[Federal Register Volume 65, Number 219 (Monday, November 13, 2000)]
[Rules and Regulations]
[Pages 68022-68047]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-28693]



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Part III





Department of Labor





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Office of Federal Contract Compliance Programs



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41 CFR Parts 60-1 and 60-2



Government Contractors, Affirmative Action Requirements; Final Rule

  Federal Register / Vol. 165, No. 219 / Monday, November 13, 2000 / 
Rules and Regulations  

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DEPARTMENT OF LABOR

Office of Federal Contract Compliance Programs

41 CFR Parts 60-1, 60-2

RIN 1215-AA01


Government Contractors, Affirmative Action Requirements

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

ACTION: Final rule.

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SUMMARY: The Office of Federal Contract Compliance Programs (OFCCP) is 
revising certain regulations implementing Executive Order 11246, as 
amended. The Executive Order prohibits Government contractors and 
subcontractors, and Federally assisted construction contractors and 
subcontractors, from discriminating in employment, and requires these 
contractors to take affirmative action to ensure that employees and 
applicants are treated without regard to race, color, religion, sex, or 
national origin. The final rule will refocus, revise, and restructure 
41 CFR part 60-2, the regulations that establish the requirements for 
affirmative action programs, and related sections in 41 CFR part 60-1. 
The rule will refocus the regulatory emphasis from the development of a 
document that complies with highly prescriptive standards, to a 
performance based standard that effectively implements an affirmative 
action program into the overall management plan of the contractor. The 
rule also will introduce a new tool, the Equal Opportunity Survey, that 
will aid contractors in assessing their pay and other personnel 
practices, while increasing the efficiency and effectiveness of program 
monitoring. OFCCP is encouraging contractors to file the Survey 
electronically.
    The rule will help fulfill the Administration's Equal Pay 
Initiative to provide contractors with the necessary tools to assess 
and improve their pay policies. The rule also will help fulfill the 
Department's goal of increasing the number of Federal contractors 
brought into compliance. A means to fulfill that goal is for OFCCP to 
more effectively monitor the pay practices of Federal contractors.
    In addition, the final rule revising and restructuring the 
regulations relating to affirmative action programs is part of OFCCP's 
continuing efforts to meet the objectives of the Reinventing Government 
Initiative. These objectives include obtaining input from those most 
directly affected by the regulations, reducing paperwork and compliance 
burdens wherever possible, more effectively focusing Government 
resources where most needed in order to administer the law most 
efficiently, making the regulations easier to understand by 
streamlining and simplifying them and writing them in plain language, 
and updating the regulations to accommodate modern organizational 
structures and to take advantage of new technologies.

EFFECTIVE DATES: These regulations are effective December 13, 2000.

FOR FURTHER INFORMATION CONTACT: James I. Melvin, Director, Division of 
Policy, Planning and Program Development, OFCCP, Room C-3325, 200 
Constitution Avenue, NW., Washington, DC 20210. Telephone (202) 693-
0102 (voice), (202) 693-1308 (TTY). Copies of this rule in alternative 
formats may be obtained by calling (202) 693-0102 (voice) or (202) 693-
1308 (TTY). The alternative formats available are large print, 
electronic file on computer disk, and audiotape. The rule also is 
available on the Internet at. http://www.dol.gov/dol/esa.

SUPPLEMENTARY INFORMATION:   

