxpayer too). Consumers of their services were not considered though, which is odd considering these costs may be passed on to the consumer in the form of higher prices. There is a thorough analysis of differential costs for different sizes of contractors. Cost calculations also acknowledge that employees, as well as employers, will bear some costs, and it calculates these costs. The analysis asserts that government will bear many of the costs of the current system but does not demonstrate how or why. There is no discussion of whether government will bear any costs of the proposed regulation.
4/5
Does the analysis identify all parties who would receive benefits and assess the incidence of benefits?
The analysis asserts in several places that both contractors and government will benefit. This is not calculated. But elsewhere it suggests that contractors will be harmed on net because some contractors would prefer to use the current system and bear the risk of costly enforcement actions.
1/5

Use

9. Does the proposed rule or the RIA present evidence that the agency used the analysis?
This analysis appears to have been written to satisfy requirements that the agency estimate costs.
1/5
10. Did the agency maximize net benefits or explain why it chose another alternative?
Net benefits are not calculated. The agency said it chose the alternative with the highest total benefits but provides no rationale for doing this.
1/5
11. Does the proposed rule establish measures and goals that can be used to track the regulation's results in the future?
Outputs from the e-verify system imply that measures and goals could be established, but the regulation doesn't do it.
1/5
12. Did the agency indicate what data it will use to assess the regulation's performance in the future and establish provisions for doing so?
Outputs from the e-verify system would be useful data for assessing some outcomes.
1/5
 
Total 24 / 60