[Federal Register Volume 61, Number 99 (Tuesday, May 21, 1996)]
[Proposed Rules]
[Pages 25516-25526]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-12687]




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Part II





Department of Labor





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Office of Federal Contract Compliance Programs



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41 CFR Parts 60-1 and 60-60



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

Federal Register / Vol. 61, No. 99 / Tuesday, May 21, 1996 / Proposed 
Rules

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DEPARTMENT OF LABOR

Office of Federal Contract Compliance Programs

41 CFR Parts 60-1 and 60-60


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

AGENCY: Office of Federal Contract Compliance Programs (OFCCP), ESA, 
Labor.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This proposal would revise certain provisions of the current 
regulations implementing Executive Order 11246, as amended, to reduce 
burdens on the regulated community and to improve administration of the 
Order. The Executive Order prohibits all nonexempt Government 
contractors and subcontractors, and federally assisted construction 
contractors and subcontractors, from discriminating in employment, and 
requires these contractors to take affirmative action to ensure that 
employees and applicants are treated without regard to race, color, 
religion, sex and national origin. The proposed revisions to the 
regulations on obligations of contractors and subcontractors concern 
record retention, compliance monitoring, and segregated facilities. In 
addition, the proposal would amend certain provisions of the 
regulations to parallel provisions included in OFCCP's final rule 
implementing Section 503 of the Rehabilitation Act of 1973, as amended, 
which was published in the Federal Register on May 1, 1996. The 
proposal also would transfer some sections of the regulations on 
contractor evaluation procedures for supplies and services to the 
regulations on obligations of contractors and subcontractors and delete 
the remainder of the sections. Finally, this proposal would withdraw 
portions of a final rule published on December 30, 1980 (and 
subsequently suspended), and it hereby withdraws a proposed rule 
published on August 25, 1981 (and supplemented on April 23, 1982).

DATES: To be assured of consideration, comments must be in writing and 
must be received on or before July 22, 1996.

ADDRESSES: Comments should be sent to Joe N. Kennedy, Deputy Director, 
OFCCP, Room C-3325, 200 Constitution Avenue, N.W., Washington, DC 
20210.
    As a convenience to commenters, OFCCP will accept public comments 
transmitted by facsimile (FAX) machine. The telephone number of the FAX 
receiver is 202-219-6195. To assure access to the FAX equipment, only 
public comments of six or fewer pages will be accepted via FAX 
transmittal. Receipts of FAX transmittals will not be acknowledged, 
except that the sender may request confirmation of receipt by calling 
OFCCP at 202-219-9430 (voice), 1-800-326-2577 (TDD).

FOR FURTHER INFORMATION CONTACT: Joe N. Kennedy, Deputy Director, 
OFCCP, Room C-3325, 200 Constitution Avenue, N.W., Washington, DC 
20210. Telephone 202-219-9475 (voice), 1-800-326-2577 (TDD). Copies of 
this NPRM, including copies in alternate formats, may be obtained by 
calling 202-219-9430 (voice), 1-800-326-2577 (TDD). The alternate 
formats available are large print, electronic file on computer disk and 
audio-tape.

SUPPLEMENTARY INFORMATION:

Background

    OFCCP's regulations at 41 CFR chapter 60 implementing Executive 
Order 11246, as amended (30 FR 12319, September 28, 1965) have not 
undergone substantive revision since the 1970s. A final rule was 
published on December 30, 1980 (45 FR 86215; corrected at 46 FR 7332, 
January 23, 1981), but was stayed in accordance with Executive Order 
12291 on January 28, 1981 (46 FR 9084). This rule later was stayed 
indefinitely on August 25, 1981 (46 FR 42865), pending action on a 
notice of proposed rulemaking (NPRM) published on that same date (46 FR 
42968; supplemented at 47 FR 17770, April 23, 1982). OFCCP has taken no 
further action on the August 25, 1981, proposal, or consequently on the 
1980 stayed final rule.
    Both the 1980 final rule and the 1981 proposal addressed 41 CFR 
part 60-1. The changes they would have made to 41 CFR part 60-1 have 
been considered in developing today's NPRM and, where pertinent, are 
discussed in the Section-by-Section analysis below. To avoid conflict 
with today's NPRM, OFCCP proposes to withdraw part 60-1 of the 1980 
final rule, and hereby withdraws the 1981 and 1982 NPRMs in their 
entirety.
    As discussed in the Section-by-Section analysis, today's NPRM 
proposes changes to 41 CFR part 60-1 provisions concerning record 
retention, compliance monitoring, and segregated facilities. In 
addition, to ensure consistency in OFCCP programs, today's NPRM 
proposes conforming certain part 60-1 provisions to parallel provisions 
revised by OFCCP's final rule implementing Section 503 of the 
Rehabilitation Act of 1973, as amended (61 FR 19336; May 1, 1996). 
These proposed conforming changes would affect several definitions and, 
for example, some aspects of enforcement.
    Finally, today's NPRM proposes the deletion of most sections of 
part 60-60 from the regulations and the transfer of a few sections to 
part 60-1. The deleted sections describe OFCCP's traditional compliance 
review process and the transferred sections relate to preservation of 
confidentiality of data submitted by contractors, the timeframe within 
which a contractor must submit an affirmative action program and 
supporting documents and authorization for agreements concerning 
nationwide AAP formats. Similar deletions and transfers were contained 
in the 1980 final rule and the 1981 proposal.

Section-by-Section Analysis

Section 60-1.3  Definitions

    The proposal adds one new definition for compliance evaluation and 
revises several others to render them consistent with the definitions 
included in OFCCP's Section 503 final rule.
    ``Compliance Evaluation.'' The proposal adds a new definition of 
the term ``compliance evaluation'' to reflect OFCCP's authority to 
conduct a variety or range of activities to assess a contractor's 
compliance status. Previously OFCCP generally has conducted a full 
compliance review of a contractor, assessing all its employment 
practices, whenever it reviewed a contractor's status. As discussed in 
more detail in the preamble discussion of Sec. 60-1.20, the proposal 
would allow OFCCP to use any one or a combination of actions to examine 
a contractor's compliance with one or more of the Executive Order 11246 
requirements. Thus, the proposal would allow OFCCP to streamline the 
review process for many contractors. The proposal also would allow 
OFCCP to focus its investigatory resources where they are needed, while 
conducting some level of review of a broader segment of the contractor 
universe.
    ``Contract.'' The current regulation defines the term ``contract'' 
as ``any Government contract or any federally assisted construction 
contract.'' The proposal adds the word ``subcontract'' to this 
definition (``any Government contract or subcontract or any federally 
assisted construction contract or subcontract'') to eliminate the need 
to reference ``subcontract'' each time ``contract'' is referenced in 
the body of the regulation. Accordingly, the proposal generally 
references the term ``subcontract'' only when necessary to

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the context. This same change would have been made by the 1980 final 
rule.
    ``Deputy Assistant Secretary.'' The Director of OFCCP recently was 
redesignated the Deputy Assistant Secretary for Federal Contract 
Compliance Programs. The proposal, therefore, substitutes a definition 
of ``Deputy Assistant Secretary,'' for the definition of ``Director'' 
in the current regulations, and makes this title change throughout the 
proposal. To ensure internal consistency, OFCCP intends to issue a rule 
making a corresponding universal change to its regulations before 
publishing the final rule resulting from this proposal.
    ``Government Contract.'' The proposed definition of ``Government 
contract'' is revised to clarify that covered contracts include those 
under which the Government is a seller of goods or services, as well as 
those under which it is a purchaser. This change reflects OFCCP's long-
standing interpretation of the scope of the Executive Order, upheld in 
Crown Central Petroleum Corp. v. Kleppe (424 F. Supp. 744 (D. Md. 
1976)), that sales by the Government result in covered contracts. 
Hence, the proposal substitutes a reference to contracts for the 
``purchase, sale or use of personal property or nonpersonal services'' 
and a definition of the term ``personal property'' for the existing 
reference to the ``furnishing'' of supplies or services, or for the use 
of real or personal property, including lease arrangements.
    ``Rules, regulations and relevant orders of the Secretary of 
Labor.'' A rule published on May 3, 1996 (61 Fed. Reg. 19982) amended 
the definition of ``Secretary'' to include a ``designee'' of the 
Secretary of Labor. The definition of ``rules, regulations and relevant 
orders of the Secretary of Labor'' in the current regulations, which 
makes reference to the designee of the Secretary, therefore is no 
longer necessary and is omitted in this proposal.
    ``Subcontract.'' The proposal conforms the current definition of 
``subcontract'' to the proposed definition of ``Government contract'' 
above; that is, as revised, the proposed definition references 
agreements for the ``purchase, sale or use'' of personal property or 
nonpersonal services.
    ``United States.'' OFCCP proposes to revise the current definition 
of ``United States'' by deleting the Panama Canal Zone (which was ceded 
back to Panama under the terms of the Panama Canal Treaty) and by 
specifying the possessions and territories of the United States as: the 
Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern 
Mariana Islands, and Wake Island.

