Government Contractors, Affirmative Action Requirements; Implementation of Executive Order 11246

SUMMARY: This proposal would revise certain provisions of the current

regulations implementing Executive Order 11246, as amended, to reduce

burdens on the regulated community and to improve administration of the

Order. The Executive Order prohibits all nonexempt Government

contractors and subcontractors, and federally assisted construction

contractors and subcontractors, from discriminating in employment, and

requires these contractors to take affirmative action to ensure that

employees and applicants are treated without regard to race, color,

religion, sex and national origin. The proposed revisions to the

regulations on obligations of contractors and subcontractors concern

record retention, compliance monitoring, and segregated facilities. In

addition, the proposal would amend certain provisions of the

regulations to parallel provisions included in OFCCP's final rule

implementing Section 503 of the Rehabilitation Act of 1973, as amended,

which was published in the Federal Register on May 1, 1996. The

proposal also would transfer some sections of the regulations on

contractor evaluation procedures for supplies and services to the

regulations on obligations of contractors and subcontractors and delete

the remainder of the sections. Finally, this proposal would withdraw

portions of a final rule published on December 30, 1980 (and

subsequently suspended), and it hereby withdraws a proposed rule

published on August 25, 1981 (and supplemented on April 23, 1982).

DATES: To be assured of consideration, comments must be in writing and

must be received on or before July 22, 1996.

ADDRESSES: Comments should be sent to Joe N. Kennedy, Deputy Director,

OFCCP, Room C-3325, 200 Constitution Avenue, N.W., Washington, DC

20210.

As a convenience to commenters, OFCCP will accept public comments

transmitted by facsimile (FAX) machine. The telephone number of the FAX

receiver is 202-219-6195. To assure access to the FAX equipment, only

public comments of six or fewer pages will be accepted via FAX

transmittal. Receipts of FAX transmittals will not be acknowledged,

except that the sender may request confirmation of receipt by calling

OFCCP at 202-219-9430 (voice), 1-800-326-2577 (TDD).

FOR FURTHER INFORMATION CONTACT: Joe N. Kennedy, Deputy Director,

OFCCP, Room C-3325, 200 Constitution Avenue, N.W., Washington, DC

20210. Telephone 202-219-9475 (voice), 1-800-326-2577 (TDD). Copies of

this NPRM, including copies in alternate formats, may be obtained by

calling 202-219-9430 (voice), 1-800-326-2577 (TDD). The alternate

formats available are large print, electronic file on computer disk and

audio-tape.

SUPPLEMENTARY INFORMATION:

Background

OFCCP's regulations at 41 CFR chapter 60 implementing Executive

Order 11246, as amended (30 FR 12319, September 28, 1965) have not

undergone substantive revision since the 1970s. A final rule was

published on December 30, 1980 (45 FR 86215; corrected at 46 FR 7332,

January 23, 1981), but was stayed in accordance with Executive Order

12291 on January 28, 1981 (46 FR 9084). This rule later was stayed

indefinitely on August 25, 1981 (46 FR 42865), pending action on a

notice of proposed rulemaking (NPRM) published on that same date (46 FR

42968; supplemented at 47 FR 17770, April 23, 1982). OFCCP has taken no

further action on the August 25, 1981, proposal, or consequently on the

1980 stayed final rule.

Both the 1980 final rule and the 1981 proposal addressed 41 CFR

part 60-1. The changes they would have made to 41 CFR part 60-1 have

been considered in developing today's NPRM and, where pertinent, are

discussed in the Section-by-Section analysis below. To avoid conflict

with today's NPRM, OFCCP proposes to withdraw part 60-1 of the 1980

final rule, and hereby withdraws the 1981 and 1982 NPRMs in their

entirety.

As discussed in the Section-by-Section analysis, today's NPRM

proposes changes to 41 CFR part 60-1 provisions concerning record

retention, compliance monitoring, and segregated facilities. In

addition, to ensure consistency in OFCCP programs, today's NPRM

proposes conforming certain part 60-1 provisions to parallel provisions

revised by OFCCP's final rule implementing Section 503 of the

Rehabilitation Act of 1973, as amended (61 FR 19336; May 1, 1996).

These proposed conforming changes would affect several definitions and,

for example, some aspects of enforcement.

Finally, today's NPRM proposes the deletion of most sections of

part 60-60 from the regulations and the transfer of a few sections to

part 60-1. The deleted sections describe OFCCP's traditional compliance

review process and the transferred sections relate to preservation of

confidentiality of data submitted by contractors, the timeframe within

which a contractor must submit an affirmative action program and

supporting documents and authorization for agreements concerning

nationwide AAP formats. Similar deletions and transfers were contained

in the 1980 final rule and the 1981 proposal.

Section-by-Section Analysis

Section 60-1.3 Definitions

The proposal adds one new definition for compliance evaluation and

revises several others to render them consistent with the definitions

included in OFCCP's Section 503 final rule.

``Compliance Evaluation.'' The proposal adds a new definition of

the term ``compliance evaluation'' to reflect OFCCP's authority to

conduct a variety or range of activities to assess a contractor's

compliance status. Previously OFCCP generally has conducted a full

compliance review of a contractor, assessing all its employment

practices, whenever it reviewed a contractor's status. As discussed in

more detail in the preamble discussion of Sec. 60-1.20, the proposal

would allow OFCCP to use any one or a combination of actions to examine

a contractor's compliance with one or more of the Executive Order 11246

requirements. Thus, the proposal would allow OFCCP to streamline the

review process for many contractors. The proposal also would allow

OFCCP to focus its investigatory resources where they are needed, while

conducting some level of review of a broader segment of the contractor

universe.

``Contract.'' The current regulation defines the term ``contract''

as ``any Government contract or any federally assisted construction

contract.'' The proposal adds the word ``subcontract'' to this

definition (``any Government contract or subcontract or any federally

assisted construction contract or subcontract'') to eliminate the need

to reference ``subcontract'' each time ``contract'' is referenced in

the body of the regulation. Accordingly, the proposal generally

references the term ``subcontract'' only when necessary to

[[Page 25517]]

the context. This same change would have been made by the 1980 final

rule.

``Deputy Assistant Secretary.'' The Director of OFCCP recently was

redesignated the Deputy Assistant Secretary for Federal Contract

Compliance Programs. The proposal, therefore, substitutes a definition

of ``Deputy Assistant Secretary,'' for the definition of ``Director''

in the current regulations, and makes this title change throughout the

proposal. To ensure internal consistency, OFCCP intends to issue a rule

making a corresponding universal change to its regulations before

publishing the final rule resulting from this proposal.

``Government Contract.'' The proposed definition of ``Government

contract'' is revised to clarify that covered contracts include those

under which the Government is a seller of goods or services, as well as

those under which it is a purchaser. This change reflects OFCCP's long-

standing interpretation of the scope of the Executive Order, upheld in

Crown Central Petroleum Corp. v. Kleppe (424 F. Supp. 744 (D. Md.

1976)), that sales by the Government result in covered contracts.

Hence, the proposal substitutes a reference to contracts for the

``purchase, sale or use of personal property or nonpersonal services''

and a definition of the term ``personal property'' for the existing

reference to the ``furnishing'' of supplies or services, or for the use

of real or personal property, including lease arrangements.

``Rules, regulations and relevant orders of the Secretary of

Labor.'' A rule published on May 3, 1996 (61 Fed. Reg. 19982) amended

the definition of ``Secretary'' to include a ``designee'' of the

Secretary of Labor. The definition of ``rules, regulations and relevant

orders of the Secretary of Labor'' in the current regulations, which

makes reference to the designee of the Secretary, therefore is no

longer necessary and is omitted in this proposal.

