6. THE OFFICE OF FEDERAL CONTRACT COMPLIANCE PROGRAMS (DOL)
This Part offers a summary of the Department of Labor's program
to promote equal employment opportunity practices by private firms
who have contracts with the federal government.
6.1 Concepts & Principles
OFCCP's primary responsibility is to implement and enforce an
Executive Order and several statutes banning discrimination and
establishing affirmative action requirements for federal contractors
and subcontractors. While these policies have roots in the 1940s,
the seminal requirements are contained in E.O. 11246, signed by
President Johnson, and in regulations promulgated pursuant to
that order in 1970 under President Nixon, which introduced the
concept of goals and timetables. Specifically, OFCCP may require
goals for hiring and promoting women and minorities as part of
the affirmative action program (AAP) which contractors are required
to develop and/or implement; however, race- or gender-based hiring
and promotion are not required, and quotas are prohibited.
6.2 Policies & Practices
- Coverage: With certain exceptions, E.O. 11246 applies to
Federal contractors and subcontractors with contracts of more
than $10,000 per year. In FY 1993, some 92,500 nonconstruction
establishments and 100,000 construction establishments
were covered. These establishments employed approximately 26
million people and received contracts of more than $160
billion.
- Affirmative Action Requirements: OFCCP regulations impose
different requirements on construction and nonconstruction firms.
- Nonconstruction firms with 50 or more employees or contracts
of more than $50,000 must develop and maintain a written affirmative
action program (AAP). The contractor keeps the AAP on file
and carries it out; it is submitted to OFCCP only if the agency
requests it for the purpose of conducting a compliance review.
As part of its AAP, the contractor must conduct a workforce analysis
of each job title, determine workforce availability of women and
minorities for each job group, and conduct a utilization analysis
to determine whether women or minority group persons are "underutilized"
in any job group. Based on these analyses, the contractor establishes
goals to overcome the "underutilization," and makes
a good faith effort to achieve those goals.
- Construction firms are not required to maintain written AAPs,
but must make good faith efforts to meet demographic goals
informed by place-specific census data for minorities and a nation-wide
goal for women.
- OFCCP regulations expressly prohibit discrimination and the
use of goals as quotas. (48)
- Goals & Timetables: The numerical goal-setting process
in affirmative action planning is used to target and measure the
effectiveness of affirmative action efforts to eradicate and prevent
discrimination. Numerical benchmarks are established based on
the availability of qualified applicants in the job market or
qualified candidates in the employer's work force. The regulations
specifically prohibit quotas and preferential hiring and promotions
under the guise of affirmative action numerical goals. Numerical
goals do not create quotas for specific groups, nor are they
designed to achieve proportional representation or equal results.
- Enforcement Procedures: A contractor's failure to attain
its goals is not, in and of itself, a violation of the Executive
Order; failure to make good faith efforts is. OFCCP undertakes
compliance reviews for certain contractors flagged by a
computer program as having below average participation rates for
minorities or women. OFCCP also conducts reviews of contractors
selected randomly and identified through complaints.
(49)
In FY 1994, OFCCP conducted more than 4,000 reviews, roughly 3.26 percent
of its supply-and-service contractor universe, and 1.55 percent
of its construction contractors. If a firm is found to violate
affirmative action requirements (or antidiscrimination requirements)
OFCCP attempts to conciliate with the contractor; in a very small
percentage of cases, no agreement is reached and the case is referred
for formal administrative enforcement.
- Incentives: OFCCP gives Exemplary Voluntary Efforts (EVE)
and Opportunity 2000 awards to those companies who demonstrate
significant achievement in equal opportunity and affirmative action.
- Sanctions: A contractor in violation of E.O. 11246 may
have its contracts terminated or suspended, or be debarred. Such
administrative actions are rare, and there is ample due process
accorded the contractor before hand.
