Corporate Policy

Counter-Trafficking in Persons Policy

DCO-2014-1.1

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1 Purpose

The Millennium Challenge Corporation (“MCC”) is committed to working with partner countries to ensure appropriate steps are taken to prevent, mitigate and monitor trafficking in persons (“TIP”) risks in the projects it funds. MCC’s core mission, reducing poverty through economic growth, does not directly address human trafficking. However, MCC investments do aim to enhance economic opportunities and increase incomes, two factors that reduce people’s susceptibility to TIP risks. In addition, appropriate responses to TIP are consistent with overall criteria MCC uses for selecting partner countries: just governance, investments in people, and economic freedom.

MCC has adopted an approach that includes incorporating TIP into determining country eligibility for MCC funding as well as assessing and managing TIP risks on MCC-funded projects.

The purpose of this policy is to provide operational guidance to accountable entities (“MCAs”) and MCC for assessing and managing TIP risks on MCC-funded projects. This policy provides detailed information on how to: (1) assess TIP risks in projects; (2) categorize projects (either as low-risk or high-risk); and (3) manage risks through counter-TIP minimum requirements and the TIP Risk Management Plan (as defined in Annex A).

2 Scope

This policy applies to all MCC-funded projects. The Counter-TIP Minimum Compliance Requirements (as defined in Annex A) will be incorporated into all MCA’s solicitation documents and contracts for works, non-consulting services, and consulting services. In addition, for works, non-consulting services, and consulting services contracts for projects that are categorized as high-risk, the MCA is required to develop a TIP Risk Management Plan (as defined in Annex A).

3 Authorities

3.1 Acts

  1. The Victims of Trafficking and Violence Protection Act (“TVPA”) of 2000, enacted by Pub. Law 106-386
  2. The TVPA Reauthorization Act of 2003, enacted by Pub. Law 108-193 (H.R. 2620)
  3. The TVPA Reauthorization Act of 2005, enacted by Pub. Law
  4. The William Wilberforce TVPA Reauthorization Act of 2008, enacted by Pub. Law 110-457 (H.R. 7311)
  5. Violence Against Women Reauthorization Act of 2013, enacted by Pub. Law 113-4

3.2 Federal Government Regulations, Standards, and Other Guidance

  1. Executive Order 13627 on “Strengthening Protections Against TIP in Federal Contracts”

3.3 Related MCC Policies and Procedures

  1. MCC Gender Policy, DCO-2011-1.3
  2. MCC Environmental Guidelines, DCO-2012-1.2
  3. MCC Program Procurement Guidelines,
  4. MCC Suspension and Termination Policy,
  5. IFC Performance Standards

4 Overview of TIP

4.1 Trafficking in Persons (TIP ) Defined

The Victims of Trafficking and Violence Protection Act defines “severe forms of trafficking in persons” as:

  • (S)ex 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
  • (T)he 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.

A victim need not be physically transported from one location to another in order for the crime to fall within these definitions.

For the purposes of this policy, the terms set forth below are defined as follows:

  • “coercion” means (a) threats of serious harm to or physical restraint against any person; (b) any scheme, plan, or pattern intended to cause a person to believe that failure to perform an act would result in serious harm to or physical restraint against any person; or (c) the abuse or threatened abuse of the legal process.
  • “commercial sex act” means any sex act on account of which anything of value is given to or received by any person.
  • “debt bondage” means the status or condition of a debtor arising from a pledge by the debtor of his or her personal services or of those of a person under his or her control as a security for debt, if the value of those services as reasonably assessed is not applied toward the liquidation of the debt or the length and nature of those services are not respectively limited and defined.
  • “employee” means an employee of a bidder, supplier, contractor, subcontractor, consultant, or sub-consultant directly engaged in the performance of work under the contract who has other than a minimal impact or involvement in contract performance.
  • “forced labor” means knowingly providing or obtaining the labor or services of a person (a) by threats of serious harm to, or physical restraint against, that person or another person; (b) by means of any scheme, plan, or pattern intended to cause the person to believe that, if the person did not perform such labor or services, that person or another person would suffer serious harm or physical restraint; or (c) by means of the abuse or threatened abuse of law or the legal process.
  • “fraud” means any act or omission, including any misrepresentation, in order to influence (or attempt to influence) any person to engage (knowingly or unknowingly) in any of the activities prohibited by this Policy. Examples of fraud include, but are not limited to, false promises for specific employment; promises of money or other compensation that is never paid; working conditions that are not as promised; and a person being told he or she would receive legitimate immigration papers or legal authorizations necessary to work that are never received.
  • “involuntary servitude” includes a condition of servitude induced by means of (a) any scheme, plan, or pattern intended to cause a person to believe that, if the person did not enter into or continue in such conditions, that person or another person would suffer serious harm or physical restraint; or (b) the abuse or threatened abuse of the legal process.
  • “trafficking in persons” means (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.
  • “sex trafficking” means the recruitment, harboring, transportation, provision, or obtaining of a person for the purpose of a commercial sex act.

4.2 U.S. State Department’s TIP Report

The U.S. State Department is responsible for producing the Trafficking in Persons Report 1 , which is the U.S. Government’s principal diplomatic tool to engage foreign governments on human trafficking. It represents an updated, global look at the nature and scope of trafficking in persons and the broad range of government actions to confront and eliminate it. The U.S. Government uses the TIP report to engage foreign governments in dialogues to advance anti-trafficking reforms and to combat trafficking and to target resources on prevention, protection and prosecution programs. MCC’s Initial Social and Gender Assessment report includes a brief section on the overall TIP situation in the country (based on the U.S. State Department’s TIP Report and other additional sources), including the country’s TIP rating.

5 Country Eligibility

This policy is not intended to provide guidance on the process used to evaluate or respond to TIP as a country eligibility issue. Should a partner country's policy performance on TIP , or any other policy issue included in MCC's selection criteria, become a significant concern, MCC would rely on its Suspension and Termination Policy to guide MCC's response to the issue.