``Subcontract.'' The proposal conforms the current definition of

``subcontract'' to the proposed definition of ``Government contract''

above; that is, as revised, the proposed definition references

agreements for the ``purchase, sale or use'' of personal property or

nonpersonal services.

``United States.'' OFCCP proposes to revise the current definition

of ``United States'' by deleting the Panama Canal Zone (which was ceded

back to Panama under the terms of the Panama Canal Treaty) and by

specifying the possessions and territories of the United States as: the

Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern

Mariana Islands, and Wake Island.

Section 60-1.8 Segregated Facilities

Today's proposal would revise Sec. 60-1.8, which currently sets out

a general prohibition regarding the maintenance of segregated

facilities (paragraph (a)) and a certification requirement regarding

compliance with that obligation (paragraph (b)).

Specifically, under paragraph (a) of Sec. 60-1.8, nonexempt

contractors and subcontractors must ensure that facilities they provide

to their employees are not segregated on the basis of race, color,

religion or national origin. Further, paragraph (a) states that this

obligation extends to all contracts containing the equal opportunity

clause, regardless of the amount of the contract.

Paragraph (b) of the regulation provides that, prior to the award

of a Government contract or federally assisted construction contract,

each contracting agency or applicant for Federal financial assistance

involving a construction contract shall require the prospective prime

contractor to submit a certification that it does not and will not

maintain segregated employee facilities. Paragraph (b) also requires

prime contractors and subcontractors, prior to the award of

subcontracts, to obtain such a certification from their prospective

subcontractors.

This proposal would conform Sec. 60-1.8 with the Executive Order's

general nondiscrimination requirements, by adding sex to the list of

bases upon which segregation is prohibited, with the proviso that

separate or single-user restrooms and necessary dressing or sleeping

areas shall be provided to assure privacy between the sexes. The

proposal also would make a number of stylistic changes to existing

paragraph (a).

OFCCP proposes to withdraw the written certification requirement

(paragraph (b) of the current regulation). The certification

requirement originally was incorporated into the Executive Order

regulations in 1967 (see 32 FR 7439, May 19, 1967). At that time,

segregation in employee facilities, especially on the basis of race,

was not uncommon. The certification requirement was intended in large

part to put contractors on notice that such segregation was unlawful

and would not be tolerated. In the intervening 28 years, as a result of

civil rights law enforcement and other factors, employers have become

aware that segregation in employee facilities is unlawful. Indeed, such

segregation has been significantly reduced. Because today's proposal

would retain and strengthen the basic prohibition regarding segregated

facilities, which OFCCP will continue to monitor through compliance

investigations, the proposed withdrawal of the certification

requirement will not reduce protections afforded to workers.

Withdrawing the certification requirement will significantly reduce

compliance burdens on contractors. The Government lets approximately

350,000 prime contracts each year. If it is assumed that each prime

contract results in an average of four subcontracts, and that it takes

about one-half hour to prepare and submit the written certification,

eliminating the certification requirement would reduce compliance

burdens on the contractor community by roughly 875,000 hours. This

estimate may significantly understate the savings; many contractors

annually solicit the certification from all of their prospective

vendors rather than limiting their request to those firms that actually

are subcontractors on Federal projects.

The 1980 final rule, and the 1981 proposal, would have made similar

revisions to the segregated facilities regulation.

Section 60-1.12 Record Retention

OFCCP's primary Executive Order recordkeeping and record retention

regulations are contained in 41 CFR 60-1.40 and 60-4.3, and parts 60-2

and 60-3 (the Uniform Guidelines on Employee Selection Procedures,

hereafter UGESP). The regulations require certain contractors to

develop, implement and maintain a written affirmative action program

(AAP) for each of their establishments; to compile the results of the

program; to update the program annually; and to provide the program and

supporting documentation to OFCCP upon request; to maintain data on

applicants, selection and referral procedures and, as applicable,

adverse impact and evidence of validity; and, if engaged in Federal or

federally assisted construction, to compile and maintain data on

employees and applicants for construction jobs. Although retention of

relevant records is implicit in the requirement to analyze selection

decision data, prepare an annual update, and provide supporting

documentation, the Executive Order regulations, with one exception, do

not expressly prescribe a record retention period. That exception is

the requirement under the UGESP to keep certain adverse impact data for

two years after the adverse impact has been eliminated.

Paragraph (a) of the proposal amends this obligation in several

ways: First it

[[Page 25518]]

makes the record retention obligation applicable to any personnel or

employment record made or kept by the contractor, and sets out a

listing of examples of the types of records that must be retained. This

provision conforms to the analogous requirement under Title VII of the

Civil Rights Act of 1964. (Thus, contractors with 15 or more employees,

i.e., those that are covered by Title VII of the Civil Rights Act,

already are required to comply with this requirement. The only

contractors that will be newly covered by this requirement are those

that have Government contracts subject to the Executive Order's

regulations (e.g., those with contracts that exceed $10,000) and that

have fewer than 15 employees. This group of contractors consists almost

entirely of small construction contractors.)

Second, proposed paragraph (a) stipulates that the required record

retention period is two years. It is OFCCP's practice to review the

contractor's employment practices dating back two years prior to the

initiation of a compliance evaluation and to assess liability for

discriminatory practices dating back two years. Proposed paragraph (a)

requires smaller contractors (those that have fewer than 150 employees

or that do not have a Government contract of at least $150,000) to

retain records for a minimum of one year, rather than two years. Most

contractors are covered by the one year record retention period imposed

by Title VII. OFCCP is proposing a shorter record retention period for

smaller contractors as a method of reducing regulatory burden on such

contractors. This proposal is consistent with a provision included in

OFCCP's Section 503 final rule.

Third, proposed paragraph (a) requires that when a contractor has

been notified that a complaint has been filed, that a compliance

evaluation has been initiated or that an enforcement action has been

commenced, the contractor shall preserve all relevant personnel records

until the final disposition of the action. This provision conforms to

the corresponding record retention requirement under Title VII. The

purpose of this requirement is obvious--to ensure that OFCCP can obtain

all relevant documents during a compliance investigation or enforcement

action.

Proposed paragraph (b) provides that a contractor establishment

required to develop a written affirmative action program (AAP) shall

maintain its current AAP and its AAP for the preceding AAP year, along

with documentation of good faith efforts taken under the AAPs. Such

documentation might reflect, for example, the contractor's outreach and

recruitment efforts undertaken to increase its pool of female or

minority applicants, or training programs instituted to enhance the

skills and talents of incumbent employees to increase the pool of those

eligible for promotion. This provision is intended to ensure that the

AAPs are available to OFCCP during a compliance evaluation.

Proposed paragraph (c) provides that the failure to preserve the

records required by proposed paragraphs (a) and (b) constitutes

noncompliance with the Order. Additionally, proposed paragraph (c), in

a provision that is not paralleled in the current regulations, states

that where a contractor has destroyed or failed to preserve required

records, there may be a presumption that such records would have been

unfavorable to the contractor. However, this presumption will not apply

where a contractor demonstrates that the destruction or failure to

preserve records resulted from circumstances beyond the contractor's

control (e.g., fires, floods, tornados, or other natural disasters).

This provision is consistent with EEOC's practice under Title VII, as

set forth at Sec. 632.3(b)(2)(ii) of EEOC's Compliance Manual. The

intent of this provision is to deter contractors from deliberate

attempts to frustrate OFCCP's compliance monitoring and enforcement

efforts by destroying or failing to preserve records. The adverse

inference established by paragraph (c) would be used by OFCCP in both

investigations of compliance and in enforcement litigation.

Proposed paragraph (d), which is not paralleled in the current

regulations, would clarify that the contractor is obligated to preserve

only those records which are created or kept on or after the effective

date of the regulations.

