Government Contractors, Affirmative Action Requirements, Executive Order 11246

SUMMARY: The Office of Federal Contract Compliance Programs (OFCCP) is

revising a limited number of the regulations to implement Executive

Order 11246, as amended, which prohibits employment discrimination and

establishes affirmative action requirements for nonexempt Federal

contractors and subcontractors. The final rule revises the regulations

relating to record retention, compliance monitoring, maintenance of

non-segregated facilities, and other aspects of enforcement. The

revisions to the Executive Order implementing regulations effected by

this final rule are expected to reduce the compliance burdens of

covered contractors, and improve the efficiency of OFCCP in

administering and enforcing the Executive Order.

EFFECTIVE DATE: September 18, 1997.

FOR FURTHER INFORMATION CONTACT:

Joe N. Kennedy, Deputy Director, Office of Federal Contract Compliance

Programs, Room C-3325, 200 Constitution Avenue, NW., Washington, DC

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

this final rule, 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, an electronic file on computer disk

and audiotape. The rule also is available on the Internet at http://

www.dol.gov/dol/esa.

SUPPLEMENTARY INFORMATION:

I. Current Regulations and Rulemaking History

Executive Order 11246, as amended, prohibits all nonexempt

Government contractors and subcontractors, and federally assisted

construction contractors and subcontractors, from discriminating in

employment. The Executive Order also 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. OFCCP

has been assigned responsibility for administering Executive Order

11246, and has published regulations implementing the Order at 41 CFR

Ch. 60.

The Executive Order regulations 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). Both the 1980 final rule and the 1981 NPRM addressed

the regulations contained in 41 CFR parts 60-1 and 60-60. No further

action has been taken on the August 25, 1981, proposal, or on the 1980

stayed final rule.

On May 21, 1996, OFCCP published a proposed rule, 61 FR 25516, to

revise specific regulations found at 41 CFR parts 60-1 and 60-60. The

comment period closed on July 22, 1996. A total of 32 comments was

received from six contractors, six contractor associations, one

consulting firm, one law firm, 13 civil rights and women's rights

organizations, two Federal agencies, one local government agency, and

one individual. All the comments were reviewed and carefully considered

in the development of this final rule.

II. Overview of the Final Rule

The final rule, for the most part, adopts the revisions that were

proposed in the May 21 NPRM. However, some of the proposed provisions

have been modified in response to the public comments. The changes

between the NPRM and the final rule are explained in detail in the

Section-by-Section Analysis.

The final rule revises the regulations in 41 CFR part 60-1 in four

areas: Record retention, compliance monitoring, maintenance of non-

segregated facilities, and enforcement procedures. In addition, to

ensure consistency in the administration and enforcement of the Federal

contract compliance laws, the final rule conforms several provisions in

part 60-1 to parallel provisions in the regulations found at 41 CFR

part 60-741. The latter regulations implement section 503 of the

Rehabilitation Act of 1973, as amended (29 U.S.C. 793), which also is

administered by OFCCP. A final rule published on May 1, 1996, made

comprehensive revisions to the Section 503 regulations (61 FR 19936).

The conforming changes made by the final rule published today affect

several definitions and some aspects of enforcement.

Further, the final rule deletes most of the existing provisions in

41 CFR part 60-60, which describe the procedures for conducting

compliance reviews of nonconstruction (i.e., supply and service)

contractors. A few substantive provisions in part 60-60, which are not

contained elsewhere in the regulations, are being transferred to part

60-1. The transferred provisions primarily relate to the procedures for

protecting confidential data, the time frames within which a contractor

must submit its written affirmative action program (AAP) and supporting

documentation, and authorization for nationwide AAP formats.

Finally, in order to avoid conflict, the final rule withdraws part

60-1 of the final rule which was published on December 30, 1980, and

subsequently suspended.

The discussion which follows identifies the significant comments

received in response to the NPRM, provides OFCCP's responses to those

comments, and explains any resulting changes to the proposed revisions.

Section-by-Section Analysis of Comments and Revisions

Section 60-1.3 Definitions

OFCCP proposed in the NPRM to add a definition for the new term

``compliance evaluation.'' Additionally, OFCCP proposed to revise

several definitions in the current regulations to make them consistent

with definitions contained in the Section 503 implementing regulations.

The Section 503 final rule published on May 1, 1996, made changes to

several terms and phrases that are common to both Executive Order 11246

and Section 503 of the Rehabilitation Act. Specifically, the Section

503 final rule revised the regulatory definitions of ``contract,''

``Government contract,'' ``subcontract,'' and ``United States,'' and

replaced the title ``Director'' with the new title, ``Deputy Assistant

Secretary for Federal Contract Compliance.'' In order to maintain

consistency in its administration and enforcement of the Federal

contract compliance laws, OFCCP proposed to make conforming changes to

the definitions of those terms found in existing Sec. 60-1.3.

``Compliance Evaluation.'' Under the existing regulations, the

``compliance review'' is the primary method utilized to investigate

contractor compliance

[[Page 44175]]

with the requirements of the Executive Order. The current regulations

prescribe a three-phase process for conducting compliance reviews: (1)

An off-site or desk audit review of the contractor's written AAP and

supporting documentation; (2) an on-site review of the contractor's

employment policies and activities and investigation of any problem

areas identified during the desk audit; and (3) where needed, an off-

site analysis of data obtained during the on-site review. Under the

current regulations, an on-site review is conducted at nearly every

establishment selected for review, regardless of the results of the

desk audit.

The existing ``all or nothing'' approach to compliance reviews is,

in the view of OFCCP, too restrictive. OFCCP believes that more focused

and streamlined procedures can be used to determine a contractor's

compliance status, and that a flexible approach to monitoring

compliance would enable the agency to target its enforcement resources

more efficiently.

The NPRM proposed to revise the compliance review provisions found

in Sec. 60-1.20 to authorize the agency to utilize ``compliance

evaluations'' to determine the compliance status of a contractor. The

NPRM proposed to define the term ``compliance evaluation'' used in

Sec. 60-1.20(a) of the proposal as ``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.''

Two contractor associations mentioned the proposed definition of

``compliance evaluation'' in their comments. They asserted that the

proposal was vague; that OFCCP had not adequately described how the

compliance evaluation procedure would be implemented. These commenters

also questioned whether the proposed review process for contractors

would be streamlined, because the proposed definition indicated that

OFCCP could take ``any one or combination of actions'' to determine

whether a contractor maintained nondiscriminatory employment practices

and fulfilled its affirmative action obligations.

The concerns raised by these commenters actually are more properly

directed at proposed Sec. 60-1.20(a), which describes four examination

procedures encompassed by the term ``compliance evaluation,'' rather

than to the language of the proposed definition. Accordingly, a

response to these comments is provided below in the preamble discussion

concerning Sec. 60-1.20 of the final rule.

The proposed definition of ``compliance evaluation'' is carried

forward in this final rule without substantive change, although the

wording has been revised slightly for clarity. OFCCP expects that the

flexible approach to compliance monitoring that is reflected in the

term ``compliance evaluation'' will reduce compliance burdens for the

contractors that satisfy their Executive Order obligations. OFCCP also

believes this new approach will increase the efficiency of its

enforcement program by allowing the agency to use its most

comprehensive evaluation procedure--the compliance review--selectively.

Further, a range of methods for evaluating contractor compliance will

enable the agency to reach a greater percentage of its contractor

universe than is reviewed currently.

``Contract.'' The term ``contract'' is defined in the current

regulations as ``any Government contract or any federally assisted

construction contract.'' The NPRM proposed to amend this definition to

subsume the term ``subcontractor.'' As was explained in the preamble to

the NPRM, the revision would obviate the need to make a separate

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

demonstrate that a particular provision applies to both contracts and

subcontracts.

One contractor association objected to the proposed definition of

``contract.'' This commenter believed that the amended definition would

expand the scope of the Executive Order's coverage and impose

obligations upon subcontractors that currently do not exist. This

commenter's concerns are unfounded. The Executive Order always has been

applicable to agreements which fall within the regulatory definition of

subcontractors. No substantive changes in the Executive Order's

coverage were intended nor effected by the proposed change to the

regulatory definition of contract.

Another commenter urged OFCCP to amend the definition to include

``all federally assisted contracts and subcontracts,'' not just

``federally assisted construction contracts and subcontracts.''

However, Section 301 of Executive Order 11246 expressly limits coverage

of federally assisted contracts to agreements involving federally

assisted construction.

The final rule amends the definition of ``contract'' to include

``subcontract,'' as proposed in the NPRM. The term ``subcontract'' is

referenced in the rule only when necessary to the context.

``Deputy Assistant Secretary.'' The NPRM proposed to substitute the

new title of ``Deputy Assistant Secretary for Federal Contract

Compliance Programs'' for the title of ``Director'' in the current

regulations, and to make the title change throughout the proposed rule.

No comments were received on this proposal. The final rule adopts this

title change as proposed, except that the word ``Programs' has been

dropped in order to more accurately reflect the title.

``Government Contract.'' The regulations define ``Government

contract'' as an agreement ``for the furnishing of supplies or services

or for the use of real or personal property, including lease

arrangements.'' The NPRM proposed to revise this definition to clarify

that contracts covered under Executive Order 11246 include those under

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

in which it is a purchaser. The proposal substituted a reference to the

contracts for the ``purchase, sale or use of personal property or

nonpersonal services'' and a definition of the term ``personal

services'' for the existing reference to the ``furnishing'' of goods or

services, or for the use of real or personal property, including lease

arrangements. Thus, the proposal provided, in relevant part, that a

``Government contract'' is ``any agreement or modification thereof

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

use of personal property or nonpersonal services.''

Two commenters--a contractor association that represents small

agricultural firms and a national law firm that counsels Government

contractors on the requirements of the Executive Order and its

implementing regulations--objected to the proposed clarification of the

term ``Government contract.'' Both argued that the proposed definition

was too broad; that defining Government contract to include sales by

the Government would extend the Executive Order's reach to activities

that were not intended to be covered. The law firm was concerned that

the revised definition of contract would expand the Executive Order's

coverage to concessionaires and licensees that operate on Government

lands under nonappropriated fund contracts. Specifically, this

commenter was referring to those entities that contract with units of

the Department of Defense called nonappropriated fund instrumentalities

or ``NAFIs'' to operate a wide range of food, retail, and recreational

concessions at military installations. The commenter noted that

concession contracts with NAFIs typically do not involve appropriated

[[Page 44176]]

funds, and do not impose costs to the Government.