However, MCC does consider the importance of taking measures to address TIP concerns when evaluating a potential partner’s policy performance and eligibility for an MCC compact or threshold program. MCC formally integrates the U.S. Department of State’s Trafficking in Persons Report into its selection process and uses the World Bank’s rule of law indicator, an aggregate indicator that considers human trafficking as one of its factors, as a part of the selection criteria. By law, a country determined by the U.S. Department of State to rank in Tier 3 and has had sanctions applied cannot be included on MCC’s annual candidate country list. For high-risk TIP countries, MCC’s Board of Directors reviews supplemental information on the TIP rankings and TIP -related practices, such as changes to regulations, enforcement and monitoring requirements, and provisions made to protect victims of trafficking.

6 Potential TIP Risks in MCC-Funded Compacts

The information provided below offers a description of some of the most relevant TIP -related risk factors for MCAs and MCC, and it is not intended to be an exhaustive list. Additional risk factors not included in this policy may exist. Therefore, each project must be thoroughly assessed. It is important to note that some of these risks, especially those relating to direct project impact on communities, are discussed in the IFC Performance Standards on Environmental and Social Sustainability 2 , which have been adopted by MCC. These standards cover eight areas, several of which are relevant to TIP (especially Performance Standard 2 on Labor and Working Conditions).

6.1 Recruitment and labor practices

The most direct way in which TIP can impact projects funded by MCC is through exploitative recruitment practices and/or labor conditions for workers, particularly construction workers. Exploitative practices include but are not limited to: abuses in the migrant labor recruitment chain, such as charging workers large recruitment fees that place them in debt and effectively bind them to the workplace; denying workers access to their travel documents; penalizing workers for leaving the workplace; violence or threats of violence against workers; restriction of movement of workers; non-payment or delayed payment of wages of workers; mandatory overtime for workers; and the use of child labor.

The Executive Order on “Strengthening Protections Against TIP in Federal Contracts”, explicitly recognized that many exploitative labor practices are not readily detectable on labor sites, but instead are grounded in practices within the labor migration chain. These practices generally involve the charging of large and (usually) illegal recruitment fees, which place workers in a situation of debt and therefore essentially bind them to the workplace even when they are not physically restricted from leaving. Once a worker is bound to the workplace, this fosters such practices as withholding of payment, contract substitution, unpaid overtime, and even physical abuse. Although MCA contracts do not need to follow the Federal Acquisition Regulations (FAR), MCC’s policy adheres to the spirit of this Executive Order.

Amongst other issues, the previously mentioned Executive Order prohibits 3 :

  • using misleading or fraudulent recruitment practices during the recruitment of employees, such as failing to disclose basic information or making material misrepresentations regarding the key terms and conditions of employment, including wages and fringe benefits, the location of work, living conditions and housing (if employer provided or arranged), any significant costs to be charged to the employee, and, if applicable, the hazardous nature of the work;
  • charging employees recruitment fees;
  • destroying, concealing, confiscating, or otherwise denying access by an employee to the employee's identity documents; and
  • failure to “pay return transportation costs upon the end of employment, for an employee who is not a national of the country in which the work is taking place and who was brought into that country for the purpose of working on a U.S. Government contract or subcontract.”

Denying employees access to their identity documents (such as passports) by employers has also been flagged as a labor exploitive mechanism. There are situations when the employers “store” the employees’ identity documents, due to safety reasons. This is a delicate issue and in order to understand each situation it is important to have a clear understanding that employees have continued and unlimited access to their own identity documents. In this regard, MCC recognizes that this practice can place workers at risk for exploitation but also acknowledges that some workers prefer to have the employers store identity documents due to privacy and safety reasons. Therefore, MCC recommends that when foreign workers live and work in project sites, the employer provides a neutral safe space where personal documents can be stored safely and privately, if the employee freely decides to do so.

6.2 Project implementation processes

A project can have a TIP-related impact on the community during implementation in two ways: a failure in project safeguards leading to community members becoming more vulnerable to being trafficked; or the actions of contractors/sub-contractors/workers, intentionally or unintentionally contributing to TIP .

In terms of project safeguards, numerous international development institutions have documented cases of community lifestyles and livelihoods being disrupted by poorly managed resettlement processes or lack of appropriate environmental or social safeguards, leading to risky migration or in some cases to families selling/coercing their daughters into the sex trade 4 .

A clear potential TIP risk is associated with the actions of contractors and workers through increased demand for sex services/sex workers, particularly where the project involves an influx of predominantly male workers. Depending on context, this increased demand for sex services is commonly met by a combination of harmful sexual activity with women in surrounding communities, and commercial sex with those in prostitution, each of which carries its own set of risks. It is important, however, to highlight that an increase in demand for commercial sex is not analogous with an increase in sex trafficking. In this context, it is considered TIP when adults engage in sexual activities through force, fraud or coercion. It is also considered sex trafficking when the person induced to perform such act has not attained 18 years of age.

Risk is also present in the practice of project workers offering transport to community members as this opens the possibility that project vehicles could be used in the transporting of trafficking victims (as well as the possibility of direct exploitation of passengers by drivers). MCC’s policy in this regard is to prohibit the practice on all projects unless there are compelling reasons to not do so. It may also be possible that workers themselves may contribute to TIP by, for example, bringing in child domestic workers, or luring unsuspecting community members into a trafficking situation through techniques ranging from false promises of a better job or life elsewhere.

6.3 Project location

The location of a project in an area where trafficking is an existing problem, as identified during the TIP risk assessment, is a clear indicator of the potential for project-related risk. At the same time, it is possible for a project to be located in an area with a pre-existing high TIP risk and have no obvious consequences in terms of increasing this risk. This might, for example, include an agricultural project in an area with high-risk seasonal out-migration. (Such a project may in fact serve to create more attractive alternatives to risky migration, thus reducing vulnerability to trafficking.) There may also be cases where the project works with a specific population perceived as at risk of being trafficked, such as employment-seeking youth.

Where a significant TIP problem already exists in the community, there may be an opportunity to contribute to anti-trafficking efforts even where there are no risks specifically associated with the project. For example, inclusion of a TIP education component in a youth employment program that is part of a MCC-funded compact.