The proposed regulation has been carefully drafted to comport with

requirements under Title VII of the Civil Rights Act of 1964, the Age

Discrimination in Employment Act (ADEA), the Americans with

Disabilities Act (ADA) and the requirement included in OFCCP's final

rule implementing Section 503 of the Rehabilitation Act of 1973, as

amended. The Title VII, ADEA, and ADA regulations contain record

retention requirements for similar records that vary from one to three

years. The vast majority of Federal contractors already are subject to

one or more of these statutes and thus already are required to maintain

the records described in this proposed regulation.

Section 60-1.20 Compliance Evaluations

The proposal would revise paragraphs (a) and (d) of this section,

which respectively address compliance reviews in general, and preaward

clearance requirements.

In the current regulations, paragraph (a) describes the purpose of

a compliance review of a contractor's implementation of its

nondiscrimination and affirmative action obligations, provides that the

review shall consist of a comprehensive analysis of all relevant

practices, and provides that recommendations for appropriate sanctions

shall be made. The proposal specifically authorizes OFCCP's use of

additional methods to evaluate a contractor's compliance with the

regulations. The proposal specifies that the compliance evaluation

methods available to OFCCP, other than the full compliance review, may

include a range of activities designed to focus, for example, on the

contractor's written affirmative action plan; the accuracy of data

submitted for review at desk audit; or on one component or

organizational unit of the contractor's workforce. Thus, the proposal

would allow OFCCP to streamline the review process in many cases.

The proposal also would revise paragraph (d), which currently

requires OFCCP to conduct a preaward compliance review of contractors

being considered for contracts of $1 million or more. The preaward

provision has been a component of OFCCP's regulatory procedures since

1968. The intent of the preaward clearance provision is to prevent the

award of large dollar contracts to contractors which are either in

noncompliance or unwilling to comply with the EEO clause of the

contract.

Specifically, Sec. 60-1.20(d) requires the awarding agency to

obtain clearance from OFCCP prior to awarding Federal supply/ service

contracts of $1 million or more. OFCCP must certify that a Federal

contractor/prospective contractor is in compliance before the award of

a contract.

The concept of preaward compliance reviews was premised on three

assumptions: (1) Contracts of a sizable dollar amount tend to generate

expanded hiring, promotion and upgrading opportunities; (2) the conduct

of a compliance review immediately prior to the award is the most

efficient way of ensuring that those employment opportunities be used

to address the consequences of any past job discrimination; and (3)

contractors tend to be more amenable to achieving

[[Page 25519]]

compliance across-the-board when it is an immediate condition of the

contract. Although these assumptions generally are still correct, the

preaward review has not been a successful compliance mechanism for the

past 15 years.

OFCCP has been severely hampered in its efforts to plan and carry

out compliance reviews because of the regulatory and other requirements

associated with preaward requests. OFCCP recognized the shortcomings of

the preaward process as early as 1979 and attempted to modify the

provision in the 1980 final rule. The 1981 proposal would have

eliminated the requirements for preaward clearance. The ineffectiveness

of the preaward provision also was identified and cited in 1985 and

1988 reports of the Department of Labor Inspector General.

Several factors contribute to the difficulties with the preaward

process, including: insufficient staff and budget to process the large

volume of preaward requests--approximately 27,625 preaward requests

were received in FY '93; the short time available within which to

conduct preaward reviews; and court rulings that require a hearing

before OFCCP may declare a contractor ineligible for contracts. See

e.g., Illinois Tool Works v. Marshall, 601 F.2d 943 (7th Cir. 1979).

In addition, some contracting agencies have expressed concerns

about the traditional preaward process. OFCCP has held consultations

with various contracting agencies during the past year and has adopted

a number of administrative reforms as a result. Those reforms relate to

its interactions with the contracting agencies during the preaward

process, and they were implemented in order to ensure that the process

is as streamlined as possible. Those consultations are ongoing and

OFCCP will continue to work with the contracting agencies to improve

the process.

Based on the foregoing concerns with the current preaward

provision, OFCCP considered a number of options including the complete

elimination of the preaward provision, an increase in the dollar amount

of the preaward contract threshold, and the replacement of the preaward

review with a postaward review. OFCCP decided to promulgate this

proposal which modifies the provision by making the preaward compliance

review optional. Thus, preaward reviews will be conducted if OFCCP

determines that a review would constitute the best use of its limited

resources. OFCCP may consider factors such as whether the contract is

likely to generate significant employment opportunities, whether the

contractor has held a covered Federal contract before, whether the

contractor has been reviewed before and, if so, whether prior reviews

have revealed noncompliance at the same or other establishments, the

length of time that has passed since a prior review, and the EEO-1

profile of the contractor. It is difficult to describe more precisely

the factors OFCCP will use, because they may change over time as

economic conditions change. For example, in recent years the most

growth in employment opportunities has occurred in small businesses and

that growth has occurred in the service sector of the economy. Because

these facts may change in future years, they are not specified as

factors OFCCP will consider when deciding whether to conduct a preaward

review. By making the preaward review optional, the proposal allows

OFCCP the necessary flexibility and latitude in establishing the

agency's enforcement priorities, rather than continuing to allow those

priorities to be dictated by the incoming preaward requests. OFCCP

invites commenters to address whether it should make preaward reviews

optional, or should retain such reviews as mandatory.

This proposal provides, as does the current regulation, that OFCCP

will provide an awarding agency with its conclusions regarding

clearance for an award. However, the proposal requires that OFCCP

inform an awarding agency within 15 days of its intention to conduct a

preaward review. If OFCCP does not inform an awarding agency within

that period of its intention to conduct a preaward review, clearance

shall be presumed and the agency is authorized to proceed with the

award. If OFCCP informs an awarding agency of its intention to conduct

a preaward review, OFCCP shall be allowed an additional 20 days after

the date that it so informs the agency to provide its conclusions. If

OFCCP does not provide an awarding agency with its conclusions within

that period, clearance shall be presumed and the agency is authorized

to proceed with the award. This proposal ensures that the preaward

review process will not contribute to any unnecessary delay in the

procurement process.

This proposal continues the threshold for preaward notification at

$1 million. However, OFCCP invites commenters to address whether the

existing threshold should be changed or retained, in light of the dual

goals of streamlining the procurement process and ensuring that OFCCP

has the information necessary to allow it to evaluate the compliance

status of companies that may be awarded new Government contracts. In

addition, OFCCP invites commenters to address the option of moving from

preaward reviews to a system under which OFCCP reviews would be

performed concurrent with the awarding of a Federal contract.

Finally, as discussed under the heading of part 60-60 below, the

proposal moves provisions now contained in part 60-60 that relate to

confidentiality of data, timely submission of documents to OFCCP, and

nationwide AAP formats to this section.

Section 60-1.26 Enforcement Proceedings

The proposal revises and restructures for clarity Sec. 60-1.26,

which details Executive Order enforcement procedures. With the

exception of the provision relating to calculating interest, this

proposal is not intended to make substantive changes to this section.

Proposed subsection (a) contains general provisions applicable to both

administrative and judicial enforcement. Proposed subsection (b)

addresses administrative enforcement procedures, and proposed

subsections (c) and (d) cover judicial enforcement proceedings, which

are handled by the Department of Justice.

The proposal also makes several specific changes to this section

that are consistent with provisions included in OFCCP's Section 503

final rule at 41 CFR 60-741.65(a)(1). First, it clarifies in subsection

(a)(2) that OFCCP may seek relief for victims of discrimination

identified either during a compliance evaluation or a complaint

investigation whether or not such individuals have filed a complaint

with OFCCP. OFCCP has long maintained that such a limitation on

available relief clearly is inconsistent with the Order. OFCCP's

position recently was upheld in a case under Section 503, OFCCP v.

Commonwealth Aluminum, 82-OFC-6 (Assistant Secretary for Employment

Standards, February 10, 1994), Federal court review pending sub nom.