The law firm argued that Executive Order 11246 and its implementing

regulations contemplated coverage of traditional procurement contracts

and Government leasing of property, i.e., agreements that require the

Government to expend appropriated funds. Thus, the law firm contended

that OFCCP did not have the authority to define ``Government

contracts'' so as to include the contracts of nonappropriated fund

instrumentalities. Further, this commenter argued alternatively that

no-cost concession agreements with NAFIs should not be covered under

Executive Order 11246 because OFCCP would experience difficulty

computing their dollar value for the purpose of determining whether the

contract satisfied the dollar thresholds for basic coverage and for the

written affirmative action program requirement. This commenter

requested that OFCCP either modify the definition of ``Government

contract'' or include an express exemption for concession contracts

with nonappropriated fund instrumentalities.

The assertions of this commenter ignore the longstanding policy and

practice of the agency to cover concession contracts with

nonappropriated fund instrumentalities or NAFIs. OFCCP consistently has

taken the position that contracts with nonappropriated fund

instrumentalities of the Government, such as the Army and Air Force

Exchange Service, are covered by Executive Order 11246, assuming the

dollar volume thresholds are met. As instrumentalities of the United

States, NAFIs meet the definition of contracting agency under the

regulation at 41 CFR 60-1.3. The fact that these contracts involve

nonappropriated funds, rather than appropriated funds, is

inconsequential. The Executive Order and implementing regulations do

not distinguish between the source of the funds used to pay for the

contract to determine coverage. Coverage under the Executive Order

turns on the status of the parties and the nature of the agreement in

issue.

OFCCP also disagrees with the commenter's contention that the

decision cited in the NPRM's preamble, Crown Central Petroleum Corp. v.

Kleppe, 424 F. Supp. 744 (D. Md. 1976), was limited to lease coverage

issues, and therefore, does not support the agency's position that

``Government contract'' covers sales by the Government. The plaintiff

in Kleppe, the holder of an oil and gas lease from the Interior

Department, argued that it did not have a Government contract because

the financial benefit (cash flow) was toward the Government. In

deciding that a lessee of an oil and gas lease was a ``Government

contractor,'' the court rejected the argument that the provisions of

the Executive Order were limited to those situations in which the

Government is the consumer of goods. Significantly, the court in Kleppe

concluded that it would be an inconsistent application of the national

policy to eliminate discrimination in employment to impose the

Executive Order requirements on employers which had contracted to

supply goods, services and leased property for use of the Government,

but not to impose the requirements of the Order on employers which had

contracted with the Government to receive from it goods, services and

leased property to be used by the employer.

The commenter's alternative argument for exempting concession

contracts with nonappropriated fund entities from the Executive Order

is also unpersuasive. The regulatory provisions concerning contracts

and subcontracts for indefinite quantities found in the current

regulations at Sec. 60-1.5 would govern whether dollar thresholds are

satisfied for coverage purposes.

The contractor association cited recipients of disaster relief

insurance proceeds as an example of a situation that would be newly

covered under the Executive Order as a result of the proposed amendment

to the definition of ``Government contract.'' Disaster relief programs

such as crop insurance and flood insurance usually involve federal

financial assistance. The only federally assisted contracts covered by

the Executive Order are federally assisted construction contracts. This

does not mean, of course, that the agency is taking a position here

that all transactions involving Federal disaster relief are excluded

from coverage. Rather, questions relating to coverage under the

Executive Order necessarily are decided case by case, based on the

particulars of the program and the nature of the agreement at issue.

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

Labor.'' A final rule published on May 3, 1996 (61 FR 19982), relating

to the establishment of the Administrative Review Board, amended the

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

of Labor. Consequently, 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, is no longer

necessary, and has been omitted in this final rule.

``Subcontract.'' The definition of ``subcontract'' in the current

regulations refers to agreements ``for the furnishing of goods or

services.'' The NPRM contained a proposal to revise this definition so

that it would conform to the NPRM's definition of ``Government

contract.'' Accordingly, the proposal included a definition of

``subcontract'' that referenced agreements ``for the purchase, sale, or

use of personal property or nonpersonal services.''

The contractor association which represents small agricultural

firms objected to the proposal, contending that it would expand the

scope of the Executive Order's coverage. The commenter said the

proposed definition of ``subcontract'' would be particularly burdensome

for companies in the agricultural industry, as the subcontracts for a

producer of fruit products necessarily include growers, pickers,

haulers, as well as fertilizers and pesticide applicators. This

commenter raised a similar objection to the proposed definition of

``contract.'' It appears that these comments were directed primarily at

the ``necessary to the performance'' part of the existing regulatory

definition of ``subcontract,'' rather than the proposed ``purchase,

sale or use'' language. As has been explained previously, the scope of

coverage under the Executive Order has not been expanded. The existing

definition of ``subcontract'' under the Executive Order regulations

applies to agreements which are necessary to the performance of a

Government contract, or under which part of the performance of the

Government contract is assumed or undertaken.

The final rule adopts, without change, the definition of

``subcontract'' that was published in the NPRM.

``United States.'' The NPRM proposed to revise the definition of

``United States,'' by deleting the references to 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, the Commonwealth of Puerto Rico,

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

and Wake Island. No comments were received on this proposed revision.

The proposed definition of ``United States'' is adopted.

Section 60-1.8 Segregated Facilities

Section 60-1.8 of the current regulations prohibits the maintenance

of segregated facilities (paragraph (a)) and requires contractors to

certify that they are in compliance with that obligation (paragraph

(b)). OFCCP proposed in the NPRM to conform paragraph (a) of Sec. 60-

1.8 with the Executive Order's general

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nondiscrimination requirements by expanding the list of prohibited

practices to include gender-based segregation, with the proviso that

separate or single-user restrooms and necessary dressing or sleeping

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

stylistic changes to existing paragraph (a) also were proposed. In

addition, the NPRM proposed to eliminate the written certification

requirement in paragraph (b).

Nearly half of the commenters addressed the proposed changes

concerning segregated facilities. Commenters representing the

constituencies most directly affected by the regulations--minorities,

women and Government contractors--all supported the proposed

prohibition against gender-based segregated employee facilities. The

women's rights groups, in particular, applauded the proposal. In their

view, the proposed amendment recognizes that sex-segregation remains a

problem in traditionally male workplaces.

The comment of the Equal Employment Opportunity Commission (EEOC)

concerned the requirement that ``separate or single-user restrooms,

dressing or sleeping areas shall be provided to assure privacy between

the sexes.'' EEOC suggested that we alert contractors that, under Title

VII of the Civil Rights Act of 1964, as amended, it would be an

unlawful employment practice for an employer to deny employment or to

otherwise adversely affect the employment opportunities of an applicant

or employee in order to avoid the cost of providing separate or single

restroom or dressing facilities. Likewise, contractors are advised that

the costs of providing such separate facilities would not be a defense

to a charge of sex-based employment discrimination brought under the

Executive Order.

Further, all but two comments expressed support for the elimination

of the written certification requirement in paragraph (b). A women's

rights organization and a local government entity objected to the

proposal. The women's rights organization argued that retention of the

written certification requirement would serve as a useful reminder of

the new prohibition against sex-segregated employee facilities. This

commenter suggested that the benefits of the notice-serving function of

the certification outweighed any time-savings that would be realized by

elimination of the requirement. The governmental entity similarly

commented that requiring a contractor to certify that it maintains non-

segregated facilities reflected the essence of the Executive Order, but

imposed only a minimal burden on contractors.

OFCCP agrees that contractors should be apprised of their

obligation under the Executive Order regulations to ensure that

employee facilities are not segregated on the basis of sex, except

where it is necessary to safeguard privacy between men and women. The

agency, however, is of the view that the prohibition against segregated

facilities can be effectively enforced without the benefit of the

written certification. Eliminating the certification will not, for

example, affect the contractor's obligation to maintain facilities on a

non-segregated basis. In short, the written certification is a

paperwork requirement that does not produce commensurate benefit, and

its repeal is consistent with the Administration's regulatory reform

initiative.

Another commenter asked that OFCCP clarify in the final rule that

repeal of the written certification will not expose prime contractors

to liability for the violations of the Executive Order committed by

their subcontractors. OFCCP accepts the point that the repeal will not

expose prime contractors to liability for violations committed by their

subcontractors. However, it is not necessary to codify the point in the

regulations. Under the existing regulations, prime contractors are not

responsible for the compliance of their subcontractors with the

requirements of the Order and regulations. Consequently, the

certification of non-segregated facilities has not, as the comment

seems to suggest, served to shield prime contractors from liability for

the noncompliance of their subcontractors. The certification merely has

provided notice to the prime contractors of whether their

subcontractors (in the latters' view at least) are complying with the

nondiscrimination requirements of the order.

The final rule amends paragraph (a) and deletes paragraph (b) of

Sec. 60-1.8 as was proposed in the NPRM.

Section 60-1.12 Record Retention

Section 60-1.12(a) General Requirements

The obligation to retain relevant employment records is implicit in

some of the current regulatory requirements (e.g., those relating to

maintaining data on applicants, hiring, transfers and promotions, and

developing and updating written affirmative action programs). However,

the regulations, with one exception, do not prescribe a record

retention period. That exception is the requirement under the Uniform

Guidelines on Employee Selection Procedures published at 41 CFR part

60-3 (hereinafter UGESP) to keep certain adverse impact data for two

years after the adverse impact has been eliminated.

Paragraph (a) of the proposal would amend the record retention

obligation in several ways. First, proposed paragraph (a) would make

the record retention obligation applicable to any personnel or

employment record made or maintained by the contractor and lists

examples of the types of records that must be retained. Second,

proposed paragraph (a) would establish the required record retention

period as two years. The proposal would establish a one-year record

retention period for contractors that employ fewer than 150 employees

or that do not have a Government contract of at least $150,000. Third,

proposed paragraph (a) would provide that when a contractor has been

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

been initiated or an enforcement action has been commenced, the

contractor shall preserve all relevant personnel records until the

final disposition of the action.

Several of the commenters expressed views on proposed paragraph

(a). The civil rights and women's rights organizations commended the

proposal to make record retention requirements explicit. They viewed

the addition of a record retention regulation as essential to effective

enforcement and said it would ensure consistency with the regulations

under Title VII and Section 503.

The contractor community opposed the record retention proposal. Two

contractor associations asserted that proposed paragraph (a) was too

broad. They claimed that the proposal would expand the scope of records

subject to the retention requirement; that is, the examples of records

listed suggest that any document related to an employee or employment

decision must be retained for two years. These commenters contended

further that the proposed regulation would impose a considerable

burden, particularly on the larger contractors that have employment

related activities which might generate millions of records.

