[Federal Register Volume 62, Number 160 (Tuesday, August 19, 1997)]
[Rules and Regulations]
[Pages 44174-44192]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-21782]



[[Page 44173]]

_______________________________________________________________________

Part II





Department of Labor





_______________________________________________________________________



Employment Standards Administration, Office of Federal Contract 
Compliance Programs



_______________________________________________________________________



41 CFR Parts 60-1, 60-6



Government Contractors, Affirmative Action Requirements, Executive 
Order 11246; Final Rule

  Federal Register / Vol. 62, No. 160 / Tuesday, August 19, 1997 / 
Rules and Regulations  

[[Page 44174]]



DEPARTMENT OF LABOR

Employment Standards Administration, Office of Federal Contract 
Compliance Programs

41 CFR Parts 60-1, 60-60

RIN 1215-AA01


Government Contractors, Affirmative Action Requirements, 
Executive Order 11246

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

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Office of Federal Contract Compliance Programs (OFCCP) is 
revising a limited number of the regulations to implement Executive 
Order 11246, as amended, which prohibits employment discrimination and 
establishes affirmative action requirements for nonexempt Federal 
contractors and subcontractors. The final rule revises the regulations 
relating to record retention, compliance monitoring, maintenance of 
non-segregated facilities, and other aspects of enforcement. The 
revisions to the Executive Order implementing regulations effected by 
this final rule are expected to reduce the compliance burdens of 
covered contractors, and improve the efficiency of OFCCP in 
administering and enforcing the Executive Order.

EFFECTIVE DATE: September 18, 1997.

FOR FURTHER INFORMATION CONTACT:
Joe N. Kennedy, Deputy Director, Office of Federal Contract Compliance 
Programs, Room C-3325, 200 Constitution Avenue, NW., Washington, DC 
20210. Telephone 202-219-9475 (voice), 1-800-326-2577 (TDD). Copies of 
this final rule, 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, an electronic file on computer disk 
and audiotape. The rule also is available on the Internet at http://
www.dol.gov/dol/esa.

SUPPLEMENTARY INFORMATION:

I. Current Regulations and Rulemaking History

    Executive Order 11246, as amended, prohibits all nonexempt 
Government contractors and subcontractors, and federally assisted 
construction contractors and subcontractors, from discriminating in 
employment. The Executive Order also 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. OFCCP 
has been assigned responsibility for administering Executive Order 
11246, and has published regulations implementing the Order at 41 CFR 
Ch. 60.
    The Executive Order regulations 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). Both the 1980 final rule and the 1981 NPRM addressed 
the regulations contained in 41 CFR parts 60-1 and 60-60. No further 
action has been taken on the August 25, 1981, proposal, or on the 1980 
stayed final rule.
    On May 21, 1996, OFCCP published a proposed rule, 61 FR 25516, to 
revise specific regulations found at 41 CFR parts 60-1 and 60-60. The 
comment period closed on July 22, 1996. A total of 32 comments was 
received from six contractors, six contractor associations, one 
consulting firm, one law firm, 13 civil rights and women's rights 
organizations, two Federal agencies, one local government agency, and 
one individual. All the comments were reviewed and carefully considered 
in the development of this final rule.

II. Overview of the Final Rule

    The final rule, for the most part, adopts the revisions that were 
proposed in the May 21 NPRM. However, some of the proposed provisions 
have been modified in response to the public comments. The changes 
between the NPRM and the final rule are explained in detail in the 
Section-by-Section Analysis.
    The final rule revises the regulations in 41 CFR part 60-1 in four 
areas: Record retention, compliance monitoring, maintenance of non-
segregated facilities, and enforcement procedures. In addition, to 
ensure consistency in the administration and enforcement of the Federal 
contract compliance laws, the final rule conforms several provisions in 
part 60-1 to parallel provisions in the regulations found at 41 CFR 
part 60-741. The latter regulations implement section 503 of the 
Rehabilitation Act of 1973, as amended (29 U.S.C. 793), which also is 
administered by OFCCP. A final rule published on May 1, 1996, made 
comprehensive revisions to the Section 503 regulations (61 FR 19936). 
The conforming changes made by the final rule published today affect 
several definitions and some aspects of enforcement.
    Further, the final rule deletes most of the existing provisions in 
41 CFR part 60-60, which describe the procedures for conducting 
compliance reviews of nonconstruction (i.e., supply and service) 
contractors. A few substantive provisions in part 60-60, which are not 
contained elsewhere in the regulations, are being transferred to part 
60-1. The transferred provisions primarily relate to the procedures for 
protecting confidential data, the time frames within which a contractor 
must submit its written affirmative action program (AAP) and supporting 
documentation, and authorization for nationwide AAP formats.
    Finally, in order to avoid conflict, the final rule withdraws part 
60-1 of the final rule which was published on December 30, 1980, and 
subsequently suspended.
    The discussion which follows identifies the significant comments 
received in response to the NPRM, provides OFCCP's responses to those 
comments, and explains any resulting changes to the proposed revisions.

Section-by-Section Analysis of Comments and Revisions

Section 60-1.3  Definitions

    OFCCP proposed in the NPRM to add a definition for the new term 
``compliance evaluation.'' Additionally, OFCCP proposed to revise 
several definitions in the current regulations to make them consistent 
with definitions contained in the Section 503 implementing regulations. 
The Section 503 final rule published on May 1, 1996, made changes to 
several terms and phrases that are common to both Executive Order 11246 
and Section 503 of the Rehabilitation Act. Specifically, the Section 
503 final rule revised the regulatory definitions of ``contract,'' 
``Government contract,'' ``subcontract,'' and ``United States,'' and 
replaced the title ``Director'' with the new title, ``Deputy Assistant 
Secretary for Federal Contract Compliance.'' In order to maintain 
consistency in its administration and enforcement of the Federal 
contract compliance laws, OFCCP proposed to make conforming changes to 
the definitions of those terms found in existing Sec. 60-1.3.
    ``Compliance Evaluation.'' Under the existing regulations, the 
``compliance review'' is the primary method utilized to investigate 
contractor compliance

[[Page 44175]]

with the requirements of the Executive Order. The current regulations 
prescribe a three-phase process for conducting compliance reviews: (1) 
An off-site or desk audit review of the contractor's written AAP and 
supporting documentation; (2) an on-site review of the contractor's 
employment policies and activities and investigation of any problem 
areas identified during the desk audit; and (3) where needed, an off-
site analysis of data obtained during the on-site review. Under the 
current regulations, an on-site review is conducted at nearly every 
establishment selected for review, regardless of the results of the 
desk audit.
    The existing ``all or nothing'' approach to compliance reviews is, 
in the view of OFCCP, too restrictive. OFCCP believes that more focused 
and streamlined procedures can be used to determine a contractor's 
compliance status, and that a flexible approach to monitoring 
compliance would enable the agency to target its enforcement resources 
more efficiently.
    The NPRM proposed to revise the compliance review provisions found 
in Sec. 60-1.20 to authorize the agency to utilize ``compliance 
evaluations'' to determine the compliance status of a contractor. The 
NPRM proposed to define the term ``compliance evaluation'' used in 
Sec. 60-1.20(a) of the proposal as ``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.''
    Two contractor associations mentioned the proposed definition of 
``compliance evaluation'' in their comments. They asserted that the 
proposal was vague; that OFCCP had not adequately described how the 
compliance evaluation procedure would be implemented. These commenters 
also questioned whether the proposed review process for contractors 
would be streamlined, because the proposed definition indicated that 
OFCCP could take ``any one or combination of actions'' to determine 
whether a contractor maintained nondiscriminatory employment practices 
and fulfilled its affirmative action obligations.
    The concerns raised by these commenters actually are more properly 
directed at proposed Sec. 60-1.20(a), which describes four examination 
procedures encompassed by the term ``compliance evaluation,'' rather 
than to the language of the proposed definition. Accordingly, a 
response to these comments is provided below in the preamble discussion 
concerning Sec. 60-1.20 of the final rule.
    The proposed definition of ``compliance evaluation'' is carried 
forward in this final rule without substantive change, although the 
wording has been revised slightly for clarity. OFCCP expects that the 
flexible approach to compliance monitoring that is reflected in the 
term ``compliance evaluation'' will reduce compliance burdens for the 
contractors that satisfy their Executive Order obligations. OFCCP also 
believes this new approach will increase the efficiency of its 
enforcement program by allowing the agency to use its most 
comprehensive evaluation procedure--the compliance review--selectively. 
Further, a range of methods for evaluating contractor compliance will 
enable the agency to reach a greater percentage of its contractor 
universe than is reviewed currently.
    ``Contract.'' The term ``contract'' is defined in the current 
regulations as ``any Government contract or any federally assisted 
construction contract.'' The NPRM proposed to amend this definition to 
subsume the term ``subcontractor.'' As was explained in the preamble to 
the NPRM, the revision would obviate the need to make a separate 
reference to ``subcontract,'' each time ``contract'' is referenced, to 
demonstrate that a particular provision applies to both contracts and 
subcontracts.
    One contractor association objected to the proposed definition of 
``contract.'' This commenter believed that the amended definition would 
expand the scope of the Executive Order's coverage and impose 
obligations upon subcontractors that currently do not exist. This 
commenter's concerns are unfounded. The Executive Order always has been 
applicable to agreements which fall within the regulatory definition of 
subcontractors. No substantive changes in the Executive Order's 
coverage were intended nor effected by the proposed change to the 
regulatory definition of contract.
    Another commenter urged OFCCP to amend the definition to include 
``all federally assisted contracts and subcontracts,'' not just 
``federally assisted construction contracts and subcontracts.'' 
However, Section 301 of Executive Order 11246 expressly limits coverage 
of federally assisted contracts to agreements involving federally 
assisted construction.
    The final rule amends the definition of ``contract'' to include 
``subcontract,'' as proposed in the NPRM. The term ``subcontract'' is 
referenced in the rule only when necessary to the context.
    ``Deputy Assistant Secretary.'' The NPRM proposed to substitute the 
new title of ``Deputy Assistant Secretary for Federal Contract 
Compliance Programs'' for the title of ``Director'' in the current 
regulations, and to make the title change throughout the proposed rule. 
No comments were received on this proposal. The final rule adopts this 
title change as proposed, except that the word ``Programs' has been 
dropped in order to more accurately reflect the title.
    ``Government Contract.'' The regulations define ``Government 
contract'' as an agreement ``for the furnishing of supplies or services 
or for the use of real or personal property, including lease 
arrangements.'' The NPRM proposed to revise this definition to clarify 
that contracts covered under Executive Order 11246 include those under 
which the Government is a seller of goods or services, as well as those 
in which it is a purchaser. The proposal substituted a reference to the 
contracts for the ``purchase, sale or use of personal property or 
nonpersonal services'' and a definition of the term ``personal 
services'' for the existing reference to the ``furnishing'' of goods or 
services, or for the use of real or personal property, including lease 
arrangements. Thus, the proposal provided, in relevant part, that a 
``Government contract'' is ``any agreement or modification thereof 
between any contracting agency and any person for the purchase, sale or 
use of personal property or nonpersonal services.''
    Two commenters--a contractor association that represents small 
agricultural firms and a national law firm that counsels Government 
contractors on the requirements of the Executive Order and its 
implementing regulations--objected to the proposed clarification of the 
term ``Government contract.'' Both argued that the proposed definition 
was too broad; that defining Government contract to include sales by 
the Government would extend the Executive Order's reach to activities 
that were not intended to be covered. The law firm was concerned that 
the revised definition of contract would expand the Executive Order's 
coverage to concessionaires and licensees that operate on Government 
lands under nonappropriated fund contracts. Specifically, this 
commenter was referring to those entities that contract with units of 
the Department of Defense called nonappropriated fund instrumentalities 
or ``NAFIs'' to operate a wide range of food, retail, and recreational 
concessions at military installations. The commenter noted that 
concession contracts with NAFIs typically do not involve appropriated