Section 60-1.8  Segregated Facilities

    Today's proposal would revise Sec. 60-1.8, which currently sets out 
a general prohibition regarding the maintenance of segregated 
facilities (paragraph (a)) and a certification requirement regarding 
compliance with that obligation (paragraph (b)).
    Specifically, under paragraph (a) of Sec. 60-1.8, nonexempt 
contractors and subcontractors must ensure that facilities they provide 
to their employees are not segregated on the basis of race, color, 
religion or national origin. Further, paragraph (a) states that this 
obligation extends to all contracts containing the equal opportunity 
clause, regardless of the amount of the contract.
    Paragraph (b) of the regulation provides that, prior to the award 
of a Government contract or federally assisted construction contract, 
each contracting agency or applicant for Federal financial assistance 
involving a construction contract shall require the prospective prime 
contractor to submit a certification that it does not and will not 
maintain segregated employee facilities. Paragraph (b) also requires 
prime contractors and subcontractors, prior to the award of 
subcontracts, to obtain such a certification from their prospective 
subcontractors.
    This proposal would conform Sec. 60-1.8 with the Executive Order's 
general nondiscrimination requirements, by adding sex to the list of 
bases upon which segregation is prohibited, with the proviso that 
separate or single-user restrooms and necessary dressing or sleeping 
areas shall be provided to assure privacy between the sexes. The 
proposal also would make a number of stylistic changes to existing 
paragraph (a).
    OFCCP proposes to withdraw the written certification requirement 
(paragraph (b) of the current regulation). The certification 
requirement originally was incorporated into the Executive Order 
regulations in 1967 (see 32 FR 7439, May 19, 1967). At that time, 
segregation in employee facilities, especially on the basis of race, 
was not uncommon. The certification requirement was intended in large 
part to put contractors on notice that such segregation was unlawful 
and would not be tolerated. In the intervening 28 years, as a result of 
civil rights law enforcement and other factors, employers have become 
aware that segregation in employee facilities is unlawful. Indeed, such 
segregation has been significantly reduced. Because today's proposal 
would retain and strengthen the basic prohibition regarding segregated 
facilities, which OFCCP will continue to monitor through compliance 
investigations, the proposed withdrawal of the certification 
requirement will not reduce protections afforded to workers.
    Withdrawing the certification requirement will significantly reduce 
compliance burdens on contractors. The Government lets approximately 
350,000 prime contracts each year. If it is assumed that each prime 
contract results in an average of four subcontracts, and that it takes 
about one-half hour to prepare and submit the written certification, 
eliminating the certification requirement would reduce compliance 
burdens on the contractor community by roughly 875,000 hours. This 
estimate may significantly understate the savings; many contractors 
annually solicit the certification from all of their prospective 
vendors rather than limiting their request to those firms that actually 
are subcontractors on Federal projects.
    The 1980 final rule, and the 1981 proposal, would have made similar 
revisions to the segregated facilities regulation.

Section 60-1.12  Record Retention

    OFCCP's primary Executive Order recordkeeping and record retention 
regulations are contained in 41 CFR 60-1.40 and 60-4.3, and parts 60-2 
and 60-3 (the Uniform Guidelines on Employee Selection Procedures, 
hereafter UGESP). The regulations require certain contractors to 
develop, implement and maintain a written affirmative action program 
(AAP) for each of their establishments; to compile the results of the 
program; to update the program annually; and to provide the program and 
supporting documentation to OFCCP upon request; to maintain data on 
applicants, selection and referral procedures and, as applicable, 
adverse impact and evidence of validity; and, if engaged in Federal or 
federally assisted construction, to compile and maintain data on 
employees and applicants for construction jobs. Although retention of 
relevant records is implicit in the requirement to analyze selection 
decision data, prepare an annual update, and provide supporting 
documentation, the Executive Order regulations, with one exception, do 
not expressly prescribe a record retention period. That exception is 
the requirement under the UGESP to keep certain adverse impact data for 
two years after the adverse impact has been eliminated.
    Paragraph (a) of the proposal amends this obligation in several 
ways: First it

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makes the record retention obligation applicable to any personnel or 
employment record made or kept by the contractor, and sets out a 
listing of examples of the types of records that must be retained. This 
provision conforms to the analogous requirement under Title VII of the 
Civil Rights Act of 1964. (Thus, contractors with 15 or more employees, 
i.e., those that are covered by Title VII of the Civil Rights Act, 
already are required to comply with this requirement. The only 
contractors that will be newly covered by this requirement are those 
that have Government contracts subject to the Executive Order's 
regulations (e.g., those with contracts that exceed $10,000) and that 
have fewer than 15 employees. This group of contractors consists almost 
entirely of small construction contractors.)
    Second, proposed paragraph (a) stipulates that the required record 
retention period is two years. It is OFCCP's practice to review the 
contractor's employment practices dating back two years prior to the 
initiation of a compliance evaluation and to assess liability for 
discriminatory practices dating back two years. Proposed paragraph (a) 
requires smaller contractors (those that have fewer than 150 employees 
or that do not have a Government contract of at least $150,000) to 
retain records for a minimum of one year, rather than two years. Most 
contractors are covered by the one year record retention period imposed 
by Title VII. OFCCP is proposing a shorter record retention period for 
smaller contractors as a method of reducing regulatory burden on such 
contractors. This proposal is consistent with a provision included in 
OFCCP's Section 503 final rule.
    Third, proposed paragraph (a) requires that when a contractor has 
been notified that a complaint has been filed, that a compliance 
evaluation has been initiated or that an enforcement action has been 
commenced, the contractor shall preserve all relevant personnel records 
until the final disposition of the action. This provision conforms to 
the corresponding record retention requirement under Title VII. The 
purpose of this requirement is obvious--to ensure that OFCCP can obtain 
all relevant documents during a compliance investigation or enforcement 
action.
    Proposed paragraph (b) provides that a contractor establishment 
required to develop a written affirmative action program (AAP) shall 
maintain its current AAP and its AAP for the preceding AAP year, along 
with documentation of good faith efforts taken under the AAPs. Such 
documentation might reflect, for example, the contractor's outreach and 
recruitment efforts undertaken to increase its pool of female or 
minority applicants, or training programs instituted to enhance the 
skills and talents of incumbent employees to increase the pool of those 
eligible for promotion. This provision is intended to ensure that the 
AAPs are available to OFCCP during a compliance evaluation.
    Proposed paragraph (c) provides that the failure to preserve the 
records required by proposed paragraphs (a) and (b) constitutes 
noncompliance with the Order. Additionally, proposed paragraph (c), in 
a provision that is not paralleled in the current regulations, states 
that where a contractor has destroyed or failed to preserve required 
records, there may be a presumption that such records would have been 
unfavorable to the contractor. However, this presumption will not apply 
where a contractor demonstrates that the destruction or failure to 
preserve records resulted from circumstances beyond the contractor's 
control (e.g., fires, floods, tornados, or other natural disasters). 
This provision is consistent with EEOC's practice under Title VII, as 
set forth at Sec. 632.3(b)(2)(ii) of EEOC's Compliance Manual. The 
intent of this provision is to deter contractors from deliberate 
attempts to frustrate OFCCP's compliance monitoring and enforcement 
efforts by destroying or failing to preserve records. The adverse 
inference established by paragraph (c) would be used by OFCCP in both 
investigations of compliance and in enforcement litigation.
    Proposed paragraph (d), which is not paralleled in the current 
regulations, would clarify that the contractor is obligated to preserve 
only those records which are created or kept on or after the effective 
date of the regulations.
    The proposed regulation has been carefully drafted to comport with 
requirements under Title VII of the Civil Rights Act of 1964, the Age 
Discrimination in Employment Act (ADEA), the Americans with 
Disabilities Act (ADA) and the requirement included in OFCCP's final 
rule implementing Section 503 of the Rehabilitation Act of 1973, as 
amended. The Title VII, ADEA, and ADA regulations contain record 
retention requirements for similar records that vary from one to three 
years. The vast majority of Federal contractors already are subject to 
one or more of these statutes and thus already are required to maintain 
the records described in this proposed regulation.