6.3 Performance & Effects
Performance Generally:
As noted in Part 3 of this document, OFCCP programs have been
studied in some detail. During the 1970s, when enforcement was
quite strong, the programs were found to increase modestly the
employment of minorities. (During the 1980s, enforcement -- and
the effectiveness of the policies -- declined.) Most studies have
found that OFCCP has had a less significant impact on hiring of
minorities in skilled crafts and trades. However, some limitations
on the validity of the OFCCP evaluation studies have been raised.
The available evidence indicates that productivity at contracting
firms is unaffected by OFCCP. This suggests that OFCCP has not
caused contracting firms to hire less qualified workers. Further,
a recent study finds that exemplary affirmative action programs
help a company's stock market values.
The OFCCP national office conducted a random survey of 247 conciliation
agreements obtained by the field in FY 1993 and FY 1994, and did
not find any situations where the agency sought and obtained remedies
outside the scope of OFCCP's authority. Moreover, during the review
of the conciliation agreements OFCCP found an example of an OFCCP
regional office requiring corrective action by a contractor who
had engaged in an employment practice that discriminated against
males, both whites and minorities. OFCCP cited the contractor
with a violation of Executive Order 11246 and required it to enter
into an agreement providing relief to both white and minority
victims.
Several studies were critical of the administrative aspects of
the programs, such as the mechanisms for selection of contractors
for review and the paperwork burdens on smaller contractors. Some
groups have been critical of the length and detail of the AAPs.
In response to this latter criticism, OFCCP plans to (i) significantly
reduce the AAP paperwork requirements and (ii) initiate a summary
AAP format that will help target reviews.
Finally, some have raised a concern that although AAPs as a formal
matter are framed in terms of flexible goals, and although rigid
quotas violate both OFCCP regulations and Title VII, in some cases
employers implement the goal with a rigidity making it tantamount
to a quota. OFCCP has little data directly addressing this concern,
but notes that reverse discrimination complaints, including objections
to de facto quotas, are very rare in their administrative
mechanism or at the EEOC. The absence of litigation is not, of
course, a complete answer, in as much as subtle discrimination
-- reverse or otherwise -- can be difficult to detect and even
more difficult to challenge. Therefore, the DOL conducted further
analysis for this Review:
- analysis of a recent report by an association of 300 Federal
contractors, and interviews with attorneys who represent contractors
on OFCCP matters;
- analysis of OFCCP's 1994 customer satisfaction sample survey
of contractors; and
- detailed interviews with OFCCP regional directors.
The conclusion of this further analysis is that, while there are
some issues of regulatory burden and enforcement consistency,
and while there are a small number of firms who feel that the
effect of goals is to make them "hire by the numbers,"
the weight of the evidence refutes the claim that the Executive
Order program leads to widespread abuses.
The following subsections review this material in more detail.
Views of the Contractors' Trade Association and Attorneys
On March 17, 1995, the Equal Employment Advisory Council (EEAC),
an association of 300 federal contractors (including companies
such as Marriott, Martin-Marietta, and Bausch & Lomb), issued
a report "to clarify the nature of affirmative action planning"
as well as "to explain the point that Executive Order 11246
does not require contractors to grant preferential treatment to
any employee or applicant on the basis of race, gender, or ethnic
background." DOL played no role in soliciting the EEAC to
prepare and issue its report, but believes it is entitled to considerable
weight because EEAC exists to promote the interests of federal
contractors.
Emphasizing that OFCCP's regulations explicitly prohibit the use
of goals as "inflexible quotas,"
(50) the Report notes
that "rancorous debate" often ensues between employers and
OFCCP over how many women and minorities are "available"
in the work force because solid empirical data do not exist.
The Report also noted that goals and timetables in the past
(i.e., during the 1970s and 1980s) worked as quotas. Under
OFCCP regulations, numerical affirmative action steps are not
required unless "underutilization" exists. OFCCP's previous
approach required three types of goals for each underutilized
group: an annual placement rate goal (expressed as a percentage,
and generally set at a rate above "availability"); an
annual numerical goal (determined by multiplying the annual
placement rate goal by the number of anticipated placements);
and an ultimate goal (expressed as a percentage and equal
to availability, coupled with a timetable for reaching that goal).