[[Page 44176]]

funds, and do not impose costs to the Government.
    The law firm argued that Executive Order 11246 and its implementing 
regulations contemplated coverage of traditional procurement contracts 
and Government leasing of property, i.e., agreements that require the 
Government to expend appropriated funds. Thus, the law firm contended 
that OFCCP did not have the authority to define ``Government 
contracts'' so as to include the contracts of nonappropriated fund 
instrumentalities. Further, this commenter argued alternatively that 
no-cost concession agreements with NAFIs should not be covered under 
Executive Order 11246 because OFCCP would experience difficulty 
computing their dollar value for the purpose of determining whether the 
contract satisfied the dollar thresholds for basic coverage and for the 
written affirmative action program requirement. This commenter 
requested that OFCCP either modify the definition of ``Government 
contract'' or include an express exemption for concession contracts 
with nonappropriated fund instrumentalities.
    The assertions of this commenter ignore the longstanding policy and 
practice of the agency to cover concession contracts with 
nonappropriated fund instrumentalities or NAFIs. OFCCP consistently has 
taken the position that contracts with nonappropriated fund 
instrumentalities of the Government, such as the Army and Air Force 
Exchange Service, are covered by Executive Order 11246, assuming the 
dollar volume thresholds are met. As instrumentalities of the United 
States, NAFIs meet the definition of contracting agency under the 
regulation at 41 CFR 60-1.3. The fact that these contracts involve 
nonappropriated funds, rather than appropriated funds, is 
inconsequential. The Executive Order and implementing regulations do 
not distinguish between the source of the funds used to pay for the 
contract to determine coverage. Coverage under the Executive Order 
turns on the status of the parties and the nature of the agreement in 
issue.
    OFCCP also disagrees with the commenter's contention that the 
decision cited in the NPRM's preamble, Crown Central Petroleum Corp. v. 
Kleppe, 424 F. Supp. 744 (D. Md. 1976), was limited to lease coverage 
issues, and therefore, does not support the agency's position that 
``Government contract'' covers sales by the Government. The plaintiff 
in Kleppe, the holder of an oil and gas lease from the Interior 
Department, argued that it did not have a Government contract because 
the financial benefit (cash flow) was toward the Government. In 
deciding that a lessee of an oil and gas lease was a ``Government 
contractor,'' the court rejected the argument that the provisions of 
the Executive Order were limited to those situations in which the 
Government is the consumer of goods. Significantly, the court in Kleppe 
concluded that it would be an inconsistent application of the national 
policy to eliminate discrimination in employment to impose the 
Executive Order requirements on employers which had contracted to 
supply goods, services and leased property for use of the Government, 
but not to impose the requirements of the Order on employers which had 
contracted with the Government to receive from it goods, services and 
leased property to be used by the employer.
    The commenter's alternative argument for exempting concession 
contracts with nonappropriated fund entities from the Executive Order 
is also unpersuasive. The regulatory provisions concerning contracts 
and subcontracts for indefinite quantities found in the current 
regulations at Sec. 60-1.5 would govern whether dollar thresholds are 
satisfied for coverage purposes.
    The contractor association cited recipients of disaster relief 
insurance proceeds as an example of a situation that would be newly 
covered under the Executive Order as a result of the proposed amendment 
to the definition of ``Government contract.'' Disaster relief programs 
such as crop insurance and flood insurance usually involve federal 
financial assistance. The only federally assisted contracts covered by 
the Executive Order are federally assisted construction contracts. This 
does not mean, of course, that the agency is taking a position here 
that all transactions involving Federal disaster relief are excluded 
from coverage. Rather, questions relating to coverage under the 
Executive Order necessarily are decided case by case, based on the 
particulars of the program and the nature of the agreement at issue.
    ``Rules, regulations and relevant orders of the Secretary of 
Labor.'' A final rule published on May 3, 1996 (61 FR 19982), relating 
to the establishment of the Administrative Review Board, amended the 
definition of ``Secretary'' to include a ``designee'' of the Secretary 
of Labor. Consequently, 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, is no longer 
necessary, and has been omitted in this final rule.
    ``Subcontract.'' The definition of ``subcontract'' in the current 
regulations refers to agreements ``for the furnishing of goods or 
services.'' The NPRM contained a proposal to revise this definition so 
that it would conform to the NPRM's definition of ``Government 
contract.'' Accordingly, the proposal included a definition of 
``subcontract'' that referenced agreements ``for the purchase, sale, or 
use of personal property or nonpersonal services.''
    The contractor association which represents small agricultural 
firms objected to the proposal, contending that it would expand the 
scope of the Executive Order's coverage. The commenter said the 
proposed definition of ``subcontract'' would be particularly burdensome 
for companies in the agricultural industry, as the subcontracts for a 
producer of fruit products necessarily include growers, pickers, 
haulers, as well as fertilizers and pesticide applicators. This 
commenter raised a similar objection to the proposed definition of 
``contract.'' It appears that these comments were directed primarily at 
the ``necessary to the performance'' part of the existing regulatory 
definition of ``subcontract,'' rather than the proposed ``purchase, 
sale or use'' language. As has been explained previously, the scope of 
coverage under the Executive Order has not been expanded. The existing 
definition of ``subcontract'' under the Executive Order regulations 
applies to agreements which are necessary to the performance of a 
Government contract, or under which part of the performance of the 
Government contract is assumed or undertaken.
    The final rule adopts, without change, the definition of 
``subcontract'' that was published in the NPRM.
    ``United States.'' The NPRM proposed to revise the definition of 
``United States,'' by deleting the references to 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, the Commonwealth of Puerto Rico, 
Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, 
and Wake Island. No comments were received on this proposed revision. 
The proposed definition of ``United States'' is adopted.

Section 60-1.8  Segregated Facilities

    Section 60-1.8 of the current regulations prohibits the maintenance 
of segregated facilities (paragraph (a)) and requires contractors to 
certify that they are in compliance with that obligation (paragraph 
(b)). OFCCP proposed in the NPRM to conform paragraph (a) of Sec. 60-
1.8 with the Executive Order's general

[[Page 44177]]

nondiscrimination requirements by expanding the list of prohibited 
practices to include gender-based segregation, with the proviso that 
separate or single-user restrooms and necessary dressing or sleeping 
areas shall be provided to assure privacy between the sexes. Several 
stylistic changes to existing paragraph (a) also were proposed. In 
addition, the NPRM proposed to eliminate the written certification 
requirement in paragraph (b).
    Nearly half of the commenters addressed the proposed changes 
concerning segregated facilities. Commenters representing the 
constituencies most directly affected by the regulations--minorities, 
women and Government contractors--all supported the proposed 
prohibition against gender-based segregated employee facilities. The 
women's rights groups, in particular, applauded the proposal. In their 
view, the proposed amendment recognizes that sex-segregation remains a 
problem in traditionally male workplaces.
    The comment of the Equal Employment Opportunity Commission (EEOC) 
concerned the requirement that ``separate or single-user restrooms, 
dressing or sleeping areas shall be provided to assure privacy between 
the sexes.'' EEOC suggested that we alert contractors that, under Title 
VII of the Civil Rights Act of 1964, as amended, it would be an 
unlawful employment practice for an employer to deny employment or to 
otherwise adversely affect the employment opportunities of an applicant 
or employee in order to avoid the cost of providing separate or single 
restroom or dressing facilities. Likewise, contractors are advised that 
the costs of providing such separate facilities would not be a defense 
to a charge of sex-based employment discrimination brought under the 
Executive Order.
    Further, all but two comments expressed support for the elimination 
of the written certification requirement in paragraph (b). A women's 
rights organization and a local government entity objected to the 
proposal. The women's rights organization argued that retention of the 
written certification requirement would serve as a useful reminder of 
the new prohibition against sex-segregated employee facilities. This 
commenter suggested that the benefits of the notice-serving function of 
the certification outweighed any time-savings that would be realized by 
elimination of the requirement. The governmental entity similarly 
commented that requiring a contractor to certify that it maintains non-
segregated facilities reflected the essence of the Executive Order, but 
imposed only a minimal burden on contractors.
    OFCCP agrees that contractors should be apprised of their 
obligation under the Executive Order regulations to ensure that 
employee facilities are not segregated on the basis of sex, except 
where it is necessary to safeguard privacy between men and women. The 
agency, however, is of the view that the prohibition against segregated 
facilities can be effectively enforced without the benefit of the 
written certification. Eliminating the certification will not, for 
example, affect the contractor's obligation to maintain facilities on a 
non-segregated basis. In short, the written certification is a 
paperwork requirement that does not produce commensurate benefit, and 
its repeal is consistent with the Administration's regulatory reform 
initiative.
    Another commenter asked that OFCCP clarify in the final rule that 
repeal of the written certification will not expose prime contractors 
to liability for the violations of the Executive Order committed by 
their subcontractors. OFCCP accepts the point that the repeal will not 
expose prime contractors to liability for violations committed by their 
subcontractors. However, it is not necessary to codify the point in the 
regulations. Under the existing regulations, prime contractors are not 
responsible for the compliance of their subcontractors with the 
requirements of the Order and regulations. Consequently, the 
certification of non-segregated facilities has not, as the comment 
seems to suggest, served to shield prime contractors from liability for 
the noncompliance of their subcontractors. The certification merely has 
provided notice to the prime contractors of whether their 
subcontractors (in the latters' view at least) are complying with the 
nondiscrimination requirements of the order.
    The final rule amends paragraph (a) and deletes paragraph (b) of 
Sec. 60-1.8 as was proposed in the NPRM.