Current Regulations and Rulemaking History

    Executive Order 11246, as amended, requires that Federal Government 
contractors and subcontractors ``take affirmative action to ensure that 
applicants are employed, and that employees are treated during 
employment, without regard to their race, color, religion, sex, or 
national origin.'' Affirmative action under Executive Order 11246, as 
amended, connotes more than passive nondiscrimination; it requires that 
contractors take affirmative steps to identify and eliminate 
impediments to equal employment opportunity.
    The history, principles and concepts underlying the current 
blueprint for affirmative action under Executive Order 11246, as 
amended, were recounted in the notice of proposed rulemaking (NPRM), 65 
FR 26088, published on May 4, 2000, and readers interested in that 
background information may refer to that discussion.
    The current regulations require Federal Government nonconstruction 
contractors and subcontractors with 50 or more employees and a contract 
of $50,000 or more to prepare and implement a written Affirmative 
Action Program (AAP) for each of their establishments. The basic 
elements of the AAP are discussed in more detail in the Section-by-
Section Analysis which follows.
    On May 4, 2000, OFCCP published a proposed rule, 65 FR 26088, to 
revise specific regulations found at 41 CFR parts 60-1 and 60-2. The 
comment period closed on July 3, 2000. A total of 187 comments were 
received within the comment period from five contractor advocacy 
organizations; 137 labor, civil rights, and women's advocacy 
organizations and their individual members; four law firms that advise 
or represent contractors or contractor advocacy organizations; 14 
contractors; 17 consulting firms; 9 civil rights and affirmative action 
officials of state and local governments and institutions of higher 
learning; and one Member of Congress. All the comments were reviewed 
and carefully considered in the development of this final rule.
    The final rule revises the regulations at 41 CFR part 60-2, which 
address the content of AAPs. The rule also makes a corresponding 
revision of Sec. 60-1.12, which covers records that must be retained, 
and Sec. 60-1.40, which covers who must develop and maintain an AAP.
    The rule also performs several ``housekeeping'' functions with 
respect to the part 60-2 regulations. 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 an NPRM published 
on that same date (46 FR 42968; supplemented at 47 FR 17770, April 23, 
1982). No further action on the August 25, 1981, proposal, or 
consequently on the 1980 stayed final rule, has been taken. Both the 
1980 final rule and the 1981 proposal addressed 41 CFR part 60-2. To 
avoid conflict with the rule published today, OFCCP hereby withdraws 
part 60-2 of the 1980 final rule. Additionally, consistent with the 
President's 1998 ``Plain Language'' Memorandum, OFCCP has replaced the 
word ``shall'' with ``must'' or ``will'' as appropriate to the context.

Overview of the Final Rule

    The final rule, for the most part, adopts the revisions that were 
proposed in the May 4 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.

[[Page 68023]]

    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 60-1.12  Record Retention

    OFCCP published a final rule revising 41 CFR part 60-1 on August 
19, 1997. The proposed rule published on May 4, 2000 would further 
amend the record retention provisions in Sec. 60-1.12 to harmonize them 
with the proposed changes to part 60-2. Specifically, the NPRM would 
amend paragraph (b) to eliminate the modifier ``written'' from a 
contractor's current requirement to develop a written affirmative 
action program. Furthermore, the proposal called for a new paragraph 
(c) that would codify in this part a longstanding regulatory obligation 
for contractors to be able to identify their employees and, where 
possible, applicants by gender, race, and ethnicity. Existing paragraph 
(a) would remain unchanged, while paragraphs (c) and (d) would be 
redesignated as paragraphs (d) and (e) respectively, with the first 
sentence of the newly designated paragraph (d) reflecting the addition 
of new paragraph (c).

Section 60-1.12(b)  Affirmative Action Programs

    In response to a number of comments, OFCCP has decided not to 
remove the modifier ``written'' from the phrase ``written affirmative 
action program.'' See further discussion under Sec. 60-1.40 below.

Section 60-1.12(c)