Contractors complained that by setting the placement rate above
availability, they were pressured "into extending preferences
to fulfill goals." Also during prior periods, failure to
implement an acceptable affirmative action goal could be remedied
by "catch-up goals." This would have the effect of having
goals function like quotas and bore "no relationship to true
current availability." In the early 1980s OFCCP abandoned
these "preferential tactics." In 1987, a majority staff
report of the Committee on Education and Labor, U.S. House of
Representatives, specifically recommended reinstating (1) ultimate
goals; (2) multi-year timetables; (3) goals set above availability;
and (4) numerical goals (to add to percentage placement rate goals).
The EEAC concludes that OFCCP did not adopt these recommendations
and "the goal-setting process today clearly does not impose
preferences or quota-like requirements."
DOL also contacted several lawyers who work with contractors on
OFCCP matters. These attorneys consistently stated that employers'
major concerns about the administration of Executive Order 11246
have very little to do with goals operating as quotas. Major complaints
include inconsistent enforcement among regions, irrelevance of
some factors OFCCP requires to be considered in the workforce
availability analysis, length and paperwork burden associated
with preparing the affirmative action plan, and compliance officers'
emphasis on minor or technical requirements. They attribute some
of these problems to lack of training of compliance officers and
poor quality control.
Customer Satisfaction Survey
In its 1994 customer satisfaction surveys of nonconstruction and
construction contractors, OFCCP selected randomly from contractors
that had been reviewed during the past year. The response rate
for each group was approximately 80 percent -- responses from
278 construction and 363 service and supply contractors were tabulated.
One question, designed to elicit respondents' overall opinion
of the compliance review, asked respondents to indicate their
agreement with five statements using a ten point scale. Overall,
the survey results were relatively positive. Regarding perceptions
of enforcement consistency, 15.2 percent of the construction and
29.3 percent of the service and supply contractors responded that
OFCCP had not been very consistent among reviews by the same compliance
officer or by staff members from the same office. More than 70
percent agreed that the compliance review was a thorough assessment
of compliance with OFCCP's regulations, that OFCCP provided responsive
technical assistance, and that the company's position was considered
during the conciliation process. Most respondents (more than 80
percent) agreed that the compliance officer was professional during
the review and that oral and written communications from OFCCP
were professional and courteous.
More broadly, two survey questions ("If you could change
or improve any part of the review process, what would it be?"
and "Are there any additional comments that you would care
to include?") invited respondents to add narrative comments.
Of the 278 construction and 363 nonconstruction responses, one-quarter
and one-third of the firms, respectively, commented. Only 10
construction firms and four nonconstruction firms chose to address
quotas or reverse discrimination. The following are examples
of these comments:
-
Allow businesses to conduct their business for the betterment
of customers and employees and not to satisfy some minority quota
requirement. [nonconstruction contractor]
Believe program has gone overboard. It is not flexible considering
the different factors that effect the hiring process. It has become
a numbers game, even though it will not be admitted to. [nonconstruction]
I can see no way to improve the review due to its basis in the
code which stresses quotas and quality with little or no emphasis
on productivity, work ethic or quantity and quality of work which
ultimately makes us competitive nationally and internationally.
[construction]
Greater consideration for employer showing good faith. If skills
necessary are not available in area in minority and female applicants,
they cannot be hired. Do not want to hire unqualified applicants
just because they are minorities or females; want to hire best
qualified applicant regardless of race or sex. [nonconstruction]
- There were also isolated comments about unrealistic goals:
-
Our women goals, we can't even come close to obtaining. Add to
this, the fact that there is currently high levels of unemployment
at the union local. What's the reality of these goals? How can
we comply when there isn't enough work, and there aren't enough
women and minorities in the trade? When will someone take an honest
look at this situation and develop realistic goals and procedures
to follow? [construction]
The fact that so very few contractors addressed the quota issue
is consistent with OFCCP's random survey of conciliation agreements
obtained by the field in FY 1993 and FY 1994. OFCCP did not find
any instances of contractors being cited for not meeting their
goals, use of the word "quota," or obtaining remedies
outside the scope of OFCCP's authority.