Section 60-1.12  Record Retention

Section 60-1.12(a)  General Requirements
    The obligation to retain relevant employment records is implicit in 
some of the current regulatory requirements (e.g., those relating to 
maintaining data on applicants, hiring, transfers and promotions, and 
developing and updating written affirmative action programs). However, 
the regulations, with one exception, do not prescribe a record 
retention period. That exception is the requirement under the Uniform 
Guidelines on Employee Selection Procedures published at 41 CFR part 
60-3 (hereinafter UGESP) to keep certain adverse impact data for two 
years after the adverse impact has been eliminated.
    Paragraph (a) of the proposal would amend the record retention 
obligation in several ways. First, proposed paragraph (a) would make 
the record retention obligation applicable to any personnel or 
employment record made or maintained by the contractor and lists 
examples of the types of records that must be retained. Second, 
proposed paragraph (a) would establish the required record retention 
period as two years. The proposal would establish a one-year record 
retention period for contractors that employ fewer than 150 employees 
or that do not have a Government contract of at least $150,000. Third, 
proposed paragraph (a) would provide that when a contractor has been 
notified that a complaint has been filed, a compliance evaluation has 
been initiated or an enforcement action has been commenced, the 
contractor shall preserve all relevant personnel records until the 
final disposition of the action.
    Several of the commenters expressed views on proposed paragraph 
(a). The civil rights and women's rights organizations commended the 
proposal to make record retention requirements explicit. They viewed 
the addition of a record retention regulation as essential to effective 
enforcement and said it would ensure consistency with the regulations 
under Title VII and Section 503.
    The contractor community opposed the record retention proposal. Two 
contractor associations asserted that proposed paragraph (a) was too 
broad. They claimed that the proposal would expand the scope of records 
subject to the retention requirement; that is, the examples of records 
listed suggest that any document related to an employee or employment 
decision must be retained for two years. These commenters contended 
further that the proposed regulation would impose a considerable 
burden, particularly on the larger contractors that have employment 
related activities which might generate millions of records.
    The concern that the proposal would oblige contractors to maintain 
records beyond current requirements is unfounded. The NPRM explained 
that the proposed record retention requirement (paragraph (a)) comports 
with the analogous record retention requirements under Title VII and 
the

[[Page 44178]]

Americans with Disabilities Act (ADA). In addition, proposed paragraph 
(a) is consistent with the provisions adopted in the Section 503 final 
rule. The types of employment records covered by the record retention 
requirement, listed in proposed paragraph (a), include items not listed 
in the corresponding Title VII and ADA regulations. But, as EEOC noted 
in its comment, those additional items--the results of any physical 
examination, job advertisements and postings, applications and resumes, 
tests and test results, and interview notes--are examples of ``any 
personnel or employment record made or kept,'' and, therefore, clearly 
fall within the coverage of the existing Title VII and ADA record 
retention rule.
    Another contractor association contended that the proposed 
regulatory language was inadequate because it failed to answer 
contractors' recurrent questions embraced by record retention 
obligations under Executive Order 11246. This commenter argued that the 
regulations should include guidance on: (1) Who is an ``applicant'' for 
the purposes of the record retention requirement; and (2) whether and 
to what extent the record retention requirement applied when a 
contractor used electronic bulletin boards and the Internet as 
recruitment sources.
    OFCCP has issued the following guidance on the meaning of the term 
``applicant'':

    The precise definition of the term `applicant' depends upon [a 
contractor's] recruitment and selection procedures. The concept of 
an applicant is that of a person who has indicated an interest in 
being considered for hiring, promotion, or other employment 
opportunities. This interest might be expressed by completing an 
application form, or might be expressed orally, depending upon the 
[contractor's] practice. Question and Answer No. 15, Adoption of 
Questions and Answers to Clarify and Provide a Common Interpretation 
of the Uniform Guidelines on Employee Selection Procedures (44 FR 
11996, 11998 (March 2, 1979)).

Accordingly, whether an individual will be considered an applicant 
turns on the employee selection procedures designed and utilized by the 
contractor. OFCCP is studying the range of ways contractors are 
utilizing electronic media in their employee selection processes and 
intends to issue guidance responding to questions most frequently asked 
by contractors regarding this issue.
    Commenters from the contractor community criticized the two-year 
record retention period proposed for larger contractors. These 
commenters argued that it was inconsistent for OFCCP to impose a two-
year retention period, when the retention period under Title VII is 
one-year. They argued that, because OFCCP follows the principles 
developed under Title VII case law to enforce the Executive Order, the 
agency should adopt the EEOC rule. These same commenters said that 
OFCCP had underestimated the administrative and storage costs 
associated with maintaining an additional year of records.
    These comments ignore the differences in the enforcement schemes of 
EEOC and OFCCP. Reviews of contractors' compliance with the Executive 
Order and regulations cover a two-year period. The policy and practice 
are to examine the contractor's personnel policies and activities for 
the two years preceding the initiation of the review, and to assess 
liability for discriminatory practices dating back two years. The two-
year record retention period provides greater assurance that relevant 
records will be available during OFCCP compliance evaluations. In 
contrast, EEOC's enforcement of Title VII is triggered exclusively by 
charges, which must be filed within 180 days (or, in deferral 
jurisdictions, 300 days) of an alleged violation. EEOC's one-year 
retention period is designed to ensure that relevant records are not 
discarded before the expiration of the complaint filing period.
    Turning to the concern about the burdens on contractors, OFCCP 
believes that requiring larger contractors to retain records for an 
additional year will result in only a minimal increase in burden. As 
was noted in the preamble to the NPRM, many large employers and some 
smaller employers as well, are increasingly maintaining records 
electronically. In such instances, compliance with the record retention 
requirement will impose little or no additional burden. Moreover, the 
decision to establish a one-year record retention period for smaller 
contractors--the same period required by EEOC--is part of the agency's 
effort to maintain burdens associated with record keeping at a minimal 
level. The one-year rule also will accommodate those smaller 
contractors that are less likely to maintain electronic records.
    Two contractor associations commented on the separate record 
retention requirements for larger and smaller contractors. One 
association questioned whether OFCCP had authority under the U.S. 
Constitution and Federal procurement laws to tie the record retention 
requirement to workforce and contract size. This comment overlooks the 
fact that size distinctions are common in regulatory schemes. Indeed, 
the existing Executive Order regulations provide different requirements 
for smaller contractors (e.g., those that employ fewer than 50 
employees or do not have a contract of at least $50,000). Such 
contractors, for example, are exempted from the regulatory requirement 
to develop and maintain a written AAP.
    The other contractor representative raised questions regarding the 
record retention obligations of contractors who are at or near the 
thresholds that trigger the different retention periods. Specifically, 
the commenter questioned what would happen if the employment levels or 
contract values exceed or fall below the 150 employees, $150,000 
thresholds during the course of the contract. A change in status 
relating to either threshold would affect the record retention 
obligation. If the number of employees should fall below 150 or if the 
contractor no longer has a contract of at least $150,000, the 
contractor would not be required to retain employment records for two 
years. The requirement to keep records for two years would become 
effective again on the date that the contractor met the thresholds of 
150 employees and a contract of $150,000. The record retention 
requirement, however, would not be applied retroactively, i.e., the 
change from one year to two years would be phased in day-by-day. But 
see the discussion regarding the obligation to maintain records once a 
compliance evaluation has commenced, which follows.
    One commenter expressed disapproval of the requirement in proposed 
paragraph (a) that contractors retain all relevant records once a 
compliance evaluation has been initiated. This commenter contended that 
the requirement was burdensome and unfair to contractors, particularly 
because of the proposal to eliminate the provision in Sec. 60-60.7, 
which allows the agency 60 days to complete a compliance review.
    The purpose of this record retention requirement is to ensure that 
OFCCP can obtain all relevant documents during a compliance 
investigation or enforcement action. OFCCP appreciates the contractor's 
concerns about the timely completion of compliance evaluations, but 
disagrees with the assertion that the schedule has to be codified in 
the regulations. In the preamble discussion concerning Sec. 60-1.20 of 
the final rule, and again in the discussion regarding part 60-60 of the 
regulations, OFCCP explains that the agency's standards for timeliness 
and work schedules are not derived solely from the regulations. 
Therefore, there would be set time frames for completing

[[Page 44179]]

compliance evaluations even if the regulatory provisions were 
eliminated.
    The final rule adopts the record retention provisions proposed in 
the NPRM without change.
Section 60-1.12(b)  Affirmative Action Programs
    Paragraph (b) of the proposal provides that a contractor 
establishment required to develop a written affirmative action program 
(AAP) shall maintain the AAP for the current year and preserve the AAP 
for the preceding year, together with the supporting documentation, 
including good faith efforts undertaken. Three commenters from the 
contractor community objected to proposed paragraph (b). They 
questioned the relevance of information contained in an expired AAP and 
expressed concern that OFCCP would examine the AAP for deficiencies. 
One of the commenters contended that the only possible reason OFCCP 
could have for requesting an AAP from the preceding year is to see if 
one exists. This commenter urged OFCCP to include a statement to that 
effect in the final regulation.
    The written AAP serves dual purposes. The AAP is developed 
primarily to assist the contractor in monitoring its employment 
practices to ensure that they are nondiscriminatory and that 
affirmative action is taken to ensure equal employment opportunity. 
OFCCP also reviews and relies upon the AAP to determine whether the 
contractor is complying with the Executive Order and regulations. The 
contractor's affirmative action performance (e.g., personnel activity, 
goals progress and good faith efforts to meet goals) is examined for at 
least the last full AAP year. However, a compliance evaluation may be 
scheduled at any time during the year. If, at the time of the review, 
the contractor is six months or more into its current AAP year, OFCCP 
examines performance under both the current year and the prior year 
AAP. Accordingly, the requirement in proposed paragraph (b) that the 
contractor preserve the AAP for the previous year would ensure the 
availability of an AAP covering a full AAP year.
    In addition, under the current regulations the AAP for the current 
year must contain a progress report on goals for the previous AAP year. 
Whether progress or little or no improvement was made in the goal 
areas, the AAP for the previous year should provide an explanation of 
the efforts undertaken and the results achieved. For example, the AAP 
and documentation of good faith efforts may describe the contractor's 
outreach and recruitment activities designed to increase its pool of 
female or minority applicants, or training programs instituted to 
enhance the skills and talents of incumbent employees with an eye to 
increasing the pool of those eligible for promotion. In other words the 
AAP from the previous year may contain information that would allow an 
evaluation of those commitments that are directly related to the 
performance of the contractor in the current year. In addition the 
affirmative action obligation is not a one year requirement. Rather, it 
is a continuing obligation and maintaining the AAPs in the fashion 
proposed in paragraph (b) enables OFCCP to assess the quality and 
effectiveness of the contractor's affirmative action commitments on a 
multi-year basis.
    The regulation in proposed paragraph (b) is adopted without change.
Section 60-1.12(c)  Failure To Preserve Records
    Paragraph (c) of the proposed rule provides that the failure to 
maintain and preserve the records as proposed in paragraphs (a) and (b) 
is a violation of Executive Order 11246. Additionally, paragraph (c) 
proposes that a contractor's failure to preserve required records or 
destruction of such records, may raise a presumption that the records, 
if available, would have been unfavorable to the contractor. Paragraph 
(c) of the proposed rule includes a proviso that the presumption shall 
not apply if the contractor demonstrates that the destruction or 
failure to preserve records resulted from circumstances beyond the 
contractor's control.
    EEOC commented that its Compliance Manual limited application of 
the ``adverse inference rule'' to situations in which an employer acted 
with the intent to defeat the purposes of Title VII. The view of EEOC 
is that the proposal does not limit the adverse inference to instances 
of deliberate destruction with an intent to frustrate the purposes of 
the Executive Order.
    OFCCP believes that clarification would be helpful. The adverse 
inference presumption in proposed paragraph (c) is not limited to 
situations in which the destruction or failure to preserve records may 
be attributed to the willful conduct of the contractor. The agency 
intends to invoke the presumption on a case-by-case basis as the 
circumstances warrant. The proposed rule, in recognition of this 
discretionary approach, states that a presumption may arise if the 
contractor destroyed or failed to preserve records.
    One commenter suggested that we amend the proposal to expressly 
provide a procedure that would permit the contractor to rebut the 
presumption that the records destroyed or not maintained were 
unfavorable. The suggested amendment is unnecessary. The presumption is 
rebuttable, and contractors will have a full opportunity to submit 
evidence to refute the inference.
    Another commenter recommended that the final rule set forth the 
sanctions that may be imposed for violations of the record retention 
requirements. The sanctions described in Sec. 60-1.27 may be imposed 
for any violation of Executive Order 11246 or the implementing 
regulations, including Sec. 60-1.12. A separate sanction provision for 
violations of the record retention regulations, accordingly, is 
unnecessary.
    The final rule adopts paragraph (c) of the proposal without change.
Section 60-1.12(d)  Effective Date
    Paragraph (d) of the proposal provides that the contractor is 
obligated to preserve only those records which are created or kept on 
or after the effective date of this rule. No comments were received on 
this provision. The final rule adopts paragraph (d) as proposed.