    The NPRM proposed a new paragraph (c) that would require that the 
contractor be able to identify the gender, race, and ethnicity of each 
employee, and where possible, the gender, race, and ethnicity of each 
applicant in any records the contractor maintains pursuant to this 
section. In addition, the contractor would be required to supply this 
information to OFCCP upon request. This provision is necessary for 
OFCCP to verify EEO data.
    The agency received fifteen comments pertaining to paragraph (c), 
which fit into several categories. Most prominently, three consultants 
and two law firms sought a clear definition of which job seekers 
contractors must track as ``applicants.'' More narrowly, a contractor 
objected to tracking as job applicants those persons it perceives as 
lacking requisite skills. Still another contractor hoped that the 
``where possible'' language in the proposal indicated OFCCP has not 
definitively resolved the applicant issue, but rather intends to pursue 
a flexible approach that reflects modern realities.
    Three contractors, three consultants, and a law firm representing 
an employer association expressed their view that it is an undue burden 
to obtain demographic data for prospective employees, especially 
unsolicited applicants. Another commenter, an organization representing 
contractors, agreed that this practice is burdensome, but also observed 
that collection of such demographic information for employee and 
applicant records is already required. In actuality, all employers with 
fifteen or more employees, including Federal contractors, have been 
covered by the Uniform Guidelines on Employee Selection Procedures 
since 1978.
    The agency wishes to make clear that it is not revising the meaning 
of ``applicant'' in the final rule. OFCCP and other Federal civil 
rights agencies have adhered to the same definition since Question and 
Answer 15 was published in the Federal Register in 1979 (see ``Adoption 
of Questions and Answers to Clarify and Provide a Common Interpretation 
of the Uniform Guidelines on Employee Selection Procedures,'' 44 F.R. 
11996, 11998 (March 2, 1979)). On the other hand, the final rule 
recognizes that some job applicants refuse to divulge demographic 
information to identify themselves. Therefore, OFCCP wishes to be 
reasonable through inclusion of the ``where possible'' phrase referring 
to applicants in Sec. 60-1.12(c)(1)(ii).
    A consultant and a law firm representing a business association 
expressed concern about marking the actual records of employees and 
applicants with demographic information. As one of them noted, such a 
requirement would be contrary to normal equal employment opportunity 
procedures. OFCCP agrees and does not intend for contractors to place 
gender, race, and ethnicity information directly on the employment 
records of their employees or job candidates. Thus, for sake of 
clarity, in the final rule the agency substitutes the preposition 
``for'' for ``in,'' which appeared in the proposed rule. Therefore, 
Sec. 60-1.12(c)(1) now reads: ``For any record the contractor maintains 
pursuant to this section, the contractor must be able to identify: (i) 
The gender, race, and ethnicity of each employee; and (ii) where 
possible, the gender, race, and ethnicity of each applicant.'' 
Consistent with the Uniform Guidelines on Employee Selection Procedures 
(UGESP), the burden is on the contractor to demonstrate that every 
reasonable effort has been made to identify the gender, race, and 
ethnicity of the applicant. In the case of electronic applications, the 
contractor may use an electronic tear-off sheet.
    Each of the remaining categories of comments on proposed Sec. 60-
1.12(c) came from just one or two commenters. A consultant wondered 
whether a contractor could be found in violation if an employee or job 
applicant refused to provide demographic information. In a similar 
vein, the same commenter wanted to know whether a contractor could 
justifiably discipline such a person. In fact, such concerns are 
groundless because a contractor's invitation to an employee or 
applicant to self-identify his or her gender, race, and ethnicity 
should always make plain that the provision of such information is 
voluntary. Consequently, OFCCP would not hold a contractor responsible 
for an employee or applicant's refusal to self-identify.
    One contractor requested more guidance on how to collect applicant 
data. Such detailed ``how-to'' information does not belong in the 
regulation itself. However, the agency does offer some guidance here in 
today's preamble. Specifically, while self-identification is the most 
reliable and the preferred method for compiling information about a 
person's race, sex, and ethnicity, such as through use of a ``tear off 
sheet,'' other alternatives are likewise acceptable. Some contractors 
send a short form or post card requesting demographic information from 
applicants who respond to job advertisements in newspapers, electronic 
job posting services, or other places. Although self-identification is 
the preferred method, visual observation also can be an acceptable 
method for identifying demographic data, although it may not be 
reliable in every instance. Methods for collecting data on gender, 
race, and ethnicity are also discussed in Question and Answer 88 in the 
``Adoption of Questions and Answers to Clarify and Provide a Common 
Interpretation of the Uniform Guidelines on Employee Selection 
Procedures,'' 44 FR 11996, 12008 (March 2, 1979).
    Two other commenters urged delaying implementation of Sec. 60-
1.12(c) until 2002, arguing that collection of race and ethnicity 
information is not required until then. In fact, OMB published a Notice 
stating that ``Federal programs should adopt the standards [for race 
and ethnicity classification] as soon as possible, but not later than 
January 1, 2003,'' 62 FR 58781, 58782

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(October 30, 1997). As per these requirements, OFCCP is adopting the 
new standards as soon as possible.
    Finally, a contractor asserted that the proposal at Sec. 60-
1.12(c)(2) to require contractors to supply demographic information to 
OFCCP upon request would violate the attorney-client privilege. In 
fact, contractor personnel prepare most such documentation without the 
involvement of legal counsel. Even when they do not, it is clear that 
an enforcement agency must have access to pertinent records in order to 
carry out its lawful duties.
    Accordingly, except as noted above, Sec. 60-1.12(c) is adopted as 
proposed.

