[Federal Register Volume 80, Number 30 (Friday, February 13, 2015)]
[Notices]
[Pages 8119-8122]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-03082]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74239; File No. S7-02-15]


Contract Standard for Contractor Workforce Inclusion and Request 
for Public Comment

AGENCY: Securities and Exchange Commission.

ACTION: Notice of proposed contract standard; notice of proposed 
information collection; and request for public comment.

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SUMMARY: To implement section 342 of the Dodd-Frank Wall Street Reform 
and Consumer Protection Act of 2010 (the ``Dodd-Frank Act'' or ``the 
Act''), the Securities and Exchange Commission (the ``Commission'') is 
proposing to include in its service contracts a standard concerning 
workforce inclusion of minorities and women.

DATES: Comments should be received on or before: April 14, 2015.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic Comments

    <bullet> Use the Commission's Internet comment form (http://www.sec.gov/rules/other.shtml);
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#f785829b92da94989a9a92998384b7849294d9909881"><span class="__cf_email__" data-cfemail="4e3c3b222b632d2123232b203a3d0e3d2b2d60292138">[email protected]</span></a>. Please include 
File No. S7-02-15 on the subject line; or
    <bullet> Use the Federal eRulemaking Portal (http://www.regulations.gov). Follow instructions for submitting comments.

Paper Comments

    <bullet> Send paper comments to Brent J. Fields, Secretary, 
Securities and Exchange Commission, 100 F Street NE., Washington, DC 
20549-1090.

All submissions should refer to File No. S7-02-15. This file number 
should be included on the subject line if email is used. To help us 
process and review your comments more efficiently, please use only one 
method. The Commission will post all comments on the Commission's 
Internet Web site (http://www.sec.gov/rules/other.shtml). Comments will 
also be available for Web site viewing and printing in the Commission's 
Public Reference Room, 100 F Street NE., Washington, DC 20549 on 
official business days between the hours of 10:00 a.m. and 3:00 p.m. 
All comments received will be posted without change; we do not edit 
personal identifying information from submissions. You should submit 
only information that you wish to make available publicly.

FOR FURTHER INFORMATION CONTACT: Pamela A. Gibbs, Director, Office of 
Minority and Women Inclusion, or Audrey B. Little, Senior Counsel, 
Office of Minority and Women Inclusion at (202) 551-6046, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549.

SUPPLEMENTARY INFORMATION: Section 342(a)(1)(A) of the Dodd-Frank Act 
provides for certain agencies, including the Securities and Exchange 
Commission, to establish an Office of Minority and Women Inclusion 
(``OMWI'').\1\ Section 342(c)(1) provides that the OMWI Director shall 
develop and implement standards and procedures to ensure the fair 
inclusion and utilization of minorities, women, and minority-owned and 
women-owned businesses in all business and activities of the agency, 
including in procurement, insurance, and all types of contracts. 
Section 342(c)(2) requires that the OMWI Director include in the 
procedures for evaluating contract proposals and hiring service 
providers a component that gives consideration to the diversity of an 
applicant, to the extent consistent with applicable laws. In addition, 
section 342(c)(2) requires that such procedures include a written 
statement, in the form and content prescribed by the OMWI Director, 
that a contractor shall ensure, to the maximum extent possible, the 
fair inclusion of women and minorities in the workforce of the 
contractor and, as applicable, subcontractors.
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    \1\ 12 U.S.C. 5452.
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    Further, section 342(c)(3)(A) requires the OMWI Director to 
establish standards and procedures for determining whether an agency 
contractor or subcontractor ``has failed to make a good faith effort to 
include minorities and women'' in its workforce. Section 
342(c)(3)(B)(i) provides that if the OMWI Director determines that a 
contractor has failed to make good faith efforts, the Director shall 
recommend to the agency administrator that the contract be terminated. 
Upon receipt of such a recommendation, section 342(c)(3)(B)(ii) 
provides that the agency administrator may terminate the contract, make 
a referral to the Office of Federal Contract Compliance Programs of the 
Department of Labor, or take other appropriate action.
    Under section 342(c)(3)(A) of the Dodd-Frank Act, the OMWI Director 
is required to determine whether a contractor or subcontractor has made 
good faith efforts to include minorities and women in its workforce. 
The proposed Contract Standard would require that a Commission 
contractor, upon request from the OMWI Director, provide documentation 
of the actions undertaken (and as applicable, the actions each covered 
subcontractor under the contract has undertaken) that demonstrate its 
good faith efforts to ensure the fair inclusion of minorities and women 
in its workforce. The documentation requested may include, but is not 
limited to: (1) The total number of employees in the contractor's 
workforce, and the number of employees by race, ethnicity, gender, and 
job title or EEO-1 job category (e.g., EEO-1 Report(s)); (2) a list of 
covered subcontract awards under the contract that includes the dollar 
amount of each subcontract, date of award, and the subcontractor's 
race, ethnicity, and/or gender ownership status; (3) the contractor's 
plan to ensure the fair inclusion of minorities and women in its 
workforce, including outreach efforts; and (4) for each covered 
subcontractor, the information requested in items 1 and 3 above. The 
OMWI Director will consider the information submitted in evaluating 
whether the contractor or subcontractor has complied with its 
contractual obligation to make good faith efforts to ensure the fair 
inclusion of minorities and women in its workforce.
    The Commission's proposes to satisfy section 342(c)(2) through the 
inclusion of a contract standard concerning workforce inclusion of 
minorities and women (the ``Contract Standard'') in solicitations and 
resulting contracts for services with a dollar value of $100,000 or 
more. The proposed Contract Standard is similar to the contract clauses 
adopted by OMWIs of other federal financial regulatory agencies.\2\ The 
Contract Standard requires the service contractor, upon entering into a 
contract with the Commission, to confirm that it will ensure, to the 
maximum extent possible and consistent with applicable law, the fair 
inclusion of minorities and women in its workforce. In addition, the 
proposed