Section 60-1.20  Compliance Evaluations

    The proposal would revise paragraphs (a) and (d) of this section, 
which respectively address compliance reviews in general, and preaward 
clearance requirements.
    In the current regulations, paragraph (a) describes the purpose of 
a compliance review of a contractor's implementation of its 
nondiscrimination and affirmative action obligations, provides that the 
review shall consist of a comprehensive analysis of all relevant 
practices, and provides that recommendations for appropriate sanctions 
shall be made. The proposal specifically authorizes OFCCP's use of 
additional methods to evaluate a contractor's compliance with the 
regulations. The proposal specifies that the compliance evaluation 
methods available to OFCCP, other than the full compliance review, may 
include a range of activities designed to focus, for example, on the 
contractor's written affirmative action plan; the accuracy of data 
submitted for review at desk audit; or on one component or 
organizational unit of the contractor's workforce. Thus, the proposal 
would allow OFCCP to streamline the review process in many cases.
    The proposal also would revise paragraph (d), which currently 
requires OFCCP to conduct a preaward compliance review of contractors 
being considered for contracts of $1 million or more. The preaward 
provision has been a component of OFCCP's regulatory procedures since 
1968. The intent of the preaward clearance provision is to prevent the 
award of large dollar contracts to contractors which are either in 
noncompliance or unwilling to comply with the EEO clause of the 
contract.
    Specifically, Sec. 60-1.20(d) requires the awarding agency to 
obtain clearance from OFCCP prior to awarding Federal supply/ service 
contracts of $1 million or more. OFCCP must certify that a Federal 
contractor/prospective contractor is in compliance before the award of 
a contract.
    The concept of preaward compliance reviews was premised on three 
assumptions: (1) Contracts of a sizable dollar amount tend to generate 
expanded hiring, promotion and upgrading opportunities; (2) the conduct 
of a compliance review immediately prior to the award is the most 
efficient way of ensuring that those employment opportunities be used 
to address the consequences of any past job discrimination; and (3) 
contractors tend to be more amenable to achieving

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compliance across-the-board when it is an immediate condition of the 
contract. Although these assumptions generally are still correct, the 
preaward review has not been a successful compliance mechanism for the 
past 15 years.
    OFCCP has been severely hampered in its efforts to plan and carry 
out compliance reviews because of the regulatory and other requirements 
associated with preaward requests. OFCCP recognized the shortcomings of 
the preaward process as early as 1979 and attempted to modify the 
provision in the 1980 final rule. The 1981 proposal would have 
eliminated the requirements for preaward clearance. The ineffectiveness 
of the preaward provision also was identified and cited in 1985 and 
1988 reports of the Department of Labor Inspector General.
    Several factors contribute to the difficulties with the preaward 
process, including: insufficient staff and budget to process the large 
volume of preaward requests--approximately 27,625 preaward requests 
were received in FY '93; the short time available within which to 
conduct preaward reviews; and court rulings that require a hearing 
before OFCCP may declare a contractor ineligible for contracts. See 
e.g., Illinois Tool Works v. Marshall, 601 F.2d 943 (7th Cir. 1979).
    In addition, some contracting agencies have expressed concerns 
about the traditional preaward process. OFCCP has held consultations 
with various contracting agencies during the past year and has adopted 
a number of administrative reforms as a result. Those reforms relate to 
its interactions with the contracting agencies during the preaward 
process, and they were implemented in order to ensure that the process 
is as streamlined as possible. Those consultations are ongoing and 
OFCCP will continue to work with the contracting agencies to improve 
the process.
    Based on the foregoing concerns with the current preaward 
provision, OFCCP considered a number of options including the complete 
elimination of the preaward provision, an increase in the dollar amount 
of the preaward contract threshold, and the replacement of the preaward 
review with a postaward review. OFCCP decided to promulgate this 
proposal which modifies the provision by making the preaward compliance 
review optional. Thus, preaward reviews will be conducted if OFCCP 
determines that a review would constitute the best use of its limited 
resources. OFCCP may consider factors such as whether the contract is 
likely to generate significant employment opportunities, whether the 
contractor has held a covered Federal contract before, whether the 
contractor has been reviewed before and, if so, whether prior reviews 
have revealed noncompliance at the same or other establishments, the 
length of time that has passed since a prior review, and the EEO-1 
profile of the contractor. It is difficult to describe more precisely 
the factors OFCCP will use, because they may change over time as 
economic conditions change. For example, in recent years the most 
growth in employment opportunities has occurred in small businesses and 
that growth has occurred in the service sector of the economy. Because 
these facts may change in future years, they are not specified as 
factors OFCCP will consider when deciding whether to conduct a preaward 
review. By making the preaward review optional, the proposal allows 
OFCCP the necessary flexibility and latitude in establishing the 
agency's enforcement priorities, rather than continuing to allow those 
priorities to be dictated by the incoming preaward requests. OFCCP 
invites commenters to address whether it should make preaward reviews 
optional, or should retain such reviews as mandatory.
    This proposal provides, as does the current regulation, that OFCCP 
will provide an awarding agency with its conclusions regarding 
clearance for an award. However, the proposal requires that OFCCP 
inform an awarding agency within 15 days of its intention to conduct a 
preaward review. If OFCCP does not inform an awarding agency within 
that period of its intention to conduct a preaward review, clearance 
shall be presumed and the agency is authorized to proceed with the 
award. If OFCCP informs an awarding agency of its intention to conduct 
a preaward review, OFCCP shall be allowed an additional 20 days after 
the date that it so informs the agency to provide its conclusions. If 
OFCCP does not provide an awarding agency with its conclusions within 
that period, clearance shall be presumed and the agency is authorized 
to proceed with the award. This proposal ensures that the preaward 
review process will not contribute to any unnecessary delay in the 
procurement process.
    This proposal continues the threshold for preaward notification at 
$1 million. However, OFCCP invites commenters to address whether the 
existing threshold should be changed or retained, in light of the dual 
goals of streamlining the procurement process and ensuring that OFCCP 
has the information necessary to allow it to evaluate the compliance 
status of companies that may be awarded new Government contracts. In 
addition, OFCCP invites commenters to address the option of moving from 
preaward reviews to a system under which OFCCP reviews would be 
performed concurrent with the awarding of a Federal contract.
    Finally, as discussed under the heading of part 60-60 below, the 
proposal moves provisions now contained in part 60-60 that relate to 
confidentiality of data, timely submission of documents to OFCCP, and 
nationwide AAP formats to this section.