The concern that the proposal would oblige contractors to maintain

records beyond current requirements is unfounded. The NPRM explained

that the proposed record retention requirement (paragraph (a)) comports

with the analogous record retention requirements under Title VII and

the

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Americans with Disabilities Act (ADA). In addition, proposed paragraph

(a) is consistent with the provisions adopted in the Section 503 final

rule. The types of employment records covered by the record retention

requirement, listed in proposed paragraph (a), include items not listed

in the corresponding Title VII and ADA regulations. But, as EEOC noted

in its comment, those additional items--the results of any physical

examination, job advertisements and postings, applications and resumes,

tests and test results, and interview notes--are examples of ``any

personnel or employment record made or kept,'' and, therefore, clearly

fall within the coverage of the existing Title VII and ADA record

retention rule.

Another contractor association contended that the proposed

regulatory language was inadequate because it failed to answer

contractors' recurrent questions embraced by record retention

obligations under Executive Order 11246. This commenter argued that the

regulations should include guidance on: (1) Who is an ``applicant'' for

the purposes of the record retention requirement; and (2) whether and

to what extent the record retention requirement applied when a

contractor used electronic bulletin boards and the Internet as

recruitment sources.

OFCCP has issued the following guidance on the meaning of the term

``applicant'':

The precise definition of the term `applicant' depends upon [a

contractor's] recruitment and selection procedures. The concept of

an applicant is that of a person who has indicated an interest in

being considered for hiring, promotion, or other employment

opportunities. This interest might be expressed by completing an

application form, or might be expressed orally, depending upon the

[contractor's] practice. Question and Answer No. 15, Adoption of

Questions and Answers to Clarify and Provide a Common Interpretation

of the Uniform Guidelines on Employee Selection Procedures (44 FR

11996, 11998 (March 2, 1979)).

Accordingly, whether an individual will be considered an applicant

turns on the employee selection procedures designed and utilized by the

contractor. OFCCP is studying the range of ways contractors are

utilizing electronic media in their employee selection processes and

intends to issue guidance responding to questions most frequently asked

by contractors regarding this issue.

Commenters from the contractor community criticized the two-year

record retention period proposed for larger contractors. These

commenters argued that it was inconsistent for OFCCP to impose a two-

year retention period, when the retention period under Title VII is

one-year. They argued that, because OFCCP follows the principles

developed under Title VII case law to enforce the Executive Order, the

agency should adopt the EEOC rule. These same commenters said that

OFCCP had underestimated the administrative and storage costs

associated with maintaining an additional year of records.

These comments ignore the differences in the enforcement schemes of

EEOC and OFCCP. Reviews of contractors' compliance with the Executive

Order and regulations cover a two-year period. The policy and practice

are to examine the contractor's personnel policies and activities for

the two years preceding the initiation of the review, and to assess

liability for discriminatory practices dating back two years. The two-

year record retention period provides greater assurance that relevant

records will be available during OFCCP compliance evaluations. In

contrast, EEOC's enforcement of Title VII is triggered exclusively by

charges, which must be filed within 180 days (or, in deferral

jurisdictions, 300 days) of an alleged violation. EEOC's one-year

retention period is designed to ensure that relevant records are not

discarded before the expiration of the complaint filing period.

Turning to the concern about the burdens on contractors, OFCCP

believes that requiring larger contractors to retain records for an

additional year will result in only a minimal increase in burden. As

was noted in the preamble to the NPRM, many large employers and some

smaller employers as well, are increasingly maintaining records

electronically. In such instances, compliance with the record retention

requirement will impose little or no additional burden. Moreover, the

decision to establish a one-year record retention period for smaller

contractors--the same period required by EEOC--is part of the agency's

effort to maintain burdens associated with record keeping at a minimal

level. The one-year rule also will accommodate those smaller

contractors that are less likely to maintain electronic records.

Two contractor associations commented on the separate record

retention requirements for larger and smaller contractors. One

association questioned whether OFCCP had authority under the U.S.

Constitution and Federal procurement laws to tie the record retention

requirement to workforce and contract size. This comment overlooks the

fact that size distinctions are common in regulatory schemes. Indeed,

the existing Executive Order regulations provide different requirements

for smaller contractors (e.g., those that employ fewer than 50

employees or do not have a contract of at least $50,000). Such

contractors, for example, are exempted from the regulatory requirement

to develop and maintain a written AAP.

The other contractor representative raised questions regarding the

record retention obligations of contractors who are at or near the

thresholds that trigger the different retention periods. Specifically,

the commenter questioned what would happen if the employment levels or

contract values exceed or fall below the 150 employees, $150,000

thresholds during the course of the contract. A change in status

relating to either threshold would affect the record retention

obligation. If the number of employees should fall below 150 or if the

contractor no longer has a contract of at least $150,000, the

contractor would not be required to retain employment records for two

years. The requirement to keep records for two years would become

effective again on the date that the contractor met the thresholds of

150 employees and a contract of $150,000. The record retention

requirement, however, would not be applied retroactively, i.e., the

change from one year to two years would be phased in day-by-day. But

see the discussion regarding the obligation to maintain records once a

compliance evaluation has commenced, which follows.

One commenter expressed disapproval of the requirement in proposed

paragraph (a) that contractors retain all relevant records once a

compliance evaluation has been initiated. This commenter contended that

the requirement was burdensome and unfair to contractors, particularly

because of the proposal to eliminate the provision in Sec. 60-60.7,

which allows the agency 60 days to complete a compliance review.

The purpose of this record retention requirement is to ensure that

OFCCP can obtain all relevant documents during a compliance

investigation or enforcement action. OFCCP appreciates the contractor's

concerns about the timely completion of compliance evaluations, but

disagrees with the assertion that the schedule has to be codified in

the regulations. In the preamble discussion concerning Sec. 60-1.20 of

the final rule, and again in the discussion regarding part 60-60 of the

regulations, OFCCP explains that the agency's standards for timeliness

and work schedules are not derived solely from the regulations.

Therefore, there would be set time frames for completing

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compliance evaluations even if the regulatory provisions were

eliminated.

The final rule adopts the record retention provisions proposed in

the NPRM without change.

Section 60-1.12(b) Affirmative Action Programs

Paragraph (b) of the proposal provides that a contractor

establishment required to develop a written affirmative action program

(AAP) shall maintain the AAP for the current year and preserve the AAP

for the preceding year, together with the supporting documentation,

including good faith efforts undertaken. Three commenters from the

contractor community objected to proposed paragraph (b). They

questioned the relevance of information contained in an expired AAP and

expressed concern that OFCCP would examine the AAP for deficiencies.

One of the commenters contended that the only possible reason OFCCP

could have for requesting an AAP from the preceding year is to see if

one exists. This commenter urged OFCCP to include a statement to that

effect in the final regulation.

The written AAP serves dual purposes. The AAP is developed

primarily to assist the contractor in monitoring its employment

practices to ensure that they are nondiscriminatory and that

affirmative action is taken to ensure equal employment opportunity.

OFCCP also reviews and relies upon the AAP to determine whether the

contractor is complying with the Executive Order and regulations. The

contractor's affirmative action performance (e.g., personnel activity,

goals progress and good faith efforts to meet goals) is examined for at

least the last full AAP year. However, a compliance evaluation may be

scheduled at any time during the year. If, at the time of the review,

the contractor is six months or more into its current AAP year, OFCCP

examines performance under both the current year and the prior year

AAP. Accordingly, the requirement in proposed paragraph (b) that the

contractor preserve the AAP for the previous year would ensure the

availability of an AAP covering a full AAP year.

In addition, under the current regulations the AAP for the current

year must contain a progress report on goals for the previous AAP year.

Whether progress or little or no improvement was made in the goal

areas, the AAP for the previous year should provide an explanation of

the efforts undertaken and the results achieved. For example, the AAP

and documentation of good faith efforts may describe the contractor's

outreach and recruitment activities designed to increase its pool of

female or minority applicants, or training programs instituted to

enhance the skills and talents of incumbent employees with an eye to

increasing the pool of those eligible for promotion. In other words the

AAP from the previous year may contain information that would allow an

evaluation of those commitments that are directly related to the

performance of the contractor in the current year. In addition the

affirmative action obligation is not a one year requirement. Rather, it

is a continuing obligation and maintaining the AAPs in the fashion

proposed in paragraph (b) enables OFCCP to assess the quality and

effectiveness of the contractor's affirmative action commitments on a

multi-year basis.

The regulation in proposed paragraph (b) is adopted without change.

Section 60-1.12(c) Failure To Preserve Records

Paragraph (c) of the proposed rule provides that the failure to

maintain and preserve the records as proposed in paragraphs (a) and (b)

is a violation of Executive Order 11246. Additionally, paragraph (c)

proposes that a contractor's failure to preserve required records or

destruction of such records, may raise a presumption that the records,

if available, would have been unfavorable to the contractor. Paragraph

(c) of the proposed rule includes a proviso that the presumption shall

not apply if the contractor demonstrates that the destruction or

failure to preserve records resulted from circumstances beyond the

contractor's control.

EEOC commented that its Compliance Manual limited application of

the ``adverse inference rule'' to situations in which an employer acted

with the intent to defeat the purposes of Title VII. The view of EEOC

is that the proposal does not limit the adverse inference to instances

of deliberate destruction with an intent to frustrate the purposes of

the Executive Order.

OFCCP believes that clarification would be helpful. The adverse

inference presumption in proposed paragraph (c) is not limited to

situations in which the destruction or failure to preserve records may

be attributed to the willful conduct of the contractor. The agency

intends to invoke the presumption on a case-by-case basis as the

circumstances warrant. The proposed rule, in recognition of this

discretionary approach, states that a presumption may arise if the

contractor destroyed or failed to preserve records.

One commenter suggested that we amend the proposal to expressly

provide a procedure that would permit the contractor to rebut the

presumption that the records destroyed or not maintained were

unfavorable. The suggested amendment is unnecessary. The presumption is

rebuttable, and contractors will have a full opportunity to submit

evidence to refute the inference.

Another commenter recommended that the final rule set forth the

sanctions that may be imposed for violations of the record retention

requirements. The sanctions described in Sec. 60-1.27 may be imposed

for any violation of Executive Order 11246 or the implementing

regulations, including Sec. 60-1.12. A separate sanction provision for

violations of the record retention regulations, accordingly, is

unnecessary.

The final rule adopts paragraph (c) of the proposal without change.

Section 60-1.12(d) Effective Date

Paragraph (d) of the proposal provides that the contractor is

obligated to preserve only those records which are created or kept on

or after the effective date of this rule. No comments were received on

this provision. The final rule adopts paragraph (d) as proposed.