[[Page 8120]]

Contract Standard requires the contractor to include the substance of 
the Contract Standard in all subcontracts for services awarded under 
the contract with a dollar value of $100,000 or more. Accordingly, the 
requirements of the proposed Contract Standard will apply to covered 
subcontractors, as prescribed in section 342(c)(2) of the Dodd-Frank 
Act.
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    \2\ See Department of the Treasury Acquisition Regulations; 
Contract Clause on Minority and Women Inclusion in Contractor 
Workforce, 79 FR 15551, at http://www.gpo.gov/fdsys/pkg/FR-2014-03-20/pdf/2014-05846.pdf.
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    The proposed Contract Standard requires a contractor to provide 
documentation, upon the request of the OMWI Director, to demonstrate 
that it has made good faith efforts to ensure the fair inclusion of 
minorities and women in its workforce and, as applicable, to 
demonstrate that its covered subcontractors have made such good faith 
efforts. ``Good faith efforts'' are interpreted to include actions by a 
contractor (and, as applicable, actions by each covered subcontractor) 
to ensure the fair inclusion of women and minorities in its workforce, 
while at the same time identifying, and if present, removing barriers 
to minority and women employment or expansion of employment 
opportunities for minorities and women within its workforce. Efforts to 
remove such barriers may include, but are not limited to, recruiting to 
ensure that applicant pools include minorities and women, providing 
job-related training, or other activity that could lead to removing 
such barriers.
    Section 342 of the Dodd-Frank Act applies to ``all contracts of 
[the Commission] for services of any kind,'' but the section does not 
define the term ``contract.'' FAR 37.101 defines ``service contract'' 
as a ``contract that directly engages the time and effort of a 
contractor whose primary purpose is to perform an identifiable task 
rather than to furnish an end item of supply.'' Pursuant to the FAR 
definition, this proposed Contract Standard will be included in all 
Commission solicitations and resulting contracts for services with a 
dollar value of $100,000 or more, and in all subcontracts under the 
related prime contract for services with a dollar value of $100,000 or 
more.

Public Comment

    The proposed Contract Standard is being published for public 
comment pursuant to 41 U.S.C. 1707, which applies to the publication of 
a covered federal procurement policy, regulation, procedure or form. 
Section 1707 provides that a procurement policy, regulation, procedure 
or form (including an amendment or modification thereof) is to be 
published for public comment in the Federal Register if it relates to 
the expenditure of appropriated funds, and has either a significant 
effect beyond the internal operating procedures of the agency issuing 
the policy, regulation, procedure or form, or has a significant cost or 
administrative impact on contractors or offerors.
    Here, the proposed Contract Standard relates to the expenditure of 
appropriated funds of the Commission, because it will be incorporated 
in certain Commission service contracts paid for with appropriated 
funds. The Contract Standard may have a significant effect beyond the 
internal operating procedures of the agency, as it implements 
requirements of the Dodd-Frank Act designed to address minority and 
women inclusion by federal contractors and implements the new contract 
termination authority contained in section 342(c)(3). The proposed 
Contract Standard may also have a cost or administrative impact on 
contractors or offerors, but we believe these effects would be 
insignificant as a result of the overlap with existing EEO laws. The 
consequence for non-compliance could have a cost or administrative 
impact on the covered service contractors, although they again overlap 
with existing remedies.

