by Betsy Dorminey
Wimberly, Lawson, Steckel, Nelson &
Schneider, Athens, Ga.
Regulations rushed into publication in the final days of the Clinton
Administration may have widespread effect, notably on the thousands
of firms that are contractors or sub-contractors to the Federal
government. This article will discuss two that will have profound
and immediate repercussions for companies that do business with
the Federal government: new regulations from the Office of Federal
Contract Compliance Programs (OFCCP) concerning affirmative action
requirements, and new Federal Acquisition Regulations (FAR) requiring
prospective contractors to certify their record of compliance with
federal tax, environmental, and anti-discrimination laws.
Smarting from defeat at the polls, and realizing that a Republican
administration could toss aside their efforts, in December 2000
and January 2001 outgoing Federal agency heads rushed to print an
avalanche of new rules and regulations. Many had been under
consideration for years, but their authors realized that their
time had run out, and it was imperative to publish or else abandon
these initiatives. Not since President Carter left office in 1980
has there been such a large number of last-minute, or "midnight,"
President George W. Bush's order to "stop the presses"
on inauguration day -- January 20, 2001 -- prevented some regulations
from being printed in the Federal Register and thus taking effect,
but several significant new rules, or reinterpretations of existing
rules, were published between certification of the election results
and inauguration day. Some of these already have become effective,
even as the Bush Administration is conducting a massive review to
determine which of the rules currently on hold it will endorse and
which it will reject.
A major overhaul of the Government's requirements concerning affirmative
action programs mandated by Executive Order 11246 was published
by the Office of Federal Contract Compliance Programs (OFCCP) on
November 13 and took effect 30 days later. A significant new obligation
that these regulations impose on Federal contractors is the preparation
of an equal opportunity survey. This requires employers to provide
the OFCCP with summary compensation data broken down according to
race and gender -- statistical information that very likely will
be used to show that employers are discriminating on the basis of
race and gender in both hiring and promotion decisions.
The new regulations, which are the first major change since 1970,
are designed in part to reduce paperwork and to improve the compliance
evaluation process. The regulations do, in fact, streamline the
obligation of federal contractors and subcontractors to maintain
written affirmative action plans. OFCCP claims they have shifted
their focus from line-by-line compliance with technical standards
to the contractors' actual non-discrimination and affirmative action
activities. The "workforce analysis" in the former regulations,
which required a detailed job analysis that ran about 23 pages,
is replaced by a simpler, one-page organizational profile. The "8-factor
availability analysis," which requires contractors to compare
the availability of minorities and women in each job group to the
overall workforce, the unemployed workforce, skills, training availability,
and four other factors, has been eliminated and replaced by two
factors: external and internal availability. Small employers
those with 50 - 150 employees -- are permitted to use EEO-1 categories
for their job groups rather than create particular job groups tailored
to their organizations.
More troubling is the new equal opportunity survey requirement.
OFCCP will group employees on the basis of their job levels or grades
and their EEO-1 job categories. Within each group, it will then
compare the median pay of females to that of males, and that of
minority to non-minority employees. Time in grade will be analyzed
within each sub-group to adjust for differences due to seniority.
Employers are troubled that they will be required to prepare simplistic
statistical analyses of compensation that will portray them in a
false light; pay disparities that may be explained by factors such
as performance may appear as race or sex discrimination using OFCCP's
In-depth interviews will follow if disparities along race or sex
lines are discovered. Some of the 7,000 employers who participated
in a pilot pay survey have been the target of searching on-site
reviews. OFCCP intends to include some 53,000 employers in the survey
the first year.
Although OFCCP claims the new rules really don't represent a change,
employers say the new obligation to break down compensation information
according to race and gender will be extremely burdensome and problematic.
A careful review of current pay practices certainly is indicated
for the employer who wishes to minimize potential exposure under
these new rules.
An amendment to the Federal Acquisition Regulations (FAR) requires
firms seeking government contracts to disclose their record of compliance
for the past 3 years with non-procurement-related laws as a precondition
to eligibility for government contracts. Like many rules of this
nature, it seems rational on its face but will be exceedingly burdensome
in practice, and ultimately may discourage many firms from seeking
these contracts. This, in turn, will delay the procurement process,
drive up costs for taxpayers, and potentially cause the economy
to contract, as many firms who formerly provided goods and services
to the government are ruled to be ineligible for future contracts.
This new set of rules requires prospective Federal contractors
to supply detailed information concerning their firm's track record
of compliance with tax, labor & employment, safety, environmental,
antitrust, and consumer protection laws so that contract officers
within the government can assess the firm's "record of integrity
and business ethics." This includes records of any convictions
or civil judgments rendered against the prospective contractor for
offenses ranging from fraud in procuring contracts or tax evasion
all the way to adverse OSHA decisions or EEOC discrimination determinations.
This may strengthen the hand of plaintiffs' lawyers in extracting
settlements from employers on dubious employment discrimination
or consumer products safety claims, since settlements are not included
among the list of reportable events. The new procurement regulations
took effect January 19, 2001.