Section 60-1.26  Enforcement Proceedings

    The proposal revises and restructures for clarity Sec. 60-1.26, 
which details Executive Order enforcement procedures. With the 
exception of the provision relating to calculating interest, this 
proposal is not intended to make substantive changes to this section. 
Proposed subsection (a) contains general provisions applicable to both 
administrative and judicial enforcement. Proposed subsection (b) 
addresses administrative enforcement procedures, and proposed 
subsections (c) and (d) cover judicial enforcement proceedings, which 
are handled by the Department of Justice.
    The proposal also makes several specific changes to this section 
that are consistent with provisions included in OFCCP's Section 503 
final rule at 41 CFR 60-741.65(a)(1). First, it clarifies in subsection 
(a)(2) that OFCCP may seek relief for victims of discrimination 
identified either during a compliance evaluation or a complaint 
investigation whether or not such individuals have filed a complaint 
with OFCCP. OFCCP has long maintained that such a limitation on 
available relief clearly is inconsistent with the Order. OFCCP's 
position recently was upheld in a case under Section 503, OFCCP v. 
Commonwealth Aluminum, 82-OFC-6 (Assistant Secretary for Employment 
Standards, February 10, 1994), Federal court review pending sub nom. 
Commonwealth Aluminum Corporation v. United States (WD Ky., No. 94-
0071-O(C)).
    Second, the proposal states, also in subsection (a)(2), that 
interest on back pay shall be compounded quarterly at the percentage 
rate established by the Internal Revenue Service for the underpayment 
of taxes. This provision would reverse the ruling of the Department of 
Labor's Assistant Secretary for Employment Standards in OFCCP v. 
Washington Metropolitan Area Transit Authority, 84-OFC-8 (orders dated 
August 23 and November 17, 1989), that simple interest, rather

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than compounded interest, should be used in the calculation of back pay 
awards under Section 503. That Section 503 ruling, which relied upon 
the Department's regulations (at 29 CFR part 20) implementing Section 
11 of the Debt Collection Act of 1982 (31 U.S.C. 3717), could be 
construed as applicable also to relief under the Executive Order. OFCCP 
had a longstanding policy of requiring that interest on back pay awards 
under the Executive Order be compounded; such policy is consistent with 
the case law under Title VII of the Civil Rights Act of 1964. OFCCP 
believes that it must reinstate this policy to ensure that victims of 
discrimination obtain complete ``make whole'' relief.
    Third, the proposal provides in subsection (b)(1) that 
administrative enforcement proceedings also may be instituted where 
OFCCP determines that referral for formal enforcement (rather than 
settlement) is appropriate. Fourth, the proposal specifies in 
subsection (b)(1) that the administrative enforcement referral will be 
made to the Solicitor of Labor.
    The proposal states that the rules of evidence set out in the 
hearing rules applicable to the Department's Administrative Law Judges 
shall also apply to hearings conducted under 41 CFR part 60-30. These 
rules, which were issued in 1990, are generally applicable to the 
Department's formal adversarial adjudications. Consistent with a 
requirement included in OFCCP's Section 503 final rule, the proposal 
also requires that the Department's Final Administrative Order in an 
Executive Order case be issued within one year from the date of the 
Administrative Law Judge's recommended decision, or the submission of 
the parties' exceptions and responses to exceptions to such decision 
(if any), whichever is later. OFCCP believes that this time limit is 
needed to ensure that aggrieved individuals obtain expeditious relief 
and that contractors are assured of closure of the administrative 
proceedings.

Section 60-1.27  Sanctions

    The current sanction regulation provides only that the sanctions 
authorized by section 209 of the Executive Order may be exercised by or 
with the approval of the Director of OFCCP. The 1980 final rule and the 
1981 proposal deleted the current sanction regulation as a separate 
provision, and they both generally merged the sanction regulation with 
the regulation pertaining to enforcement proceedings. The regulation 
pertaining to enforcement proceedings currently is set forth at 
Sec. 60-1.26. In the 1980 final rule the combined sanctions and 
enforcement proceedings regulation appeared at Sec. 60-1.29, and in the 
1981 proposal the combined regulation appeared at Sec. 60-1.68.
    The proposal adds a new paragraph specifically addressing the 
sanction of debarment. Paragraph (b) of the proposal provides for a 
fixed term debarment for a period of six months or more, as well as 
indefinite term debarment. The Secretary already has ordered the 
imposition of a fixed term debarment in OFCCP v. Disposable Safety 
Wear, 92-OFC-11 (Decision and Final Administrative Order of the 
Secretary of Labor, September 29, 1992). See also OFCCP v. Blaine 
Construction Co., 94-OFC-4 (Decision and Final Administrative Order of 
the ALJ, March 9, 1994); OFCCP v. KRT Drywall/Acoustical, 94-OFC-14 
(Order of the ALJ, August 18, 1994); OFCCP v. State Construction of 
Southeast Wisconsin, 94-0FC-18 (Orders of the ALJ, August 31 and 
September 8, 1994). The proposal simply provides contractors with 
greater notice that a fixed term debarment of six months or more may be 
imposed in some cases instead of an indefinite term debarment. OFCCP 
believes that the use of fixed period debarments will serve as a more 
effective deterrent and encourage compliance among the recalcitrant 
contractors who repeatedly break their promises of future compliance 
with respect to affirmative action and recordkeeping and retention 
requirements. OFCCP has found that the current practice of reinstating 
the contractor upon its simple demonstration of compliance is 
insufficient to ensure voluntary compliance. Under the current 
procedure the contractor may be reinstated immediately without 
incurring any economic loss for a violation of an affirmative action 
requirement (e.g., a contractor which has failed to develop an AAP can 
simply do so to be eligible for reinstatement). A fixed term debarment 
establishes a trial period during which a contractor can demonstrate 
its commitment and ability to establish personnel practices that will 
ensure continued compliance with the requirements of the Executive 
Order. Thus, in a Final Administrative Order, the Adminstrative Review 
Board could order a company to take specific action to come into 
compliance and to submit periodic reports to OFCCP regarding its 
compliance status during the fixed term debarment period. A fixed term 
debarment scheme will strengthen the Executive Order program by 
deterring contractors from engaging in violations based upon ``a cold 
weighing of the costs and benefits of noncompliance.'' Janik Paving & 
Construction v. Brock, 828 F.2d 84 (2d Cir. 1987). Where fixed term 
debarment is ordered, in lieu of an indefinite term debarment, the 
length of the debarment period will be determined on a case-by-case 
basis, depending upon factors such as the nature and severity of the 
violations. A contractor debarred for a fixed term will not be 
automatically reinstated upon the conclusion of the fixed term 
debarment period. In making his or her determination as to whether 
reinstatement of such a contractor is appropriate, the Deputy Assistant 
Secretary shall consider whether the contractor has demonstrated that 
it has established and will carry out employment policies and practices 
in compliance with the Executive Order. If the contractor failed to 
comply with the Department's Final Administrative Order, it would not 
be eligible for reinstatement at the conclusion of the fixed term 
debarment period.

Section 60-1.30  Notification of Agencies

    Consistent with a regulation in OFCCP's Section 503 final rule, the 
proposal would delete the requirement that OFCCP distribute a list of 
debarred contractors to all executive departments and agencies, and 
substitute a requirement that the Deputy Assistant Secretary ensure 
that the heads of agencies are notified of debarments. Accordingly, the 
section would be renamed ``Notification of agencies'' instead of 
``Contract ineligibility list.'' The General Services Administration 
now publishes a listing of debarred contractors, and it would be 
redundant for OFCCP to issue a separate list.
    The 1980 final rule would have required that OFCCP promptly notify 
the Comptroller General of the United States regarding contract 
cancellations and debarments. Further, that section of the final rule 
would have required that OFCCP take appropriate steps to notify prime 
contractors of the debarred contractor's ineligibility for 
subcontracts. Notice now is provided adequately by the General Services 
Administration's list of debarred contractors.

Section 60-1.31  Reinstatement of Ineligible Prime Contractors and 
Subcontractors

    The proposal would revise this section to make it consistent with 
proposed Sec. 60-1.27(b), which authorizes debarment either for an 
indefinite

[[Page 25521]]

period or for a fixed period of not less than six months. Accordingly, 
the proposal provides that a contractor debarred for an indefinite 
period may request reinstatement at any time, and that a contractor 
debarred for a fixed period may request reinstatement after the 
expiration of the fixed period. In either type of debarment, the 
contractor, as under the current regulations, would be required to show 
that it has established and will carry out employment practices in 
compliance with the Executive Order.
    Further, the proposal would adopt some of the 1980 final rule's 
reinstatement procedures. For instance, similar to the 1980 final rule, 
the proposal specifies that the contractor may be subject to a 
compliance evaluation before a final determination is made on the 
reinstatement request. The 1980 final rule would have established some 
additional detailed procedures that OFCCP, upon reconsideration, does 
not believe need to be incorporated into the regulations.