Paperwork Reduction Act

    The proposed Contract Standard contains ``collection of 
information'' requirements within the meaning of the Paperwork 
Reduction Act of 1995 (``PRA'').\3\ The title for the proposed 
collection of information is:
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    \3\ 44 U.S.C. 3501 et seq.
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    <bullet> Contract Standard for Contractor Workforce Inclusion.
    An agency may not conduct or sponsor, and a person is not required 
to respond to a collection of information unless it displays a 
currently valid OMB control number. We intend to submit these 
requirements to the Office of Management and Budget (``OMB'') for 
review and approval in accordance with the PRA and its implementing 
regulations.\4\ If approved, the responses to the new collection of 
information would be mandatory. For collections of information not 
contained in a proposed rule, the PRA requires federal agencies to 
publish a notice in the Federal Register concerning each proposed 
collection of information and to allow 60 days for public comment.\5\ 
To comply with this requirement, we are publishing this notice.
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    \4\ 44 U.S.C. 3507(c); 5 CFR 1320.10.
    \5\ 44 U.S.C. 3506(c)(2).
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A. Overview of Information Collection

1. Description of the Need for the Information and Proposed Use
    Under section 342(c)(3)(A) of the Dodd-Frank Act, the OMWI Director 
is required to determine whether a contractor or subcontractor has made 
good faith efforts to include minorities and women in its workforce. 
The proposed Contract Standard would require that a Commission 
contractor, upon request from the OMWI Director, provide documentation 
of the actions undertaken (and as applicable, the actions each covered 
subcontractor under the contract has undertaken) that demonstrate its 
good faith efforts to ensure the fair inclusion of minorities and women 
in its workforce. The documentation requested may include, but is not 
limited to: (1) The total number of employees in the contractor's 
workforce, and the number of employees by race, ethnicity, gender, and 
job title or EEO-1 job category (e.g., EEO-1 Report(s)); (2) a list of 
covered subcontract awards under the contract that includes the dollar 
amount of each subcontract, date of award, and the subcontractor's 
race, ethnicity, and/or gender ownership status; (3) the contractor's 
plan to ensure the fair inclusion of minorities and women in its 
workforce, including outreach efforts; and (4) for each covered 
subcontractor, the information requested in items 1 and 3 above. The 
OMWI Director will consider the information submitted in evaluating 
whether the contractor or subcontractor has complied with its 
contractual obligation to make good faith efforts to ensure the fair 
inclusion of minorities and women in its workforce.
2. Respondents and Estimate of Recordkeeping and Reporting Burdens
    The proposed Contract Standard will be included in Commission 
contracts and subcontracts for services with a dollar value of $100,000 
or more. Based on the data showing the dollar value of service 
contracts and subcontracts awarded in FY 2012 and FY 2013, we estimate 
that 170 contractors \6\ would be subject to the proposed Contract 
Standard. Approximately 120 of these contractors have 50 or more 
employees, while about 50 contractors have fewer than 50 employees.
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    \6\ Unless otherwise specified, the term ``contractors'' refers 
to contractors and subcontractors.
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a. Recordkeeping Burden
    The information collection under the proposed Contract Standard 
would

[[Page 8121]]