6.4 Conclusion of project implementation phase

There is the possibility that a project might inadvertently help to create conditions that facilitate trafficking upon completion of its implementation phase. This is most particularly relevant to transport and tourism projects. While increased transport connectivity brings more opportunities for local communities, it also brings more opportunities for traffickers to access target populations. Among the documented effects of some road building and tourism developments are:

  • An increase in risky migration practices leading to trafficking. New migration patterns are often less safe than established ones as communities have not yet developed their own practices to identify and manage risk;
  • Increased exposure to the cash economy, which can fuel a range of negative behaviors aimed at generating quick cash. Many of these behaviors have potential TIP implications, including pushing children into prostitution, risky migration, and selling of family or community land; 5

Infrastructure development can also increase the extent of the sex trade. As noted above, this can happen during the construction phase where there is an influx of unaccompanied male workers. On completion, an increase in transitory populations and the increase of contact between those with wide income disparities can further contribute to the development of the sex trade particularly if combined with the exposure of local communities to new material goods, creating demand for quick cash. There are documented examples of infrastructure leading to the development of a sex trade involving minors, and subsequently the trafficking of young women and girls to other locations. 6

7 Project Risk Assessment and Categorization

TIP risk assessment will be conducted in all MCC-funded projects. To the extent possible, TIP risks should be assessed as part of existing processes, notably due diligence by MCC’s Social and Gender Assessment unit (“SGA”) and Environmental and Social Performance unit (“ESP”). However, TIP-specific assessments may be required in some case, for example, when the community surrounding the project area is particularly vulnerable or the standard ESP and SGA studies do not yield enough information. Under the leadership of MCC’s SGA team, both the MCC’s ESP and sector leads will support a TIP risk assessment for each project following the protocols outlined in Annex A, section 2.

Projects will be assessed for TIP risks by MCC, with support from MCAs, and categorized by MCC SGA either as low-risk or high-risk for TIP (in consultation with MCA SGA).

Low-Risk: A project will be categorized as low-risk when it is determined that there are no TIP-specific risk factors related to the project and there are no significant TIP problems already present in the area where the project will be implemented. An example might be a water system rehabilitation project involving predominantly local workers in an area of low TIP risk.

When a project is categorized as low-risk for TIP , only the Counter-TIP Minimum Compliance Requirements will need to be included in the solicitation documents and contracts, as detailed in Annex A, section 3.

High-Risk: A project will be categorized as high-risk when it is determined that the project could contribute to an increase in TIP either during project development and/or implementation phases. In addition, a high-risk project may also contribute to an increase in TIP once the project implementation phase is completed and/or may present high-risk if the project is implemented in an area with a strong TIP problem.

When a project is categorized as high-risk for TIP, in addition to the Counter-TIP Minimum Compliance Requirements, MCA staff or contractor/consultants must develop a specific TIP Risk Management Plan to be approved by MCC prior to issuing the solicitation for procurement, and implemented by the contractor (under direct supervision from MCA) (See Annex A, section 4). Counter-TIP Minimum Compliance Requirements and adherence with and implementation of the TIP Risk Management Plan will be included in the technical specifications as a task in the Statement of Work and Terms of Reference for contractor/consultants, and in the bill of quantities/specifications works, and non-consulting solicitation documents. These requirements will be discussed during negotiations with the selected contractor/consultants, and be included as deliverables in the contracts that will be monitored by MCAs and MCC.

8 Risk Management

TIP risk management will depend on two factors: (1) project risk category; and (2) items required to implement the project. Project risk category refers to low-risk or high-risk projects for TIP . Items procured (in accordance with MCC’s Program Procurement Guidelines (“PPG”) refers to: (1) works (large and small); (2) goods; (3) consulting services; and (4) non-consulting services; these items are procured through different procurement and contract mechanisms as outlined in the PPG.

All projects that use contract mechanisms for works (both large and small works), non-consulting, and consulting services are required to incorporate Counter-TIP Minimum Compliance Requirements in their solicitations and contracts. In addition, for works and consulting services contracts for projects that are categorized as high-risk, MCAs are also required to develop and require the contractor/consultants to implement a TIP Risk Management Plan per instructions in Annex A, section 4.

9 Responsible Parties

Due to the complexity of TIP, both MCC and MCA will require a multi-sectorial approach to the assessment, classification and management of TIP risks in MCC-funded projects. However, within the Department of Compact Operations (“DCO”), SGA has the ultimate responsibility for leading this process and ensuring relevant sector staff provide input and support.

MCC and the core teams/MCAs will be responsible for conducting TIP risk assessment on each project during the compact development phase. Based on the assessment, MCC (in consultation with MCA) will categorize each project as high-risk or low-risk. Many aspects of TIP mitigation are part of the IFC Performance Standards, therefore, this will require SGA and ESP to work together to manage any identified risks accordingly.

Each MCA will be responsible for implementing the Counter-TIP Minimum Compliance Requirements on all projects, with support and supervision from MCC. For high-risk projects, MCAs will be responsible for developing the TIP Risk Management Plan (in addition to the Counter-TIP Minimum Compliance Requirements) and the corresponding contractor(s) will be responsible for implementing the plan. MCC will approve the TIP Risk Management Plan prior to its implementation.

10 Effectiveness

This policy was approved as of November 25, 2014 and is effective upon the date of signing and supersedes any prior policy, guidance, and/or delegation of authority with respect to the subject matter hereof.

This policy will remain in effect with respect to any successor position or office performing the functions of its predecessor until this policy is modified, revoked, or superseded.

11 Amendments to This Policy

This policy may be modified or amended in writing following a process defined by MCC’s Policy on Creating and Maintaining Policies.

Annex A: Procedures for Implementing the C-TIP Policy

1. Purpose

This document establishes the procedures that the MCC and MCA staff will follow with respect to assessing, categorizing, managing and mitigating TIP risks in MCC-funded projects. To the extent possible, TIP risks should be assessed as part of existing processes during compact development, notably due diligence conducted by SGA and ESP. However, TIP-specific assessment may be required in cases where the community is at increased risk for TIP or when more information is needed in addition to what is provided by the ESP and SGA studies. Assessments of the TIP situation in a country during the project development and due diligence phases are covered in detail in section 2 of this annex. All projects that use contract mechanisms for works (both large and small), non-consulting, and consulting services are required to follow the Counter-TIP Minimum Compliance Requirements as outlined in section 3 of this annex. For those projects categorized as high-risk by the MCC SGA with support from the MCA, a TIP Risk Management Plan is required in addition to the Counter-TIP Minimum Compliance Requirements as described in section 4 of this annex.