Section 60-1.32  Intimidation and Interference

    Currently, the regulations provide that the sanctions and penalties 
contained therein may be exercised against any contractor which fails 
to ensure that no person intimidates, threatens, coerces or 
discriminates against any individual because he or she files a 
complaint or otherwise participates in compliance activity under the 
Executive Order or a similar Federal, state or local law. The proposal 
contains a similar prohibition but specifies that the contractor itself 
shall not engage in such activities and shall ensure that all persons 
under its control do not do so, and adds that the prohibition applies 
to harassment. Further, the proposal states that the prohibition 
applies to an individual's opposition to any practice that is unlawful 
under the Order or similar Federal, state or local laws, and to the 
exercise of any other right protected by the Order. The proposal is 
consistent with a provision included in OFCCP's Section 503 final rule, 
and it is substantially similar to the counterpart provision in the 
1980 final rule (Sec. 60-1.28). The intent of the proposal is to 
incorporate strengthened provisions that ensure that individuals fully 
enjoy all rights protected under the Order, the regulations and 
comparable Federal, state and local laws without the threat of 
harassment or intimidation.

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

    The proposal contains a clarification that in enforcement 
proceedings related to violation of a conciliation agreement, OFCCP is 
not required to present proof of the underlying violations resolved by 
the agreement. This provision, which reflects OFCCP's current practice 
and which is consistent with OFCCP's Section 503 final rule, is to 
remove any doubt that OFCCP need not litigate claims that have already 
been resolved through the agreement.

Section 60-1.42  Notices to be Posted

    Technical corrections are made to the wording of the poster 
regarding the jurisdictional coverage of Title VII and the address of 
EEOC.

Section 60-1.43  Access to Records and Site of Employment

    Consistent with a provision included in OFCCP's Section 503 final 
rule, the proposal specifies that computerized records are among the 
records to which the contractor shall permit OFCCP access for 
inspection and copying. In addition, the proposal specifies that 
contractors must permit OFCCP access to their premises for the purpose 
of conducting compliance evaluations and complaint investigations (the 
current regulation mentions only compliance reviews). Further, the 
proposal revises the list of uses which can be made of information 
OFCCP obtains from a contractor, to include the administration of other 
laws that are enforced, in whole or in part, by OFCCP.

Part 60-60--Contractor Evaluation Procedures for Contractors for 
Supplies and Services

    Part 60-60 is to be deleted. Most of part 60-60 is properly 
characterized as internal operating procedures. A number of the 
procedures have been incorporated into OFCCP's Federal Contract 
Compliance Manual, and the provisions regarding confidentiality of data 
furnished to OFCCP by contractors are proposed to be incorporated into 
part 60-1. Specifically, provisions currently found at Secs. 60-
60.2(a), 60-60.3(a)(3), 60-60.3(d) and 60-60.4(a-d) will be 
incorporated into Sec. 60-1.20 with minor changes. The 1980 final rule, 
and the 1981 proposal, would have made similar revisions to part 60-60.

Regulatory Procedures

Executive Order 12866

    The Department is issuing this proposed rule in conformance with 
Executive Order 12866. This proposal has been determined to be 
significant for purposes of Executive Order 12866 and therefore has 
been reviewed by OMB. This proposal does not meet the criteria of 
Section 3(f)(1) of Executive Order 12866 and therefore the information 
enumerated in Section 6(a)(3)(C) of that Order is not required.
    In accordance with section 6 of Executive Order 12866, an 
assessment of the potential costs and benefits of the proposal has been 
made. Potential costs and benefits of record retention and 
certification proposals are discussed below in the sections on the 
Regulatory Flexibility Act and the Paperwork Reduction Act. As noted 
therein, this proposal would significantly reduce the compliance burden 
on the contractor community by eliminating the segregated facilities 
certification requirement. OFCCP anticipates publishing an additional 
proposal relating to 41 CFR part 60-2 and the requirements of written 
affirmative action programs that would, if adopted, further reduce the 
burdens on contractors. OFCCP's goal in proposing regulatory changes is 
to streamline its existing regulations and to reinvent its current 
processes in order make both contractor compliance and agency 
enforcement more efficient and cost effective. Therefore, OFCCP invites 
comments on additional ways to reduce compliance burdens such as 
simplified compliance procedures for small contractors.

Regulatory Flexibility Act

    The proposed rule, if promulgated, will not have a significant 
economic impact on a substantial number of small business entities. A 
requirement that records be maintained for one to two years (depending 
upon contractor size) might result in a slight additional storage 
burden for some small entities; conversely, small entities and other 
contractors would benefit from the elimination of the segregated 
facilities certification. Therefore, a regulatory flexibility analysis 
under the Regulatory Flexibility Act is not required.

Paperwork Reduction Act

    The proposed rule would slightly revise information collection 
requirements currently approved by OMB under the Paperwork Reduction 
Act (44 U.S.C. 3501, et seq.).
    As previously stated, withdrawing the certification requirement 
will significantly reduce compliance burdens on contractors. The 
Government lets approximately 350,000 prime contracts each year. If it 
is assumed that each prime contract results in an average of four

[[Page 25522]]

subcontracts, and that it takes about one-half hour to prepare and 
submit the written certification, eliminating the certification 
requirement would reduce compliance burdens on the contractor community 
by roughly 875,000 hours. This estimate may significantly understate 
the savings; many contractors annually solicit the certification from 
all of their prospective vendors rather than limiting their request to 
those firms that actually are subcontractors on Federal projects.
    Although for contractors with 150 or more employees and a contract 
of $150,000 or more this proposal extends to two years the current 
obligations such contractors already have under Title VII and the ADA 
to retain records for one year, there will be only a minimal increase 
in burden imposed on contractors as a result of this change. A similar 
conclusion was reached by EEOC in 1991 when it doubled its existing 
six-month retention period under Title VII to one year--an obligation 
that applies to a significantly larger universe of employers than does 
the obligation under the Executive Order. See 56 FR 35753 (July 26, 
1991). Employers, especially larger ones, are increasingly maintaining 
electronic records. Where this is the case, compliance with the 
requirement will impose little or no additional burden. In many cases, 
additional storage space would be needed only for applications of 
persons not hired (which generally are not cost effective to record and 
store electronically).
    In addition, the proposal makes this retention obligation 
applicable to a broader range of records than was previously required 
by the Executive Order regulations. However, this proposal would 
conform the obligation to the analogous requirement under EEOC's 
regulations (29 CFR 1602.14) issued pursuant to Title VII and the ADA.
    OFCCP solicits comments concerning the proposed revisions to the 
collections of information contained in this proposed rule. OFCCP 
solicits comments to: (i) Evaluate whether the proposed collection of 
information is necessary for the proper performance of the functions of 
the agency, including whether the information will have practical 
utility; (ii) evaluate the accuracy of the agency's estimate of the 
burden of the proposed collection of information, including the 
validity of the methodology and assumptions used; (iii) enhance the 
quality, utility, and clarity of the information to be collected; and 
(iv) minimize the burden of the collection of information on those who 
are to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology, e.g., permitting electronic 
submission of responses.
    The revised collections of information contained in this proposed 
rule have been submitted to OMB for review under section 3507(d) of the 
Paperwork Reduction Act of 1995. Written comments on these proposed 
information collection revisions may also be sent to the Office of 
Information and Regulatory Affairs, Office of Management and Budget, 
Attention: Desk Officer for Employment Standards, Washington, D.C. 
20503.

Unfunded Mandates Reform Act

    The proposed rule, if promulgated, will not include any Federal 
mandate that may result in the expenditure by state, local and tribal 
governments in the aggregate, or by the private sector, of $100,000,000 
or more in any one year.

List of Subjects

41 CFR Part 60-1

    Administrative practice and procedure, Civil rights, Employment, 
Equal employment opportunity, Government contracts, Government 
procurement, Investigations, Reporting and recordkeeping requirements.

41 CFR Part 60-60

    Equal employment opportunity, Government procurement, Reporting and 
recordkeeping requirements.