Section 60-1.20 Compliance Evaluations

The compliance review is the primary method of evaluating a

contractor's compliance with the Executive Order and regulations

Paragraph (a) of the current Sec. 60-1.20 describes the purpose of the

compliance review and provides that the review shall consist of a

comprehensive analysis of each aspect of a contractor's employment

practices, and where appropriate, include recommendations for

appropriate sanctions.

The NPRM would amend paragraph (a) to authorize OFCCP to use a

range of methods to revaluate a evaluate a contractor's compliance with

the regulations. Specifically, paragraph (a) would provide that a

compliance evaluation may consist of any one or a combination of the

following: (1) A compliance review, (2) of off-site review of records,

(3) a compliance check, and (4) a focused review.

Nearly all commenters addressed the proposed compliance evaluation

regulation. The commenters from the women's rights and civil rights

communities supported the proposal. They opined that the flexible

approach of the proposal would improve the efficiency of OFCCP and

permit the agency to target resources better. A contractor also

supported proposed paragraph (a) and offered that it was a thoughtful

proposal to streamline the compliance review process.

[[Page 44180]]

Some of the contractor associations favored the concept of having a

range of evaluation methods to determine compliance with Executive

Order 11246 and the regulations, but expressed reservations about

various aspects of the proposed regulation. For example, one commenter

questioned the off-site review of records, especially confidential

data. Another questioned whether the ``compliance check'' would entail

an on-site visit, off-site review of records, or both. Another

commenter requested that the rule be clarified as to whether the

additional options for evaluating compliance--the off-site review of

records of records, the compliance check and the focused review--would

constitute a complete evaluation. Specifically, this commenter wanted

to know whether the current practice of reviewing a contractor no more

frequently than once every 24 months would continue under the expanded

system.

Three commenters from the contractor community objected outright to

the proposed compliance evaluation regulation. One of the contractor

associations contended that the proposed rule would give OFCCP

unbridled authority to evaluate contractor compliance, and that

contractors would be subjected to endless requests for information,

data, and records if the rule were finalized. In addition, this

commenter contended that contractors needed regulatory notice of how

each type of compliance evaluation would be implemented. Similarly,

another commenter argued that the procedures for each of the evaluation

methods needed to be spelled out in the regulations with the same level

of detail provided in the current regulations concerning the compliance

review process. These commenters believed they should have the

opportunity to comment upon a proposed regulation that specified, among

other things, the number of evaluation methods the contractor could

expect, the frequency of such evaluations, and the time frames for

completing each method of evaluation.

OFCCP has made revisions in the final rule to provide more detail

about the methods for evaluating contractor compliance. The revisions

are explained below. Further, OFCCP agrees that contractors should be

apprised of how the agency intends to implement the proposed compliance

evaluation procedures. The agency disagrees, however, with the notion

that the particulars of implementation must be included in the

regulations.

The Federal Contract Compliance Manual (FCCM) contains the policy

guidance interpreting the Executive Order and regulations, as well as

agency instructions for implementing the regulatory provisions. OFCCP's

Compliance Manual currently describes the procedures for conducting

compliance reviews. The aspects of implementation addressed in the

Manual include the time frames for conducting the review, how to open

and close a review, and how frequently reviews should be conducted. The

FCCM is the appropriate medium to specify the procedures for conducting

the different types of compliance evaluations. The agency, therefore,

declines to adopt the changes suggested by some of the commenters. The

final rule adopts the compliance evaluation provisions of proposed

paragraph (a). However, paragraph (a) of the final rule differs from

the proposal by including expanded descriptions of the activities

contemplated under each evaluation method. The final rule for example,

clarifies that a compliance review is the same comprehensive

examination of the contractor's employment practices that is prescribed

by the current regulations. In addition, the description of the off-

site review of records is revised in the final rule to explain that the

scope of the examination would be substantially similar to the desk

audit phase of the compliance review. Further, the final rule provides

that the compliance check involves an on-site visit to an establishment

to review the contractor's books and records for the purpose of

determining whether: (1) Data and other information previously

submitted by the contractor are accurate and complete; (2) the

contractor has maintained records consistent with the requirements of

Sec. 60-1.12; and/or (3) the contractor has developed an AAP consistent

with the requirements of Sec. 60-1.40.

Contractor fears of repeated and unending evaluations are

unfounded. OFCCP always has been sensitive to contractor concerns about

the amount of time, money and personnel resources consumed by

compliance reviews. Thus, the agency's practice normally has been to

conduct a compliance review of a contractor no more frequently than

once every two years. Additionally, the agency's Compliance Manual

instructs the compliance officer to complete the compliance review

within 60 days from the date the AAP is received. (See FCCM C204). The

compliance officer must request an extension of time whenever it

becomes apparent that the compliance review cannot be completed within

the allotted time. (Id.)

OFCCP intends to continue to follow the currently prescribed time

frames whenever the compliance review is the method used to evaluate a

contractor's performance. The agency also intends to establish similar

standards regarding the frequency and duration of the off-site review

of records, the compliance check, and the focused review, to ensure

that the compliance evaluations authorized by Sec. 60-1.20 are not

overly intrusive. Finally, OFCCP will develop other policies and

procedures for compliance officers to follow when implementing these

new evaluation methods. That policy and procedural guidance will be

incorporated in the Compliance Manual, and thereby made available to

the public, before any of the new methods for evaluating contractor

compliance are utilized.

Section 60-1.20(d) Preaward Compliance Evaluations

Section 60-1.20(d) in the current regulations requires contracting

agencies to obtain clearance from OFCCP prior to awarding Federal

supply and service contracts of $1 million or more. The current

regulations require OFCCP to conduct a preaward compliance review if

the facility at which the contract will be performed has not undergone

a compliance review within the preceding 12 months, and to provide its

report of compliance within 30 days of receipt of the request from the

contracting agency.

The NPRM would revise paragraph (d) of the current regulation to

make the preaward compliance evaluation optional. Under paragraph (d)

of the proposed rule, OFCCP would have 15 days to inform an awarding

agency of its intentions to conduct a preaward compliance evaluation.

The proposed rule would allow OFCCP an additional 20 days from the date

of the notice of intention to conduct the preaward evaluation to

provide the conclusions regarding compliance to the contracting agency.

The proposed rule further provides that clearance shall be presumed if

OFCCP does not give notice of its intention to conduct a preaward

compliance evaluation or does not report its conclusions within the

prescribed time periods.

Several comments urged that the proposal be revised. Women's rights

and civil rights groups unanimously opposed the proposal to make

preaward compliance evaluations optional. They contended that changing

the preaward review from a mandatory function to a discretionary

function would seriously diminish the effectiveness of a compliance

procedure they viewed as an important enforcement tool. A few

[[Page 44181]]

expressed the fear that preawards would be discontinued entirely if

they were left to the discretion of the agency. As an alternative to

making all preaward compliance evaluations optional, some commenters

suggested that OFCCP could target its enforcement resources more

efficiently by: (1) Raising the $1 million minimum threshold to reflect

inflation over the last 25 years; and (2) expanding the 30-day time

allowed to conduct preaward compliance evaluations.

Most of the comments from the contractor community on proposed

paragraph (d) were supportive of the proposal to make preaward

compliance evaluations optional. However, one contractor and the

Department of Defense recommended that the agency eliminate preawards

entirely, and adopt a post-award notification and post-award review

procedure. Another contractor questioned the feasibility of the

proposed time frames for conducting preaward compliance evaluations,

noting that proposed paragraph (d) requires OFCCP to report its

conclusions about compliance within 20 days, while proposed paragraph

(e) would allow the contractor 15 days to submit an AAP.

The NPRM discusses the problems associated with the current

preaward process at length, so that discussion will not be recounted

here. (See 61 FR 25516, 25519.) The NPRM explained that several models

for modifying the preaward provisions were considered during the

development of the proposal, including an increase in the dollar amount

of the preaward contract threshold.

Upon reconsideration and in response to the comments, OFCCP has

decided to maintain the current mandatory nature of preaward

evaluations, but to raise the threshold trigger for the conduct of the

preaward evaluation. Accordingly, the final rule requires that a

preaward compliance evaluation of a prospective contractor be conducted

when the amount of the contract is $10 million or more, and that a

preaward evaluation of known prospective subcontractors be conducted

when the amount of the subcontract is $10 million or more, unless OFCCP

has conducted an evaluation and found them to be in compliance with the

Order within the preceding 24 months. These increases in contract

amount and compliance history thresholds will reduce the number of

preaward compliance evaluations OFCCP will need to conduct. A reduction

in the number of preaward evaluations will permit OFCCP greater

flexibility in targeting its enforcement resources. Continuing the

requirement that the agency conduct preawards, albeit of a smaller

universe, addresses the concerns of the civil rights and women's rights

groups that a discretionary preaward evaluation process would seriously

undermine the utility of preaward compliance evaluations as an

enforcement tool. Under the final rule, the preaward evaluation process

will remain a significant component of the Executive Order enforcement

program by targeting those contractors who benefit most from taxpayers-

funded Government contracts.

OFCCP also studied the option of eliminating the preaward

provisions, and considered replacing preawards with post-award

compliance evaluations. In OFCCP's view, however, the preaward

evaluation still has value as an enforcement tool. The final rule will

retain the preaward clearance time frames contained in the proposal to

ensure that the preaward evaluation process is conducted expeditiously.

The reduction of the number of preaward evaluations which will be

conducted under the final rule and the regulatory time frames for

completing the evaluations, coupled with the administrative changes

OFCCP is making to streamline the preaward clearance process, will

significantly decrease the burden on contracting agencies of processing

Executive Order preaward clearance requests during the procurement

process.

As for the question regarding the compatibility of the time frames

in paragraphs (d) and (e) of the proposal, the deadline for the

submission of documents in proposed paragraph (e) would not apply to

preaward compliance evaluations. Under the existing preaward

procedures, the contractor is not asked to submit its AAP and support

data for review. Currently, OFCCP either conducts an abbreviated desk

audit or review of the AAP and support data on-site, or dispenses with

review and analysis of the AAP and support data altogether. Contractors

can expect that OFCCP will continue to adjust its compliance evaluation

procedures to meet the preaward clearance time frames in paragraph (d).

The final rule revises paragraph (d) of Sec. 60-1.20 by requiring

that a preaward compliance evaluation of a prospective contractor be

conducted when the amount of the contract is $10 million or more and a

preaward evaluation of its known first-tier prospective subcontractors

be conducted when the amount of the subcontract is $10 million or more,

unless OFCCP has conducted an evaluation and found them to be in

compliance in the preceding 24 months. The final rule establishes time

frames for OFCCP to inform the awarding agency of the necessity for

conducting a preaward evaluation and for OFCCP to provide its

conclusions about the contractor's compliance status.