2. Risk Assessment

TIP risk assessment will be conducted in all MCC-funded projects. The Initial Social and Gender Assessment report will include a brief section on the overall TIP situation in the country (based on the U.S. State Department’s TIP Report and other additional sources), including the country’s TIP rating. In addition, MCC utilizes the following questions to assess the overall context of the TIP situation in a country early in the compact development process:

  • What is the relative (or per capita) size of the trafficking/forced labor problem in the country?
  • Forced/indentured labor
  • Sexual exploitation
  • Child labor
  • Sexual exploitation of children
  • What are the main patterns of trafficking/exploitation in the country? As a source? As a destination? As a transit?
  • What are the primary causal factors involved in each of these patterns?
  • To what extent does the justice system act as a deterrent to traffickers?
  • To what extent does the justice system protect the rights of the population, including victims of trafficking?
  • To what extent is there trust between the population and justice actors (police, judges, etc.)?
  • Are there government bodies or civil society organizations that assist citizens in accessing their rights?
  • Do they work with trafficking victims?
  • Do they work with migrants?
  • Do they search for trafficking victims or simply respond to the needs of trafficking victims after being directly approached?
  • Are their locations and contact details well-known and relatively easily accessible by trafficking victims?

During the project development and due diligence phases, the MCC SGA team, in collaboration with ESP and sector leads, is to utilize the following questions to assess TIP risks. These questions are to be considered when conducting the assessment and can be adapted as needed. Appropriate tools for assessing these risks include Environmental and Social Impact Assessment (ESIA), feasibility studies, TIP-specific studies, or other social and gender-related studies.

  1. Project location risk
    • Is there an existing problem or pattern of TIP (or related forms of exploitation such as indentured/child labor) in the project area? If so, what are these?
    • What is the extent/nature of in and out migration in the project area?
    • Are the populations in these areas marginalized in any way (e.g. ethnic minorities)?
    • Is the area prone to natural or man-made disasters?
    • Are there other factors existing in the community that could facilitate trafficking and related forms of exploitation (e.g. attitudes that children should earn money to support parents, exploitative or corrupted traditional practices?)
  2. Project implementation related risk
    • Is the project likely to involve a significant number of migrant laborers, particularly from another country?
    • Does the project involve improvements in transport infrastructure or another factor that might lead to an increase in migration?
    • Is there a possibility that project vehicles may be used for the transport of trafficked persons, either purposefully or inadvertently?
    • Is the project likely to increase demand for commercial sex? To what extent is this demand likely to be met by forced/coerced women and/or minors?
    • Are there TIP risks relating to resettlement?
    • Does the project involve resettlement?
    • Is this resettlement likely to involve the loss of community livelihoods and/or significant changes to community lifestyle that present TIP risks?
    • Are there other factors that add risk to the resettlement process (e.g. the involvement of a marginalized population)?
    • Are there any other relevant factors in relation to community TIP risks?
    • Are there any other relevant factors in relation to potential TIP risks faced by communities outside of the project area?
  3. Recruitment and Labor practices related risk
    • What is the likelihood that foreign labor will be needed to staff the project?
    • If so, what information is available on the situation of migrant workers from that country? (Including recruitment processes and payments).
    • What is the legal framework under which third party laborers are hired, including the requirements of the Ministry of Labor or Immigration (or similar governmental entity) for work visas, etc. In particular, is there a policy and/or practice in the destination country of the employer holding the identity documents of workers?
    • How is labor being recruited for the project? If this is being done through recruiting agents, are the workers required to pay fees?
  4. Possible TIP risks following project completion
    • Does theproject involve the development of new transport routes that create new migration paths and/or involve previously remote communities?
    • Is there is reason to believe the project will lead to significant changes in the lifestyles of local communities?
    • Is the project likely to increase demand for paid sex? To what extent is this demand likely to be met by forced/coerced women and/or minors?

It is important to note that some projects may need to be re-assessed once there is more information available on the project or community, or even during project implementation if specific situations arise that require additional attention. In cases where a re-assessment is conducted and the level of risk changes from low to high, MCAs are expected to comply with all requirements associated with high-risk projects.

3 Counter-TIP Minimum Compliance Requirements

The compliance requirements set forth in this section apply to all MCC-funded projects that use works, non-consulting, and consulting contracts regardless of whether they are categorized as low-risk or high-risk for TIP , including those under grant facilities or commercial facilities.

The MCA SGA team is responsible for ensuring that potential bidders are explicitly alerted through clear requirements in the solicitation documents; questions and answers clarified during pre-bid meetings; and the requirements discussed during negotiations with the selected winner of the contract including through briefing by MCA on their contractual responsibilities. Guidance and support will be provided by MCC to MCA as needed throughout the entire contracting and implementation process.

MCA through its SGA team and the project sector lead must notify bidders of the following counter-TIP minimum requirements before they submit their bid, and ensure compliance throughout project implementation.

MCA staff, project managers, and supervisory engineers will conduct periodic site visits to certify that the contractor is taking specified measures to comply with the counter-TIP minimum requirements.

Prohibition

Bidders, contractors, subcontractors, consultants, sub-consultants and any of their respective employees shall not engage in any form of trafficking in persons during the period of performance of any contract funded, in whole or in part, with MCC funding and must also comply with those prohibitions described in U.S. laws and Execute Orders regarding TIP , including using misleading recruitment practices; charging employees recruitment fees; or destroying, concealing, confiscating, or otherwise denying access by an employee to the employee’s identity documents.

