44174 Federal Register / Vol. 62, No. 160 / Tuesday, August 19, 1997 / Rules and Regulations

DEPARTMENT OF LABOR

Employment Standards

Administration, Office of Federal

Contract Compliance Programs

41 CFR Parts 60–1, 60–60

RIN 1215–AA01

Government Contractors, Affirmative

Action Requirements, Executive Order

11246

AGENCY: Office of Federal Contract

Compliance Programs (OFCCP), ESA,

Labor.

ACTION: Final rule.

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 nonsegregated 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 nonsegregated 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 § 60–1.3.

‘‘Compliance Evaluation.’’ Under the

existing regulations, the ‘‘compliance

review’’ is the primary method utilized

to investigate contractor compliance
Federal Register / Vol. 62, No. 160 / Tuesday, August 19, 1997 / Rules and Regulations 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 onsite 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

§ 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 § 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 § 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 § 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
44176 Federal Register / Vol. 62, No. 160 / Tuesday, August 19, 1997 / Rules and Regulations

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 nocost 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 § 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 § 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 timesavings that would be realized by

elimination of the requirement. The

governmental entity similarly

commented that requiring a contractor

to certify that it maintains nonsegregated 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 nonsegregated 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 § 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
44178 Federal Register / Vol. 62, No. 160 / Tuesday, August 19, 1997 / Rules and Regulations

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 § 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 § 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
Federal Register / Vol. 62, No. 160 / Tuesday, August 19, 1997 / Rules and Regulations 44179

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 § 60–1.27 may be

imposed for any violation of Executive

Order 11246 or the implementing

regulations, including § 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 § 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.
44180 Federal Register / Vol. 62, No. 160 / Tuesday, August 19, 1997 / Rules and Regulations

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 offsite 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 § 60–1.12; and/or (3) the

contractor has developed an AAP

consistent with the requirements of

§ 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 § 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
Federal Register / Vol. 62, No. 160 / Tuesday, August 19, 1997 / Rules and Regulations 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 postaward 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

§ 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 § 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 § 60–1.26 are

applicable. The NPRM proposed to

incorporate the provisions of § 60–60.2

as a new paragraph (e) of § 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
44182 Federal Register / Vol. 62, No. 160 / Tuesday, August 19, 1997 / Rules and Regulations

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 § 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 § 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 offsite 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 § 60–1.43.

The information to be removed for offsite 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 § 60–60.3(c) and

§ 60–60.4 to a new § 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
Federal Register / Vol. 62, No. 160 / Tuesday, August 19, 1997 / Rules and Regulations 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, § 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
44184 Federal Register / Vol. 62, No. 160 / Tuesday, August 19, 1997 / Rules and Regulations

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 § 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
Federal Register / Vol. 62, No. 160 / Tuesday, August 19, 1997 / Rules and Regulations 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 § 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 § 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 § 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
44186 Federal Register / Vol. 62, No. 160 / Tuesday, August 19, 1997 / Rules and Regulations

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 § 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

§ 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,

§ 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 (§ 60–60.2(a)),

nationwide AAP formats (§ 60–

60.3(a)(3)), off-site analysis of contractor

data (§ 60–60.3(d)), and confidentiality

and relevancy of information (§ 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

§ 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 § 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
Federal Register / Vol. 62, No. 160 / Tuesday, August 19, 1997 / Rules and Regulations 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 § 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 § 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 § 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
44188 Federal Register / Vol. 62, No. 160 / Tuesday, August 19, 1997 / Rules and Regulations

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 § 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:

§ 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
Federal Register / Vol. 62, No. 160 / Tuesday, August 19, 1997 / Rules and Regulations 44189

the Northern Mariana Islands, and Wake

Island.

3. Section 60–1.8 is revised to read as

follows:

§ 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 § 60–1.12 is added to

Subpart A to read as follows:

§ 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

§ 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 § 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:

§ 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
44190 Federal Register / Vol. 62, No. 160 / Tuesday, August 19, 1997 / Rules and Regulations

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 § 60–1.12; and/or

whether the contractor has developed

an AAP consistent with § 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

(§ 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 § 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 § 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 offsite 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:

§ 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
Federal Register / Vol. 62, No. 160 / Tuesday, August 19, 1997 / Rules and Regulations 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 § 60–2.2(b) of this

chapter.

7. Section 60–1.27 is revised to read

as follows:

§ 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 § 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:

§ 60–1.30 Notification of agencies.

The Deputy Assistant Secretary shall

ensure that the heads of all agencies are
44192 Federal Register / Vol. 62, No. 160 / Tuesday, August 19, 1997 / Rules and Regulations

notified of any debarment taken against

any contractor.

9. Section 60–1.31 is revised to read

as follows:

§ 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:

§ 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 § 60–1.34, paragraph (a)(4) is

added to read as follows:

§ 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:

§ 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 § 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:

§ 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