Section 60-1.20(e) Submission of Documents; Standard Affirmative

Action Formats

Under Sec. 60-60.2, a contractor must submit its AAP and supporting

documents to OFCCP within 30 days of a request. If the contractor fails

to submit the documents within the prescribed time period, the

enforcement procedures specified in Sec. 60-1.26 are applicable. The

NPRM proposed to incorporate the provisions of Sec. 60-60.2 as a new

paragraph (e) of Sec. 60-1.20, with one modification. Under proposed

paragraph (e), the time for submission of an AAP and supporting

documentation would be reduced from 30 days to 15 days.

Several comments on the proposed change in time frames were

received. The commenters from the civil rights and women's rights

communities supported the proposal. They viewed 15 days as more than

adequate time to submit an AAP because, they argued, contractors are

required to have an AAP in place as a condition of doing business with

the Federal Government. These commenters believed the 15-day deadline

would address the unacceptable (and unlawful) practice of contractors

waiting until a compliance review has been scheduled before they

develop an AAP.

The commenters from the contractor community objected to the

proposal and strongly urged retention of the 30-day time frame for

submission of the AAP and supporting data. One commenter observed that

the 15-day requirement assumes that a contractor could simply pull the

AAP out of a file, copy it, and send it to OFCCP. But, according to

this commenter and others, an AAP is a fluid, evolutionary document

rather than a static piece of paper. They asserted that the 15-day

deadline ignored other realities of compliance reviews and how AAPs are

developed and updated.

The commenters said that even where a detailed AAP has been

developed contractors frequently use the 30 days provided under the

current regulations to update the support data. They pointed out that a

request for an AAP may require that the contractor submit data on

personnel activity for the current goal year, which normally would be

compiled and analyzed during the 30-day period. Further, the commenters

identified several situations

[[Page 44182]]

which might make it difficult for a contractor to meet the 15-day

deadline. The request for the AAP might come when the company officials

responsible for updating or reviewing the AAP are unavailable, or at

the expiration of the AAP year and before the contractor has had an

opportunity to review and analyze the current labor force statistics in

order to update its AAP.

In recognition of the concerns of the contractors, OFCCP has

decided not to adopt the 15-day deadline in the final regulation. The

final rule retains the existing 30-day time frame for the submission of

the AAP and support data.

The current regulation at Sec. 60-60.3(a) states, in relevant part,

that ``Contractors may reach agreement with OFCCP on nationwide AAP

formats or on frequency of updating statistics.'' OFCCP proposed also

to incorporate this provision, without any changes, in new paragraph

(e).

Two contractor associations and one contractor commented on this

provision. All favored the inclusion of the provision in the final rule

and viewed it as a change in agency policy on nationwide AAPs, which

also are called standardized affirmative action formats or ``SAAFs.''

Some officials in OFCCP had been critical of the nationwide AAP formats

that had previously been negotiated and viewed them as impediments to

effective enforcement of the Executive Order. In response to these

agency concerns, a moratorium on new SAAF agreements was issued on

December 16, 1994. That moratorium remains in effect today. Thus, the

inclusion of the provision regarding nationwide AAP formats does not

represent a change in agency policy. Rather, it preserves the status

quo until OFCCP completes its evaluation of the concept.

The final rule adopts all the provisions proposed in paragraph (e)

except the change proposed in the time frame for the submission of

documents. The existing 30-day time frame for submitting the AAP and

supporting documents is retained in the final regulation.

Section 60-1.20(f) Confidentiality

The regulation at Sec. 60-60.3 provides that information made

available during the on-site review may be taken off-site if the

compliance officer finds that further analysis is required to make a

determination of compliance. Section 60-60.4 contains procedures under

which contractors may seek rulings on the relevancy of data requested

for off-site analysis. The regulation also prescribes procedures for

preserving the confidentiality of contractor data removed off-site for

analysis.

Under the current regulations, a contractor concerned about the

confidentiality of information such as employee names and compensation

data may submit alphabetic and coded data for desk audit purposes.

However, the contractor must provide the compliance officer with full

access to all relevant data on-site, as is directed by Sec. 60-1.43.

The information to be removed for off-site analysis may be coded, but

only if the key to the code is made available to the compliance

officer. The contractor also may seek a ruling from the District

Director as to the relevance of documents requested for off-site

analysis. The District Director is allowed 10 days to issue a ruling,

the contractor 10 days to appeal the District Director's ruling to the

Regional Director, and the Regional Director 10 days to issue a final

ruling. The current regulations provide that, during the pendency of

the relevancy determination, the contractor must allow the compliance

officer to remove the disputed information off-site.

The NPRM would delete part 60-60 of the regulations and transfer

the provisions found in Sec. 60-60.3(c) and Sec. 60-60.4 to a new

Sec. 60-1.20(f). The new paragraph (f) would incorporate the

substantive provisions of the current regulations, but would revise the

procedures for rulings on relevancy. The proposed rule would eliminate

the provision concerning the removal of disputed data off-site pending

the ruling on relevancy. In addition, paragraph (f) of the proposed

rule would replace the existing 10-day time frames for issuing rulings

on relevancy with the requirement that the District Director and

Regional Director issue their rulings ``promptly.''

The provisions concerning confidentiality and removal of data for

off-site analysis generated extensive comments from the contractor

community. All the commenters contended that the proposed rule did not

ensure protection of confidential or proprietary information during

compliance evaluations. Some commenters claimed that the provision

requiring the contractor to make the key to coded data available to a

compliance officer posed a threat to confidentiality. They recommended

amending the proposed rule to provide that the key to coded data may

never be taken off-site.

In fact, no changes to the provisions regarding the coding of

confidential data were proposed. The proposed rule would continue the

current regulatory requirement that the contractor make the key to

coded data available to the compliance officer. If the key to coded

data is needed for off-site analysis, contractors can be assured that

confidentiality will be protected, as it has been under the current

regulations. Where the contractor codes data that are submitted for

desk audit purposes, the current practice is that the key to the code

is retained by the contractor and made available to the compliance

officer during the on-site review. (See FCCM at 2GO1). That practice

would continue also under the proposed regulation.

Other commenters expressed concern about the provisions regarding

rulings on the relevancy of data requested for off-site analysis. They

argued that the determination of relevancy should be made prior to the

removal of any confidential data off-site. The commenters asserted also

that the regulations should contain definite time frames for the

District Director and Regional Director to issue rulings on relevancy.

Although the NPRM proposed modifications to the procedures for

obtaining rulings regarding the relevance of data requested for off-

site analysis, OFCCP has decided not to adopt those changes in the

final regulation. The final rule retains the provision that the

contractor must allow removal of the disputed data off-site pending a

final ruling on relevancy. Upon further consideration, OFCCP believes

that eliminating the provision regarding off-site availability pending

a relevance determination would prolong the compliance evaluation

process and adversely impact efficiency and effectiveness. The

resumption of an interrupted compliance evaluation might be delayed

well beyond the date the final ruling regarding relevancy is issued

because the compliance officer may have initiated another compliance

evaluation in the interim. The current regulation and practice allows

the compliance officer to proceed with the investigation while the

trail is still fresh and close the compliance evaluation within a

reasonable amount of time.

Further, in response to contractors' criticism concerning the

proposed removal of the definite time frames for issuing relevancy

determinations, OFCCP has decided not to adopt that provision of the

proposal. Instead, the final rule provides that the District Director

shall issue a ruling within 10 days, and that if the contractor appeals

the District Director's ruling to the Regional Director, the Regional

Director shall issue a final ruling within 10 days.

The comments concerning proposed paragraph (f) reveal that the

contractors' overriding concern is that confidential or proprietary

information obtained by

[[Page 44183]]

OFCCP for off-site analysis may be disclosed pursuant to the Freedom of

Information Act (FOIA). Several commenters recommended that the rule be

amended to require that all confidential data be returned at the

conclusion of the complaint investigation or compliance evaluation. One

commenter further suggested that the amendment state expressly that

contractor data are not subject to disclosure under FOIA while the

investigation or compliance evaluation is open, and that the compliance

review or investigation is not considered closed until all data are

returned to the contractor.

OFCCP follows the Department's regulations implementing the Freedom

of Information Act and Executive Order 12600 when processing FOIA

requests. The Department's FOIA regulations are found at 29 CFR Part

70. Data obtained from contractors that are contained in files

connected with open compliance evaluations, complaint investigations or

administrative enforcement actions are not disclosed. The agency

considers such information to be part of an investigatory file complied

for law enforcement purposes within the meaning of 5 U.S.C. 552(b)(7),

and therefore exempt from mandatory disclosure under FOIA. The

exemption in FOIA for information compiled for law enforcement

purposes, however, is not a permanent one. Once the compliance

evaluation, complaint investigation, or enforcement action has been

concluded and the investigatory files exemption no longer is in effect,

another exemption would need to apply in order to protect the

information in the files from disclosure in response to a FOIA request.

For example, information obtained from contractors arguably might be

protected from disclosure under the exemption for trade secrets or

commercial or financial information that is privileged or confidential

(5 U.S.C. 552(b)(4)).

The Department's FOIA regulations set forth procedures for

processing requests for the disclosure of information and material

provided by business submitters. Those regulations permit the

contractor to designate specific information as confidential commercial

information at the time of submission to the Department. 29 CFR

70.26(b). In addition, the Department's FOIA regulations require OFCCP

to give the contractor written notice of any request encompassing

confidential commercial information, and to provide the contractor an

opportunity to object to disclosure. 29 CFR 70.26 (d) and (e).

OFCCP previously has considered the question of whether assertedly

confidential data may be returned to the contractor upon completion of

the investigation or compliance evaluation. The position of OFCCP is

that the Federal records retention requirements do not permit the

agency to return data obtained from the contractor during a compliance

review or complaint investigation upon completion of the action. The

information and records received from the contractors in connection

with enforcement activities constitute Government records. As such,

their disposition is strictly prescribed by statute and regulation and

must be made in accordance with the agency's records management

program, with the approval of the Archivist of the United States. The

documents may be disposed of only by the methods defined by the

statute, which do not include returning them to the originating source,

i.e., the contractor, but instead call for disposal by sale or salvage,

donation for preservation and use, or destruction.

