AAP Archives - Biddle Consulting Group News

OFCCP COVID-19 “Exemption” Clarification

March 23, 2020 By Matt Nusbaum

To be clear, the OFCCP is still open for business. The agency is still auditing and still expects contractors to complete, implement, and maintain their AAPs.

BCGi has been getting several questions that appear to be prompted by incomplete and potentially misleading headlines regarding the OFCCP’s coronavirus relief exemption.

The “exemption” here only applies to federal contracts related to coronavirus relief, as determined by the contracting agency. Entering into such a contract does not exempt the organization from existing affirmative action obligations.

If a contractor holds no other qualifying federal contracts, they will not be required to prepare AAPs and will not be audited because they enter into a contract related to coronavirus relief. Existing federal contractors are not affected by this exemption.

If you have questions, please do not hesitate to reach out to us at BCGi@biddle.com.

OFCCP Issues National Interest Exemption for Coronavirus Relief

March 18, 2020 By Matt Nusbaum

Much as the agency has done in response to past crises, the OFCCP has granted a three-month “exemption” for federal contracts pertaining to coronavirus relief. What does that mean?

First, let’s be clear that this does not have any significant impact on existing federal contractors. If you are already obligated to prepare AAPs, you still have to finish and implement your AAPs. If you are already subject to OFCCP audit, those audits will still happen. This mainly applies to new contractors and is only a partial exemption from OFCCP requirements.

Federal contracting agencies are required to insert the OFCCP’s “EO clauses” in their federal contracts. That is the “hook” that imposes special EEO/AA obligations on federal contractors. Federal agencies do not have the authority to pick and choose the circumstances in which they will include the EO clauses. In other words, they do not have the authority to decide whether and to what extent OFCCP jurisdiction applies to any particular contract. Even if the agency fails to insert the required contract language, the EO clauses will be read-into the contract as a matter of law.

In times of crisis, when OFCCP’s requirements might discourage organizations from providing essential help, the OFCCP can and does grant limited waivers. Most recently, the OFCCP has done this repeatedly in recent years for hurricane relief efforts.

The OFCCP does not grant blanket waivers for any purpose. Instead, federal agencies are authorized to insert special language exempting certain portions of the OFCCP’s EO clauses. This special language allows an organization to enter into federal contracts without fear of that triggering an audit.

How does that work? The OFCCP basically grants federal contracting agencies the authority to determine whether or not a particular contract falls into the national interest exemption. Here, the contract must specifically be for “coronavirus relief.” But the OFCCP does not define that term; they leave it up to the contracting agency to decide.

If the contract is deemed to fall into the exemption, the federal contracting agency inserts special language into their contracts provided by the OFCCP. If that language is not included in the contract, the contract is not exempt.

And those contracts are not exempt from OFCCP jurisdiction entirely. Contracts subject to these national interest exemptions still confer the obligation to ensure nondiscrimination under the OFCCP’s various laws. However, they do not confer the obligation to prepare formal, written affirmative action programs (AAPs). And the OFCCP commits to not initiating an audit based on these contracts.

That is not the same as the OFCCP not auditing companies that hold such a contract—it is not a “get out of jail free” card. It simply means that if the OFCCP schedules the company for an audit, they must point to a different federal contract to establish jurisdiction, one that does not contain the special national exemption language.

Because the nondiscrimination provisions are not exempted, the OFCCP can still investigate discrimination complaints based on an “exempted” federal contract.

What is less clear is whether and to what extent this extends to subcontracts. Logic dictates that if an organization enters into a subcontract that is necessary for the performance of a prime contract that, in turn, is subject to the national interest exemption, then the exemption should “flow-down” to the subcontracts. The OFCCP confirms that (not in the exemption itself, but in subregulatory guidance). As long as the prime contract is exempt, all necessary subcontracts are similarly exempt. It is up to each contractor whether or not to include special language in the EO “flow-down” clause. Unlike the prime contract, though, the special language does not have to appear in subcontracts for those contracts to be exempt.

Is your head spinning yet? That’s okay. If you are otherwise already a federal contractor required to prepare AAPs and subject to audit, this is unlikely to impact you at all. It is just a way to encourage new federal contractors to pitch in and help out.

The coronavirus relief exemption applies to contracts entered into from March 17, 2020 to June 17, 2020. The exemption and guidance are available on the OFCCP’s website here.

OFCCP Reports Progress Toward AAP “Monitoring” (Annual Submission)

September 24, 2019 By Matt Nusbaum

According to a follow-up/status report by the U.S. Government Accountability Office (GAO), the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) has made significant progress toward implementing a GAO recommendation to “monitor” federal contractors’ affirmative action programs (AAPs) by requiring contractors to annually submit written AAPs to the OFCCP, regardless of whether or not the contractor has been selected for a compliance review.

The GAO is a legislative branch agency that provides auditing, evaluation, and investigative services for Congress. In 2016 the GAO investigated the OFCCP’s practices at the urging of Representatives John Kline (R-PA) and Tim Walberg (R-IL) over concern that the OFCCP was imposing excessive compliance burdens on contractors.

Ironically, the GAO made several recommendations for ways the OFCCP could improve its practices, at least one of which would significantly increase the burden on the federal contracting community. Specifically, the GAO recommended that the OFCCP develop “a mechanism to monitor AAPs from covered federal contractors on a regular basis.” The GAO suggested that such a mechanism “could include electronically collecting AAPs and contractor certification of annual updates.”

Of the six recommendations the GAO made in the 2016 report, and five additional recommendations in a 2017 follow-up report, the OFCCP has implemented just one—the agency has taken steps toward requiring contractors to “disaggregate demographic data for the purpose of setting placement goals…rather than setting a single goal for all minorities.” The OFCCP has in fact been encouraging contractors to set race-/ethnicity-specific placement goals, but the agency’s regulations do not require it and the agency has not provided any meaningful guidance regarding how contractors should determine when/if such placement goals are necessary.

On page 11 of a recent follow-up/status report, the GAO notes that the OFCCP “has taken steps toward implementing a mechanism to monitor AAPs but has not fully implemented this recommendation.” Specifically, the OFCCP contracted with a third-party information technology vendor last year to develop a web-based “portal” to allow contractors to upload their AAPs electronically for OFCCP review and “resource prioritization” (e.g., identifying where, when, and how to better allocate audit resources). The OFCCP anticipates delivery of a working portal by the close of fiscal year 2019 (September 30, 2019).

Notably, the OFCCP also reports that the agency has developed the necessary information collection request (ICR) to obtain approval from the White House Office of Management and Budget (OMB) to “collect all contractors’ AAPs annually.” The agency anticipates that OMB approval will come in time for the completion of the portal. Interestingly, a search of ICR requests at reginfo.gov for the past two years does not return an ICR request regarding the annual collection of federal contractors’ AAPs. Nor has there been any notice in the Federal Register regarding such a requirement.

Given that we are days away from the end of the OFCCP’s 2019 fiscal year with no other indication that an AAP reporting requirement is eminent, it would appear that there has been some delay. Nonetheless, it would also appear that such a requirement is in the works.

Note that there is an existing provision in the OFCCP’s regulations at 41 C.F.R. § 60-2.31 that requires contractors to annually summarize and update their AAPs and submit these “program summaries” to the OFCCP each year in a format prescribed by the agency. This provision has laid dormant since its inception but would be relatively easy for the agency to “activate.”

Given that the OFCCP currently audits anywhere from 2-4% of federal contractor AAPs each year, this technological advancement would fundamentally change the landscape by requiring all contractors submit all AAPs each year…a sea change to say the least.

We will continue to monitor the situation and report on further developments as they occur.