Section 60-1.40  Affirmative Action Programs

    OFCCP proposed several modifications to Sec. 60-1.40. The proposal 
retained in paragraph (a) current standards for those who must develop 
and maintain an affirmative action program, removed from paragraph (a) 
references to ``written'' affirmative action program, and deleted the 
remainder of paragraph (a), as well as all of paragraphs (b) and (c).
    Several commenters strongly encouraged the retention of the 
designation ``written'' affirmative action programs. One commenter 
asserted, in part, that ``the `written' AAP provides a structure on 
which to build and subsequently evidence a company's affirmative action 
efforts.'' Another commenter asserted that the ``written AAP is 
essential to adequate discussions of: the nature of an organization, 
the methodology used to develop goals, identify problem areas, good 
faith efforts; and to aid in the development of a Program Summary.'' 
OFCCP believes that these comments have merit. Consequently, OFCCP has 
decided to retain the reference to ``written'' affirmative action 
program in paragraph (a) of this section. ``Written'' also is 
reinserted into Sec. 60-2.1 and inserted into Sec. 60-2.2 for clarity. 
A ``written'' AAP may include electronic maintenance of the AAP. A 
contractor may maintain its AAP in electronic format if all of its 
employees who are permitted or required to have access to the AAP have 
equal access to the electronic version of the AAP. If some of a 
contractor's employees lack access to an electronic version of the AAP, 
the contractor also must provide access to a hard (paper) copy of the 
AAP.
    The retention of the current language ``written'' by no means 
vitiates the spirit of the proposed language that affirmative action is 
more than a paper exercise and that it be an indelible aspect of the 
entire corporate enterprise or business process. Pursuant to these 
regulatory changes, OFCCP will focus its resources on the action 
undertaken to promote equal employment opportunity, rather than on the 
technical compliance.
    One commenter, noting what it characterized as ``the magnitude of 
the systems and other changes that will be required,'' recommended that 
the new regulations apply only to AAPs created or updated after January 
1, 2002, or after one full AAP year has elapsed after the new 
requirements become effective. The new regulations impose very few, if 
any, new requirements other than the Equal Opportunity Survey. 
Therefore, contractors will not need to make substantial changes to 
their AAPs in order to comply with the revised regulations. 
Nevertheless, a contractor that has prepared an AAP under the old 
regulations may maintain that AAP without penalty for the duration of 
the AAP year even if that AAP year overlaps with the effective date of 
the regulations.
    In addition, in order to avoid confusion OFCCP has inserted into 
Secs. 60-1.40(a)(1) and 60-2.1(a), the phrase ``(supply and service)'' 
after the term ``nonconstruction.'' Finally, OFCCP has revised slightly 
the structure of paragraph (a) to conform to Federal Register format 
requirements; no change of substance is intended by the revision.

Part 60-2

Subpart A--General

Section 60-2.1  Scope and application

    Existing Sec. 60-2.1 describes the purpose and scope of the 
regulations contained in 41 CFR part 60-2. Current paragraph (a) 
specifies which contractors are required to develop AAPs and provides a 
general overview of the regulations contained in part 60-2. Paragraph 
(b) of the current regulation states that relief, including back pay 
where appropriate, must be provided for an affected class in all 
conciliation agreements entered into to resolve violations uncovered 
during a compliance review. Paragraph (b) also states that an 
``affected class'' problem must be remedied in order for a contractor 
to be considered in compliance, and indicates that a contractor may be 
subject to the enforcement procedures set forth in Sec. 60-2.2 for its 
failure to remedy past discrimination.
    Consistent with the goals of streamlining and simplifying the 
regulations, the rule revises and restructures Sec. 60-2.1. The rule 
revises paragraph (a) by limiting the language to a brief description 
of the scope of the regulations contained in Part 60-2. No comments 
were received on this provision. The final rule adopts paragraph (a) as 
proposed.
    The final rule deletes as redundant the contents of paragraph (b) 
of current Sec. 60-2.1, because the requirement that conciliation 
agreements include provisions for back pay and other remedies also is 
set forth in Sec. 60-1.33. The removal of the back pay and affected 
class language from paragraph (b), however, is not intended to affect 
OFCCP's ability to recover back pay or other affirmative relief for 
victims of discrimination.
    The final rule also deletes the historical reference to ``Revised 
Order No. 4,'' the predecessor to the current Part 60-2, as it would 
not be appropriate or necessary in light of the changes to be made to 
part 60-2.
    Paragraph (b) of the new Sec. 60-2.1 specifies who must develop an 
AAP; it repeats the standards found in Sec. 60-1.40, because recitation 
of the scope of coverage is important for completeness in both parts of 
the regulation. OFCCP has written the requirements in a list form for 
the reader's ease of understanding. As OFCCP did in Sec. 60-1.40, OFCCP 
has revised slightly the structure of paragraph (b) to conform to 
Federal Register format requirements; no change of substance is 
intended by the revision.
    Several commenters recommended that in the final rule this 
provision not be limited to full-time employees only. OFCCP did not 
intend for this provision to be read as including only full time 
employees. Some of the confusion concerning the provision may have 
arisen because the Equal Opportunity (EO) Survey form requested 
information about full time employees only. The request for information 
about full-time employees in the Survey was not intended to signal any 
change in OFCCP's requirement for reporting part-time, temporary and 
full time employees in written AAPs now or in the future.
    The new Sec. 60-2.1 provision does not make reference to particular 
categories of employees but rather refers generally to ``employees.'' 
The term ``employees'' is broad enough to include part-time, temporary 
and full time employees. Therefore, the final rule adopts paragraph (b) 
of the proposal without change.
    The final rule adds a paragraph (c) that specifies that the 
contractor must develop AAPs within 120 days from the commencement of 
the contract. This requirement was previously set out in 41 CFR 
Sec. 60-1.40(c). Since Part 60-2