Section 60-1.20  Compliance Evaluations

    The compliance review is the primary method of evaluating a 
contractor's compliance with the Executive Order and regulations 
Paragraph (a) of the current Sec. 60-1.20 describes the purpose of the 
compliance review and provides that the review shall consist of a 
comprehensive analysis of each aspect of a contractor's employment 
practices, and where appropriate, include recommendations for 
appropriate sanctions.
    The NPRM would amend paragraph (a) to authorize OFCCP to use a 
range of methods to revaluate a evaluate a contractor's compliance with 
the regulations. Specifically, paragraph (a) would provide that a 
compliance evaluation may consist of any one or a combination of the 
following: (1) A compliance review, (2) of off-site review of records, 
(3) a compliance check, and (4) a focused review.
    Nearly all commenters addressed the proposed compliance evaluation 
regulation. The commenters from the women's rights and civil rights 
communities supported the proposal. They opined that the flexible 
approach of the proposal would improve the efficiency of OFCCP and 
permit the agency to target resources better. A contractor also 
supported proposed paragraph (a) and offered that it was a thoughtful 
proposal to streamline the compliance review process.

[[Page 44180]]

    Some of the contractor associations favored the concept of having a 
range of evaluation methods to determine compliance with Executive 
Order 11246 and the regulations, but expressed reservations about 
various aspects of the proposed regulation. For example, one commenter 
questioned the off-site review of records, especially confidential 
data. Another questioned whether the ``compliance check'' would entail 
an on-site visit, off-site review of records, or both. Another 
commenter requested that the rule be clarified as to whether the 
additional options for evaluating compliance--the off-site review of 
records of records, the compliance check and the focused review--would 
constitute a complete evaluation. Specifically, this commenter wanted 
to know whether the current practice of reviewing a contractor no more 
frequently than once every 24 months would continue under the expanded 
system.
    Three commenters from the contractor community objected outright to 
the proposed compliance evaluation regulation. One of the contractor 
associations contended that the proposed rule would give OFCCP 
unbridled authority to evaluate contractor compliance, and that 
contractors would be subjected to endless requests for information, 
data, and records if the rule were finalized. In addition, this 
commenter contended that contractors needed regulatory notice of how 
each type of compliance evaluation would be implemented. Similarly, 
another commenter argued that the procedures for each of the evaluation 
methods needed to be spelled out in the regulations with the same level 
of detail provided in the current regulations concerning the compliance 
review process. These commenters believed they should have the 
opportunity to comment upon a proposed regulation that specified, among 
other things, the number of evaluation methods the contractor could 
expect, the frequency of such evaluations, and the time frames for 
completing each method of evaluation.
    OFCCP has made revisions in the final rule to provide more detail 
about the methods for evaluating contractor compliance. The revisions 
are explained below. Further, OFCCP agrees that contractors should be 
apprised of how the agency intends to implement the proposed compliance 
evaluation procedures. The agency disagrees, however, with the notion 
that the particulars of implementation must be included in the 
regulations.
    The Federal Contract Compliance Manual (FCCM) contains the policy 
guidance interpreting the Executive Order and regulations, as well as 
agency instructions for implementing the regulatory provisions. OFCCP's 
Compliance Manual currently describes the procedures for conducting 
compliance reviews. The aspects of implementation addressed in the 
Manual include the time frames for conducting the review, how to open 
and close a review, and how frequently reviews should be conducted. The 
FCCM is the appropriate medium to specify the procedures for conducting 
the different types of compliance evaluations. The agency, therefore, 
declines to adopt the changes suggested by some of the commenters. The 
final rule adopts the compliance evaluation provisions of proposed 
paragraph (a). However, paragraph (a) of the final rule differs from 
the proposal by including expanded descriptions of the activities 
contemplated under each evaluation method. The final rule for example, 
clarifies that a compliance review is the same comprehensive 
examination of the contractor's employment practices that is prescribed 
by the current regulations. In addition, the description of the off-
site review of records is revised in the final rule to explain that the 
scope of the examination would be substantially similar to the desk 
audit phase of the compliance review. Further, the final rule provides 
that the compliance check involves an on-site visit to an establishment 
to review the contractor's books and records for the purpose of 
determining whether: (1) Data and other information previously 
submitted by the contractor are accurate and complete; (2) the 
contractor has maintained records consistent with the requirements of 
Sec. 60-1.12; and/or (3) the contractor has developed an AAP consistent 
with the requirements of Sec. 60-1.40.
    Contractor fears of repeated and unending evaluations are 
unfounded. OFCCP always has been sensitive to contractor concerns about 
the amount of time, money and personnel resources consumed by 
compliance reviews. Thus, the agency's practice normally has been to 
conduct a compliance review of a contractor no more frequently than 
once every two years. Additionally, the agency's Compliance Manual 
instructs the compliance officer to complete the compliance review 
within 60 days from the date the AAP is received. (See FCCM C204). The 
compliance officer must request an extension of time whenever it 
becomes apparent that the compliance review cannot be completed within 
the allotted time. (Id.)
    OFCCP intends to continue to follow the currently prescribed time 
frames whenever the compliance review is the method used to evaluate a 
contractor's performance. The agency also intends to establish similar 
standards regarding the frequency and duration of the off-site review 
of records, the compliance check, and the focused review, to ensure 
that the compliance evaluations authorized by Sec. 60-1.20 are not 
overly intrusive. Finally, OFCCP will develop other policies and 
procedures for compliance officers to follow when implementing these 
new evaluation methods. That policy and procedural guidance will be 
incorporated in the Compliance Manual, and thereby made available to 
the public, before any of the new methods for evaluating contractor 
compliance are utilized.
Section 60-1.20(d)  Preaward Compliance Evaluations
    Section 60-1.20(d) in the current regulations requires contracting 
agencies to obtain clearance from OFCCP prior to awarding Federal 
supply and service contracts of $1 million or more. The current 
regulations require OFCCP to conduct a preaward compliance review if 
the facility at which the contract will be performed has not undergone 
a compliance review within the preceding 12 months, and to provide its 
report of compliance within 30 days of receipt of the request from the 
contracting agency.
    The NPRM would revise paragraph (d) of the current regulation to 
make the preaward compliance evaluation optional. Under paragraph (d) 
of the proposed rule, OFCCP would have 15 days to inform an awarding 
agency of its intentions to conduct a preaward compliance evaluation. 
The proposed rule would allow OFCCP an additional 20 days from the date 
of the notice of intention to conduct the preaward evaluation to 
provide the conclusions regarding compliance to the contracting agency. 
The proposed rule further provides that clearance shall be presumed if 
OFCCP does not give notice of its intention to conduct a preaward 
compliance evaluation or does not report its conclusions within the 
prescribed time periods.
    Several comments urged that the proposal be revised. Women's rights 
and civil rights groups unanimously opposed the proposal to make 
preaward compliance evaluations optional. They contended that changing 
the preaward review from a mandatory function to a discretionary 
function would seriously diminish the effectiveness of a compliance 
procedure they viewed as an important enforcement tool. A few

[[Page 44181]]

expressed the fear that preawards would be discontinued entirely if 
they were left to the discretion of the agency. As an alternative to 
making all preaward compliance evaluations optional, some commenters 
suggested that OFCCP could target its enforcement resources more 
efficiently by: (1) Raising the $1 million minimum threshold to reflect 
inflation over the last 25 years; and (2) expanding the 30-day time 
allowed to conduct preaward compliance evaluations.
    Most of the comments from the contractor community on proposed 
paragraph (d) were supportive of the proposal to make preaward 
compliance evaluations optional. However, one contractor and the 
Department of Defense recommended that the agency eliminate preawards 
entirely, and adopt a post-award notification and post-award review 
procedure. Another contractor questioned the feasibility of the 
proposed time frames for conducting preaward compliance evaluations, 
noting that proposed paragraph (d) requires OFCCP to report its 
conclusions about compliance within 20 days, while proposed paragraph 
(e) would allow the contractor 15 days to submit an AAP.
    The NPRM discusses the problems associated with the current 
preaward process at length, so that discussion will not be recounted 
here. (See 61 FR 25516, 25519.) The NPRM explained that several models 
for modifying the preaward provisions were considered during the 
development of the proposal, including an increase in the dollar amount 
of the preaward contract threshold.
    Upon reconsideration and in response to the comments, OFCCP has 
decided to maintain the current mandatory nature of preaward 
evaluations, but to raise the threshold trigger for the conduct of the 
preaward evaluation. Accordingly, the final rule requires that a 
preaward compliance evaluation of a prospective contractor be conducted 
when the amount of the contract is $10 million or more, and that a 
preaward evaluation of known prospective subcontractors be conducted 
when the amount of the subcontract is $10 million or more, unless OFCCP 
has conducted an evaluation and found them to be in compliance with the 
Order within the preceding 24 months. These increases in contract 
amount and compliance history thresholds will reduce the number of 
preaward compliance evaluations OFCCP will need to conduct. A reduction 
in the number of preaward evaluations will permit OFCCP greater 
flexibility in targeting its enforcement resources. Continuing the 
requirement that the agency conduct preawards, albeit of a smaller 
universe, addresses the concerns of the civil rights and women's rights 
groups that a discretionary preaward evaluation process would seriously 
undermine the utility of preaward compliance evaluations as an 
enforcement tool. Under the final rule, the preaward evaluation process 
will remain a significant component of the Executive Order enforcement 
program by targeting those contractors who benefit most from taxpayers-
funded Government contracts.
    OFCCP also studied the option of eliminating the preaward 
provisions, and considered replacing preawards with post-award 
compliance evaluations. In OFCCP's view, however, the preaward 
evaluation still has value as an enforcement tool. The final rule will 
retain the preaward clearance time frames contained in the proposal to 
ensure that the preaward evaluation process is conducted expeditiously. 
The reduction of the number of preaward evaluations which will be 
conducted under the final rule and the regulatory time frames for 
completing the evaluations, coupled with the administrative changes 
OFCCP is making to streamline the preaward clearance process, will 
significantly decrease the burden on contracting agencies of processing 
Executive Order preaward clearance requests during the procurement 
process.
    As for the question regarding the compatibility of the time frames 
in paragraphs (d) and (e) of the proposal, the deadline for the 
submission of documents in proposed paragraph (e) would not apply to 
preaward compliance evaluations. Under the existing preaward 
procedures, the contractor is not asked to submit its AAP and support 
data for review. Currently, OFCCP either conducts an abbreviated desk 
audit or review of the AAP and support data on-site, or dispenses with 
review and analysis of the AAP and support data altogether. Contractors 
can expect that OFCCP will continue to adjust its compliance evaluation 
procedures to meet the preaward clearance time frames in paragraph (d).
    The final rule revises paragraph (d) of Sec. 60-1.20 by requiring 
that a preaward compliance evaluation of a prospective contractor be 
conducted when the amount of the contract is $10 million or more and a 
preaward evaluation of its known first-tier prospective subcontractors 
be conducted when the amount of the subcontract is $10 million or more, 
unless OFCCP has conducted an evaluation and found them to be in 
compliance in the preceding 24 months. The final rule establishes time 
frames for OFCCP to inform the awarding agency of the necessity for 
conducting a preaward evaluation and for OFCCP to provide its 
conclusions about the contractor's compliance status.
Section 60-1.20(e)  Submission of Documents; Standard Affirmative 
Action Formats
    Under Sec. 60-60.2, a contractor must submit its AAP and supporting 
documents to OFCCP within 30 days of a request. If the contractor fails 
to submit the documents within the prescribed time period, the 
enforcement procedures specified in Sec. 60-1.26 are applicable. The 
NPRM proposed to incorporate the provisions of Sec. 60-60.2 as a new 
paragraph (e) of Sec. 60-1.20, with one modification. Under proposed 
paragraph (e), the time for submission of an AAP and supporting 
documentation would be reduced from 30 days to 15 days.
    Several comments on the proposed change in time frames were 
received. The commenters from the civil rights and women's rights 
communities supported the proposal. They viewed 15 days as more than 
adequate time to submit an AAP because, they argued, contractors are 
required to have an AAP in place as a condition of doing business with 
the Federal Government. These commenters believed the 15-day deadline 
would address the unacceptable (and unlawful) practice of contractors 
waiting until a compliance review has been scheduled before they 
develop an AAP.
    The commenters from the contractor community objected to the 
proposal and strongly urged retention of the 30-day time frame for 
submission of the AAP and supporting data. One commenter observed that 
the 15-day requirement assumes that a contractor could simply pull the 
AAP out of a file, copy it, and send it to OFCCP. But, according to 
this commenter and others, an AAP is a fluid, evolutionary document 
rather than a static piece of paper. They asserted that the 15-day 
deadline ignored other realities of compliance reviews and how AAPs are 
developed and updated.
    The commenters said that even where a detailed AAP has been 
developed contractors frequently use the 30 days provided under the 
current regulations to update the support data. They pointed out that a 
request for an AAP may require that the contractor submit data on 
personnel activity for the current goal year, which normally would be 
compiled and analyzed during the 30-day period. Further, the commenters 
identified several situations

