The problem arises when the government is forced to develop policies regarding procurement in this volatile debate. The government must decide whether to take a micro view, favoring the rights of companies, or a macro view that places the interest of the American people at its forefront.
Legal Implications
The issue of off shoring has several legal implications that must be considered. The first and foremost is that if a problem arise from an offshore contract, the legalities can be complex. There is always a question of which set of laws prevails. If laws in the two countries differ on key points, such as contract law, the problem arises of how to decide which law takes precedence. Off shoring makes a complex legal issue even more complex. These issues are often difficult enough in domestic courts. However, when the problem becomes an international issue, the problems are compounded.
One of the most recent issues regarding outsourcing involves polices regarding sending private information about American consumers overseas. Privacy policies in the U.S. are strict, compared to many foreign entities. Within the U.S., there are strict laws regarding who can obtain certain pieces of information and how they can be used. However, when that information crosses international boundaries, the rules change. Laws offshore may not have the same restrictions on sharing or use that protect American citizens. One example of this is the sharing of medical information or personal information that could be used to commit fraud or identity theft. This is a key concern in the practice of hiring offshore companies by government entities.
As of February 2006, no federal laws existed that regulated offshore outsourcing. There were certain laws that came into play, such as SOX for public companies, HPAA and GLB for certain types of information and data transfer. In addition, certain export laws came into play for where offshore entities are accessing onshore databases and customer records. These laws were not intended to address offshore outsourcing, but were intended to protect the rights and privacy of American citizens regardless of the circumstance. They domestic, as well as offshore companies.
The past two Congressional sessions have seen a flurry of activity regarding the introduction of new legislation concerning off shoring. This new legislation represents a trend that recognizes the problems associated with off shoring and the legalities associated with it. These new legislative introductions include contraction negotiations, licensing concerns, IP protection, tax issues, labor practices, employment practices, data protections, information security, immigration and national security issues. This new wave of interest in setting policies regarding off shoring reflects a growing concern for the issues surrounding it.
The laws of the United States are designed to protect U.S. citizens from exploitation by domestic and foreign entities. The crux of legalities regarding offshore entities lies in contract law and the specifics of how the contract is written. One of the key controversies in the practice of off shoring is that although contracts are written to comply with U.S. laws, there may be local laws that prevent enforcement of the law in the foreign country. In addition, enforcement requires cooperation of the foreign entity. This may not always be possible to obtain. In this sense, offshore outsourcing essentially strips the American citizen of the protections and rights afforded them by U.S. laws.
If the offshore company commits an act that is illegal according to U.S. law, they may have no recourse from a legal or practical standpoint. In the event that they can force enforcement of the legal issues, international lawyers are expensive. The average person cannot bear the costs of such litigation. This means that even if protections against exploitation exist, they may be out of reach from a practical standpoint. There is the potential that offshore entities may exploit these weaknesses and use off shoring as a way to engage in exploitative practices against American citizens. This leaves the citizen with little that they can do to protect themselves. Current proposed legislation is aimed at closing gaps that could potentially be exploited in the future.
Federal Acquisition Regulation (FAR)
The above regulations involve laws that affect actions by companies engaging in offshore activities. They are laws that are designed to protect individual U.S. citizens from illegal activities by offshore companies. Another set of legislation affects specifications that govern economics and public administration of procurement activities. The principle law regulating procurement is the Federal Acquisition Regulation (FAR). This legislation governs the primary...
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