Paragraph (f) of the proposal is adopted in the final rule with the

changes regarding the procedures for issuing relevancy determinations

described herein. In addition, at the suggestion of one commenter, the

final rule substitutes ``key to coded data'' for the reference to ``the

code'' to the data. Thus, the final rule provides, in relevant part,

``Such data may only be coded if the contractor makes the key to the

code available to the compliance officer.''

Section 60-1.20(f) Access to Information

Section 60-60.4(d), concerning public access to information,

describes outdated procedures under which requests received from the

public for information obtained from the contractor previously were

processed. OFCCP proposed to substitute provisions in the current rule

with a statement of the agency's current practices. Accordingly,

paragraph (g) of the proposal provides that ``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.''

No comments were received on paragraph (g) of the proposal. The

provision is adopted in the final rule as proposed.

Section 60-1.26 Enforcement Proceedings

The NPRM would revise and restructure, for clarity, Sec. 60-1.26,

which specifies the Executive Order enforcement procedures. With the

exception of the provisions relating to the calculation of interest,

the proposal would not make substantive changes to this section.

Subsection (a) of the proposal would apply to both administrative and

judicial enforcement. Proposed subsection (b) would address

administrative enforcement procedures. Subsections (c) and (d) of the

proposed regulation would cover judicial enforcement proceedings

initiated by the Department of Justice.

Several of the proposed changes are consistent with provisions

included in the Section 503 implementing regulations at 41 CFR 60-

741.65(a)(1). Subsection (a)(2) of the proposed regulation, clarifies

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.

Subsection (a)(2) of the proposal would require that interest on back

pay be compounded quarterly at the percentage rate established by the

Internal Revenue Service for the underpayment of taxes.

The proposal would provide, in subsection (b)(1), that

administrative enforcement proceedings may be instituted where OFCCP

determines that referral for formal enforcement (rather than

settlement) is appropriate. Subsection (b)(1) of the proposed

regulation would specify that the litigation referral will be made to

the Solicitor of Labor. Further, consistent with a requirement included

in the Section 503 regulations, the proposal would require 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.

The commenters from the civil rights and women's rights communities

welcomed the clarification in subsection (a)(2) that OFCCP may seek

back pay and other make whole relief for victims of discrimination

identified during a complaint investigation or compliance evaluation,

regardless of whether such individuals have filed a complaint with the

agency. One contractor suggested that contractors be given the

opportunity to correct a discriminatory practice or situation

identified for the first time during a compliance review before

liability is imposed. However, simply changing the offending employment

practice only addresses part of the problem. In most instances, the

discriminatory practice cannot be

[[Page 44184]]

considered ``corrected'' unless and until remedial relief is provided

for those victimized by the practice.

Two commenters from the contractor community objected to the

proposal concerning the compounding of interest on back pay awards. One

commenter suggested that compound interest provided a ``windfall'' to

the victim. OFCCP disagrees. Compounded interest is necessary to make

the victim whole. OFCCP has a longstanding policy of requiring that

interest on back pay awards under the Executive Order be compounded.

That policy is consistent with the policy and practice of the

Department to request compounded, pre-judgment interest whenever back

pay is sought in cases arising under the Fair Labor Standards Act. See

e.g., Brock v. The Claridge Hotel and Casino, 644 F.Supp. 899, 908

(D.N.J. 1986), aff'd, 846 F.2d 180 (3d Cir. 1988), cert. denied, 488

U.S. 925 (1988); and Brennan v. Bd. of Ed., Jersey City, 374 F.Supp.

817, 833 (D.N.J. 1974). Moreover, as noted in the NPRM, compounding

interest on awards of back pay is consistent with the case law under

Title VII of Civil Rights Act of 1964 and other Federal employment

discrimination laws. See e.g., Saulpaugh v. Monroe Community Hospital,

4 F.3d 134, 144 (2d Cir. 1993), cert. denied, 510 U.S. 1164 (1994);

EEOC v. Gurnee Inn Corp., 914 F.2d 815, 820 (7th Cir. 1990), and Mennen

v. Easter Stores, 951 F.Supp. 838, 863 n. 28 (N.D. Iowa 1997). The

proposal would reinstate this policy to ensure that victims of

discrimination obtain complete relief.

A contractor association objected to the provision in subsection

(a)(1)(ix) of the proposal, which provides that violations of the

Executive Order may be based upon the ``alteration or falsification''

of records. This commenter argued that the term ``alteration'' should

be deleted because it implied that contractors could not alter records

to correct errors without violating the Order. OFCCP, however, believes

that it is clear from the context that the term ``alteration'' refers

to changes or modifications in records which misrepresent the facts.

Accordingly, the agency declines to make that modification to the

proposed rule.

Further, a commeter from the contractor community objected to the

provision in proposed subsection (b), which would provide that OFCCP

may refer matters to the Solicitor of Labor with the recommendation for

the institution of administrative enforcement proceedings ``when OFCCP

determines that referral for consideration of formal enforcement

(rather than settlement) is appropriate.'' The commenter said the

provision appeared to eliminate the duty to conciliate and considered

it to be a substantive change to the existing regulations. The

commenter is incorrect. The proposed regulation does not change the

existing regulations; OFCCP is still required to make reasonable

efforts to secure compliance through conciliation. Proposed paragraph

(b), however, recognizes, that some violations, such as denial of OFCCP

access, are not always amenable to conciliation, and therefore, warrant

OFCCP initiating immediate administrative enforcement.

Section 60-1.26 of the proposal is adopted in the final rule.

However, some modifications have been made in the final regulation.

Subsection (a)(1)(ii) of the proposal, which provides that violations

may be based upon the results of a compliance review, has been deleted

from the final regulation as redundant. The final rule specifies that

violations may be based on the results of a compliance evaluation,

which includes compliance reviews. In addition, the final rule adds a

new subsection which states that violations may be based on a

contractor's refusal to provide data for off-site review or analysis as

required in the regulations. Although subsection (a)(1)(viii) of the

final rule references the refusal to furnish records, OFCCP believes

the amendment is necessary to clarify that violations may be based upon

the contractor's refusal to furnish records requested for off-site

review or analysis.

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 NPRM would add a new

paragraph specifically to address the sanction of debarment. Paragraph

(b) of the proposal would provide that the contractor may be debarred,

subject to reinstatement pursuant to the provisions in Sec. 60-1.31.

The proposal also would provide that debarment may be imposed for an

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

Several comments were received on the proposed sanction provision.

The comments from the women's rights and civil rights communities

supported the proposal to make the debarment sanction explicit in the

regulations. Commenters from the contractor community, however,

objected to the proposed sanction regulation. It appeared from a few

comments that the indefinite debarment sanction needed further

explication.

The duration of an indefinite term of debarment is not

indeterminable, as some commenters suggested. Under the current

regulations, and the proposed reinstatement regulation as well, a

contractor debarred for an indefinite term may request reinstatement at

any time. Thus, as OFCCP noted in the preamble discussion concerning

sanctions, a contractor debarred for an indefinite term can be

reinstated immediately without incurring any economic loss.

Several commenters from the contractor community thought that fixed

term debarments were too harsh a sanction. Two commenters questioned

whether fixed term debarments were authorized under the Executive

Order. A contractor association argued that the Secretary does not have

authority to continue a debarment beyond the time the contractor

demonstrates its willingness and ability to comply. A contractor, in an

extensive comment on this proposal, contended that fixed term

debarments were not authorized under the Order because they were

punitive in nature.

Under Section 209(a)(6) of the Order, a debarred contractor remains

ineligible for future Government contracts ``until such contractor has

satisfied the Secretary of Labor that such contractor has established

and will carry out personnel and employment policies in compliance with

the provisions of this Order.'' The Executive Order does not, as the

contractor association's comment suggests, require the Secretary to

reinstate a contractor merely because it promises to implement revised

policies. Rather, the Order states that the Secretary must be

``satisfied'' that the contractor will carry out the revised policies.

In some cases, a contractor will have to demonstrate its commitment to

changed employment policies over a period of time, before an

affirmative determination can be made about the contractor's

willingness and ability to comply with the Executive Order's

requirements.

The debarment for a fixed period is not intended as a

``punishment.'' The purpose of the sanction is to provide a trial

period during which a contractor can demonstrate its commitment and

ability to establish employment practices that will ensure continued

compliance with its Executive Order obligations. OFCCP believes that

the prospect of a fixed period of ineligibility for government

contracts will deter contractors from engaging in violations. Contrary

to the contentions of one commenter, sanctions can discourage

[[Page 44185]]

certain conduct without being retributive.

Other commenters from the contractor community objected to the

proposal because it would authorize the Secretary to impose a fixed

term debarment for ``any'' violation. They said that, while the

Secretary had imposed the fixed term debarment in very limited

circumstances in the past, paragraph (b) of the proposal was not

tailored to address these limited and unusual circumstances. A few

commenters recommended that we amend the proposed regulation to specify

the instances that would warrant the imposition of a fixed term

debarment.

It is neither practicable nor necessary precisely to define the

types of violations for which it would be appropriate to impose a fixed

term debarment. Where a fixed term debarment is ordered, in contrast to

an indefinite term debarment, the length of the debarment period will

be determined case-by-case, and will depend upon factors such as the

nature and severity of the violations. The sanction regulation is

adopted in the final rule as proposed.

Section 60-1.30 Notification of Agencies

Currently, the regulations require the OFCCP distribute a list of

debarred contractors to all executive departments and agencies. OFCCP

proposed to eliminate this requirement because the General Services

Administration now publishes a listing of debarred contractors. The

proposal substitutes in its place a provision requiring the Deputy

Assistant Secretary ensure that the heads of agencies are notified of

debarments. The proposal also renames the section ``Notification of

Agencies'' instead of ``Contract ineligibility list.''

No comments were received on proposed Sec. 60-1.30. The regulation

is adopted in the final rule as proposed.

Section 60-1.31 Reinstatement of Ineligible Contractors

The current regulation provides that a contractor declared

ineligible for future contracts may request reinstatement in a letter

directed to the Director. The regulations state that the contractor

must show that it has established and will carry out employment

policies in compliance with the equal opportunity clause in any

reinstatement proceedings. The NPRM would revise the current provisions

regarding reinstatement to conform them to proposed Sec. 60-1.27(b),

which authorizes debarment either for an indefinite term or for a fixed

term of not less than six months. Under the proposal, a contractor

debarred for an indefinite period could request reinstatement at any

time. A contractor debarred for a fixed period could request

reinstatement after the expiration of the fixed period. The proposal

would authorize a compliance evaluation of the contractor's employment

practices before a final disposition of the reinstatement request.