Commonwealth Aluminum Corporation v. United States (WD Ky., No. 94-

0071-O(C)).

Second, the proposal states, also in subsection (a)(2), that

interest on back pay shall be compounded quarterly at the percentage

rate established by the Internal Revenue Service for the underpayment

of taxes. This provision would reverse the ruling of the Department of

Labor's Assistant Secretary for Employment Standards in OFCCP v.

Washington Metropolitan Area Transit Authority, 84-OFC-8 (orders dated

August 23 and November 17, 1989), that simple interest, rather

[[Page 25520]]

than compounded interest, should be used in the calculation of back pay

awards under Section 503. That Section 503 ruling, which relied upon

the Department's regulations (at 29 CFR part 20) implementing Section

11 of the Debt Collection Act of 1982 (31 U.S.C. 3717), could be

construed as applicable also to relief under the Executive Order. OFCCP

had a longstanding policy of requiring that interest on back pay awards

under the Executive Order be compounded; such policy is consistent with

the case law under Title VII of the Civil Rights Act of 1964. OFCCP

believes that it must reinstate this policy to ensure that victims of

discrimination obtain complete ``make whole'' relief.

Third, the proposal provides in subsection (b)(1) that

administrative enforcement proceedings also may be instituted where

OFCCP determines that referral for formal enforcement (rather than

settlement) is appropriate. Fourth, the proposal specifies in

subsection (b)(1) that the administrative enforcement referral will be

made to the Solicitor of Labor.

The proposal states that the rules of evidence set out in the

hearing rules applicable to the Department's Administrative Law Judges

shall also apply to hearings conducted under 41 CFR part 60-30. These

rules, which were issued in 1990, are generally applicable to the

Department's formal adversarial adjudications. Consistent with a

requirement included in OFCCP's Section 503 final rule, the proposal

also requires that the Department's Final Administrative Order in an

Executive Order case be issued within one year from the date of the

Administrative Law Judge's recommended decision, or the submission of

the parties' exceptions and responses to exceptions to such decision

(if any), whichever is later. OFCCP believes that this time limit is

needed to ensure that aggrieved individuals obtain expeditious relief

and that contractors are assured of closure of the administrative

proceedings.

Section 60-1.27 Sanctions

The current sanction regulation provides only that the sanctions

authorized by section 209 of the Executive Order may be exercised by or

with the approval of the Director of OFCCP. The 1980 final rule and the

1981 proposal deleted the current sanction regulation as a separate

provision, and they both generally merged the sanction regulation with

the regulation pertaining to enforcement proceedings. The regulation

pertaining to enforcement proceedings currently is set forth at

Sec. 60-1.26. In the 1980 final rule the combined sanctions and

enforcement proceedings regulation appeared at Sec. 60-1.29, and in the

1981 proposal the combined regulation appeared at Sec. 60-1.68.

The proposal adds a new paragraph specifically addressing the

sanction of debarment. Paragraph (b) of the proposal provides for a

fixed term debarment for a period of six months or more, as well as

indefinite term debarment. The Secretary already has ordered the

imposition of a fixed term debarment in OFCCP v. Disposable Safety

Wear, 92-OFC-11 (Decision and Final Administrative Order of the

Secretary of Labor, September 29, 1992). See also OFCCP v. Blaine

Construction Co., 94-OFC-4 (Decision and Final Administrative Order of

the ALJ, March 9, 1994); OFCCP v. KRT Drywall/Acoustical, 94-OFC-14

(Order of the ALJ, August 18, 1994); OFCCP v. State Construction of

Southeast Wisconsin, 94-0FC-18 (Orders of the ALJ, August 31 and

September 8, 1994). The proposal simply provides contractors with

greater notice that a fixed term debarment of six months or more may be

imposed in some cases instead of an indefinite term debarment. OFCCP

believes that the use of fixed period debarments will serve as a more

effective deterrent and encourage compliance among the recalcitrant

contractors who repeatedly break their promises of future compliance

with respect to affirmative action and recordkeeping and retention

requirements. OFCCP has found that the current practice of reinstating

the contractor upon its simple demonstration of compliance is

insufficient to ensure voluntary compliance. Under the current

procedure the contractor may be reinstated immediately without

incurring any economic loss for a violation of an affirmative action

requirement (e.g., a contractor which has failed to develop an AAP can

simply do so to be eligible for reinstatement). A fixed term debarment

establishes a trial period during which a contractor can demonstrate

its commitment and ability to establish personnel practices that will

ensure continued compliance with the requirements of the Executive

Order. Thus, in a Final Administrative Order, the Adminstrative Review

Board could order a company to take specific action to come into

compliance and to submit periodic reports to OFCCP regarding its

compliance status during the fixed term debarment period. A fixed term

debarment scheme will strengthen the Executive Order program by

deterring contractors from engaging in violations based upon ``a cold

weighing of the costs and benefits of noncompliance.'' Janik Paving &

Construction v. Brock, 828 F.2d 84 (2d Cir. 1987). Where fixed term

debarment is ordered, in lieu of an indefinite term debarment, the

length of the debarment period will be determined on a case-by-case

basis, depending upon factors such as the nature and severity of the

violations. A contractor debarred for a fixed term will not be

automatically reinstated upon the conclusion of the fixed term

debarment period. In making his or her determination as to whether

reinstatement of such a contractor is appropriate, the Deputy Assistant

Secretary shall consider whether the contractor has demonstrated that

it has established and will carry out employment policies and practices

in compliance with the Executive Order. If the contractor failed to

comply with the Department's Final Administrative Order, it would not

be eligible for reinstatement at the conclusion of the fixed term

debarment period.

Section 60-1.30 Notification of Agencies

Consistent with a regulation in OFCCP's Section 503 final rule, the

proposal would delete the requirement that OFCCP distribute a list of

debarred contractors to all executive departments and agencies, and

substitute a requirement that the Deputy Assistant Secretary ensure

that the heads of agencies are notified of debarments. Accordingly, the

section would be renamed ``Notification of agencies'' instead of

``Contract ineligibility list.'' The General Services Administration

now publishes a listing of debarred contractors, and it would be

redundant for OFCCP to issue a separate list.

The 1980 final rule would have required that OFCCP promptly notify

the Comptroller General of the United States regarding contract

cancellations and debarments. Further, that section of the final rule

would have required that OFCCP take appropriate steps to notify prime

contractors of the debarred contractor's ineligibility for

subcontracts. Notice now is provided adequately by the General Services

Administration's list of debarred contractors.

Section 60-1.31 Reinstatement of Ineligible Prime Contractors and

Subcontractors

The proposal would revise this section to make it consistent with

proposed Sec. 60-1.27(b), which authorizes debarment either for an

indefinite

[[Page 25521]]

period or for a fixed period of not less than six months. Accordingly,

the proposal provides that a contractor debarred for an indefinite

period may request reinstatement at any time, and that a contractor

debarred for a fixed period may request reinstatement after the

expiration of the fixed period. In either type of debarment, the

contractor, as under the current regulations, would be required to show

that it has established and will carry out employment practices in

compliance with the Executive Order.

Further, the proposal would adopt some of the 1980 final rule's

reinstatement procedures. For instance, similar to the 1980 final rule,

the proposal specifies that the contractor may be subject to a

compliance evaluation before a final determination is made on the

reinstatement request. The 1980 final rule would have established some

additional detailed procedures that OFCCP, upon reconsideration, does

not believe need to be incorporated into the regulations.

