The rule for defense contractors would affect any company getting a contract over $100,000 or a sub-contract over $3,000. This would mean that basically any company would have to use it. The chances of a defense contractor working on a major system or in a government office being an illegal immigrant is low, although there is concern with service contracts that provide maintenance and house keeping. There has been a great deal of push back and a major law suit is still working itself through the courts.
Now it has been announced that the Obama Administration intends to implement the rule and begin to require companies to use it. Not only will this requirement be levied on defense contractors but now any company getting a contract with the "Stimulus" funds must utilize it. There had been some examples of states using the system as part of their contracting, but it has not been applied across the Federal government yet.
One would think using this system would be a no-brainer. It is to be expected that those companies getting government money should not employ illegal immigrants and follow the law. There probably have only been a few cases where contractors have made a concentrated effort to hire illegals most likely due to the cost but there have been a few. When they are found out they tend to garner headlines due to the security implications.