    Signed at Washington, D.C., this 10th day of May, 1996.
Robert B. Reich,
Secretary of Labor.
Bernard E. Anderson,
Assistant Secretary for Employment Standards.
Shirley J. Wilcher,
Deputy Assistant Secretary for Federal Contract Compliance.

    Accordingly, part 60-1 of the rule amending 41 CFR chapter 60 
published on December 30, 1980 (45 FR 86216), which was delayed 
indefinitely at 46 FR 42865, is proposed to be withdrawn; the proposed 
rule published on August 25, 1981 (46 FR 42968; supplemented at 47 FR 
17770, April 23, 1982) is hereby withdrawn in its entirety; and under 
the authority of Executive Order 11246, as amended, Title 41 of the 
Code of Federal Regulations, chapter 60, is proposed to be amended as 
follows:

 60-1--[AMENDED]

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

    Authority: Sec. 201, E.O. 11246 (30 FR 12319), as amended by 
E.O. 12086.

    2. Section 60-1.3 is amended by removing the definitions of 
Director and Rules, regulations, and relevant orders of the Secretary 
of Labor, by revising the definitions of Contract, Government contract, 
Subcontract and United States, and by adding, in alphabetical order, 
the definitions of Compliance evaluation and Deputy Assistant Secretary 
to read as follows:


Sec. 60-1.3  Definitions.

* * * * *
    Compliance evaluation means any one or combination of actions OFCCP 
may take to examine a Federal contractor or subcontractor's compliance 
with one or more of the Executive Order 11246 requirements.
* * * * *
    Contract means any Government contract or subcontract or any 
federally assisted construction contract or subcontract.
* * * * *
    Deputy Assistant Secretary means the Deputy Assistant Secretary for 
Federal Contract Compliance Programs, United States Department of 
Labor, or his or her designee.
* * * * *
    Government contract means any agreement or modification thereof 
between any contracting agency and any person for the purchase, sale or 
use of personal property or nonpersonal services. The term ``personal 
property,'' as used in this section, includes supplies, and contracts 
for the use of real property (such as lease arrangements), unless the 
contract for the use of real property itself constitutes real property 
(such as easements). The term ``nonpersonal services'' as used in this 
section includes, but is not limited to, the following services: 
Utilities, construction, transportation, research, insurance, and fund 
depository. The term Government contract does not include:
    (1) Agreements in which the parties stand in the relationship of 
employer and employee; and
    (2) Federally assisted construction contracts.
* * * * *
    Subcontract means any agreement or arrangement between a contractor 
and any person (in which the parties do not stand in the relationship 
of an employer and an employee):
    (1) For the purchase, sale or use of personal property or 
nonpersonal services which, in whole or in part, is necessary to the 
performance of any one or more contracts; or

[[Page 25523]]

    (2) Under which any portion of the contractor's obligation under 
any one of more contracts is performed, undertaken or assumed.
* * * * *
    United States, as used herein, shall include the several States, 
the District of Columbia, the Virgin Islands, the Commonwealth of 
Puerto Rico, Guam, American Samoa, the Commonwealth of the Northern 
Mariana Islands, and Wake Island.
    3. Section 60-1.8 is revised to read as follows:


Sec. 60-1.8  Segregated facilities.

    To comply with its obligations under the Order, a contractor must 
ensure that facilities provided for employees are provided in such a 
manner that segregation on the basis of race, color, religion, sex or 
national origin cannot result. The contractor may neither require such 
segregated use by written or oral policies nor tolerate such use by 
employee custom. The contractor's obligation extends further to 
ensuring that its employees are not assigned to perform their services 
at any location, under the contractor's control, where the facilities 
are segregated. This obligation extends to all contracts containing the 
equal opportunity clause regardless of the amount of the contract. The 
term ``facilities,'' as used in this section, means waiting rooms, work 
areas, restaurants and other eating areas, time clocks, restrooms, wash 
rooms, locker rooms, and other storage or dressing areas, parking lots, 
drinking fountains, recreation or entertainment areas, transportation, 
and housing provided for employees: Provided, That separate or single-
user restrooms and necessary dressing or sleeping areas shall be 
provided to assure privacy between the sexes.
    4. A new Sec. 60-1.12 is added to subpart A to read as follows:


Sec. 60-1.12  Record retention.

    (a) General requirements. Any personnel or employment record made 
or kept by the contractor shall be preserved by the contractor for a 
period of not less than two years from the date of the making of the 
record or the personnel action involved, whichever occurs later. 
However, if the contractor has fewer than 150 employees or does not 
have a Government contract of at least $150,000, the minimum record 
retention period shall be one year from the date of the making of the 
record or the personnel action involved, whichever occurs later. Such 
records include, but are not necessarily limited to, records pertaining 
to hiring, assignment, promotion, demotion, transfer, lay-off or 
termination, rates of pay or other terms of compensation, and selection 
for training or apprenticeship, and other records having to do with 
requests for reasonable accommodation, the results of any physical 
examination, job advertisements and postings, applications and resumes, 
tests and test results, and interview notes. In the case of involuntary 
termination of an employee, the personnel records of the individual 
terminated shall be kept for a period of not less than two years from 
the date of the termination, except that contractors that have fewer 
than 150 employees or that do not have a Government contract of at 
least $150,000 shall keep such records for a period of not less than 
one year from the date of the termination. Where the contractor has 
received notice that a complaint of discrimination has been filed, that 
a compliance evaluation has been initiated, or that an enforcement 
action has been commenced, the contractor shall preserve all personnel 
records relevant to the complaint, compliance evaluation or enforcement 
action until final disposition of the complaint, compliance evaluation 
or enforcement action. The term ``personnel records relevant to the 
complaint,'' for example, would include personnel or employment records 
relating to the complainant and to all other employees holding 
positions similar to that held or sought by the complainant and 
application forms or test papers submitted by unsuccessful applicant 
and by all other candidates for the same position as that for which the 
complainant unsuccessfully applied. Where a compliance evaluation has 
been initiated, all personnel and employment records described above 
are relevant until OFCCP makes a final disposition of the evaluation.
    (b) Affirmative action programs. A contractor establishment 
required under Sec. 60-1.40 to develop a written affirmative action 
program (AAP) shall maintain its current AAP and documentation of good 
faith effort, and shall preserve its AAP and documentation of good 
faith effort for the immediately preceding AAP year, unless it was not 
then covered by the written AAP requirement.
    (c) Failure to preserve records. Failure to preserve complete and 
accurate records as required by paragraphs (a) and (b) of this section 
constitutes noncompliance with the contractor's obligations under the 
Executive Order and this part. Where the contractor has destroyed or 
failed to preserve records as required by this section, there may be a 
presumption that the information destroyed or not preserved would have 
been unfavorable to the contractor: Provided, That this presumption 
shall not apply where the contractor shows that the destruction or 
failure to preserve records results from circumstances that are outside 
of the contractor's control.
    (d) The requirements of this section shall apply only to records 
made or kept on or after [30 days after date of publication of final 
rule].
    5. In Sec. 60-1.20, the section heading and paragraphs (a) and (d) 
are revised and paragraphs (e), (f) and (g) are added to read as 
follows:


Sec. 60-1.20  Compliance evaluations.

