Brandon Williams asked me a question in a recent email about whether or not contract inspectors are authorized. He based this question on (and sent me a copy of) an article from the Federal Lawyer (June 2008, pages 41 – 47). It was written by James W. Conrad Jr. and provides a very good summary of how we got to CFATS, a brief summary of the CFATS provisions and a discussion of HR 5577 and HR 5533.
Before answering Brandon’s question I have to say that I thoroughly enjoyed Conrad’s article. I highly recommend this article to anyone that is connected with security at high-risk chemical facilities. It should be required reading for all Security Managers and Facility Managers. It is written by a lawyer who knows how to write so that non-lawyers can understand; a rare talent in my opinion.
Are Contractors Authorized?
Brandon called my attention to a specific statement made in the article; “As a result, DHS has raised the prospect of a future rulemaking to authorize the use of third-party auditors to conduct inspections.” He wanted to know if these third-party auditors (contractors) were authorized under CFATS. The short answer is no, there are no provisions in CFATS for DHS using contractors. That is why Conrad noted the ‘prospect of future rulemaking’.
The more important question would be if contractors were allowed under the Section 550 authorization for CFATS. This is what would control the legal ability of the Secretary of DHS to implement a rule authorizing the use of contract inspectors. The wording in Section 550 does not specifically provide for contractors, but the wording is so wide open that it seems to me that the Secretary could certainly proceed with such a rule making procedure. It is almost certainly too late for Secretary Chertoff to do so (President Bush has reportedly prohibited the wholesale publishing of new rules so common at the ends of recent administrations), but the next Secretary of DHS could publish such a rule.
Legal Standing of Contractors
Brandon noted that the teams from the Commerce Department that support the Chemical Weapons Convention inspections only use government inspectors to avoid non-disclosure issues and authority issues for suggestions made by contractors. He wondered if the same issues would not affect the efficacy of CFATS contract inspectors.
While I have undergone two CWC inspections (10+ years ago) I am not familiar enough with the regulations to comment on why they decided not to use contract inspectors. The problems that Brandon identified are real legal problems that must be addressed before such contractors enter the first facility. The ‘third party’ provisions of HR 5577 specifically addressed each of these as well as requirements for liability insurance.
Regulations issued by DHS could address the same issues and that should be legally sufficient. Legal sufficiency is not always enough. There would certainly be some facilities where management or owners were not confident that mere regulations were sufficient to protect their interests. Without specific authorizing language in legislation there will certainly be attempts to prevent contractor inspections through law suits.
Training and Supervision Issues
The legal issues are relatively easy to solve. It is ‘merely’ a matter of putting the right words in the right order to cover the legal requirements. It is much more difficult to deal with the training and supervision of contract inspectors. Especially if the Department uses a large number of companies for this purpose as is envisioned in HR 5577. As I noted in an earlier blog (see: “Third Party Entities under HR 5577”) the proposed legislation requires that:
- “DHS contractors and sub-contractors come from a wide variety of selected small business and disadvantage business concerns. Among those specifically mentioned are businesses ‘owned and controlled’ by service disable veterans, ‘HubZone’ businesses, and ‘socially and economically disadvantaged’ small businesses. Black, Hispanic and Tribal colleges and universities are also included.”
This means that the training of the individual inspectors is going to be uneven at best. Even if DHS were to prepare and present a centralized training course for all of the contractors the training issue would still exist. Training for this type of position will not be a one-time event. It will have to be on-going and continuous. Multiple contractors and sub-contractors will make it difficult to ensure that training makes it way down to all inspectors in a timely manner.
If inspectors are actually sub-contractors, then the legal requirements for limiting training and supervision will make it even more difficult. Various tax and legal requirements for employing contractors delineate the amount of training and supervision that separates a ‘contractor’ from an employee. Companies violating these requirements can be held responsible for all sorts of additional payroll costs and other legal liabilities.
Multiple levels of contractors and subcontractors will make the supervision and control of inspectors much more difficult, even if the actual inspectors are employees. Each company will have a different background and area of expertise. Some will come from a law enforcement background, others will be from a security equipment background, while still others will be from more of a chemical safety background. These varied backgrounds with their different outlooks and management styles will make it difficult to maintain a common message and enforcement style.
Future of Contract Inspectors
As I have mentioned in an earlier blog (see: “DHS Inspections: Contract Inspectors”) there are a number of viable reasons for DHS to use contract inspectors. If DHS does use contract inspectors, they are going to have to be careful to address these issues. One thing that they are going to have to ensure is that each inspector is actually an employee of someone. This is the only way that they are going to be able to insure adequate ‘command and control’ of the inspection force.
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