Section 60-1.32 Intimidation and Interference

Currently, the regulations provide that the sanctions and penalties

contained therein may be exercised against any contractor which fails

to ensure that no person intimidates, threatens, coerces or

discriminates against any individual because he or she files a

complaint or otherwise participates in compliance activity under the

Executive Order or a similar Federal, state or local law. The proposal

contains a similar prohibition but specifies that the contractor itself

shall not engage in such activities and shall ensure that all persons

under its control do not do so, and adds that the prohibition applies

to harassment. Further, the proposal states that the prohibition

applies to an individual's opposition to any practice that is unlawful

under the Order or similar Federal, state or local laws, and to the

exercise of any other right protected by the Order. The proposal is

consistent with a provision included in OFCCP's Section 503 final rule,

and it is substantially similar to the counterpart provision in the

1980 final rule (Sec. 60-1.28). The intent of the proposal is to

incorporate strengthened provisions that ensure that individuals fully

enjoy all rights protected under the Order, the regulations and

comparable Federal, state and local laws without the threat of

harassment or intimidation.

Section 60-1.34 Violation of a Conciliation Agreement or Letter of

Commitment

The proposal contains a clarification that in enforcement

proceedings related to violation of a conciliation agreement, OFCCP is

not required to present proof of the underlying violations resolved by

the agreement. This provision, which reflects OFCCP's current practice

and which is consistent with OFCCP's Section 503 final rule, is to

remove any doubt that OFCCP need not litigate claims that have already

been resolved through the agreement.

Section 60-1.42 Notices to be Posted

Technical corrections are made to the wording of the poster

regarding the jurisdictional coverage of Title VII and the address of

EEOC.

Section 60-1.43 Access to Records and Site of Employment

Consistent with a provision included in OFCCP's Section 503 final

rule, the proposal specifies that computerized records are among the

records to which the contractor shall permit OFCCP access for

inspection and copying. In addition, the proposal specifies that

contractors must permit OFCCP access to their premises for the purpose

of conducting compliance evaluations and complaint investigations (the

current regulation mentions only compliance reviews). Further, the

proposal revises the list of uses which can be made of information

OFCCP obtains from a contractor, to include the administration of other

laws that are enforced, in whole or in part, by OFCCP.

Part 60-60--Contractor Evaluation Procedures for Contractors for

Supplies and Services

Part 60-60 is to be deleted. Most of part 60-60 is properly

characterized as internal operating procedures. A number of the

procedures have been incorporated into OFCCP's Federal Contract

Compliance Manual, and the provisions regarding confidentiality of data

furnished to OFCCP by contractors are proposed to be incorporated into

part 60-1. Specifically, provisions currently found at Secs. 60-

60.2(a), 60-60.3(a)(3), 60-60.3(d) and 60-60.4(a-d) will be

incorporated into Sec. 60-1.20 with minor changes. The 1980 final rule,

and the 1981 proposal, would have made similar revisions to part 60-60.

Regulatory Procedures

Executive Order 12866

The Department is issuing this proposed rule in conformance with

Executive Order 12866. This proposal has been determined to be

significant for purposes of Executive Order 12866 and therefore has

been reviewed by OMB. This proposal does not meet the criteria of

Section 3(f)(1) of Executive Order 12866 and therefore the information

enumerated in Section 6(a)(3)(C) of that Order is not required.

In accordance with section 6 of Executive Order 12866, an

assessment of the potential costs and benefits of the proposal has been

made. Potential costs and benefits of record retention and

certification proposals are discussed below in the sections on the

Regulatory Flexibility Act and the Paperwork Reduction Act. As noted

therein, this proposal would significantly reduce the compliance burden

on the contractor community by eliminating the segregated facilities

certification requirement. OFCCP anticipates publishing an additional

proposal relating to 41 CFR part 60-2 and the requirements of written

affirmative action programs that would, if adopted, further reduce the

burdens on contractors. OFCCP's goal in proposing regulatory changes is

to streamline its existing regulations and to reinvent its current

processes in order make both contractor compliance and agency

enforcement more efficient and cost effective. Therefore, OFCCP invites

comments on additional ways to reduce compliance burdens such as

simplified compliance procedures for small contractors.

Regulatory Flexibility Act

The proposed rule, if promulgated, will not have a significant

economic impact on a substantial number of small business entities. A

requirement that records be maintained for one to two years (depending

upon contractor size) might result in a slight additional storage

burden for some small entities; conversely, small entities and other

contractors would benefit from the elimination of the segregated

facilities certification. Therefore, a regulatory flexibility analysis

under the Regulatory Flexibility Act is not required.

Paperwork Reduction Act

The proposed rule would slightly revise information collection

requirements currently approved by OMB under the Paperwork Reduction

Act (44 U.S.C. 3501, et seq.).

As previously stated, withdrawing the certification requirement

will significantly reduce compliance burdens on contractors. The

Government lets approximately 350,000 prime contracts each year. If it

is assumed that each prime contract results in an average of four

[[Page 25522]]

subcontracts, and that it takes about one-half hour to prepare and

submit the written certification, eliminating the certification

requirement would reduce compliance burdens on the contractor community

by roughly 875,000 hours. This estimate may significantly understate

the savings; many contractors annually solicit the certification from

all of their prospective vendors rather than limiting their request to

those firms that actually are subcontractors on Federal projects.

Although for contractors with 150 or more employees and a contract

of $150,000 or more this proposal extends to two years the current

obligations such contractors already have under Title VII and the ADA

to retain records for one year, there will be only a minimal increase

in burden imposed on contractors as a result of this change. A similar

conclusion was reached by EEOC in 1991 when it doubled its existing

six-month retention period under Title VII to one year--an obligation

that applies to a significantly larger universe of employers than does

the obligation under the Executive Order. See 56 FR 35753 (July 26,

1991). Employers, especially larger ones, are increasingly maintaining

electronic records. Where this is the case, compliance with the

requirement will impose little or no additional burden. In many cases,

additional storage space would be needed only for applications of

persons not hired (which generally are not cost effective to record and

store electronically).

In addition, the proposal makes this retention obligation

applicable to a broader range of records than was previously required

by the Executive Order regulations. However, this proposal would

conform the obligation to the analogous requirement under EEOC's

regulations (29 CFR 1602.14) issued pursuant to Title VII and the ADA.

OFCCP solicits comments concerning the proposed revisions to the

collections of information contained in this proposed rule. OFCCP

solicits comments to: (i) Evaluate whether the proposed collection of

information is necessary for the proper performance of the functions of

the agency, including whether the information will have practical

utility; (ii) evaluate the accuracy of the agency's estimate of the

burden of the proposed collection of information, including the

validity of the methodology and assumptions used; (iii) enhance the

quality, utility, and clarity of the information to be collected; and

(iv) minimize the burden of the collection of information on those who

are to respond, including through the use of appropriate automated,

electronic, mechanical, or other technological collection techniques or

other forms of information technology, e.g., permitting electronic

submission of responses.

The revised collections of information contained in this proposed

rule have been submitted to OMB for review under section 3507(d) of the

Paperwork Reduction Act of 1995. Written comments on these proposed

information collection revisions may also be sent to the Office of

Information and Regulatory Affairs, Office of Management and Budget,

Attention: Desk Officer for Employment Standards, Washington, D.C.

20503.

Unfunded Mandates Reform Act

The proposed rule, if promulgated, will not include any Federal

mandate that may result in the expenditure by state, local and tribal

governments in the aggregate, or by the private sector, of $100,000,000

or more in any one year.

List of Subjects

41 CFR Part 60-1

Administrative practice and procedure, Civil rights, Employment,

Equal employment opportunity, Government contracts, Government

procurement, Investigations, Reporting and recordkeeping requirements.

41 CFR Part 60-60

Equal employment opportunity, Government procurement, Reporting and

recordkeeping requirements.

Signed at Washington, D.C., this 10th day of May, 1996.

Robert B. Reich,

Secretary of Labor.

Bernard E. Anderson,

Assistant Secretary for Employment Standards.

Shirley J. Wilcher,

Deputy Assistant Secretary for Federal Contract Compliance.