    (a) OFCCP may conduct compliance evaluations to determine if the 
prime contractor or subcontractor maintains nondiscriminatory hiring 
and employment practices and is taking affirmative action to ensure 
that applicants are employed and that employees are placed, trained, 
upgraded, promoted, and otherwise treated during employment without 
regard to race, color, religion, sex, or national origin. A compliance 
evaluation may consist of any one of the following or any combination 
thereof:
    (1) A compliance review, which consists of comprehensive analysis 
and evaluation of each aspect of the aforementioned practices, 
policies, and conditions resulting therefrom;
    (2) An off-site review of records, which could consist of a full 
desk audit, a review of the contractor's affirmative action plan or 
parts thereof, or a review of particular records such as personnel 
activity data;
    (3) A compliance check, where OFCCP ascertains whether or not the 
contractor has maintained records consistent with Sec. 60-1.12 and/or 
has developed an AAP consistent with Sec. 60-1.40; or
    (4) A focused review, where OFCCP restricts its on-site review to 
one or more components of the contractor's organization or one or more 
aspects of the contractor's employment practices.
* * * * *
    (d) Preaward compliance evaluations. Each agency shall include in 
the invitation for bids for each formally advertised nonconstruction 
contract or state at the outset of negotiations for each negotiated 
contract, that if the award, when let, should exceed the amount of $1 
million or more, the prospective contractor and its known first-tier 
subcontractors with subcontracts of $1 million or more may be subject 
to a compliance evaluation before the award of the contract. The 
awarding agency will notify OFCCP and request appropriate action and 
findings

[[Page 25524]]

in accordance with this subsection. Within 15 days of the notice OFCCP 
will inform the awarding agency of its intention to conduct a preaward 
review. If OFCCP does not inform the awarding agency within that period 
of its intention to conduct a preaward review, clearance shall be 
presumed and the awarding agency is authorized to proceed with the 
award. If OFCCP informs the awarding agency of its intention to conduct 
a preaward review, OFCCP shall be allowed an additional 20 days after 
the date that it so informs the awarding agency to provide its 
conclusions. If OFCCP does not provide the awarding agency with its 
conclusions within that period, clearance shall be presumed and the 
awarding agency is authorized to proceed with the award.
    (e) Each prime contractor or subcontractor with 50 or more 
employees and a contract of $50,000 or more is required to develop a 
written affirmative action program for each of its establishments 
(Sec. 60-1.40). If a contractor fails to submit an affirmative action 
program and supporting documents, including the workforce analysis, 
within 15 days of a request, the enforcement procedures specified in 
Sec. 60-1.26(b) shall be applicable. Contractors may reach agreement 
with OFCCP on nationwide AAP formats or on frequency of updating 
statistics.
    (f) Confidentiality and relevancy of information. If the contractor 
is concerned with the confidentiality of such information as lists of 
employee names, reasons for termination, or pay data, then alphabetic 
or numeric coding or the use of an index of pay and pay ranges, 
consistent with the ranges assigned to each job group, are acceptable 
for desk audit purposes. The contractor must provide full access to all 
relevant data on-site as required by Sec. 60-1.43. Where necessary, the 
compliance officer may take information made available during the on-
site evaluation off-site for further analysis. An off-site analysis 
should be conducted where issues have arisen concerning deficiencies or 
an apparent violation which, in the judgment of the compliance officer, 
should be more thoroughly analyzed off-site before a determination of 
compliance is made. The contractor must provide all data determined by 
the compliance officer to be necessary for off-site analysis. Such data 
may only be coded if the contractor makes the code available to the 
compliance officer. If the contractor believes that particular 
information which is to be taken off-site is not relevant to compliance 
with the Executive Order, the contractor may request a ruling by the 
OFCCP District/Area Director. The OFCCP District/Area Director shall 
issue a ruling promptly. The contractor may appeal that ruling to the 
OFCCP Regional Director within 10 days of receipt. The Regional 
Director shall issue a final ruling promptly. Pending a final ruling, 
such information may not be copied by OFCCP and access to the 
information shall be limited to the compliance officer and personnel 
involved in the determination of relevancy. Data determined to be not 
relevant to the investigation will be returned to the contractor 
immediately.
    (g) Public access to information. The disclosure of information 
obtained from a contractor will be evaluated pursuant to the public 
inspection and copying provisions of the Freedom of Information Act, 5 
U.S.C. 552, and the Department of Labor's implementing regulations at 
29 CFR part 70.
    6. Section 60-1.26 is revised to read as follows:


Sec. 60-1.26   Enforcement proceedings.

    (a) General. (1) Violations of the Order, the equal opportunity 
clause, the regulations in this chapter, or applicable construction 
industry equal employment opportunity requirements, may result in the 
institution of administrative or judicial enforcement proceedings. 
Violations may be found based upon, inter alia, any of the following:
    (i) The results of a complaint investigation;
    (ii) The results of a compliance review;
    (iii) The results of a compliance evaluation;
    (iv) Analysis of an affirmative action program;
    (v) The results of an on-site review of the contractor's compliance 
with the Order and its implementing regulations;
    (vi) A contractor's refusal to submit an affirmative action 
program;
    (vii) A contractor's refusal to allow an on-site compliance 
evaluation to be conducted;
    (viii) A contractor's refusal to establish, maintain and supply 
records or other information as required by the regulations in this 
chapter or applicable construction industry requirements;
    (ix) A contractor's alteration or falsification of records and 
information required to be maintained by the regulations in this 
chapter; or
    (x) Any substantial or material violation or the threat of a 
substantial or material violation of the contractual provisions of the 
Order, or of the rules or regulations in this chapter.
    (2) OFCCP may seek back pay and other make whole relief for victims 
of discrimination identified during a complaint investigation or 
compliance evaluation. Such individuals need not have filed a complaint 
as a prerequisite to OFCCP seeking such relief on their behalf. 
Interest on back pay shall be calculated from the date of the loss and 
compounded quarterly at the percentage rate established by the Internal 
Revenue Service for the underpayment of taxes.
    (b) Administrative enforcement. (1) OFCCP may refer matters to the 
Solicitor of Labor with a recommendation for the institution of 
administrative enforcement proceedings, which may be brought to enjoin 
violations, to seek appropriate relief, and to impose appropriate 
sanctions. The referral may be made when violations have not been 
corrected in accordance with the conciliation procedures in this 
chapter, or when OFCCP determines that referral for consideration of 
formal enforcement (rather than settlement) is appropriate. However, if 
a contractor refuses to submit an affirmative action program, or 
refuses to supply records or other requested information, or refuses to 
allow OFCCP access to its premises for an on-site review, and if 
conciliation efforts under this chapter are unsuccessful, OFCCP may 
immediately refer the matter to the Solicitor, notwithstanding other 
requirements of this chapter.
    (2) Administrative enforcement proceedings shall be conducted under 
the control and supervision of the Solicitor of Labor and under the 
Rules of Practice for Administrative Proceedings to Enforce Equal 
Opportunity under Executive Order 11246 contained in part 60-30 of this 
chapter and the Rules of Evidence set out in the Rules of Practice and 
Procedure for Administrative Hearings Before the Office of 
Administrative Law Judges contained in 29 CFR part 18, subpart B: 
Provided, That a Final Administrative Order shall be issued within one 
year from the date of the issuance of the recommended findings, 
conclusions and decision of the Administrative Law Judge, or the 
submission of any exceptions and responses to exceptions to such 
decision (if any), whichever is later.
    (c) Referrals to the Department of Justice. (1) The Deputy 
Assistant Secretary may refer matters to the Department of Justice with 
a recommendation for the institution of judicial enforcement 
proceedings. There are no procedural prerequisites to a referral to the 
Department of Justice. Such referrals may be accomplished without 
proceeding through the conciliation procedures in this chapter,

[[Page 25525]]