Other comments from contractors addressed the length of time that
it took to prepare for and conduct the compliance review; inconvenient
scheduling of the review; inconsistency among compliance officers;
and compliance officers' lack of familiarity with the particular
industry. Approximately 11 percent of the construction contractors
comments and approximately 14 percent of the service and supply
contractor comments addressed paperwork burdens. Many of the comments
indicated that OFCCP devoted too much time to the on-site review
and took an inordinately long time to complete the entire review.
Contractors also commented that they sometimes were given the
impression during the on-site review that the review had gone
well, but the formal closing correspondence was much more negative.
Interviews with OFCCP Regional Directors
The complaints of contractors conveyed by the regional directors
were similar to those revealed in the customer satisfaction survey,
such as inconsistency and frustration over technical infractions.
Also:
- The Region III Director believes that some contractors
today allow goals and timetables to limit unnecessarily opportunities
for women and minorities in that the contractors consider the
goal to be a ceiling. For example, they hire only 20 percent women
because that is the affirmative action program, but there are
60 percent women in the applicant pool for a particular job. (Such
a situation could lead OFCCP to investigate whether the contractor
is engaging in unlawful discrimination, and a quota would be unlawful.)
- According to the Director from Region II, some contractors
often set their own hiring and promotion goals and treat those
as quotas because "it is smart for their company" and
to "keep the government off their backs." When they
"hire by the numbers," the word spreads that numbers
are driving hiring and promotion decisions -- leaving it unclear
as to whose "numbers" are driving the process. Where
a contractor engages in such action, the OFCCP is charged with
conducting an investigation. Such conduct would violate the executive
order.
- Neither Director from Region VIII or IX believes their
federal contractors have treated their goals as quotas. The Directors
from Regions III, IV, VIII, and IX cannot recall reverse discrimination
complaints. The Region V Director reports only one reverse discrimination
complaint.
- The Region I Director noted that contractors can perpetuate
the false notion that contractors are being driven by "quotas."
Contractors will sometimes tell disappointed male applicants that
the individual who got the job or promotion got it because he
or she was a women or minority, even though that was not the reason.
OFCCP Response and Reforms
As part of the ongoing National Performance Review process led
by the Vice President, OFCCP is eliminating unnecessary paperwork
requirements associated with the written affirmative action plan
and has designed a summary format for the affirmative action plan
that will greatly assist OFCCP in targeting its limited resources,
while saving contractors approximately 4.5 million (out of 15
million) hours in the annual preparation of their plans and recordkeeping.
Several other streamlining and burden-reduction measures are also
underway.
OFCCP currently attempts to address the problem of inconsistencies
with policy guidance by reemphasizing relevant portions of the
Federal Contract Compliance Manual, the agency's operating manual,
and with its continuing program of training for its compliance
officers. Other mechanisms are more ad hoc. According to the Director
from Region III, for example, the region has moved forward with
suggestions from Scott Paper Company that (1) the Regional Office
communicate/negotiate with the contractor before sending a formal
letter of noncompliance, and (2) the compliance officer focus
on substantive issues in the review (e.g. good faith) and not
technical issues (e.g. formatting of the plan documents).
6.4 A Note on OFCCP Law Enforcement Functions
In addition to enforcing the government's affirmative action requirements,
the OFCCP performs a related but distinct function: enforcement
of the antidiscrimination provisions of Executive Order 11246
(based on the principles of Title VII of the Civil Rights Act).
The courts and Congress have permitted the use of statistical
evidence showing a disparate impact, or manifest imbalance, to
establish a prima facie case of unlawful discrimination.