Accordingly, part 60-1 of the rule amending 41 CFR chapter 60

published on December 30, 1980 (45 FR 86216), which was delayed

indefinitely at 46 FR 42865, is proposed to be withdrawn; the proposed

rule published on August 25, 1981 (46 FR 42968; supplemented at 47 FR

17770, April 23, 1982) is hereby withdrawn in its entirety; and under

the authority of Executive Order 11246, as amended, Title 41 of the

Code of Federal Regulations, chapter 60, is proposed to be amended as

follows:

60-1--[AMENDED]

The authority citation for part 60-1 continues to read as follows:

Authority: Sec. 201, E.O. 11246 (30 FR 12319), as amended by

E.O. 12086.

2. Section 60-1.3 is amended by removing the definitions of

Director and Rules, regulations, and relevant orders of the Secretary

of Labor, by revising the definitions of Contract, Government contract,

Subcontract and United States, and by adding, in alphabetical order,

the definitions of Compliance evaluation and Deputy Assistant Secretary

to read as follows:

Sec. 60-1.3 Definitions.

* * * * *

Compliance evaluation means any one or combination of actions OFCCP

may take to examine a Federal contractor or subcontractor's compliance

with one or more of the Executive Order 11246 requirements.

* * * * *

Contract means any Government contract or subcontract or any

federally assisted construction contract or subcontract.

* * * * *

Deputy Assistant Secretary means the Deputy Assistant Secretary for

Federal Contract Compliance Programs, United States Department of

Labor, or his or her designee.

* * * * *

Government contract means any agreement or modification thereof

between any contracting agency and any person for the purchase, sale or

use of personal property or nonpersonal services. The term ``personal

property,'' as used in this section, includes supplies, and contracts

for the use of real property (such as lease arrangements), unless the

contract for the use of real property itself constitutes real property

(such as easements). The term ``nonpersonal services'' as used in this

section includes, but is not limited to, the following services:

Utilities, construction, transportation, research, insurance, and fund

depository. The term Government contract does not include:

(1) Agreements in which the parties stand in the relationship of

employer and employee; and

(2) Federally assisted construction contracts.

* * * * *

Subcontract means any agreement or arrangement between a contractor

and any person (in which the parties do not stand in the relationship

of an employer and an employee):

(1) For the purchase, sale or use of personal property or

nonpersonal services which, in whole or in part, is necessary to the

performance of any one or more contracts; or

[[Page 25523]]

(2) Under which any portion of the contractor's obligation under

any one of more contracts is performed, undertaken or assumed.

* * * * *

United States, as used herein, shall include the several States,

the District of Columbia, the Virgin Islands, the Commonwealth of

Puerto Rico, Guam, American Samoa, the Commonwealth of the Northern

Mariana Islands, and Wake Island.

3. Section 60-1.8 is revised to read as follows:

Sec. 60-1.8 Segregated facilities.

To comply with its obligations under the Order, a contractor must

ensure that facilities provided for employees are provided in such a

manner that segregation on the basis of race, color, religion, sex or

national origin cannot result. The contractor may neither require such

segregated use by written or oral policies nor tolerate such use by

employee custom. The contractor's obligation extends further to

ensuring that its employees are not assigned to perform their services

at any location, under the contractor's control, where the facilities

are segregated. This obligation extends to all contracts containing the

equal opportunity clause regardless of the amount of the contract. The

term ``facilities,'' as used in this section, means waiting rooms, work

areas, restaurants and other eating areas, time clocks, restrooms, wash

rooms, locker rooms, and other storage or dressing areas, parking lots,

drinking fountains, recreation or entertainment areas, transportation,

and housing provided for employees: Provided, That separate or single-

user restrooms and necessary dressing or sleeping areas shall be

provided to assure privacy between the sexes.

4. A new Sec. 60-1.12 is added to subpart A to read as follows:

Sec. 60-1.12 Record retention.

(a) General requirements. Any personnel or employment record made

or kept by the contractor shall be preserved by the contractor for a

period of not less than two years from the date of the making of the

record or the personnel action involved, whichever occurs later.

However, if the contractor has fewer than 150 employees or does not

have a Government contract of at least $150,000, the minimum record

retention period shall be one year from the date of the making of the

record or the personnel action involved, whichever occurs later. Such

records include, but are not necessarily limited to, records pertaining

to hiring, assignment, promotion, demotion, transfer, lay-off or

termination, rates of pay or other terms of compensation, and selection

for training or apprenticeship, and other records having to do with

requests for reasonable accommodation, the results of any physical

examination, job advertisements and postings, applications and resumes,

tests and test results, and interview notes. In the case of involuntary

termination of an employee, the personnel records of the individual

terminated shall be kept for a period of not less than two years from

the date of the termination, except that contractors that have fewer

than 150 employees or that do not have a Government contract of at

least $150,000 shall keep such records for a period of not less than

one year from the date of the termination. Where the contractor has

received notice that a complaint of discrimination has been filed, that

a compliance evaluation has been initiated, or that an enforcement

action has been commenced, the contractor shall preserve all personnel

records relevant to the complaint, compliance evaluation or enforcement

action until final disposition of the complaint, compliance evaluation

or enforcement action. The term ``personnel records relevant to the

complaint,'' for example, would include personnel or employment records

relating to the complainant and to all other employees holding

positions similar to that held or sought by the complainant and

application forms or test papers submitted by unsuccessful applicant

and by all other candidates for the same position as that for which the

complainant unsuccessfully applied. Where a compliance evaluation has

been initiated, all personnel and employment records described above

are relevant until OFCCP makes a final disposition of the evaluation.

(b) Affirmative action programs. A contractor establishment

required under Sec. 60-1.40 to develop a written affirmative action

program (AAP) shall maintain its current AAP and documentation of good

faith effort, and shall preserve its AAP and documentation of good

faith effort for the immediately preceding AAP year, unless it was not

then covered by the written AAP requirement.

(c) Failure to preserve records. Failure to preserve complete and

accurate records as required by paragraphs (a) and (b) of this section

constitutes noncompliance with the contractor's obligations under the

Executive Order and this part. Where the contractor has destroyed or

failed to preserve records as required by this section, there may be a

presumption that the information destroyed or not preserved would have

been unfavorable to the contractor: Provided, That this presumption

shall not apply where the contractor shows that the destruction or

failure to preserve records results from circumstances that are outside

of the contractor's control.

(d) The requirements of this section shall apply only to records

made or kept on or after [30 days after date of publication of final

rule].

5. In Sec. 60-1.20, the section heading and paragraphs (a) and (d)

are revised and paragraphs (e), (f) and (g) are added to read as

follows:

Sec. 60-1.20 Compliance evaluations.

(a) OFCCP may conduct compliance evaluations to determine if the

prime contractor or subcontractor maintains nondiscriminatory hiring

and employment practices and is taking affirmative action to ensure

that applicants are employed and that employees are placed, trained,

upgraded, promoted, and otherwise treated during employment without

regard to race, color, religion, sex, or national origin. A compliance

evaluation may consist of any one of the following or any combination

thereof:

(1) A compliance review, which consists of comprehensive analysis

and evaluation of each aspect of the aforementioned practices,

policies, and conditions resulting therefrom;

(2) An off-site review of records, which could consist of a full

desk audit, a review of the contractor's affirmative action plan or

parts thereof, or a review of particular records such as personnel

activity data;

(3) A compliance check, where OFCCP ascertains whether or not the

contractor has maintained records consistent with Sec. 60-1.12 and/or

has developed an AAP consistent with Sec. 60-1.40; or

(4) A focused review, where OFCCP restricts its on-site review to

one or more components of the contractor's organization or one or more

aspects of the contractor's employment practices.