and a referral may be made at any stage in the procedures under this 
chapter.
    (2) Whenever a matter has been referred to the Department of 
Justice for consideration of judicial enforcement, the Attorney General 
may bring a civil action in the appropriate district court of the 
United States requesting a temporary restraining order, preliminary or 
permanent injunction (including relief against noncontractors, 
including labor unions, who seek to thwart the implementation of the 
Order and regulations), and an order for such additional sanctions or 
relief, including back pay, deemed necessary or appropriate to ensure 
the full enjoyment of the rights secured by the Order, or any of the 
above in this paragraph (c)(2).
    (3) The Attorney General is authorized to conduct such 
investigation of the facts as he/she may deem necessary or appropriate 
to carry out his/her responsibilities under the regulations in this 
chapter.
    (4) Prior to the institution of any judicial proceedings, the 
Attorney General, on behalf of the Deputy Assistant Secretary, is 
authorized to make reasonable efforts to secure compliance with the 
contract provisions of the Order. The Attorney General may do so by 
providing the contractor and any other respondent with reasonable 
notice of his/her findings, his/her intent to file suit, and the 
actions he/she believes necessary to obtain compliance with the 
contract provisions of the Order without contested litigation, and by 
offering the contractor and any other respondent a reasonable 
opportunity for conference and conciliation, in an effort to obtain 
such compliance without contested litigation.
    (5) As used in the regulations in this part, the Attorney General 
shall mean the Attorney General, the Assistant Attorney General for 
Civil Rights, or any other person authorized by regulations or practice 
to act for the Attorney General with respect to the enforcement of 
equal employment opportunity laws, orders and regulations generally, or 
in a particular matter or case.
    (6) The Deputy Assistant Secretary or his/her designee, and 
representatives of the Attorney General may consult from time to time 
to determine what investigations should be conducted to determine 
whether contractors or groups of contractors or other persons may be 
engaged in patterns or practices in violation of the Executive Order or 
these regulations, or of resistance to or interference with the full 
enjoyment of any of the rights secured by them, warranting judicial 
proceedings.
    (d) Initiation of lawsuits by the Attorney General without referral 
from the Deputy Assistant Secretary. In addition to initiating lawsuits 
upon referral under this section, the Attorney General may, subject to 
approval by the Deputy Assistant Secretary, initiate independent 
investigations of contractors which he/she has reason to believe may be 
in violation of the Order or the rules and regulations issued pursuant 
thereto. If, upon completion of such an investigation, the Attorney 
General determines that the contractor has in fact violated the Order 
or the rules and regulations issued thereunder, he/she shall make 
reasonable efforts to secure compliance with the contract provisions of 
the Order. He/she may do so by providing the contractor and any other 
respondent with reasonable notice of the Department of Justice's 
findings, its intent to file suit, and the actions that the Attorney 
General believes are necessary to obtain compliance with the contract 
provisions of the Order without contested litigation, and by offering 
the contractor and any other respondent a reasonable opportunity for 
conference and conciliation in an effort to obtain such compliance 
without contested litigation. If these efforts are unsuccessful, the 
Attorney General may, upon approval by the Deputy Assistant Secretary, 
bring a civil action in the appropriate district court of the United 
States requesting a temporary restraining order, preliminary or 
permanent injunction, and an order for such additional sanctions or 
equitable relief, including back pay, deemed necessary or appropriate 
to ensure the full enjoyment of the rights secured by the Order or any 
of the above in this paragraph (d).
    (e) To the extent applicable, this section and part 60-30 of this 
chapter shall govern proceedings resulting from any Deputy Assistant 
Secretary's determinations under Sec. 60-2.2(b) of this chapter.
    7. Section 60-1.27 is revised to read as follows:


Sec. 60-1.27  Sanctions.

    (a) General. The sanctions described in subsections (1), (5), and 
(6) of Section 209(a) of the Order may be exercised only by or with the 
approval of the Deputy Assistant Secretary. Referral of any matter 
arising under the Order to the Department of Justice or to the Equal 
Employment Opportunity Commission shall be made by the Deputy Assistant 
Secretary.
    (b) Debarment. A contractor may be debarred from receiving future 
contracts or modifications or extensions of existing contracts, subject 
to reinstatement pursuant to Sec. 60-1.31, for any violation of 
Executive Order 11246 or the implementing rules, regulations and orders 
of the Secretary of Labor. Debarment may be imposed for an indefinite 
term or for a fixed minimum period of at least six months.
    8. Section 60-1.30 is revised to read as follows:


Sec. 60-1.30  Notification of agencies.

    The Deputy Assistant Secretary shall ensure that the heads of all 
agencies are notified of any debarments taken against any contractor.
    9. Section 60-1.31 is revised to read as follows:


Sec. 60-1.31  Reinstatement of ineligible prime contractors and 
subcontractors.

    A prime contractor or subcontractor debarred from further contracts 
for an indefinite period under the Order may request reinstatement in a 
letter filed with the Deputy Assistant Secretary at any time after the 
effective date of the debarment; a prime contractor or subcontractor 
debarred for a fixed period may make such a request upon the expiration 
of the fixed debarment period. In connection with the reinstatement 
proceedings, all debarred contractors shall be required to show that 
they have established and will carry out employment policies and 
practices in compliance with the Order and implementing regulations. 
Before reaching a decision, the Deputy Assistant Secretary may conduct 
a compliance evaluation of the contractor and may require the 
contractor to supply additional information regarding the request for 
reinstatement. The Deputy Assistant Secretary shall issue a written 
decision on the request.
    10. Section 60-1.32 is revised to read as follows:


Sec. 60-1.32  Intimidation and interference.

    (a) The contractor, subcontractor or applicant shall not harass, 
intimidate, threaten, coerce, or discriminate against any individual 
because the individual has engaged in or may engage in any of the 
following activities:
    (1) Filing a complaint;
    (2) Assisting or participating in any manner in an investigation, 
compliance evaluation, hearing, or any other activity related to the 
administration of the Order or any other Federal, state or local law 
requiring equal opportunity;
    (3) Opposing any act or practice made unlawful by the Order or any 
other Federal, state or local law requiring equal opportunity; or
    (4) Exercising any other right protected by the Order.
    (b) The contractor, subcontractor or applicant shall ensure that 
all persons under its control do not engage in such

[[Page 25526]]

harassment, intimidation, threats, coercion or discrimination. The 
sanctions and penalties contained in this part may be exercised by 
OFCCP against any contractor, subcontractor or applicant who violates 
this obligation.
    11. In Sec. 60-1.34, paragraph (a)(4) is added to read as follows:


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

    (a) * * *
    (4) In any proceeding involving an alleged violation of a 
conciliation agreement OFCCP may seek enforcement of the agreement 
itself and shall not be required to present proof of the underlying 
violations resolved by the agreement.
* * * * *
    12. Section 60-1.42 is amended by revising paragraph (a) to read as 
follows:


Sec. 60-1.42  Notices to be posted.

    (a) Unless alternative notices are prescribed by the Deputy 
Assistant Secretary, the notices which prime contractors and 
subcontractors are required to post by paragraphs (1) and (3) of the 
equal opportunity clause in Sec. 60-1.4 will contain the following 
language and be provided by the contracting or administering agencies:

EQUAL EMPLOYMENT OPPORTUNITY IS THE LAW--DISCRIMINATION IS PROHIBITED 
BY THE CIVIL RIGHTS ACT OF 1964 AND BY EXECUTIVE ORDER No. 11246

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

THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION

    Prohibits discrimination because of Race, Color, Religion, Sex, 
or National Origin by Employers with 15 or more employees, by Labor 
Organizations, by Employment Agencies, and by Apprenticeship or 
Training Programs.

ANY PERSON

    Who believes he or she has been discriminated against

SHOULD CONTACT

THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION

    1801 L Street N.W., Washington, D.C. 20507
    Executive Order No. 11246-Administered by:

THE OFFICE OF FEDERAL CONTRACT COMPLIANCE PROGRAMS

    Prohibits discrimination because of Race, Color, Religion, Sex, 
or National Origin, and requires affirmative action to ensure 
equality of opportunity in all aspects of employment.
    By all Federal Government Contractors and Subcontractors, and by 
Contractors Performing Work Under a Federally Assisted Construction 
Contract, regardless of the number of employees in either case.

ANY PERSON

    Who believes he or she has been discriminated against

SHOULD CONTACT

THE OFFICE OF FEDERAL CONTRACT COMPLIANCE PROGRAMS

    U.S. Department of Labor, Washington, D.C. 20210
* * * * *
    13. Section 60-1.43 is revised to read as follows:


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

    Each prime contractor and subcontractor shall permit access during 
normal business hours to its premises for the purpose of conducting on-
site compliance evaluations and complaint investigations. Each 
contractor shall permit the inspecting and copying of such books and 
accounts and records, including computerized records, and other 
material as may be relevant to the matter under investigation and 
pertinent to compliance with the Order, and the rules and regulations 
promulgated pursuant thereto by the agency, or the Deputy Assistant 
Secretary. Information obtained in this manner shall be used only in 
connection with the administration of the Order, the Civil Rights Act 
of 1964 (as amended), and any other law that is or may be enforced in 
whole or in part by OFCCP.

PART 60-60--[REMOVED]

    14. Part 60-60 is removed.

[FR Doc. 96-12687 Filed 5-20-96; 8:45 am]
BILLING CODE 4510-27-P