[[Page 44182]]

which might make it difficult for a contractor to meet the 15-day 
deadline. The request for the AAP might come when the company officials 
responsible for updating or reviewing the AAP are unavailable, or at 
the expiration of the AAP year and before the contractor has had an 
opportunity to review and analyze the current labor force statistics in 
order to update its AAP.
    In recognition of the concerns of the contractors, OFCCP has 
decided not to adopt the 15-day deadline in the final regulation. The 
final rule retains the existing 30-day time frame for the submission of 
the AAP and support data.
    The current regulation at Sec. 60-60.3(a) states, in relevant part, 
that ``Contractors may reach agreement with OFCCP on nationwide AAP 
formats or on frequency of updating statistics.'' OFCCP proposed also 
to incorporate this provision, without any changes, in new paragraph 
(e).
    Two contractor associations and one contractor commented on this 
provision. All favored the inclusion of the provision in the final rule 
and viewed it as a change in agency policy on nationwide AAPs, which 
also are called standardized affirmative action formats or ``SAAFs.'' 
Some officials in OFCCP had been critical of the nationwide AAP formats 
that had previously been negotiated and viewed them as impediments to 
effective enforcement of the Executive Order. In response to these 
agency concerns, a moratorium on new SAAF agreements was issued on 
December 16, 1994. That moratorium remains in effect today. Thus, the 
inclusion of the provision regarding nationwide AAP formats does not 
represent a change in agency policy. Rather, it preserves the status 
quo until OFCCP completes its evaluation of the concept.
    The final rule adopts all the provisions proposed in paragraph (e) 
except the change proposed in the time frame for the submission of 
documents. The existing 30-day time frame for submitting the AAP and 
supporting documents is retained in the final regulation.
Section 60-1.20(f)  Confidentiality
    The regulation at Sec. 60-60.3 provides that information made 
available during the on-site review may be taken off-site if the 
compliance officer finds that further analysis is required to make a 
determination of compliance. Section 60-60.4 contains procedures under 
which contractors may seek rulings on the relevancy of data requested 
for off-site analysis. The regulation also prescribes procedures for 
preserving the confidentiality of contractor data removed off-site for 
analysis.
    Under the current regulations, a contractor concerned about the 
confidentiality of information such as employee names and compensation 
data may submit alphabetic and coded data for desk audit purposes. 
However, the contractor must provide the compliance officer with full 
access to all relevant data on-site, as is directed by Sec. 60-1.43. 
The information to be removed for off-site analysis may be coded, but 
only if the key to the code is made available to the compliance 
officer. The contractor also may seek a ruling from the District 
Director as to the relevance of documents requested for off-site 
analysis. The District Director is allowed 10 days to issue a ruling, 
the contractor 10 days to appeal the District Director's ruling to the 
Regional Director, and the Regional Director 10 days to issue a final 
ruling. The current regulations provide that, during the pendency of 
the relevancy determination, the contractor must allow the compliance 
officer to remove the disputed information off-site.
    The NPRM would delete part 60-60 of the regulations and transfer 
the provisions found in Sec. 60-60.3(c) and Sec. 60-60.4 to a new 
Sec. 60-1.20(f). The new paragraph (f) would incorporate the 
substantive provisions of the current regulations, but would revise the 
procedures for rulings on relevancy. The proposed rule would eliminate 
the provision concerning the removal of disputed data off-site pending 
the ruling on relevancy. In addition, paragraph (f) of the proposed 
rule would replace the existing 10-day time frames for issuing rulings 
on relevancy with the requirement that the District Director and 
Regional Director issue their rulings ``promptly.''
    The provisions concerning confidentiality and removal of data for 
off-site analysis generated extensive comments from the contractor 
community. All the commenters contended that the proposed rule did not 
ensure protection of confidential or proprietary information during 
compliance evaluations. Some commenters claimed that the provision 
requiring the contractor to make the key to coded data available to a 
compliance officer posed a threat to confidentiality. They recommended 
amending the proposed rule to provide that the key to coded data may 
never be taken off-site.
    In fact, no changes to the provisions regarding the coding of 
confidential data were proposed. The proposed rule would continue the 
current regulatory requirement that the contractor make the key to 
coded data available to the compliance officer. If the key to coded 
data is needed for off-site analysis, contractors can be assured that 
confidentiality will be protected, as it has been under the current 
regulations. Where the contractor codes data that are submitted for 
desk audit purposes, the current practice is that the key to the code 
is retained by the contractor and made available to the compliance 
officer during the on-site review. (See FCCM at 2GO1). That practice 
would continue also under the proposed regulation.
    Other commenters expressed concern about the provisions regarding 
rulings on the relevancy of data requested for off-site analysis. They 
argued that the determination of relevancy should be made prior to the 
removal of any confidential data off-site. The commenters asserted also 
that the regulations should contain definite time frames for the 
District Director and Regional Director to issue rulings on relevancy.
    Although the NPRM proposed modifications to the procedures for 
obtaining rulings regarding the relevance of data requested for off-
site analysis, OFCCP has decided not to adopt those changes in the 
final regulation. The final rule retains the provision that the 
contractor must allow removal of the disputed data off-site pending a 
final ruling on relevancy. Upon further consideration, OFCCP believes 
that eliminating the provision regarding off-site availability pending 
a relevance determination would prolong the compliance evaluation 
process and adversely impact efficiency and effectiveness. The 
resumption of an interrupted compliance evaluation might be delayed 
well beyond the date the final ruling regarding relevancy is issued 
because the compliance officer may have initiated another compliance 
evaluation in the interim. The current regulation and practice allows 
the compliance officer to proceed with the investigation while the 
trail is still fresh and close the compliance evaluation within a 
reasonable amount of time.
    Further, in response to contractors' criticism concerning the 
proposed removal of the definite time frames for issuing relevancy 
determinations, OFCCP has decided not to adopt that provision of the 
proposal. Instead, the final rule provides that the District Director 
shall issue a ruling within 10 days, and that if the contractor appeals 
the District Director's ruling to the Regional Director, the Regional 
Director shall issue a final ruling within 10 days.
    The comments concerning proposed paragraph (f) reveal that the 
contractors' overriding concern is that confidential or proprietary 
information obtained by

[[Page 44183]]

OFCCP for off-site analysis may be disclosed pursuant to the Freedom of 
Information Act (FOIA). Several commenters recommended that the rule be 
amended to require that all confidential data be returned at the 
conclusion of the complaint investigation or compliance evaluation. One 
commenter further suggested that the amendment state expressly that 
contractor data are not subject to disclosure under FOIA while the 
investigation or compliance evaluation is open, and that the compliance 
review or investigation is not considered closed until all data are 
returned to the contractor.
    OFCCP follows the Department's regulations implementing the Freedom 
of Information Act and Executive Order 12600 when processing FOIA 
requests. The Department's FOIA regulations are found at 29 CFR Part 
70. Data obtained from contractors that are contained in files 
connected with open compliance evaluations, complaint investigations or 
administrative enforcement actions are not disclosed. The agency 
considers such information to be part of an investigatory file complied 
for law enforcement purposes within the meaning of 5 U.S.C. 552(b)(7), 
and therefore exempt from mandatory disclosure under FOIA. The 
exemption in FOIA for information compiled for law enforcement 
purposes, however, is not a permanent one. Once the compliance 
evaluation, complaint investigation, or enforcement action has been 
concluded and the investigatory files exemption no longer is in effect, 
another exemption would need to apply in order to protect the 
information in the files from disclosure in response to a FOIA request. 
For example, information obtained from contractors arguably might be 
protected from disclosure under the exemption for trade secrets or 
commercial or financial information that is privileged or confidential 
(5 U.S.C. 552(b)(4)).
    The Department's FOIA regulations set forth procedures for 
processing requests for the disclosure of information and material 
provided by business submitters. Those regulations permit the 
contractor to designate specific information as confidential commercial 
information at the time of submission to the Department. 29 CFR 
70.26(b). In addition, the Department's FOIA regulations require OFCCP 
to give the contractor written notice of any request encompassing 
confidential commercial information, and to provide the contractor an 
opportunity to object to disclosure. 29 CFR 70.26 (d) and (e).
    OFCCP previously has considered the question of whether assertedly 
confidential data may be returned to the contractor upon completion of 
the investigation or compliance evaluation. The position of OFCCP is 
that the Federal records retention requirements do not permit the 
agency to return data obtained from the contractor during a compliance 
review or complaint investigation upon completion of the action. The 
information and records received from the contractors in connection 
with enforcement activities constitute Government records. As such, 
their disposition is strictly prescribed by statute and regulation and 
must be made in accordance with the agency's records management 
program, with the approval of the Archivist of the United States. The 
documents may be disposed of only by the methods defined by the 
statute, which do not include returning them to the originating source, 
i.e., the contractor, but instead call for disposal by sale or salvage, 
donation for preservation and use, or destruction.
    Paragraph (f) of the proposal is adopted in the final rule with the 
changes regarding the procedures for issuing relevancy determinations 
described herein. In addition, at the suggestion of one commenter, the 
final rule substitutes ``key to coded data'' for the reference to ``the 
code'' to the data. Thus, the final rule provides, in relevant part, 
``Such data may only be coded if the contractor makes the key to the 
code available to the compliance officer.''
Section 60-1.20(f)  Access to Information
    Section 60-60.4(d), concerning public access to information, 
describes outdated procedures under which requests received from the 
public for information obtained from the contractor previously were 
processed. OFCCP proposed to substitute provisions in the current rule 
with a statement of the agency's current practices. Accordingly, 
paragraph (g) of the proposal provides that ``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.''
    No comments were received on paragraph (g) of the proposal. The 
provision is adopted in the final rule as proposed.