* * * * *

(d) Preaward compliance evaluations. Each agency shall include in

the invitation for bids for each formally advertised nonconstruction

contract or state at the outset of negotiations for each negotiated

contract, that if the award, when let, should exceed the amount of $1

million or more, the prospective contractor and its known first-tier

subcontractors with subcontracts of $1 million or more may be subject

to a compliance evaluation before the award of the contract. The

awarding agency will notify OFCCP and request appropriate action and

findings

[[Page 25524]]

in accordance with this subsection. Within 15 days of the notice OFCCP

will inform the awarding agency of its intention to conduct a preaward

review. If OFCCP does not inform the awarding agency within that period

of its intention to conduct a preaward review, clearance shall be

presumed and the awarding agency is authorized to proceed with the

award. If OFCCP informs the awarding agency of its intention to conduct

a preaward review, OFCCP shall be allowed an additional 20 days after

the date that it so informs the awarding agency to provide its

conclusions. If OFCCP does not provide the awarding agency with its

conclusions within that period, clearance shall be presumed and the

awarding agency is authorized to proceed with the award.

(e) Each prime contractor or subcontractor with 50 or more

employees and a contract of $50,000 or more is required to develop a

written affirmative action program for each of its establishments

(Sec. 60-1.40). If a contractor fails to submit an affirmative action

program and supporting documents, including the workforce analysis,

within 15 days of a request, the enforcement procedures specified in

Sec. 60-1.26(b) shall be applicable. Contractors may reach agreement

with OFCCP on nationwide AAP formats or on frequency of updating

statistics.

(f) Confidentiality and relevancy of information. If the contractor

is concerned with the confidentiality of such information as lists of

employee names, reasons for termination, or pay data, then alphabetic

or numeric coding or the use of an index of pay and pay ranges,

consistent with the ranges assigned to each job group, are acceptable

for desk audit purposes. The contractor must provide full access to all

relevant data on-site as required by Sec. 60-1.43. Where necessary, the

compliance officer may take information made available during the on-

site evaluation off-site for further analysis. An off-site analysis

should be conducted where issues have arisen concerning deficiencies or

an apparent violation which, in the judgment of the compliance officer,

should be more thoroughly analyzed off-site before a determination of

compliance is made. The contractor must provide all data determined by

the compliance officer to be necessary for off-site analysis. Such data

may only be coded if the contractor makes the code available to the

compliance officer. If the contractor believes that particular

information which is to be taken off-site is not relevant to compliance

with the Executive Order, the contractor may request a ruling by the

OFCCP District/Area Director. The OFCCP District/Area Director shall

issue a ruling promptly. The contractor may appeal that ruling to the

OFCCP Regional Director within 10 days of receipt. The Regional

Director shall issue a final ruling promptly. Pending a final ruling,

such information may not be copied by OFCCP and access to the

information shall be limited to the compliance officer and personnel

involved in the determination of relevancy. Data determined to be not

relevant to the investigation will be returned to the contractor

immediately.

(g) Public access to information. The disclosure of information

obtained from a contractor will be evaluated pursuant to the public

inspection and copying provisions of the Freedom of Information Act, 5

U.S.C. 552, and the Department of Labor's implementing regulations at

29 CFR part 70.

6. Section 60-1.26 is revised to read as follows:

Sec. 60-1.26 Enforcement proceedings.

(a) General. (1) Violations of the Order, the equal opportunity

clause, the regulations in this chapter, or applicable construction

industry equal employment opportunity requirements, may result in the

institution of administrative or judicial enforcement proceedings.

Violations may be found based upon, inter alia, any of the following:

(i) The results of a complaint investigation;

(ii) The results of a compliance review;

(iii) The results of a compliance evaluation;

(iv) Analysis of an affirmative action program;

(v) The results of an on-site review of the contractor's compliance

with the Order and its implementing regulations;

(vi) A contractor's refusal to submit an affirmative action

program;

(vii) A contractor's refusal to allow an on-site compliance

evaluation to be conducted;

(viii) A contractor's refusal to establish, maintain and supply

records or other information as required by the regulations in this

chapter or applicable construction industry requirements;

(ix) A contractor's alteration or falsification of records and

information required to be maintained by the regulations in this

chapter; or

(x) Any substantial or material violation or the threat of a

substantial or material violation of the contractual provisions of the

Order, or of the rules or regulations in this chapter.

(2) OFCCP may seek back pay and other make whole relief for victims

of discrimination identified during a complaint investigation or

compliance evaluation. Such individuals need not have filed a complaint

as a prerequisite to OFCCP seeking such relief on their behalf.

Interest on back pay shall be calculated from the date of the loss and

compounded quarterly at the percentage rate established by the Internal

Revenue Service for the underpayment of taxes.

(b) Administrative enforcement. (1) OFCCP may refer matters to the

Solicitor of Labor with a recommendation for the institution of

administrative enforcement proceedings, which may be brought to enjoin

violations, to seek appropriate relief, and to impose appropriate

sanctions. The referral may be made when violations have not been

corrected in accordance with the conciliation procedures in this

chapter, or when OFCCP determines that referral for consideration of

formal enforcement (rather than settlement) is appropriate. However, if

a contractor refuses to submit an affirmative action program, or

refuses to supply records or other requested information, or refuses to

allow OFCCP access to its premises for an on-site review, and if

conciliation efforts under this chapter are unsuccessful, OFCCP may

immediately refer the matter to the Solicitor, notwithstanding other

requirements of this chapter.

(2) Administrative enforcement proceedings shall be conducted under

the control and supervision of the Solicitor of Labor and under the

Rules of Practice for Administrative Proceedings to Enforce Equal

Opportunity under Executive Order 11246 contained in part 60-30 of this

chapter and the Rules of Evidence set out in the Rules of Practice and

Procedure for Administrative Hearings Before the Office of

Administrative Law Judges contained in 29 CFR part 18, subpart B:

Provided, That a Final Administrative Order shall be issued within one

year from the date of the issuance of the recommended findings,

conclusions and decision of the Administrative Law Judge, or the

submission of any exceptions and responses to exceptions to such

decision (if any), whichever is later.

(c) Referrals to the Department of Justice. (1) The Deputy

Assistant Secretary may refer matters to the Department of Justice with

a recommendation for the institution of judicial enforcement

proceedings. There are no procedural prerequisites to a referral to the

Department of Justice. Such referrals may be accomplished without

proceeding through the conciliation procedures in this chapter,

[[Page 25525]]

and a referral may be made at any stage in the procedures under this

chapter.

(2) Whenever a matter has been referred to the Department of

Justice for consideration of judicial enforcement, the Attorney General

may bring a civil action in the appropriate district court of the

United States requesting a temporary restraining order, preliminary or

permanent injunction (including relief against noncontractors,

including labor unions, who seek to thwart the implementation of the

Order and regulations), and an order for such additional sanctions or

relief, including back pay, deemed necessary or appropriate to ensure

the full enjoyment of the rights secured by the Order, or any of the

above in this paragraph (c)(2).

(3) The Attorney General is authorized to conduct such

investigation of the facts as he/she may deem necessary or appropriate

to carry out his/her responsibilities under the regulations in this

chapter.

(4) Prior to the institution of any judicial proceedings, the

Attorney General, on behalf of the Deputy Assistant Secretary, is

authorized to make reasonable efforts to secure compliance with the

contract provisions of the Order. The Attorney General may do so by

providing the contractor and any other respondent with reasonable

notice of his/her findings, his/her intent to file suit, and the

actions he/she believes necessary to obtain compliance with the

contract provisions of the Order without contested litigation, and by

offering the contractor and any other respondent a reasonable

opportunity for conference and conciliation, in an effort to obtain

such compliance without contested litigation.

(5) As used in the regulations in this part, the Attorney General

shall mean the Attorney General, the Assistant Attorney General for

Civil Rights, or any other person authorized by regulations or practice

to act for the Attorney General with respect to the enforcement of

equal employment opportunity laws, orders and regulations generally, or

in a particular matter or case.