impose no new recordkeeping burdens on the estimated 120 contractors 
that have 50 or more employees. Such contractors are generally subject 
to recordkeeping and reporting requirements under the regulations 
implementing Title VII of the Civil Rights Act \7\ and Executive Order 
11246 (``E.O. 11246'').\8\ Their contracts and subcontracts must 
include the clause implementing E.O. 11246--FAR 52.222-26, Equal 
Opportunity. In addition, contractors that have 50 or more employees 
(and a contract or subcontract of $50,000 or more) are required to 
maintain records on the race, ethnicity, gender, and EEO-1 job category 
of each employee under Department of Labor regulations implementing 
E.O. 11246.\9\ The regulations implementing E.O. 11246 also require 
contractors that have 50 or more employees (and a contract or 
subcontract of $50,000 or more) to demonstrate that they have made good 
faith efforts to remove identified barriers, expand employment 
opportunities, and produce measurable results,\10\ and to develop and 
maintain a written program, which describes the policies, practices, 
and procedures that the contractor uses to ensure that applicants and 
employees receive equal opportunities for employment and 
advancement.\11\ In lieu of developing a separate workforce inclusion 
plan, a contractor would be permitted to submit its existing written 
program prescribed by the E.O. 11246 regulations as part of the 
documentation that demonstrates the contractor's good faith efforts to 
ensure the fair inclusion of minorities and women in its workforce. 
Thus, approximately 120 contractors are already required to maintain 
the information that may be requested under the proposed Contract 
Standard.
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    \7\ 42 U.S.C. 2000e, et seq.
    \8\ Executive Order 11246, 30 FR 12,319 (Sept. 24, 1965).
    \9\ See 41 CFR 60-1.7.
    \10\ See 41 CFR 60-2.17(c).
    \11\ See 41 CFR part 60-2.
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    The estimated 50 contractors that employ fewer than 50 employees 
are required under the regulations implementing E.O. 11246 to maintain 
records showing the race, ethnicity and gender of each employee. We 
believe that these contractors also keep job title information during 
the normal course of business. However, contractors that have fewer 
than 50 employees may not have the written program prescribed by the 
E.O. 11246 regulations or similar plan that could be submitted as part 
of the documentation to demonstrate their good faith efforts to ensure 
the fair inclusion of minorities and women in their workforces. 
Accordingly, contractors with fewer than 50 employees may have to 
create a plan to ensure workforce inclusion of minorities and women.
    In order to estimate the burden on contractors associated with 
creating a workforce inclusion plan, we considered the burden estimates 
for developing the written programs required under the regulations 
implementing E.O. 11246.\12\ As there is no regulatory blueprint for a 
workforce inclusion plan, and contractors creating a workforce 
inclusion plan are not required to perform the same types of analyses 
required for the written programs prescribed by the E.O. 11246 
regulations, we believe that to develop a workforce inclusion plan 
contractors with fewer than 50 employees would require approximately a 
third of the hours that contractors of similar size spend on developing 
the written programs required under the E.O. 11246 regulations. 
Accordingly, we estimate that contractors would spend about 24 hours of 
employee resources to develop a workforce inclusion plan. This would be 
a one-time total burden of 1,200 hours. After the initial development, 
we estimate that each contractor with fewer than 50 employees would 
spend approximately 10 hours each year updating and maintaining its 
workforce inclusion plan for a total annual burden of 500 hours. To 
account for this expected diminishing burden, we use a three-year 
average of the expected burden during the first year with the expected 
ongoing burden during the next two years to estimate the annual 
recordkeeping burden on contractors with fewer than 50 employees. Thus, 
we estimate that the total annual recordkeeping burden for such 
contractors to be about 740 hours [(1,200 + 500 + 500)/3 years, rounded 
up].
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    \12\ According to the Supporting Statement for the OFCCP 
Recordkeeping and Requirements-Supply Service, OMB Control No. 1250-
003 (``Supporting Statement''), it takes approximately 73 burden 
hours for contractors with 1-100 employees to develop the initial 
written program required under the regulations implementing E.O. 
11246. We understand the quantitative analyses prescribed by the 
Executive Order regulations at 41 CFR part 60-2 are a time-consuming 
aspect of the written program development. As there is no 
requirement to perform these types of quantitative analyses in 
connection with a workforce inclusion plan under the proposed 
Contract Standard, we believe the workforce inclusion plan will take 
substantially fewer hours to develop. The Supporting Statement is 
available at reginfo.gov.
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    The proposed contract standard also would require contractors to 
maintain information about covered subcontractors' ownership status, 
workforce demographics, and workforce inclusion plans. Contractors 
would request this information from their covered subcontractors, who 
would have an obligation to keep workforce demographic data and 
maintain workforce inclusion plans because the substance of the 
proposed Contract Standard would be included in their subcontracts. 
Based on data describing recent Commission subcontractor activity, we 
believe that very few subcontractors will have subcontracts under 
Commission service contracts with a dollar value of $100,000 or 
more.\13\ These subcontractors may already be subject to similar 
recordkeeping requirements as principal contractors. Consequently, we 
believe that any additional requirements imposed on subcontractors 
would not significantly add to the burden estimates discussed above.
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    \13\ A search of subcontract awards on the usaspending.gov Web 
site showed that four subcontractors in FY 2012 and three 
subcontractors in FY 2013 had subcontracts of $100K or more. See 
data on subcontract awards available at http://usaspending.gov.
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b. Reporting Burden
    With respect to the reporting burden, we estimate that it would 
take all contractors on average approximately one hour to retrieve and 
submit to the OMWI Director the documentation specified in the proposed 
Contract Standard. We expect to request documentation from up to 100 
contractors each year and therefore we estimate the total annual 
reporting burden to be 100 hours.