Section 60-1.26  Enforcement Proceedings

    The NPRM would revise and restructure, for clarity, Sec. 60-1.26, 
which specifies the Executive Order enforcement procedures. With the 
exception of the provisions relating to the calculation of interest, 
the proposal would not make substantive changes to this section. 
Subsection (a) of the proposal would apply to both administrative and 
judicial enforcement. Proposed subsection (b) would address 
administrative enforcement procedures. Subsections (c) and (d) of the 
proposed regulation would cover judicial enforcement proceedings 
initiated by the Department of Justice.
    Several of the proposed changes are consistent with provisions 
included in the Section 503 implementing regulations at 41 CFR 60-
741.65(a)(1). Subsection (a)(2) of the proposed regulation, clarifies 
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. 
Subsection (a)(2) of the proposal would require that interest on back 
pay be compounded quarterly at the percentage rate established by the 
Internal Revenue Service for the underpayment of taxes.
    The proposal would provide, in subsection (b)(1), that 
administrative enforcement proceedings may be instituted where OFCCP 
determines that referral for formal enforcement (rather than 
settlement) is appropriate. Subsection (b)(1) of the proposed 
regulation would specify that the litigation referral will be made to 
the Solicitor of Labor. Further, consistent with a requirement included 
in the Section 503 regulations, the proposal would require 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.
    The commenters from the civil rights and women's rights communities 
welcomed the clarification in subsection (a)(2) that OFCCP may seek 
back pay and other make whole relief for victims of discrimination 
identified during a complaint investigation or compliance evaluation, 
regardless of whether such individuals have filed a complaint with the 
agency. One contractor suggested that contractors be given the 
opportunity to correct a discriminatory practice or situation 
identified for the first time during a compliance review before 
liability is imposed. However, simply changing the offending employment 
practice only addresses part of the problem. In most instances, the 
discriminatory practice cannot be

[[Page 44184]]

considered ``corrected'' unless and until remedial relief is provided 
for those victimized by the practice.
    Two commenters from the contractor community objected to the 
proposal concerning the compounding of interest on back pay awards. One 
commenter suggested that compound interest provided a ``windfall'' to 
the victim. OFCCP disagrees. Compounded interest is necessary to make 
the victim whole. OFCCP has a longstanding policy of requiring that 
interest on back pay awards under the Executive Order be compounded. 
That policy is consistent with the policy and practice of the 
Department to request compounded, pre-judgment interest whenever back 
pay is sought in cases arising under the Fair Labor Standards Act. See 
e.g., Brock v. The Claridge Hotel and Casino, 644 F.Supp. 899, 908 
(D.N.J. 1986), aff'd, 846 F.2d 180 (3d Cir. 1988), cert. denied, 488 
U.S. 925 (1988); and Brennan v. Bd. of Ed., Jersey City, 374 F.Supp. 
817, 833 (D.N.J. 1974). Moreover, as noted in the NPRM, compounding 
interest on awards of back pay is consistent with the case law under 
Title VII of Civil Rights Act of 1964 and other Federal employment 
discrimination laws. See e.g., Saulpaugh v. Monroe Community Hospital, 
4 F.3d 134, 144 (2d Cir. 1993), cert. denied, 510 U.S. 1164 (1994); 
EEOC v. Gurnee Inn Corp., 914 F.2d 815, 820 (7th Cir. 1990), and Mennen 
v. Easter Stores, 951 F.Supp. 838, 863 n. 28 (N.D. Iowa 1997). The 
proposal would reinstate this policy to ensure that victims of 
discrimination obtain complete relief.
    A contractor association objected to the provision in subsection 
(a)(1)(ix) of the proposal, which provides that violations of the 
Executive Order may be based upon the ``alteration or falsification'' 
of records. This commenter argued that the term ``alteration'' should 
be deleted because it implied that contractors could not alter records 
to correct errors without violating the Order. OFCCP, however, believes 
that it is clear from the context that the term ``alteration'' refers 
to changes or modifications in records which misrepresent the facts. 
Accordingly, the agency declines to make that modification to the 
proposed rule.
    Further, a commeter from the contractor community objected to the 
provision in proposed subsection (b), which would provide that OFCCP 
may refer matters to the Solicitor of Labor with the recommendation for 
the institution of administrative enforcement proceedings ``when OFCCP 
determines that referral for consideration of formal enforcement 
(rather than settlement) is appropriate.'' The commenter said the 
provision appeared to eliminate the duty to conciliate and considered 
it to be a substantive change to the existing regulations. The 
commenter is incorrect. The proposed regulation does not change the 
existing regulations; OFCCP is still required to make reasonable 
efforts to secure compliance through conciliation. Proposed paragraph 
(b), however, recognizes, that some violations, such as denial of OFCCP 
access, are not always amenable to conciliation, and therefore, warrant 
OFCCP initiating immediate administrative enforcement.
    Section 60-1.26 of the proposal is adopted in the final rule. 
However, some modifications have been made in the final regulation. 
Subsection (a)(1)(ii) of the proposal, which provides that violations 
may be based upon the results of a compliance review, has been deleted 
from the final regulation as redundant. The final rule specifies that 
violations may be based on the results of a compliance evaluation, 
which includes compliance reviews. In addition, the final rule adds a 
new subsection which states that violations may be based on a 
contractor's refusal to provide data for off-site review or analysis as 
required in the regulations. Although subsection (a)(1)(viii) of the 
final rule references the refusal to furnish records, OFCCP believes 
the amendment is necessary to clarify that violations may be based upon 
the contractor's refusal to furnish records requested for off-site 
review or analysis.

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 NPRM would add a new 
paragraph specifically to address the sanction of debarment. Paragraph 
(b) of the proposal would provide that the contractor may be debarred, 
subject to reinstatement pursuant to the provisions in Sec. 60-1.31. 
The proposal also would provide that debarment may be imposed for an 
indefinite term or for a fixed minimum period of at least six months.
    Several comments were received on the proposed sanction provision. 
The comments from the women's rights and civil rights communities 
supported the proposal to make the debarment sanction explicit in the 
regulations. Commenters from the contractor community, however, 
objected to the proposed sanction regulation. It appeared from a few 
comments that the indefinite debarment sanction needed further 
explication.
    The duration of an indefinite term of debarment is not 
indeterminable, as some commenters suggested. Under the current 
regulations, and the proposed reinstatement regulation as well, a 
contractor debarred for an indefinite term may request reinstatement at 
any time. Thus, as OFCCP noted in the preamble discussion concerning 
sanctions, a contractor debarred for an indefinite term can be 
reinstated immediately without incurring any economic loss.
    Several commenters from the contractor community thought that fixed 
term debarments were too harsh a sanction. Two commenters questioned 
whether fixed term debarments were authorized under the Executive 
Order. A contractor association argued that the Secretary does not have 
authority to continue a debarment beyond the time the contractor 
demonstrates its willingness and ability to comply. A contractor, in an 
extensive comment on this proposal, contended that fixed term 
debarments were not authorized under the Order because they were 
punitive in nature.
    Under Section 209(a)(6) of the Order, a debarred contractor remains 
ineligible for future Government contracts ``until such contractor has 
satisfied the Secretary of Labor that such contractor has established 
and will carry out personnel and employment policies in compliance with 
the provisions of this Order.'' The Executive Order does not, as the 
contractor association's comment suggests, require the Secretary to 
reinstate a contractor merely because it promises to implement revised 
policies. Rather, the Order states that the Secretary must be 
``satisfied'' that the contractor will carry out the revised policies. 
In some cases, a contractor will have to demonstrate its commitment to 
changed employment policies over a period of time, before an 
affirmative determination can be made about the contractor's 
willingness and ability to comply with the Executive Order's 
requirements.
    The debarment for a fixed period is not intended as a 
``punishment.'' The purpose of the sanction is to provide a trial 
period during which a contractor can demonstrate its commitment and 
ability to establish employment practices that will ensure continued 
compliance with its Executive Order obligations. OFCCP believes that 
the prospect of a fixed period of ineligibility for government 
contracts will deter contractors from engaging in violations. Contrary 
to the contentions of one commenter, sanctions can discourage

[[Page 44185]]

certain conduct without being retributive.
    Other commenters from the contractor community objected to the 
proposal because it would authorize the Secretary to impose a fixed 
term debarment for ``any'' violation. They said that, while the 
Secretary had imposed the fixed term debarment in very limited 
circumstances in the past, paragraph (b) of the proposal was not 
tailored to address these limited and unusual circumstances. A few 
commenters recommended that we amend the proposed regulation to specify 
the instances that would warrant the imposition of a fixed term 
debarment.
    It is neither practicable nor necessary precisely to define the 
types of violations for which it would be appropriate to impose a fixed 
term debarment. Where a fixed term debarment is ordered, in contrast to 
an indefinite term debarment, the length of the debarment period will 
be determined case-by-case, and will depend upon factors such as the 
nature and severity of the violations. The sanction regulation is 
adopted in the final rule as proposed.

Section 60-1.30  Notification of Agencies

    Currently, the regulations require the OFCCP distribute a list of 
debarred contractors to all executive departments and agencies. OFCCP 
proposed to eliminate this requirement because the General Services 
Administration now publishes a listing of debarred contractors. The 
proposal substitutes in its place a provision requiring the Deputy 
Assistant Secretary ensure that the heads of agencies are notified of 
debarments. The proposal also renames the section ``Notification of 
Agencies'' instead of ``Contract ineligibility list.''
    No comments were received on proposed Sec. 60-1.30. The regulation 
is adopted in the final rule as proposed.

