The OFCCP's FAAP Program Is Poised for Additional Changes
For traditional AAP programs, federal contractors and subcontractors are required to develop, implement and self-audit affirmative action programs for every establishment with 50 or more employees. Traditional AAPs contemplate that the employees in that establishment (and reporting into it from other locations) will be in a hierarchical structure centered on a single set of products or services (e.g., manufacturing, consulting services, retail operations). Recognizing that contractors are not always organized based on establishments, the OFCCP adopted FAAP regulations 20 years ago that allow contractors to enter into agreements with OFCCP to organize its AAP programs based on the functions performed by employees, rather than the establishments where they physically work or are based.
For contractors that are organized based on functions (e.g., lines of service, discrete types of operations), the FAAP program can offer a lot of benefits. Contractors whose operations are organized based on function or lines of business have found that FAAPs allow them to organize and analyze data more easily, establish lines or responsibility for developing, implementing and auditing FAAPs, and more effectively monitor compliance and progress towards goals. But even more importantly, the consultation and approval process allow contractors to develop a relationship with the FAAP program at the National Office of OFCCP. They can provide significant help in structuring the contractor’s functional units, in developing compliance programs and during compliance audits.
The challenges in the past however, have included delays in the approval process and a lack of harmony between the FAAP program and the process used to select FAAPs for audit and undertake compliance audits. Contractors feel that they have to work with field officers, who primarily handle establishment based plans, to address the difference between FAAPs and establishment-based programs, including how data requests should be tailored, how regional differences impact compensation, and how “on-sites” should be conducted when the employees in the FAAP are often spread all over the country. Mindful of the concerns of contractors and to generate additional interest in the program, OFCCP recently issued a proposed directive—which is open to public comment—revising its policies and procedures for approving FAAP agreements and undertaking compliance audits.
History of the Program
Because the regulation authorizing the FAAP program is vague, the OFCCP has relied on Directives to provide guidance to the OFCCP and contractors regarding the FAAP program. In 2013, the OFCCP issued guidelines tightening up the approval process and addressing the frequency with which contractors with a FAAP program would be audited. However, the approval process remained cumbersome and, at times, lengthy, and there was often a disconnect between the National Office and individual District and Regional Offices regarding how audits should be conducted, particularly when the FAAP included employees spread over a large region. In FAAP audits in which we have been involved in the past several years, the National Office has had to step in and provide guidance to the field office regarding which portions of the company can be audited and the unique analyses that are involved in assessing FAAPs.
Over the two years, the FAAP Office at OFCCP has worked to address these issues, providing training to contractors and field officers regarding the FAAP program and removing some of the impediments to efficient approval of FAAP programs. Members of the FAAP Office have conducted webinars and spoken at national conventions to educate contractors regarding the benefits of the FAAP program and to obtain feedback regarding initiatives the Office is considering, including programs to improve its engagement with contractors and the FAAP approval and audit process. I spoke at length with Nakish Pugh, the Branch Chief for the FAAP Program, at the National ILG Convention in early August about my experiences with the program over the past 15 years. She was eager to obtain input regarding my experiences and my recommendations for improvement.
The Proposed Directive
Consistent with these recent initiatives, OFCCP recently proposed a new Directive for the FAAP Program. The proposed reforms include a number of changes that will make the program more attractive to contractors that are organized by functions or lines of service. The proposed revisions would decrease the burdens imposed by FAAP agreements and provide more consistent application of OFCCP’s approval process, audit selection process and audit procedures. The proposed Directive explains that:
OFCCP is encouraging the use of functional or business unit based affirmative action programs (AAPs). A functional AAP agreement can be an attractive alternative to having an establishment-based AAP for several reasons. OFCCP’s FAAP program allows a company that is a covered federal contractor or subcontractor to organize its AAP to reflect how the company operates functionally and not where its facilities and people are physically located. A company with a FAAP may find that it is easier to organize and analyze data, identify issues, establish clear lines of responsibility for implementing its AAP, and monitor progress. There is also the benefit of having the flexibility to combine the use of FAAPs and establishment-based AAPs.
The most significant proposed revisions would:
Increase FAAP agreements effective period from three to five years;
Eliminate the requirement that FAAP contractors undergo at least one compliance evaluation during the term of the agreement;
Expand the exemption period for FAAP units that have undergone a compliance evaluation from 24 months to 36 months;
Eliminate the consideration of a contractor's compliance history in deciding whether to approve a FAAP request;
Remove the three-year waiting period for reapplying for a FAAP agreement following termination of an agreement;
Eliminate the annual requirement for contractors to report on the status of their FAAP agreements;
Remove language permitting OFCCP to terminate a FAAP agreement if the contractor has been found in violation of the laws and regulations enforced by OFCCP; and
Allow OFCCP to administratively close any establishment-based compliance evaluation received during the 120-calendar-day FAAP implementation period.
Input Concerning the Proposed Guidance
The notice invites contractors, law firms and consultants to provide feedback concerning the proposed modifications to the Guidance.These public comments are due by November 13, 2018.