Requirements

  1. Each bidder, supplier, contractor, subcontractor, consultant or sub-consultant shall:
    1. notify its employees of MCC’s C-TIP Policy and of the actions that will be taken against employees for violations of this policy. Such actions may include, but are not limited to, removal from the con­tract, reduction in benefits, or termination of employment; and
    2. take appropriate action, up to and including termination, against employees or subcontractors or sub-consultants that violate the prohibitions set out in this policy.
  2. Each bidder (whether to be a supplier or contractor) or consultant as part of its bid or proposal shall:
    1. certify that it is not engaged in, facilitating, or allowing any activities constituting trafficking in persons (defined in section 4.1 of the main body of this policy), or related activities also prohibited under this policy, for the duration of the contract;
    2. provide assurances that activities constituting trafficking in persons, or related activities also prohibited under this policy, will not be tolerated on the part of employees, subcontractors or sub consultants (as the case may be), or their respec­tive employees; and
    3. acknowledge that engaging in such activities is cause for suspension or termination of employmment or of the contract.
Notification

A bidder, supplier, contractor, subcontractor, consultant or sub-consultant shall inform the MCA immediately of:

  • any information it receives from any source (including law enforcement) that alleges its employee, subcontractor, sub-consultant, or the employee of a subcontractor or sub-consultant, has engaged in conduct that violates this policy; and
  • any actions taken against any employee, subcontractor, sub-contractor/consultant, or the employee of a subcontractor or sub-consultant, pursuant to these requirements.

When a contract breach regarding TIP has occurred, the MCA is required to notify MCC within 24 hours of becoming aware of the incident.

Remedies

Once the incident has been confirmed and depending on the severity of each case, MCA will apply remedies, which could include:

  • the MCA requiring the contractor/consultant to remove the involved personnel, sub-consultant or any of its involved personnel, or any involved agent or affiliate;
  • the MCA requiring the termination of a subcontract or sub-award;
  • suspension of contract payments until the breach is remedied to the satisfaction of the MCA;
  • loss of incentive payment, consistent with the incentive plan set out in the contract, if any, for the performance period in which the MCA determined non-compliance
  • the MCA pursuing sanctions of the contractor/consultant, including declaring the contractor/consultant ineligible, either indefinitely or for a stated period of time, to be awarded any MCC-funded contract; and
  • termination of the contract by the MCA for default or cause, in accordance with the termination clause of the contract

The response to a breach of contractual obligations in relation to TIP should be proportional to the violation and potential consequences to the workers.

Subcontracts

The supplier, contractor, subcontractor, consultant or sub-consultant shall include the substance of all of the provisions of this policy, in all subcontracts.

3.1 Monitoring and Reporting Responsibilities

MCC-funded projects must offer the possibility for all employees working on these projects to: (1) report TIP instances to the contractor; (2) report TIP instances to the corresponding MCA (in order to initiate an investigation), and/or (3) report TIP instances to an independent/third party through an anonymous mechanism (such as a hotline or anonymous suggestion/complaint comment box). In turn, MCAs are required to respond to any TIP situations within 24 hours after the incident is initially reported.

It is necessary to establish clear and effective reporting mechanisms for employees, contractors, supervisory engineers, project managers, independent engineers, and MCAs.

Contractors

Contractors must provide employees working on MCC-funded projects with the following information to report instances of TIP (in a clear and simple manner):

  • Contractor – name and contact information;
  • MCA—name and contact information;
  • Anonymous TIP-hotline (if existing)—telephone number/email address of a working TIP-hotline, reporting site; and
  • Anonymous comment box that will be locked; only MCA-Sector/SGA Directors and the project manager of the supervisory engineer will have a key to the box.

Note on monitoring compliance: MCA SGA, project managers, supervisory engineer, independent engineer, and MCC SGA visiting the sites need to verify that the required information outlined above is readily available to employees.

Contractors also must clearly establish who will be responsible for communicating to MCA potential TIP incidents that need to be further investigated and/or reports of TIP incidents received by employees, community members, NGOs, or any other relevant party. Such mechanism will include the name and contact information of the contracting firm personnel assigned to TIP issues and responsible for communications to MCA. The MCA must notify the contractor of who the MCA point of contact will be for TIP-reports (it may be the MCA SGA, ESP, or legal staff).

Additionally, the contractor needs to define prior to contract signing who and how it will engage with the potential victim or person doing the reporting. For example, this involves ensuring that the victim receives adequate and prompt assistance or ensuring whistleblower protection. It is recommended that the person responsible for informing the MCA of any TIP situations/reports is also the person following-up on the situation and providing assistance to victims.

Note on monitoring compliance: MCA SGA needs to ensure that the contractor has appointed a person to oversee TIP reporting processes and that this is reflected in the contract. In addition, when conducting site visits, MCA SGA staff, supervisory engineer, project manager, independent engineer, and MCC SGA staff should ask who this point person is and confirm it matches the records or contract information.

Project Manager:

Under guidance from MCA SGA staff, and with support from relevant project directors, the project manager must:

  • Establish a process for conducting site visits that explicitly observe contractor’s compliance with the Counter-TIP Minimum Compliance Requirements and the TIP Risk Management Plan (if applicable);
  • Establish a process where TIP oversight efforts are reported, for example, through periodic reports; and
  • Establish a process for quickly reporting to MCA any instances of observed TIP violations/incidents.
Supervisory Engineer:

On behalf of the MCA, the supervisory engineer must:

  • Conduct periodic site inspection to certify that the contractor is taking specified measures to comply with counter-TIP requirements;
  • Review compliance with the Counter-TIP Minimum Compliance Requirements and the TIP Risk Management Plan (if applicable);
  • Assist in gathering more information on observed or reported TIP violation or incident, as needed; and
  • The bidders for supervisory engineer contracts will be required to propose staffing and plan for this effort.
Independent Engineer:

Under guidance from MCC SGA team and relevant MCA project directors, the independent engineer must:

  • Review the various processes established by the MCA, the project manager and the contractors for adequacy and effectiveness and the supporting documentation;
  • Review the adequacy and quality of resources allocated for compliance with the Counter-TIP Minimum Compliance Requirements and the TIP Risk Management Plan (if applicable);
  • Make a quarterly assessment of the quality of the contractor’s compliance with the Counter-TIP Minimum Compliance Requirements and the TIP Risk Management Plan (if applicable); and
  • Assist MCC with gathering more information on a reported TIP violation or incident, if requested by MCC while investigating a specific incident.
MCA:

MCAs are ultimately responsible for ensuring that TIP reports are appropriately addressed. When any TIP incident is reported to the MCA, the MCA is required to respond within 24 hours after the incident is initially reported. MCA also must report to MCC RCM and MCC SGA Team and TIP incidents within 24 hours or as soon as reasonably possible, followed-up with a summary report to be submitted no later than 7 days after the incident occurred.