Section 60-1.31  Reinstatement of Ineligible Contractors

    The current regulation provides that a contractor declared 
ineligible for future contracts may request reinstatement in a letter 
directed to the Director. The regulations state that the contractor 
must show that it has established and will carry out employment 
policies in compliance with the equal opportunity clause in any 
reinstatement proceedings. The NPRM would revise the current provisions 
regarding reinstatement to conform them to proposed Sec. 60-1.27(b), 
which authorizes debarment either for an indefinite term or for a fixed 
term of not less than six months. Under the proposal, a contractor 
debarred for an indefinite period could request reinstatement at any 
time. A contractor debarred for a fixed period could request 
reinstatement after the expiration of the fixed period. The proposal 
would authorize a compliance evaluation of the contractor's employment 
practices before a final disposition of the reinstatement request.
    Commenters from the contractor community objected to the 
reinstatement procedures proposed for contractors debarred for a fixed 
term. They contended that reinstatement should occur automatically at 
the conclusion of the fixed term. According to these commenters, the 
absence of definite time frames in the reinstatement procedures 
outlined in the proposal would mean that the fixed term debarment could 
drag on indefinitely.
    OFCCP submits that the reinstatement process set forth in the 
proposed regulation is fair to debarred contractors. The argument that 
reinstatement should be automatic at the end of the fixed period misses 
a critical point. A debarred contractor is required to demonstrate that 
its employment policies and practices comply with the Order, and that 
showing usually is made in the context of a compliance evaluation.
    Nevertheless, in response to concerns that proposed Sec. 60-1.31 
would effectively extend a debarment well beyond the original fixed-
term, OFCCP has modified the reinstatement process in the final rule. 
Under the final rule, a contractor debarred for a fixed period may file 
a request for reinstatement 30 days prior to the expiration of the 
fixed debarment period, or at any time thereafter. However, filing a 
reinstatement request 30 days before the end of the debarment period 
will not result in early reinstatement; a contractor debarred for a 
fixed period may be reinstated and declared eligible for future 
Government contracts only upon or after the fixed debarment period 
expires.
    OFCCP intends to process reinstatement requests in a timely manner 
upon receipt. In many instances the compliance evaluation or other 
activity necessary to ensure that the contractor is in compliance and 
will remain in compliance may be completed during the 30-day ``window'' 
prior to the expiration of the debarment. In other instances that 
activity may extend beyond the 30-days, in which case the contractor 
will be reinstated (or notified of a decision not to reinstate) 
promptly upon completion of OFCCP's examination of the contractor's 
compliance status.

Section 60-1.32  Intimidation and Interference

    The current regulation states that sanctions and penalties may be 
imposed against the contractor who fails to ensure that no one 
intimidates, threatens, coerces or discriminates against any individual 
who files a complaint or otherwise participates in a compliance 
activity under the Executive Order or a similar Federal, state or local 
law. The proposal would include a similar prohibition, but would 
specify that the contractor itself shall not engage in such activities 
and shall ensure that all persons under its control do not do so, and 
would add that the prohibition applies to harassment. The proposed 
regulation would apply the prohibition to an individual's opposition to 
any practice that is unlawful under the Order or similar Federal, 
state, or local law.
    The women's rights and civil rights organizations supported the 
proposal, and commented that the protections outlined in the proposed 
provisions are needed to ensure the integrity of the enforcement 
process. A contractor, however, was critical of the proposal. This 
commenter suggested that the proposed regulation be revised to clarify 
that the protections extended only to ``persons who were known to the 
contractor to have participated in an investigation'' or ``persons who 
were known to the contractor to have opposed unlawful practices.'' The 
burden of proof standards applicable to disparate treatment 
discrimination cases are applied to retaliation cases, and thus, there 
must be direct or circumstantial evidence that the contractor had 
knowledge of the protected conduct in order to prove the violation. 
Accordingly, the suggested clarification is not necessary.
    The provision is carried forward in the final rule as proposed.

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

    The current regulation sets forth the procedures that apply when a 
contractor violates a conciliation agreement. The proposal would add a 
new subsection which would provide that, in any proceedings related to 
an alleged violation of a conciliation agreement, OFCCP may seek 
enforcement of the agreement and shall not be required to present proof 
of the underlying violations resolved by the agreement.
    Two comments from the contractor community objected to the 
proposal. A

[[Page 44186]]

contractor association argued that OFCCP should be required to prove 
the underlying violations resolved by a conciliation agreement in order 
to protect contractors from being coerced into signing unreasonable or 
impracticable agreements. Similarly, a law firm, whose clients include 
Government contractors, contended that contractors frequently enter 
into conciliation agreements in order to terminate the compliance 
review, and not because they have actually committed violations of the 
Executive Order. Thus, the law firm's argument continues, OFCCP should 
have the burden of proving the truth of its findings of violation, and 
the contractor should not be precluded from demonstrating that it did 
not violate the Order, in the event the contractor is unable to honor 
the commitments it made.
    The proposal is consistent with the well-settled principle under 
Title VII case law that a conciliation agreement entered to resolve 
employment discrimination claims is specifically enforceable 
independent of a finding that the employer did, in fact, engage in 
discriminatory practices, so long as regular contract rules are 
satisfied and enforcement does not conflict with the purposes of Title 
VII. See, e.g., EEOC v. Safeway Stores, Inc., 714 F.2d 567 (5th Cir. 
1983), cert. denied, 467 U.S. 1204 (1984). The courts have concluded 
that conciliation agreements would be rendered worthless as a means of 
securing voluntary compliance with Title VII, if a finding on the 
merits were required before any voluntary agreement to resolve 
discrimination claims could be enforced.
    Likewise, contractors that enter into conciliation agreements to 
resolve findings of discrimination or other substantive violations of 
the Executive Order do so voluntarily and knowingly. Contractors are 
under no compulsion to execute conciliation agreements; they are free 
to reject the terms of settlement and have the matter resolved through 
the contested litigation. However, if a contractor voluntarily and 
knowingly accepts an offer to conciliate a matter, both parties, 
including the Government, are entitled to rely on the representations 
contained in the conciliation agreement. The conciliation contract 
binds both parties, and no useful purpose would be served here by 
outlining the litany of equities and inequities that would result if 
one or the other party were allowed to ignore its agreement and return 
to ground ``zero.''
    The final rule adopts the proposed amendment to Sec. 60-1.34 
without change.

Section 60-1.42  Notices To Be Posted

    This section sets forth the language that must be included in the 
equal opportunity notices Government contractors must post in 
conspicuous places. OFCCP proposed technical corrections to the wording 
of the poster concerning the jurisdictional coverage of Title VII and 
the address of the EEOC. No comments were received on this proposal. 
The provision is adopted in the final rule as proposed.

Section 60-1.43  Access to Records and Site of Employment

    Under the current regulations, each contractor is required to 
permit access to its premises for the purpose of conducting on-site 
compliance reviews and inspecting and copying such books, records, 
accounts and other material as may be relevant to the matter under 
investigation or pertinent to compliance with the Order. The current 
regulations allow the information to be used only in connection with 
the administration and enforcement of the Executive Order and the Civil 
Rights Act of 1964.
    The proposed amendment would add computerized records to those 
which the contractor must produce for inspection and copying. The 
proposal would continue the requirement that the contractor permit 
access to its premises for the purpose of conducting compliance 
evaluations and complaint investigations. In addition, the proposal 
would allow the information to be used in connection with the 
administration of other laws that are enforced in whole, or in part, by 
OFCCP.
    Several commenters from the contractor community objected to the 
proposal regarding access to computerized records. They contended that 
the proposal would allow unlimited access to sensitive information in 
the contractors' human resource files, regardless of its relevancy to a 
determination of compliance with the Order. The commenters requested 
that OFCCP revise the proposal to clarify that access would be limited 
to existing files and that contractors would not be required to 
reprogram their computers to comply with an OFCCP request.
    The proposed rule does not expand the scope of records that would 
be made available; contractors must give OFCCP access to data in 
computer files under the current regulations. Rather, the proposed 
regulation simply would clarify that records include those maintained 
in computerized form.
    The concern that the provision would permit, if not encourage, 
unfettered access to confidential commercial proprietary data or 
irrelevant information is unjustified in OFCCP's view. Under the 
proposed rule, as under current regulation, access is limited to 
records that may be relevant to the matter under investigation and 
pertinent to compliance with the Order. Further, the contractor is not 
required to reprogram its computers in order to generate data 
responsive to OFCCP's request; access is limited to the records and 
data that already exists in computerized form. Moreover, requests to 
take computerized records off-site for further analysis would be 
subject to the relevancy determinations prescribed by Sec. 60-1.20(f) 
of the final rule.
    The regulation is adopted in the final rule as proposed in the 
NPRM.
Part 60-60  Contractor Evaluation Procedures for Contractors for 
Supplies and Services
    Part 60-60 of the current regulations concerns the conduct of 
compliance reviews. The NPRM proposed to delete a sizable portion of 
part 60-60. Most of part 60-60 properly is characterized as internal 
operating procedures. The NPRM explained that the agency's internal 
procedures are incorporated in the Federal Contract Compliance Manual 
(FCCM). Consequently, the regulations in which the procedures are 
published no longer are needed. However, those portions of part 60-60 
that are regulatory in nature were proposed to be transferred to part 
60-1. Thus, as previously has been discussed, Sec. 60-1.20 of the final 
rule incorporates the substantive provisions in the current part 60-60 
concerning submission of the AAP and support data (Sec. 60-60.2(a)), 
nationwide AAP formats (Sec. 60-60.3(a)(3)), off-site analysis of 
contractor data (Sec. 60-60.3(d)), and confidentiality and relevancy of 
information (Sec. 60-60.4 (a) through (d)).
    One commenter from the contractor community objected to the 
elimination of part 60-60. This commenter argued that the entire 
provision should be retained and expanded to include detailed 
descriptions of the procedures that will be used to implement the new 
compliance evaluation provisions in Sec. 60-1.20. According to this 
commenter, a regulatory provision devoted to evaluation procedures 
would ensure consistency in operations across OFCCP offices.
    Other commenters from the contractor community objected to the 
removal of particular provisions in Part 60-60. One contractor was 
concerned that the elimination of Sec. 60-60.3(c) would result in a 
change of the current agency practice of reviewing a contractor 
establishment no more frequently than once every 24 months. Section 60-
60.3

[[Page 44187]]

currently provides that an on-site review need not be conducted where 
the AAP is determined to be acceptable at desk audit, an on-site review 
has been conducted within the preceding 24 months, and the 
circumstances of the previous onsite review have not substantially 
changed. This regulatory provision, however, is not the basis for the 
current practice regarding the scheduling of compliance reviews.
    Detailed procedures for implementing the regulatory provisions 
should be treated in agency guidance, not in the regulations. OFCCP 
already has issued guidance on the procedures for selecting and 
scheduling supply and service contractors for compliance reviews. That 
guidance provides that contractor establishments which have been 
reviewed in the last two years are not to be reviewed again unless 
certain very specific criteria are met and the Regional Director 
approves the scheduling of the review (OFCCP Order No. ADM 92-1/SEL). 
No plans are under consideration to change current scheduling 
practices; contractors may continue to expect that a compliance review 
usually will occur no more frequently than once every two years.
    Other commenters objected to the proposed elimination of Sec. 60-
60-7, which prescribes a 60-day time frame for the completion of a 
compliance review. Again, the time frame for completing a compliance 
evaluation is an appropriate subject for agency guidance, not the 
regulations. The Compliance Manual currently states that substantial 
effort will be made to complete a compliance review within 60 days, 
although completion within that period is not a procedural prerequisite 
to an enforcement action (See FCCM 2C04). Contractors should not be 
concerned that the elimination of the regulatory provision in Sec. 60-
60.7 will mean an end to established schedules for completing 
evaluations of contractor compliance. OFCCP's subregulatory guidance 
will continue to reference the 60-day time frames even after the final 
rule is effective.
    The final rule deletes the provisions of part 60-60 in accordance 
with the proposal.