(6) The Deputy Assistant Secretary or his/her designee, and

representatives of the Attorney General may consult from time to time

to determine what investigations should be conducted to determine

whether contractors or groups of contractors or other persons may be

engaged in patterns or practices in violation of the Executive Order or

these regulations, or of resistance to or interference with the full

enjoyment of any of the rights secured by them, warranting judicial

proceedings.

(d) Initiation of lawsuits by the Attorney General without referral

from the Deputy Assistant Secretary. In addition to initiating lawsuits

upon referral under this section, the Attorney General may, subject to

approval by the Deputy Assistant Secretary, initiate independent

investigations of contractors which he/she has reason to believe may be

in violation of the Order or the rules and regulations issued pursuant

thereto. If, upon completion of such an investigation, the Attorney

General determines that the contractor has in fact violated the Order

or the rules and regulations issued thereunder, he/she shall make

reasonable efforts to secure compliance with the contract provisions of

the Order. He/she may do so by providing the contractor and any other

respondent with reasonable notice of the Department of Justice's

findings, its intent to file suit, and the actions that the Attorney

General believes are necessary to obtain compliance with the contract

provisions of the Order without contested litigation, and by offering

the contractor and any other respondent a reasonable opportunity for

conference and conciliation in an effort to obtain such compliance

without contested litigation. If these efforts are unsuccessful, the

Attorney General may, upon approval by the Deputy Assistant Secretary,

bring a civil action in the appropriate district court of the United

States requesting a temporary restraining order, preliminary or

permanent injunction, and an order for such additional sanctions or

equitable relief, including back pay, deemed necessary or appropriate

to ensure the full enjoyment of the rights secured by the Order or any

of the above in this paragraph (d).

(e) To the extent applicable, this section and part 60-30 of this

chapter shall govern proceedings resulting from any Deputy Assistant

Secretary's determinations under Sec. 60-2.2(b) of this chapter.

7. Section 60-1.27 is revised to read as follows:

Sec. 60-1.27 Sanctions.

(a) General. The sanctions described in subsections (1), (5), and

(6) of Section 209(a) of the Order may be exercised only by or with the

approval of the Deputy Assistant Secretary. Referral of any matter

arising under the Order to the Department of Justice or to the Equal

Employment Opportunity Commission shall be made by the Deputy Assistant

Secretary.

(b) Debarment. A contractor may be debarred from receiving future

contracts or modifications or extensions of existing contracts, subject

to reinstatement pursuant to Sec. 60-1.31, for any violation of

Executive Order 11246 or the implementing rules, regulations and orders

of the Secretary of Labor. Debarment may be imposed for an indefinite

term or for a fixed minimum period of at least six months.

8. Section 60-1.30 is revised to read as follows:

Sec. 60-1.30 Notification of agencies.

The Deputy Assistant Secretary shall ensure that the heads of all

agencies are notified of any debarments taken against any contractor.

9. Section 60-1.31 is revised to read as follows:

Sec. 60-1.31 Reinstatement of ineligible prime contractors and

subcontractors.

A prime contractor or subcontractor debarred from further contracts

for an indefinite period under the Order may request reinstatement in a

letter filed with the Deputy Assistant Secretary at any time after the

effective date of the debarment; a prime contractor or subcontractor

debarred for a fixed period may make such a request upon the expiration

of the fixed debarment period. In connection with the reinstatement

proceedings, all debarred contractors shall be required to show that

they have established and will carry out employment policies and

practices in compliance with the Order and implementing regulations.

Before reaching a decision, the Deputy Assistant Secretary may conduct

a compliance evaluation of the contractor and may require the

contractor to supply additional information regarding the request for

reinstatement. The Deputy Assistant Secretary shall issue a written

decision on the request.

10. Section 60-1.32 is revised to read as follows:

Sec. 60-1.32 Intimidation and interference.

(a) The contractor, subcontractor or applicant shall not harass,

intimidate, threaten, coerce, or discriminate against any individual

because the individual has engaged in or may engage in any of the

following activities:

(1) Filing a complaint;

(2) Assisting or participating in any manner in an investigation,

compliance evaluation, hearing, or any other activity related to the

administration of the Order or any other Federal, state or local law

requiring equal opportunity;

(3) Opposing any act or practice made unlawful by the Order or any

other Federal, state or local law requiring equal opportunity; or

(4) Exercising any other right protected by the Order.

(b) The contractor, subcontractor or applicant shall ensure that

all persons under its control do not engage in such

[[Page 25526]]

harassment, intimidation, threats, coercion or discrimination. The

sanctions and penalties contained in this part may be exercised by

OFCCP against any contractor, subcontractor or applicant who violates

this obligation.

11. In Sec. 60-1.34, paragraph (a)(4) is added to read as follows:

Sec. 60-1.34 Violation of a conciliation agreement or letter of

commitment.

(a) * * *

(4) In any proceeding involving an alleged violation of a

conciliation agreement OFCCP may seek enforcement of the agreement

itself and shall not be required to present proof of the underlying

violations resolved by the agreement.

* * * * *

12. Section 60-1.42 is amended by revising paragraph (a) to read as

follows:

Sec. 60-1.42 Notices to be posted.

(a) Unless alternative notices are prescribed by the Deputy

Assistant Secretary, the notices which prime contractors and

subcontractors are required to post by paragraphs (1) and (3) of the

equal opportunity clause in Sec. 60-1.4 will contain the following

language and be provided by the contracting or administering agencies:

EQUAL EMPLOYMENT OPPORTUNITY IS THE LAW--DISCRIMINATION IS PROHIBITED

BY THE CIVIL RIGHTS ACT OF 1964 AND BY EXECUTIVE ORDER No. 11246

Title VII of the Civil Rights Act of 1964-Administered by:

THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION

Prohibits discrimination because of Race, Color, Religion, Sex,

or National Origin by Employers with 15 or more employees, by Labor

Organizations, by Employment Agencies, and by Apprenticeship or

Training Programs.

ANY PERSON

Who believes he or she has been discriminated against

SHOULD CONTACT

THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION

1801 L Street N.W., Washington, D.C. 20507

Executive Order No. 11246-Administered by:

THE OFFICE OF FEDERAL CONTRACT COMPLIANCE PROGRAMS

Prohibits discrimination because of Race, Color, Religion, Sex,

or National Origin, and requires affirmative action to ensure

equality of opportunity in all aspects of employment.

By all Federal Government Contractors and Subcontractors, and by

Contractors Performing Work Under a Federally Assisted Construction

Contract, regardless of the number of employees in either case.

ANY PERSON

Who believes he or she has been discriminated against

SHOULD CONTACT

THE OFFICE OF FEDERAL CONTRACT COMPLIANCE PROGRAMS

U.S. Department of Labor, Washington, D.C. 20210

* * * * *

13. Section 60-1.43 is revised to read as follows:

Sec. 60-1.43 Access to records and site of employment.

Each prime contractor and subcontractor shall permit access during

normal business hours to its premises for the purpose of conducting on-

site compliance evaluations and complaint investigations. Each

contractor shall permit the inspecting and copying of such books and

accounts and records, including computerized records, and other

material as may be relevant to the matter under investigation and

pertinent to compliance with the Order, and the rules and regulations

promulgated pursuant thereto by the agency, or the Deputy Assistant

Secretary. Information obtained in this manner shall be used only in

connection with the administration of the Order, the Civil Rights Act

of 1964 (as amended), and any other law that is or may be enforced in

whole or in part by OFCCP.

PART 60-60--[REMOVED]

14. Part 60-60 is removed.

[FR Doc. 96-12687 Filed 5-20-96; 8:45 am]

BILLING CODE 4510-27-P