When an incident is reported, the MCA must be prepared to quickly provide a three-pronged response:

  • Ensure victim/potential victim is receiving professional assistance/support and will not be penalized for reporting the fact that someone is engaging in TIP-related activities, or that s/he has been trafficked or for having engaged in the activities entailed in his or her trafficking (this support can be provided by linking the victim to an institution/organization that provides this type of professional assistance);
  • Report the incident to the previously identified entity responsible for conducting an investigation (this institution could be local law authorities, human rights NGO, advocacy organization, or other institution working on counter-TIP efforts). When necessary, an independent investigator may be hired to conduct an investigation. The MCA and MCC will determine the appropriate institution/mechanism for investigating actual or potential TIP violations based on careful consideration of various factors, including technical skills for conducting investigations, presence of local organizations with TIP expertise, as well as the degree to which local law enforcement may be complicit in TIP; and
  • Notify MCC within 24 hours. The MCA SGA Director, MCA CEO, MCA Legal Counsel, or MCA Project Lead are responsible for notifying MCC SGA, MCC Legal Counsel, and the Resident Country Mission (“RCM”) of the reported incident and providing information/reports on the issue.

The MCA SGA Director is responsible for following up on TIP reports with the relevant contractor and project director. This involves confirming that the alleged victim is safe and has received the necessary assistance. In order to provide prompt and helpful assistance to the victim, the MCA, in coordination with the contractor, should identify existing institutions that have expertise in TIP and are able to provide assistance. Neither MCC nor MCA will be financially responsible for this assistance.

MCC:

MCC will provide support and oversight to MCA in ensuring that TIP-related reports are appropriately addressed. In order to accomplish this, MCC SGA must:

  • Provide guidance and support to MCA SGA in the establishment of clear reporting mechanisms to be adopted by contractors and supervisory engineering firms;
  • Provide guidance and support to MCC project directors and corresponding independent engineers, identifying clear mechanisms for monitoring and reporting TIP instances to MCC;
  • Work closely with the RCM, MCC’s Office of General Counsel, ESP, project directors and relevant contractor/consultants to support MCAs in investigation processes and determining appropriate response to contract breaches;
  • When a TIP incident is reported, ensure that MCAs are conducting the necessary investigations and gathering information, as well as providing appropriate assistance to the victim(s); and
  • When a TIP incident is confirmed, work with the MCA to ensure the appropriate processes are followed when a contractor does not comply with the terms and conditions and requirements of its contract.

Care should be taken to distinguish the causes of migration (poverty, inequality, etc.) with the causes of trafficking (such as opportunities for/presence of traffickers, lack of options for safe migration, failure of protective services)

This is intended as a broad category recognizing that across a wide range of different contexts and with a problem that is constantly evolving, it is impossible to capture all possibilities in a list of prescribed questions. For example, there may be practices such as virginity selling that have recently arisen in a project area, or a community norm for sending young children away as domestic workers for wealthy relatives, or acceptability of forced/early marriage.

4 TIP Risk Management Plan

For projects classified as “high risk,” the MCA must develop a TIP Risk Management Plan in addition to meeting the Counter-TIP Minimum Compliance Requirements.

4.1 Developing the TIP Risk Management Plan

The TIP Risk Management Plan will be developed by the MCA SGA Director or by a suitably qualified expert or organization engaged by the MCA. The TIP Risk Management Plan must be finalized, and included in the technical specifications with clear cost items and deliverables linked with it – prior to initiating the bidding processes for the corresponding contracts in order for potential bidders to have the necessary information to submit a complete proposal. The contractor is responsible for implementing the TIP Risk Management Plan. The MCA SGA Director is ultimately responsible for monitoring the implementation of the TIP Risk Management Plan, with support from project management contractor/consultants, and supervisory engineers (where applicable). MCC will provide support and oversight throughout this process.

In making the decision about whether outside assistance is needed to develop the TIP Risk Management Plan, the MCA should consider two main points: (1) can the risks be managed through existing processes, and (2) if the risks cannot be managed entirely through existing processes, does the MCA SGA Director have the necessary resources (time/expertise) to develop the TIP Risk Management Plan? The TIP Risk Management Plan should incorporate (to the extent possible) the C-TIP best practices described in Annex B.

4.2 Review and Approval of the TIP Risk Management Plan

The MCA SGA Director, as well as the MCA ESP staff and the MCA project director, should review and provide input into development of the TIP Risk Management Plan. MCA is expected to own the content of the TIP Risk Management Plan, as well as validate collective understanding between its staff, implementing entities, contractors, project managers, MCC, and NGOs (when relevant) on the completed plan. MCC must approve the TIP Risk Management Plan before it is implemented.

4.3 Structure of the TIP Risk Management Plan

Where necessary, MCC SGA may hire contractors to work as independent auditors. The MCA SGA unit will be responsible for reporting any suspected occurrences of TIP to the RCM and MCC SGA. MCC SGA, in turn, will forward the information to the MCC Office of the General Counsel and project director, working jointly in order to formulate the appropriate response.

  1. Country Background (1-2 pages)
    Brief summary of:
    • The main TIP trends and patterns affecting the country and their relevance to the project.
    • The country’s reponse to TIP , including the legal framework, law enforcement, victim identification and support, policy responses and prevention initiatives.
    • Key actors responsible for responding to TIP, with a brief description of their capacity.
  2. Project Context (2 pages)
    • TIP risks related to the project
    • Existing community capacity to respond to TIP.
      • Level of knowledge among different population segments within the project communities about TIP, including how to identify it and how to avoid being trafficked.
      • Level of knowledge in project communities about TIP risks connected with migration, and how to avoid them.
      • Existing organizations and initiatives working on TIP in or close to the project location.
      • Whether there is a legal framework for prohibitting and punishing TIP.
      • Whether authorities are engaged in / facilitating TIP.
  3. Identified Project Risks (2 to 5 pages)
    This section must include a description of the risks identified during project assessment. Risks will be organized into the following categories:
    • Risks related to recruitment and labor practices;
    • Risks related to project development and implementation processes;
    • Risks related to project location; and
    • Risks after project implementation phase concludes.
  4. TIP Risk Management Plan Work Plan (5 to 10 pages)

    The work plan identifies focal issues and concrete activities to address potential TIP risks across the project. The TIP Risk Management Plan work plan will specify the TIP risk identified and all risks will be organized according to the four risks categories listed above. It is not necessary to populate every category; instead, it is recommended that the work plan focus on risks identified in the assessment period.