Regulatory Procedures

Executive Order 12866

    The Department is issuing this final rule in conformance with 
Executive Order 12866. This rule has been determined to be significant 
for purposes of Executive Order 12866 and therefore has been reviewed 
by OMB. This rule 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 this rule has been 
made. Although difficult to quantify, OFCCP believes that the economic 
impact of this rule will be positive. The compliance evaluation 
regulation adopted in this rule will streamline procedures for 
assessing contractor performance, and thereby reduce compliance costs 
and paperwork burdens on contractors, particularly when there are no 
indicators of noncompliance. In addition, the changes made by this rule 
to the provisions concerning preaward compliance evaluations will 
significantly decrease the administrative burdens and costs incurred by 
contracting agencies in processing requests for preaward clearance 
during the procurement process. Further, the compliance evaluation and 
preaward clearance regulations will reduce administrative costs and 
burdens on OFCCP, permit the agency greater flexibility in deploying 
its enforcement resources, and improve the agency's overall efficiency 
in administering the Federal contract compliance program.
    As discussed below in the sections concerning the Regulatory 
Flexibility Act and the Paperwork Reduction Act, the record retention 
provisions adopted in this rule will promote efficiency in OFCCP's 
enforcement of the Executive Order by ensuring the availability of 
information needed to evaluate the compliance status of Government 
contractors. Further, the final rule will eliminate confusion about 
record retention requirements under Executive Order 11246 and ensure 
consistency with the record retention requirements under section 503 of 
the Rehabilitation Act, while imposing only a de minimis increase in 
burden on contractors. OFCCP believes the benefits provided by express 
record retention requirements to the agency's enforcement of the 
Executive Order will outweigh the minimal increase in contractor 
burdens. Finally, the elimination of the requirement for a written 
certification regarding the maintenance of non-segregated facilities 
will result in a reduction in contractor paperwork burdens.
    In the NPRM, OFCCP stated that its goal in proposing regulatory 
changes is to make both contractor compliance and agency enforcement 
more efficient and cost effective. OFCCP invited comments on additional 
ways to reduce compliance burdens such as simplified compliance 
procedures for small contractors. However, no comments were received in 
response to this request.

Regulatory Flexibility Act

    All entities, regardless of size, will benefit from the repeal of 
the written certification regarding the maintenance of non-segregated 
facilities in this final rule. The record retention requirements 
adopted in this final rule might result in a minimal increase in the 
burden associated with storage of records for some small entities. 
However, in the agency's estimation, any increase in the corresponding 
storage costs would be negligible. Consequently, under the Regulatory 
Flexibility Act, as amended, 5 U.S.C. 605(b), the Secretary of Labor 
certifies that this rule will not have a significant economic impact on 
a substantial number of small entities.

Paperwork Reduction Act

    The changes to the Executive Order regulations made by the final 
rule published today impact the information collection requirements 
currently approved by OMB under the Paperwork Reduction Act (44 U.S.C. 
3501, et seq.). The record retention provisions adopted in Sec. 60-1.12 
of the final rule affect the approved record retention requirements for 
both supply and service (OMB Control No. 1215-0072) and construction 
contractors (OMB Control No. 1215-0163).
    The new record retention requirements contained in this final rule 
have been submitted to OMB for clearance under the Paperwork Reduction 
Act. The new record retention requirements are not effective until 
OFCCP displays currently valid OMB control numbers. When OMB completes 
its review, OFCCP will publish a notice in the Federal Register 
regarding the control numbers.
    The elimination of the certification regarding non-segregated 
facilities does not affect OFCCP's existing information collection 
requirements. Although the certification imposed paperwork burdens on 
contractors, such certifications were exempt under the Paperwork 
Reduction Act of 1980.
    OFCCP predicted in the NPRM that the adoption of a two-year record 
retention requirement for larger contractors--those with 150 or more 
employees and a Government contract of at 150,000--would result in only 
a minimal increase in burden. OFCCP asserted that the one-year record 
retention period prescribed for smaller contractors (those that have 
fewer than 150 employees or that do not have a Government contract of 
$150,000) would not increase the existing burden

[[Page 44188]]

on these contractors because they already are subject to this 
obligation under Title VII. Although the obligation to retain 
employment records for a year would be new for the small number of 
Government contractors that are not subject to Title VII (i.e., those 
with fewer than 15 employees), OFCCP opined that any increase in burden 
associated with filing and storing employment records would be 
negligible for this group.
    OFCCP invited the public to comment on the accuracy of the agency's 
estimates regarding the burdens posed by the proposed revisions to the 
information collection requirements, and to suggest ways of minimizing 
the burden and enhancing the quality and utility of the information 
collected. Two commenters--a consultant to Government contractors and a 
contractor association which represents small agricultural firms--
responded to this request for comments. Several commenters from the 
contractor community, however, expressed opinions about the burdens 
associated with the record retention requirements in their comments on 
the regulatory provision.
    Both the consultant and the contractor association contended that 
the proposed regulations would cause an overall increase in paperwork. 
According to the consultant, the two-year record retention period would 
be particularly burdensome for larger employers that routinely receive 
thousands of pages of applicant materials over the course of the year. 
The consultant asserted that retention of these materials for an 
additional year would require substantial time and effort from 
personnel and material handling staffs, and significant amounts of 
storage space as well. Comments received from two contractor 
associations in response to proposed Sec. 60-1.12 expressed similar 
opinions about the increased storage burden for larger contractors. The 
contractor association contended that the proposed regulatory revisions 
would generate substantially more paperwork for the small agricultural 
companies it represents.
    OFCCP recognizes that the volume of records subject to the 
retention requirement and the storage burdens will vary among 
contractors. However, OFCCP still maintains that, on average, the 
increase in burdens associated with the two-year retention period will 
be minimal.
    OFCCP stated in the NPRM that the elimination of the written 
certification regarding non-segregated facilities would reduce 
compliance burdens by roughly 850,000 hours. Accordingly to the 
consultant, the time and expense involved in preparing certifications 
have been reduced significantly by technological advances in personnel 
and purchasing offices, and as a result, elimination of the 
certification would save at most one-half of the hours that OFCCP had 
estimated. Even if the consultant is correct and certifications do not 
involve the amount of time the agency's estimate assumes, OFCCP 
believes the elimination of the requirement will yield a significant 
reduction in contractor burdens.

Unfunded Mandates Reform Act

    This final rule does not include any Federal mandate that may 
result in the expenditures 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, DC, this 12th day of August 1997.
Alexis M. Herman,
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, and under the authority of Executive Order 
11246, as amended, Title 41 of the Code of Federal Regulations, Chapter 
60, is amended as follows:

PART 60-1--[AMENDED]

    1. The authority citation for Part 60-1 is revised to read as 
follows:

    Authority: Sec. 201, E.O. 11246 (30 FR 12319), as amended by 
E.O. 11375 (32 FR 14303) and E.O. 12086 (43 FR 46501).

    2. Section 60-1.3 is amended by removing the definition of 
Director, 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 requirements of Executive Order 11246.
* * * * *
    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, 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
    (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

[[Page 44189]]

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 compliant, 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 applicants 
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 the circumstances that are 
outside of the contractor's control.
    (d) Effective date. The requirements of this section shall apply 
only to records made or kept on or after September 18, 1997.
    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 
contractor 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 or any combination of the following investigative 
procedures:
    (1) Compliance review. A comprehensive analysis and evaluation of 
the hiring and employment practices of the contractor, the written 
affirmative action program, and the results of the affirmative action 
efforts undertaken by the contractor. A compliance review may proceed 
in three stages:
    (i) A desk audit of the written AAP and supporting documentation to 
determine whether all elements required by the regulations in this part 
are included, whether the AAP meets agency standards of reasonableness, 
and whether the AAP and supporting documentation satisfy agency 
standards of acceptability. The desk audit is conducted at OFCCP 
offices, except in the case of preaward reviews. In a preaward review, 
the desk audit normally is conducted at the contractor's establishment.
    (ii) An on-site review, conducted at the contractor's establishment 
to investigate unresolved problem areas identified in the AAP and 
supporting documentation during the desk audit, to verify that the 
contractor has implemented the AAP and has complied with those 
regulatory obligations not required to be included in the AAP, and to 
examine potential instances or issues of discrimination. An on-site 
review normally will involve an examination of the contractor's 
personnel and employment policies, inspection and copying of documents 
related to employment actions, and interviews with employees, 
supervisors, managers, hiring officials; and
    (iii) Where necessary, an off-site analysis of information supplied 
by the contractor or otherwise gathered during or pursuant to the on-
site review.
    (2) Off-site review of records. An analysis and evaluation of the 
AAP (or any part thereof) and supporting

[[Page 44190]]

documentation, and other documents related to the contractor's 
personnel policies and employment actions that may be relevant to a 
determination of whether the contractor has complied with the 
requirements of the Executive Order and regulations;
    (3) Compliance check. A visit to the establishment to ascertain 
whether data and other information previously submitted by the 
contractor are complete and accurate; whether the contractor has 
maintained records consistent with Sec. 60-1.12; and/or whether the 
contractor has developed an AAP consistent with Sec. 60-1.40; or
    (4) Focused review. An on-site review restricted 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 total $10 million or 
more, the prospective contractor and its known first-tier 
subcontractors with subcontracts of $10 million or more shall be 
subject to a compliance evaluation before the award of the contract 
unless OFCCP has conducted an evaluation and found them to be in 
compliance with the Order within the preceding 24 months. The awarding 
agency will notify OFCCP and request appropriate action and findings in 
accordance with this subsection. Within 15 days of the notice OFCCP 
will inform the awarding agency of its intention to conduct a preaward 
compliance evaluation. If OFCCP does not inform the awarding agency 
within that period of its intention to conduct a preaward compliance 
evaluation, 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 compliance evaluation, 
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) Submission of Documents; Standard Affirmative Action Formats. 
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 30 
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 purposes of the compliance evaluation. 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 key to 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 within 10 days. 
The contractor may appeal that ruling to the OFCCP Regional Director 
within 10 days. The Regional Director shall issue a final ruling within 
10 days. Pending a final ruling, the information in question must be 
made available to the compliance officer off-site, but shall be 
considered a part of the investigatory file and subject to the 
provisions of paragraph (g) of this section. The agency shall take all 
necessary precautions to safeguard the confidentiality of such 
information until a final determination is made. 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 evaluation;
    (iii) Analysis of an affirmative action program;
    (iv) The results of an on-site review of the contractor's 
compliance with the Order and its implementing regulations;
    (v) A contractor's refusal to submit an affirmative action program;
    (vi) A contractor's refusal to allow an on-site compliance 
evaluation to be conducted;
    (vii) A contractor's refusal to provide data for off-site review or 
analysis as required by the regulations in this Chapter;
    (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 contractural 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 under-payment of taxes.
    (b) Administrative enforcement. (1) OFCCP may refer matters to the

[[Page 44191]]

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 on 
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, 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 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

[[Page 44192]]

notified of any debarment taken against any contractor.
    9. Section 60-1.31 is revised to read as follows:


Sec. 60-1.31  Reinstatement of ineligible contractors.

    A contractor 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 contractor debarred for a fixed period may request 
reinstatement in a letter filed with the Deputy Assistant Secretary 30 
days prior to the expiration of the fixed debarment period, or at any 
time thereafter. The filing of a reinstatement request 30 days before a 
fixed debarment period ends will not result in early reinstatement. 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 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 contractors 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 NW., Washington, DC 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, DC 20210

* * * * *
    13. Section 60-1.43 is revised to read as follows:


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

    Each contractor 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. 97-21782 Filed 8-18-97; 8:45 am]
BILLING CODE 4510-27-M