Commenters from the contractor community objected to the

reinstatement procedures proposed for contractors debarred for a fixed

term. They contended that reinstatement should occur automatically at

the conclusion of the fixed term. According to these commenters, the

absence of definite time frames in the reinstatement procedures

outlined in the proposal would mean that the fixed term debarment could

drag on indefinitely.

OFCCP submits that the reinstatement process set forth in the

proposed regulation is fair to debarred contractors. The argument that

reinstatement should be automatic at the end of the fixed period misses

a critical point. A debarred contractor is required to demonstrate that

its employment policies and practices comply with the Order, and that

showing usually is made in the context of a compliance evaluation.

Nevertheless, in response to concerns that proposed Sec. 60-1.31

would effectively extend a debarment well beyond the original fixed-

term, OFCCP has modified the reinstatement process in the final rule.

Under the final rule, a contractor debarred for a fixed period may file

a request for reinstatement 30 days prior to the expiration of the

fixed debarment period, or at any time thereafter. However, filing a

reinstatement request 30 days before the end of the debarment period

will not result in early reinstatement; a contractor debarred for a

fixed period may be reinstated and declared eligible for future

Government contracts only upon or after the fixed debarment period

expires.

OFCCP intends to process reinstatement requests in a timely manner

upon receipt. In many instances the compliance evaluation or other

activity necessary to ensure that the contractor is in compliance and

will remain in compliance may be completed during the 30-day ``window''

prior to the expiration of the debarment. In other instances that

activity may extend beyond the 30-days, in which case the contractor

will be reinstated (or notified of a decision not to reinstate)

promptly upon completion of OFCCP's examination of the contractor's

compliance status.

Section 60-1.32 Intimidation and Interference

The current regulation states that sanctions and penalties may be

imposed against the contractor who fails to ensure that no one

intimidates, threatens, coerces or discriminates against any individual

who files a complaint or otherwise participates in a compliance

activity under the Executive Order or a similar Federal, state or local

law. The proposal would include a similar prohibition, but would

specify that the contractor itself shall not engage in such activities

and shall ensure that all persons under its control do not do so, and

would add that the prohibition applies to harassment. The proposed

regulation would apply the prohibition to an individual's opposition to

any practice that is unlawful under the Order or similar Federal,

state, or local law.

The women's rights and civil rights organizations supported the

proposal, and commented that the protections outlined in the proposed

provisions are needed to ensure the integrity of the enforcement

process. A contractor, however, was critical of the proposal. This

commenter suggested that the proposed regulation be revised to clarify

that the protections extended only to ``persons who were known to the

contractor to have participated in an investigation'' or ``persons who

were known to the contractor to have opposed unlawful practices.'' The

burden of proof standards applicable to disparate treatment

discrimination cases are applied to retaliation cases, and thus, there

must be direct or circumstantial evidence that the contractor had

knowledge of the protected conduct in order to prove the violation.

Accordingly, the suggested clarification is not necessary.

The provision is carried forward in the final rule as proposed.

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

Commitment

The current regulation sets forth the procedures that apply when a

contractor violates a conciliation agreement. The proposal would add a

new subsection which would provide that, in any proceedings related to

an alleged violation of a conciliation agreement, OFCCP may seek

enforcement of the agreement and shall not be required to present proof

of the underlying violations resolved by the agreement.

Two comments from the contractor community objected to the

proposal. A

[[Page 44186]]

contractor association argued that OFCCP should be required to prove

the underlying violations resolved by a conciliation agreement in order

to protect contractors from being coerced into signing unreasonable or

impracticable agreements. Similarly, a law firm, whose clients include

Government contractors, contended that contractors frequently enter

into conciliation agreements in order to terminate the compliance

review, and not because they have actually committed violations of the

Executive Order. Thus, the law firm's argument continues, OFCCP should

have the burden of proving the truth of its findings of violation, and

the contractor should not be precluded from demonstrating that it did

not violate the Order, in the event the contractor is unable to honor

the commitments it made.

The proposal is consistent with the well-settled principle under

Title VII case law that a conciliation agreement entered to resolve

employment discrimination claims is specifically enforceable

independent of a finding that the employer did, in fact, engage in

discriminatory practices, so long as regular contract rules are

satisfied and enforcement does not conflict with the purposes of Title

VII. See, e.g., EEOC v. Safeway Stores, Inc., 714 F.2d 567 (5th Cir.

1983), cert. denied, 467 U.S. 1204 (1984). The courts have concluded

that conciliation agreements would be rendered worthless as a means of

securing voluntary compliance with Title VII, if a finding on the

merits were required before any voluntary agreement to resolve

discrimination claims could be enforced.

Likewise, contractors that enter into conciliation agreements to

resolve findings of discrimination or other substantive violations of

the Executive Order do so voluntarily and knowingly. Contractors are

under no compulsion to execute conciliation agreements; they are free

to reject the terms of settlement and have the matter resolved through

the contested litigation. However, if a contractor voluntarily and

knowingly accepts an offer to conciliate a matter, both parties,

including the Government, are entitled to rely on the representations

contained in the conciliation agreement. The conciliation contract

binds both parties, and no useful purpose would be served here by

outlining the litany of equities and inequities that would result if

one or the other party were allowed to ignore its agreement and return

to ground ``zero.''

The final rule adopts the proposed amendment to Sec. 60-1.34

without change.

Section 60-1.42 Notices To Be Posted

This section sets forth the language that must be included in the

equal opportunity notices Government contractors must post in

conspicuous places. OFCCP proposed technical corrections to the wording

of the poster concerning the jurisdictional coverage of Title VII and

the address of the EEOC. No comments were received on this proposal.

The provision is adopted in the final rule as proposed.

Section 60-1.43 Access to Records and Site of Employment

Under the current regulations, each contractor is required to

permit access to its premises for the purpose of conducting on-site

compliance reviews and inspecting and copying such books, records,

accounts and other material as may be relevant to the matter under

investigation or pertinent to compliance with the Order. The current

regulations allow the information to be used only in connection with

the administration and enforcement of the Executive Order and the Civil

Rights Act of 1964.

The proposed amendment would add computerized records to those

which the contractor must produce for inspection and copying. The

proposal would continue the requirement that the contractor permit

access to its premises for the purpose of conducting compliance

evaluations and complaint investigations. In addition, the proposal

would allow the information to be used in connection with the

administration of other laws that are enforced in whole, or in part, by

OFCCP.

Several commenters from the contractor community objected to the

proposal regarding access to computerized records. They contended that

the proposal would allow unlimited access to sensitive information in

the contractors' human resource files, regardless of its relevancy to a

determination of compliance with the Order. The commenters requested

that OFCCP revise the proposal to clarify that access would be limited

to existing files and that contractors would not be required to

reprogram their computers to comply with an OFCCP request.

The proposed rule does not expand the scope of records that would

be made available; contractors must give OFCCP access to data in

computer files under the current regulations. Rather, the proposed

regulation simply would clarify that records include those maintained

in computerized form.

The concern that the provision would permit, if not encourage,

unfettered access to confidential commercial proprietary data or

irrelevant information is unjustified in OFCCP's view. Under the

proposed rule, as under current regulation, access is limited to

records that may be relevant to the matter under investigation and

pertinent to compliance with the Order. Further, the contractor is not

required to reprogram its computers in order to generate data

responsive to OFCCP's request; access is limited to the records and

data that already exists in computerized form. Moreover, requests to

take computerized records off-site for further analysis would be

subject to the relevancy determinations prescribed by Sec. 60-1.20(f)

of the final rule.

The regulation is adopted in the final rule as proposed in the

NPRM.

Part 60-60 Contractor Evaluation Procedures for Contractors for

Supplies and Services

Part 60-60 of the current regulations concerns the conduct of

compliance reviews. The NPRM proposed to delete a sizable portion of

part 60-60. Most of part 60-60 properly is characterized as internal

operating procedures. The NPRM explained that the agency's internal

procedures are incorporated in the Federal Contract Compliance Manual

(FCCM). Consequently, the regulations in which the procedures are

published no longer are needed. However, those portions of part 60-60

that are regulatory in nature were proposed to be transferred to part

60-1. Thus, as previously has been discussed, Sec. 60-1.20 of the final

rule incorporates the substantive provisions in the current part 60-60

concerning submission of the AAP and support data (Sec. 60-60.2(a)),

nationwide AAP formats (Sec. 60-60.3(a)(3)), off-site analysis of

contractor data (Sec. 60-60.3(d)), and confidentiality and relevancy of

information (Sec. 60-60.4 (a) through (d)).

One commenter from the contractor community objected to the

elimination of part 60-60. This commenter argued that the entire

provision should be retained and expanded to include detailed

descriptions of the procedures that will be used to implement the new

compliance evaluation provisions in Sec. 60-1.20. According to this

commenter, a regulatory provision devoted to evaluation procedures

would ensure consistency in operations across OFCCP offices.

Other commenters from the contractor community objected to the

removal of particular provisions in Part 60-60. One contractor was

concerned that the elimination of Sec. 60-60.3(c) would result in a

change of the current agency practice of reviewing a contractor

establishment no more frequently than once every 24 months. Section 60-

60.3

[[Page 44187]]

currently provides that an on-site review need not be conducted where

the AAP is determined to be acceptable at desk audit, an on-site review

has been conducted within the preceding 24 months, and the

circumstances of the previous onsite review have not substantially

changed. This regulatory provision, however, is not the basis for the

current practice regarding the scheduling of compliance reviews.

Detailed procedures for implementing the regulatory provisions

should be treated in agency guidance, not in the regulations. OFCCP

already has issued guidance on the procedures for selecting and

scheduling supply and service contractors for compliance reviews. That

guidance provides that contractor establishments which have been

reviewed in the last two years are not to be reviewed again unless

certain very specific criteria are met and the Regional Director

approves the scheduling of the review (OFCCP Order No. ADM 92-1/SEL).

No plans are under consideration to change current scheduling

practices; contractors may continue to expect that a compliance review

usually will occur no more frequently than once every two years.

Other commenters objected to the proposed elimination of Sec. 60-

60-7, which prescribes a 60-day time frame for the completion of a

compliance review. Again, the time frame for completing a compliance

evaluation is an appropriate subject for agency guidance, not the

regulations. The Compliance Manual currently states that substantial

effort will be made to complete a compliance review within 60 days,

although completion within that period is not a procedural prerequisite

to an enforcement action (See FCCM 2C04). Contractors should not be

concerned that the elimination of the regulatory provision in Sec. 60-

60.7 will mean an end to established schedules for completing

evaluations of contractor compliance. OFCCP's subregulatory guidance

will continue to reference the 60-day time frames even after the final

rule is effective.

The final rule deletes the provisions of part 60-60 in accordance

with the proposal.