    After a risk has been identified, the next step is to determine the activities to address each risk. Each activity must include a target audience as well as the timing and frequency. This will help relevant parties monitor and report on progress made. If an activity is recurrent, the frequency should be clearly stated.

    Each activity must also specify who will be the responsible party for its execution. The contractor will usually be responsible for conducting the activities. The MCA and supervisory engineers or project managers will be responsible for monitoring and ensuring compliance. However, for risks that are likely to occur after the project implementation phase concludes, the MCA will be responsible for arranging mitigation measures to protect communities and vulnerable groups. If any activities require budgetary allocation, the budgetary needs should be noted in the work plan. For ease of reference, the work plan should be presented as a table and should also include narrative descriptions, as needed.

    Annex C contains a sample TIP Risk Management Plan work plan table for a roads project located in a community that is high-risk for TIP. This sample table illustrates the different components of the TIP Risk Management Plan work plan. This sample is not intended to be replicated and MCAs/contractors should not limit the scope of their work to the activities listed in the sample.

  5. Monitoring and Reporting Strategy (1 to 2 pages)

    This section must include a list of key progress measures and specify reporting responsibilities. The MCA SGA Director, supported by the MCA’s M&E, ESP, and the corresponding project director, is responsible for overseeing the monitoring and reporting process. The MCA may need to hire local supervision contractor/consultants to help ensure contractor compliance with the TIP Risk Management Plan. This monitoring and reporting strategy should also describe the process for reviewing and updating the TIP Risk Management Plan, including dates by which annual plan updates will be prepared. At a minimum, this section will:

    • Propose progress indicators to be included in the monitoring and reporting strategy; additional indicators to be added to the work plan amendments (if the work plan requires changes, or approval has occured prior to completion of the TIP Risk Management Plan), and specify the parameters (social category, gender, etc.) according to which indictors should be disaggregated.
    • Recommend if and what additional studies or evaluations may be needed to assess implementation of the TIP Risk Management Plan.
    • Describe the process for reviewing and updating the TIP Risk Management Plan.
  6. Communications Strategy (1 page or less)
    • Include brief section on communication and outreach activities. This plan should be developed in close collaboration with the MCA Communications Specialist.
  7. Budget (half a page or a table)
    • Indicate the specific budget from which funds for each activity have been or will be allocated and whether additional resources are required.
  8. Training and Capacity Building Strategy (1 page or less)
    • Assessment of the capacity of the MCA, Implementing Entity, contractors, communities, and other related stakeholders so that appropriate training can be developed to increase their awareness and acceptance of how TIP relates to their work, as well as their knowledge of the effective responses. In developing this assessment, MCAs should seek out appropriate local NGOs or local government institutions who have knowledge of the local context.
    • Description of a strategy to provide training and capacity building to the different actors involved.

4.5 Implementing and Monitoring the TIP Risk Management Plan

Each contractor is responsible for implementing the TIP Risk Management Plan. Working in close collaboration with supervisory and independent engineers and/or project managers, the MCA (with support from the supervisory engineer and independent engineer) will monitor the contractors’ compliance.

4.6 Updating the TIP Risk Management Plan

The TIP Risk Management Plan should be reviewed and updated on an annual basis (at a minimum), with participation of all relevant stakeholders, including MCC. The MCA SGA Director is responsible for leading the updating process of the TIP Risk Management Plan and MCC SGA is responsible for approving the revised TIP Risk Management Plan. For each of the proposed activities, the annual update should describe progress made, note any implementation issues, and describe how these will be resolved. The plan should describe recent developments in TIP trends and responses relevant to the project. It should also state whether additional consultations with MCC, MCA, and affected populations in project areas are required, and specify when these will be held.

If any such update results in changes or additions to any requirements or responsibilities levied on contractor/consultants, MCC and MCA will need to consult (including on procurement and legal matters) to determine whether and to what extent contractor/consultants with existing contracts may be expected to implement such changes (recognizing that such changes are likely to have cost and schedule implications).

Annex B: Best Practices on Counter-TIP Efforts

The following provisions are intended to be incorporated as relevant to the TIP Risk Management Plan and serve as best practices to prevent trafficking in persons, especially in response to labor exploitation.

1. Prevention of Labor Exploitation

Contractors are prohibited from:

  • Destroying, concealing, confiscating, or otherwise denying access by an employee to the employee's identity or immigration documents;
  • Using misleading or fraudulent practices during the recruitment of employees or offering of employment;
  • Using recruiters that are not licensed in accordance with the standards applicable for the country in which the recruiting takes place;
  • Charging employees recruitment fees; and
  • Failing to meet the host country housing and safety standards when providing or arranging housing to an influx of workers.

Contractors are required to:

  • Post employee rights (described below) in public spaces, in English and in any foreign language(s) spoken by a significant portion of the workforce;
  • Develop hiring and subcontracting policies to protect the rights of their employees and the rights of subcontractor employees;
  • Notify their employees and subcontractors of this policy and the prohibited activities, as well as of their responsibility to report TIP violations by the contractor or subcontractor employees, at any tier, with employee protections from retribution for whistleblowing on TIP violations;
  • Display counter-TIP posters/materials/information in the languages understood by the significant portion of the employees. These materials should contain details of contacts for information and assistance;
  • Develop clear reporting mechanisms for suspected cases of TIP and/or action that violates this policy and ensure that all contract workers understand how and where they should report any cases, including the name and contact information for the person responsible for handling TIP-related issues. Employees should also be given the option to report any TIP-related actions in an anonymous way through an independent third party, for example, through a TIP hotline;
  • Notify the appropriate MCA contact upon becoming aware of any action that violates this policy;
  • Ensure that all subcontracts include the substance of all of the above components; and in consultation with MCA, make provisions for appropriate remedies in case of contract breach; and
  • Provide an employment contract, recruitment agreement, or similar work document in writing in the employee's native language and prior to the employee departing from his or her country of origin.