Such evidence then shifts to the employer the burden of producing
an explanation or other evidence showing that the disparity is
not the result of discrimination.
Understandably, these two independent concerns are sometimes confusing
to contractors when they are faced with corrective actions. For
example, contractors occasionally claim they are being "forced"
to hire a woman or minority when OFCCP, is in fact requiring them
to remedy discrimination by providing job offers, back pay or
other relief to identified victims. In contrast, OFCCP polices
the affirmative action requirement of E.O. 11246 by "auditing"
for "good faith efforts," not for whether any specific
numerical goal has been met.
6.5 Conclusions and Recommendations
Does the federal government's affirmative action programs relating
to fair employment meet the President's tests: Do they work? Are
they fair?
6.5.1 Conclusions
Do they work?
With respect to antidiscrimination enforcement, the OFCCP process
is designed to provide dispute resolution, adjudication and remediation
for identified acts of unlawful discrimination. The key issue
in this Review, however, concerns the use of affirmative action
programs. Under the Executive Order program, affirmative action
in employment is intended to:
- promote inclusion of underrepresented minorities and women,
in recognition that the lingering effects of past discrimination
and exclusionary practices have denied opportunity to qualified
people;
- prevent future discrimination by encouraging employers to be
inclusive in their hiring and promotion practices;
- provide a practical means, through use of flexible goals and
timetables, for employers to gauge their progress;This mirrors
the universal conclusion that successful organizations pursue
their objectives by adopting measurable goals, and plans to achieve
them.
The empirical literature indicates that affirmative action generally,
and specifically the OFCCP Executive Order program, does create
opportunity. According to five academic studies, active enforcement
by OFCCP during the 1970s caused government contractors to increase
moderately their hiring of minority workers.
(51) According to one
study, for example, the employment share of black males in contractor
firms increased from 5.8 percent in 1974 to 6.7 percent in 1980.
In non-contractor firms, the black male share increased more modestly,
from 5.3 percent to 5.9 percent. For white males, the employment
share fell from 58.3 percent to 53.3 percent in contractor firms,
and from 44.8 percent to 41.3 percent in non-contractor firms.
(52)
The literature also finds that contractor establishments that
underwent an OFCCP review in the 1970s subsequently had faster
rates of white female and of black employment growth than contracting
firms that did not have a review. (53) OFCCP enforcement
was scaled back during the 1980s. Nonetheless, there is reason to believe
that it continues to have a positive and significant impact on
remedying discrimination in the workplace.
Is it fair?
(1) Not Quotas
The available evidence, from court and administrative litigation,
refutes the charge, based on anecdote, that equal employment opportunity
goals have led to widespread quotas through sloppy implementation
or otherwise. Quotas are illegal under current law, and can be
used only as remedies in extremely limited court-supervised settings
involving recalcitrant defendants found to have engaged in illegal
discrimination. EEOC and court records simply do not bear out
the claim that white males or any other group have suffered widespread
"reverse discrimination."
Undeniably, however, there is anecdotal evidence of certain managers
taking impermissible short-cuts -- hiring and promoting "by
the numbers" rather than by using affirmative action in a
flexible way to broaden the pool and then ensure that the effort
to be inclusive does not compromise legitimate merit principles.
(See recommendation below.) These anecdotes, if true, may in fact
be stories about illegal discrimination, and are grounds for more
attention to enforcement and education. Nevertheless, the balance
of the evidence, based on complaints and litigation, indicates
the problem is not widespread.
(2) Race-Neutral Alternatives
Nothing in the Executive Order requires race-based hiring or promotion,
although equal opportunity results are measured. Thus,
employers are free to adopt outreach, recruiting and hiring strategies
as they choose, consistent with antidiscrimination law. While
employers must analyze workforce and labor market data to identify
manifest imbalances, the Executive Order only requires good faith
efforts, and "good faith effort" is the basis upon which
OFCCP reviews contractor performance. In that sense, therefore,
as both a logical and practical matter, employers are perfectly
free to adopt race-neutral strategies to achieve their EEO goals,
provided they make a good faith calculation that such strategies
will be effective.