B. Solicitation of Public Comment

    We request comments on the proposed collection of information in 
order to: (a) Evaluate whether the proposed collection of information 
is necessary for the proper performance of the functions of the 
Commission, including whether the information will have practical 
utility; (b) evaluate the accuracy of the Commission's estimate of the 
burden (including hours and cost) of the proposed collection of 
information; (c) determine whether there are ways to enhance the 
quality, utility, and clarity of the information to be collected; and 
(d) evaluate whether there are ways to minimize the burden of the 
collection of information on respondents, including through the use of 
automated collection techniques or other forms of information 
technology.
    Persons who desire to submit comments on the collection of 
information may use any of the methods shown in the ADDRESSES section 
of this notice. Comments should be received on

[[Page 8122]]

or before: April 14, 2015. Comments submitted in response to this 
notice will be summarized and/or included in the request for OMB 
approval of this information collection; they also will become a matter 
of public record.

Text of Proposed Contract Standard for Contractor Workforce Inclusion

    Note:  The Text of this Proposed Contract Standard will not 
appear in the Code of Federal Regulations.

Contractor Workforce Inclusion

    Authority:  12 U.S.C. 5452; Sec. 342, Pub. L. 111-203.

Scope

    The agency will include the Contractor Workforce Inclusion contract 
standard in all Commission solicitations and resulting contracts for 
services with a dollar value of $100,000 or more.

Contract Standard

    The following contract standard shall be included in all Commission 
solicitations and resulting contracts for services with a dollar value 
of $100,000 or more.
Contractor Workforce Inclusion
    The Contractor confirms its commitment to equal opportunity in 
employment and contracting, and that it shall ensure, to the maximum 
extent possible and consistent with applicable law, the fair inclusion 
of minorities and women in its workforce.
    The Contractor shall insert the substance of this contract standard 
in each subcontract for services awarded for performance of this 
contract with a dollar value of $100,000 or more.
    Within ten (10) business days of a written request from the 
Director of the Commission's Office of Minority and Women Inclusion 
(OMWI Director) or designee, or such longer time as the OMWI Director 
or designee determines, and without any additional consideration, 
action or authorization required from the OMWI Director, the Contractor 
shall provide documentation, satisfactory to the OMWI Director, of the 
actions it has undertaken (and as applicable, the actions each covered 
subcontractor under the contract has undertaken) to demonstrate its 
good faith efforts to comply with the aforementioned provisions.
    For purposes of this contract, ``good faith efforts'' shall include 
actions by the Contractor (and as applicable, actions by each covered 
subcontractor under the Service Contract) to identify and, if present, 
remove barriers to minority and women employment or expansion of 
employment opportunities for minorities and women within its workforce. 
Efforts to remove such barriers may include, but are not limited to, 
recruiting to ensure that applicant pools include minorities and women, 
providing job-related training, or other activity that could lead to 
removing such barriers.
    The documentation requested by the OMWI Director or designee to 
demonstrate good faith efforts may include, but is not limited to, one 
or more of the following:
    a. The total number of Contractor's employees, and the number of 
employees by race, ethnicity, gender, and job title or EEO-1 Report job 
category (e.g., EEO-1 Report(s));
    b. A list of covered subcontract awards for services under the 
contract, and for each covered subcontract award, the dollar amount, 
date of award, and the subcontractor's race, ethnicity, and/or gender 
ownership status;
    c. The contractor's plan for ensuring the fair inclusion of 
minorities and women in its workforce, including outreach efforts; and
    d. For each covered subcontractor, the documentation specified in 
paragraphs a. and c. above.
    Consistent with Section 342(c)(3) of the Dodd-Frank Wall Street 
Reform and Consumer Protection Act (the ``Dodd-Frank Act''), 12 U.S.C. 
5452(c)(3), a Contractor's failure to demonstrate to the OMWI Director 
that it has made good faith efforts to include minorities and women in 
its workforce (and as applicable, failure to demonstrate that its 
subcontractor(s) has made such good faith efforts) may result in 
termination of the contract for default after the contractor is 
provided written notice and an opportunity to cure the failure in 
accordance with the procedures set forth in FAR 49.402-3(d), other 
contractual remedies, referral to the Office of Federal Contract 
Compliance Programs (OFCCP), or other appropriate action.
    Compliance with this standard does not necessarily satisfy the 
requirements of EO 11246, as amended, nor does it preclude OFCCP 
compliance evaluations and/or enforcement actions undertaken pursuant 
to that Executive Order, or demonstrate compliance with other FAR 
clauses that may be included in this contract.
    For purposes of this contract standard, the term ``minority'' shall 
have the meaning set forth in section 342(g) of the Dodd-Frank Act.

    Dated: February 10, 2015.

    By the Commission.
Brent J. Fields,
Secretary.
[FR Doc. 2015-03082 Filed 2-12-15; 8:45 am]
BILLING CODE 8011-01-P


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