Employees working on MCC-funded projects have the right to:

  • Hold their own identity or immigration documents or, if they choose to allow their documents to be held by their employer, the right to unrestricted access to these documents (consider locker facilities);
  • Receive agreed upon wages on time;
  • Take work-breaks, in accordance to local labor laws;
  • Elect to terminate employment at any time;
  • Identify grievances without fear of reprisal;
  • Have a copy of their employment contract in a language they understand;
  • Receive wages that are not below any applicable legal in-country minimum wage;
  • Be notified of their rights, wages, and prohibited activities prior to signing their employment contract; and
  • If housing is provided, live in housing that meets host-country housing and safety standards.

Note: The contractor shall post these rights in employee work spaces in language(s) spoken by a significant portion of the workforce and in English.

2. Considerations on addressing breaches of contractual obligations related to TIP

It is recommended that where there is a clear breach of contractual obligations in relation to labor practices, this be addressed by the concerned MCA as a contract dispute. It is important to note that some behaviors prohibited by the USG, such as charging of migration fees, may not involve a breach of local law. Upon identification of a prohibited labor practice, the MCA CEO should immediately contact the MCC resident country mission and MCC’s SGA staff and inform them of the situation, any necessary verification steps, and the proposed response. The MCC resident country mission will inform MCC’s Office of General Counsel, ESP, and project directors of the situation.

Reports on breaches of contractual obligations by contractors/sub-contractors or workers should be handled carefully and by following all appropriate legal procedures. The response should be treated on a case-by-case basis depending on the severity of the breach. An important consideration will be whether the alleged offense is against the law in the country concerned, as well as whether there is a direct connection between this offense and TIP. For example, it is unlikely that the unauthorized transport of people not working on the project would be illegal and where there is no evidence that this has led to trafficking, a warning may suffice for the first offense.

It should also be noted that procurement of commercial sex is also not illegal in many countries. Thus, unless there is a clear basis for suspicion that this involves minors or forced adults, or that the worker has otherwise broken the law, this is essentially a contractual matter and should be addressed as such. This also covers the situation of community complaints about such behavior, which may fall more in the realm of disturbances to the community than TIP.

Where there is clear evidence that a worker or contractor has broken a law, such as being complicit in trafficking, buying sex from a minor or knowingly purchasing sex from a trafficked woman, this should also be reported to the appropriate authorities. Where a worker or contractor is suspected of breaking the law, MCA and MCC should exercise discretion considering the severity of the alleged behavior and the capacity of the local criminal justice system.

3. Considerations on reporting mechanisms:

The MCA may use existing mechanisms to facilitate reporting and monitoring of TIP, including the environmental and social management plan, health and safety plans, or the social and gender integration plan. In addition, the MCA and contractors could involve the use of an existing TIP hotline (if previously verified as functioning), local law enforcement, or a local NGO. In very rare circumstances, where there is no viable alternative of an independent third party to support the reporting process, the MCA might consider whether the MCA SGA or another staff member is the appropriate point of contact. The MCA should ensure that workers and community members are aware of this mechanism and what it can and cannot offer.

In some situations, communities and cities do not offer safe mechanisms for reporting TIP cases. These situations include when: law enforcement officials are actively engaged in or somehow facilitating trafficking; when trafficking victims are deprived of their liberty by being housed in shelters from which they are not free to leave; or when trafficking victims are given no option, but to return to country of origin. There may also be the possibility of reprisals from traffickers. These examples illustrate how it may not always appear to be in a trafficking victim’s best interest to report his or her case to authorities. These potential situations must be reviewed carefully and taken into consideration when developing reporting mechanisms. The most important goal in assessing these situations is determining how best to protect the victims.

The MCA should be sensitive to workers’ concerns, keeping in mind that in some cases workers may face longer-term negative consequences of any action taken by MCA, even when the action appears to be in the worker’s best interest. Workers who are victims of TIP should not be required to leave the project prior to the completion of their contract. Should a worker who was a TIP-victim wish to discontinue working, the contractor may be required to pay out the remainder of the contract; this should be determined on a case by case basis and in accordance with local laws.

The MCA SGA and MCC SGA will comply with local laws and should jointly decide whether the case should be reported to the local authorities or appropriate human rights organizations working in the area (in cases where local authorities are suspected of being complicit in TIP). This decision should take into account: (1) the likely response of the local authorities; (2) the severity of the breach, again bearing in mind that practices prohibited by MCC regulations may not necessarily be illegal in the country concerned; and (3) the wishes of the workers. When seeking the views of the workers, it is important that the workers are fully informed by the investigator(s) of the implications for them of reporting the case to local authorities.

Annex C: Sample TIP Risk Management Work Plan Table

TIP Risk

Activity to address risk

Target Audience

Timing/
Frequency

Responsible Party

Budget

Risks related to recruitment and labor practices

Contractor recruits foreign workers

Training/capacity building on employee rights and counter-TIP

Workers

Once, upon initiating work

Contractor

N/A

Secure locker facilities set-up for employees to save personal documents (including passports), with access 24 hours/day and 7 days/week

Workers

Ongoing

Contractor

$5,000.00

Risks related to project development and implementation processes

Worker camp is set-up close to isolated community

Training/capacity building on counter-TIP

Community members, with focus on women and girls

Every 3 months

Contractor

N/A

Risks related to project location

Community located near international border

In collaboration with local NGO, provide border crossing authorities with technical support to improve border inspection processes

Border crossing employees

Once

MCA

$10,000.00

Risks after project implementation phase concludes

Road will open new routes for international crossing

In collaboration with local NGO, raise TIP awareness among communities and border crossing authorities

Community members and border crossing authorities

Quarterly

MCA responsible for initiating partnership.

N/A

Annex D: List of Additional Resources

U.S. Department of State

U.S. Department of Defense TIP Office

Millennium Challenge Corporation (MCC)

IFC Performance Standards and Guidance Notes

Global Slavery Index

Additional Resources