(3) Flexible and Minimally Intrusive
There has been criticism of the Executive Order program as inflexible
and intrusive, but the actual structure and working of the program
demonstrate otherwise. First, there is the fact that the affirmative
action programs emphasize goals and good faith, while leaving
employers wide latitude to select means. Second, employers develop
goals following analyses of their workforce and of the relevant
labor pool, and there is no requirement of strict proportionality
in the setting of a goal. Third, OFCCP is preparing a very significant
reformulation of the guidelines for labor market analysis in order
to simplify greatly the paperwork and research burden on firms
preparing affirmative action programs. Finally, OFCCP is also
streamlining the compliance review process so that its audits
are less burdensome and disruptive. In these respects, some legitimate
concerns about administration of the Executive Order are being
addressed by the agency.
There continue to be concerns about the flat nationwide goal that
women occupy 6.9 percent of construction jobs. That goal was established
on April 8, 1978 as part of DoL regulations (41 C.F.R.60-4.6),
and has not been revisited. The Secretary of Labor should consider
whether such a review is called for. Experience may suggest adjusting
the goal.
(4) Transitional
The transitional nature of affirmative action is implicit in the
structure of the Executive Order, in as much as action is triggered
by manifest underrepresentation of minorities and women, and when
a workforce is fully inclusive, no further action is called for.
There is a broader issue, however. To the extent that a contractor
is doing a good job of inclusion -- as demonstrated quantitatively
by the numbers or qualitatively by the good faith efforts, then
the compliance burdens of the Executive Order should be reduced
and no regulations should require the continuation of elements
of an affirmative action plan that are unneeded. OFCCP is considering
taking steps in this direction.
(5) Balanced
Finally, affirmative action done the right way is balanced
in that, even where it is necessary to have goals and timetables
to correct manifest underrepresentation, those goals must be designed
with reference to the relevant pool of applicants, and actual
employment decisions cannot in the name of affirmative action
give benefits to unqualified over qualified individuals. Moreover,
caselaw makes clear that the interests of third parties -- of
bystanders -- must be weighed in the balance. All of this is reflected
in OFCCP's administration of the Executive Order program.
6.5.2. Recommendations:
Our conclusion is that the pragmatic use of affirmative action
to promote equal opportunity in employment by government contractors
has been and continues to be valuable, effective, and fair. The
leadership provided by the federal government and its contractors
has been a critical factor in causing private and public organizations
to challenge and change their own personnel practices, using affirmative
action as one tool to open up opportunity to qualified minorities
and women who might otherwise have been left outside. We recommend
that the President:
- Direct the Secretary of Labor to underscore and reinforce
current law and policy regarding nondiscrimination, the illegality
of quotas, the enforcement focus on "good faith efforts,"
and the relationship of equal opportunity to legitimate qualifications,
by instituting appropriate changes in the administrative guidelines
for the Executive Order program and in the technical assistance
provided to employers by the Office of Federal Contract Compliance
Programs.
- Instruct the Department of Labor to finalize and implement
plans to reduce the employer paperwork burden associated with
the Executive Order Program, and reward successful companies by
targeting enforcement on problem firms. Currently, OFCCP is working
to achieve a 30 percent reduction in private sector paperwork
burdens. These steps include a streamlining of the written plan
required to be prepared by contractors, targeting audits to firms
where there is evidence of a problem, and limiting audits to areas
of specific concern. In addition, OFCCP will eliminate duplicative
or unnecessary forms now required from contractors.
- Direct the Secretary of Labor to explore means of collaborating
with private sector leaders in more vigorous private sector-led
efforts to promote best practices in providing equal employment
opportunity. Other Cabinet officers and Administration officials
should participate as appropriate.
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