Regulatory Procedures

Executive Order 12866

The Department is issuing this final rule in conformance with

Executive Order 12866. This rule has been determined to be significant

for purposes of Executive Order 12866 and therefore has been reviewed

by OMB. This rule 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 this rule has been

made. Although difficult to quantify, OFCCP believes that the economic

impact of this rule will be positive. The compliance evaluation

regulation adopted in this rule will streamline procedures for

assessing contractor performance, and thereby reduce compliance costs

and paperwork burdens on contractors, particularly when there are no

indicators of noncompliance. In addition, the changes made by this rule

to the provisions concerning preaward compliance evaluations will

significantly decrease the administrative burdens and costs incurred by

contracting agencies in processing requests for preaward clearance

during the procurement process. Further, the compliance evaluation and

preaward clearance regulations will reduce administrative costs and

burdens on OFCCP, permit the agency greater flexibility in deploying

its enforcement resources, and improve the agency's overall efficiency

in administering the Federal contract compliance program.

As discussed below in the sections concerning the Regulatory

Flexibility Act and the Paperwork Reduction Act, the record retention

provisions adopted in this rule will promote efficiency in OFCCP's

enforcement of the Executive Order by ensuring the availability of

information needed to evaluate the compliance status of Government

contractors. Further, the final rule will eliminate confusion about

record retention requirements under Executive Order 11246 and ensure

consistency with the record retention requirements under section 503 of

the Rehabilitation Act, while imposing only a de minimis increase in

burden on contractors. OFCCP believes the benefits provided by express

record retention requirements to the agency's enforcement of the

Executive Order will outweigh the minimal increase in contractor

burdens. Finally, the elimination of the requirement for a written

certification regarding the maintenance of non-segregated facilities

will result in a reduction in contractor paperwork burdens.

In the NPRM, OFCCP stated that its goal in proposing regulatory

changes is to make both contractor compliance and agency enforcement

more efficient and cost effective. OFCCP invited comments on additional

ways to reduce compliance burdens such as simplified compliance

procedures for small contractors. However, no comments were received in

response to this request.

Regulatory Flexibility Act

All entities, regardless of size, will benefit from the repeal of

the written certification regarding the maintenance of non-segregated

facilities in this final rule. The record retention requirements

adopted in this final rule might result in a minimal increase in the

burden associated with storage of records for some small entities.

However, in the agency's estimation, any increase in the corresponding

storage costs would be negligible. Consequently, under the Regulatory

Flexibility Act, as amended, 5 U.S.C. 605(b), the Secretary of Labor

certifies that this rule will not have a significant economic impact on

a substantial number of small entities.

Paperwork Reduction Act

The changes to the Executive Order regulations made by the final

rule published today impact the information collection requirements

currently approved by OMB under the Paperwork Reduction Act (44 U.S.C.

3501, et seq.). The record retention provisions adopted in Sec. 60-1.12

of the final rule affect the approved record retention requirements for

both supply and service (OMB Control No. 1215-0072) and construction

contractors (OMB Control No. 1215-0163).

The new record retention requirements contained in this final rule

have been submitted to OMB for clearance under the Paperwork Reduction

Act. The new record retention requirements are not effective until

OFCCP displays currently valid OMB control numbers. When OMB completes

its review, OFCCP will publish a notice in the Federal Register

regarding the control numbers.

The elimination of the certification regarding non-segregated

facilities does not affect OFCCP's existing information collection

requirements. Although the certification imposed paperwork burdens on

contractors, such certifications were exempt under the Paperwork

Reduction Act of 1980.

OFCCP predicted in the NPRM that the adoption of a two-year record

retention requirement for larger contractors--those with 150 or more

employees and a Government contract of at 150,000--would result in only

a minimal increase in burden. OFCCP asserted that the one-year record

retention period prescribed for smaller contractors (those that have

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

$150,000) would not increase the existing burden

[[Page 44188]]

on these contractors because they already are subject to this

obligation under Title VII. Although the obligation to retain

employment records for a year would be new for the small number of

Government contractors that are not subject to Title VII (i.e., those

with fewer than 15 employees), OFCCP opined that any increase in burden

associated with filing and storing employment records would be

negligible for this group.

OFCCP invited the public to comment on the accuracy of the agency's

estimates regarding the burdens posed by the proposed revisions to the

information collection requirements, and to suggest ways of minimizing

the burden and enhancing the quality and utility of the information

collected. Two commenters--a consultant to Government contractors and a

contractor association which represents small agricultural firms--

responded to this request for comments. Several commenters from the

contractor community, however, expressed opinions about the burdens

associated with the record retention requirements in their comments on

the regulatory provision.

Both the consultant and the contractor association contended that

the proposed regulations would cause an overall increase in paperwork.

According to the consultant, the two-year record retention period would

be particularly burdensome for larger employers that routinely receive

thousands of pages of applicant materials over the course of the year.

The consultant asserted that retention of these materials for an

additional year would require substantial time and effort from

personnel and material handling staffs, and significant amounts of

storage space as well. Comments received from two contractor

associations in response to proposed Sec. 60-1.12 expressed similar

opinions about the increased storage burden for larger contractors. The

contractor association contended that the proposed regulatory revisions

would generate substantially more paperwork for the small agricultural

companies it represents.

OFCCP recognizes that the volume of records subject to the

retention requirement and the storage burdens will vary among

contractors. However, OFCCP still maintains that, on average, the

increase in burdens associated with the two-year retention period will

be minimal.

OFCCP stated in the NPRM that the elimination of the written

certification regarding non-segregated facilities would reduce

compliance burdens by roughly 850,000 hours. Accordingly to the

consultant, the time and expense involved in preparing certifications

have been reduced significantly by technological advances in personnel

and purchasing offices, and as a result, elimination of the

certification would save at most one-half of the hours that OFCCP had

estimated. Even if the consultant is correct and certifications do not

involve the amount of time the agency's estimate assumes, OFCCP

believes the elimination of the requirement will yield a significant

reduction in contractor burdens.

Unfunded Mandates Reform Act

This final rule does not include any Federal mandate that may

result in the expenditures 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, DC, this 12th day of August 1997.

Alexis M. Herman,

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, and under the authority of Executive Order

11246, as amended, Title 41 of the Code of Federal Regulations, Chapter

60, is amended as follows:

PART 60-1--[AMENDED]

1. The authority citation for Part 60-1 is revised to read as

follows:

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

E.O. 11375 (32 FR 14303) and E.O. 12086 (43 FR 46501).

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

Director, 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 requirements of Executive Order 11246.

* * * * *

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, 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

(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

[[Page 44189]]

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 compliant, 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 applicants

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 the circumstances that are

outside of the contractor's control.

(d) Effective date. The requirements of this section shall apply

only to records made or kept on or after September 18, 1997.

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

contractor 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 or any combination of the following investigative

procedures:

(1) Compliance review. A comprehensive analysis and evaluation of

the hiring and employment practices of the contractor, the written

affirmative action program, and the results of the affirmative action

efforts undertaken by the contractor. A compliance review may proceed

in three stages:

(i) A desk audit of the written AAP and supporting documentation to

determine whether all elements required by the regulations in this part

are included, whether the AAP meets agency standards of reasonableness,

and whether the AAP and supporting documentation satisfy agency

standards of acceptability. The desk audit is conducted at OFCCP

offices, except in the case of preaward reviews. In a preaward review,

the desk audit normally is conducted at the contractor's establishment.

(ii) An on-site review, conducted at the contractor's establishment

to investigate unresolved problem areas identified in the AAP and

supporting documentation during the desk audit, to verify that the

contractor has implemented the AAP and has complied with those

regulatory obligations not required to be included in the AAP, and to

examine potential instances or issues of discrimination. An on-site

review normally will involve an examination of the contractor's

personnel and employment policies, inspection and copying of documents

related to employment actions, and interviews with employees,

supervisors, managers, hiring officials; and

(iii) Where necessary, an off-site analysis of information supplied

by the contractor or otherwise gathered during or pursuant to the on-

site review.

(2) Off-site review of records. An analysis and evaluation of the

AAP (or any part thereof) and supporting

[[Page 44190]]

documentation, and other documents related to the contractor's

personnel policies and employment actions that may be relevant to a

determination of whether the contractor has complied with the

requirements of the Executive Order and regulations;

(3) Compliance check. A visit to the establishment to ascertain

whether data and other information previously submitted by the

contractor are complete and accurate; whether the contractor has

maintained records consistent with Sec. 60-1.12; and/or whether the

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

(4) Focused review. An on-site review restricted 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 total $10 million or

more, the prospective contractor and its known first-tier

subcontractors with subcontracts of $10 million or more shall be

subject to a compliance evaluation before the award of the contract

unless OFCCP has conducted an evaluation and found them to be in

compliance with the Order within the preceding 24 months. The awarding

agency will notify OFCCP and request appropriate action and findings in

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

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

compliance evaluation. If OFCCP does not inform the awarding agency

within that period of its intention to conduct a preaward compliance

evaluation, 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 compliance evaluation,

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) Submission of Documents; Standard Affirmative Action Formats.

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 30

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 purposes of the compliance evaluation. 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 key to 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 within 10 days.

The contractor may appeal that ruling to the OFCCP Regional Director

within 10 days. The Regional Director shall issue a final ruling within

10 days. Pending a final ruling, the information in question must be

made available to the compliance officer off-site, but shall be

considered a part of the investigatory file and subject to the

provisions of paragraph (g) of this section. The agency shall take all

necessary precautions to safeguard the confidentiality of such

information until a final determination is made. 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 evaluation;

(iii) Analysis of an affirmative action program;

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

compliance with the Order and its implementing regulations;

(v) A contractor's refusal to submit an affirmative action program;

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

evaluation to be conducted;

(vii) A contractor's refusal to provide data for off-site review or

analysis as required by the regulations in this Chapter;

(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 contractural 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 under-payment of taxes.

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

[[Page 44191]]

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 on

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, 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 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

[[Page 44192]]

notified of any debarment taken against any contractor.

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

Sec. 60-1.31 Reinstatement of ineligible contractors.

A contractor 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 contractor debarred for a fixed period may request

reinstatement in a letter filed with the Deputy Assistant Secretary 30

days prior to the expiration of the fixed debarment period, or at any

time thereafter. The filing of a reinstatement request 30 days before a

fixed debarment period ends will not result in early reinstatement. 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 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 contractors 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 NW., Washington, DC 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, DC 20210

* * * * *

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

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

Each contractor 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. 97-21782 Filed 8-18-97; 8:45 am]

BILLING CODE 4510-27-M