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addresses the requirements of AAPs, it appears more appropriate to 
include information specifying when the obligation to develop AAPs 
begins as part of part 60-2. One commenter, a law firm representing a 
business group, recommended that the final rule specify when the next 
AAP is to be in place. OFCCP has consistently held that the new AAP 
should be developed and in effect on the date that the old AAP expires. 
OFCCP believes that the AAP should be an ongoing management tool and 
not just an exercise to be performed annually. The provision is carried 
forward in the final rule as proposed.
    The final rule contains a paragraph (d) describing who is included 
in affirmative action programs. Subparagraph (2) provides three options 
for contractors with fewer than 50 employees at a particular 
establishment to account for those employees for AAP purposes. 
Subparagraph (3) is designed to clarify that the AAP at the 
establishment that makes the selection decision is the appropriate 
establishment for inclusion of their selectees. This is particularly 
important for corporate headquarters AAPs, since selection decisions 
are likely to be made at corporate headquarters for employees who are 
assigned to other establishments within the corporation. This reflects 
OFCCP's ``corporate initiative'' (53 FR 24830, June 28, 1988).
    Several commenters recommended that OFCCP permit contractors to 
develop their AAPs based on how their businesses actually are 
organized. Specifically these commenters asked to be allowed to prepare 
a single workforce analysis (and AAP) based on a business function or a 
line of business, without regard to the geographic locations of the 
establishments and employees (sometimes referred to as a ``functional'' 
AAP).
    In response to these commenters, OFCCP has added a subparagraph 4 
to the final rule. This provision reads as follows:

    (4) Contractors may reach agreement with OFCCP on the 
development and use of affirmative action plans based on functional 
or business units. The Deputy Assistant Secretary, or his or her 
designee, must approve such agreements. Agreements allowing the use 
of functional or business unit affirmative action programs cannot be 
construed to limit or restrict how the OFCCP structures its 
compliance evaluations.

    The purpose of this provision is to permit contractors to negotiate 
with OFCCP, subject to the approval of the Deputy Assistant Secretary, 
for permission to use affirmative action programs organized along 
business or functional lines. Some contractors have indicated that they 
would prefer a functional affirmative action program because it would 
allow them to better manage their equal employment opportunity programs 
and to hold the appropriate managers accountable for the performance of 
that program. This provision provides a mechanism by which the 
contractor can achieve these efficiencies. The provision also makes it 
clear that while OFCCP is willing to negotiate the structure of the 
contractor's affirmative action program, it is not offering to 
negotiate how the agency will conduct its compliance evaluations. Thus, 
while a contractor may receive permission to use functional or business 
unit affirmative action programs, OFCCP could still conduct an 
evaluation of a facility at a single geographic location. OFCCP hopes 
to have procedures for handling requests for functional AAPs in place 
before the effective date of the regulations. When the procedures are 
completed, OFCCP will post them on its Web site and/or include them in 
its Federal Contract Compliance Manual (FCCM).
    At the suggestion of one commenter, the final rule substitutes 
``work'' for the reference to ``perform their normal and customary 
duties'' in paragraph (d)(1). This change is necessary to clarify that 
``work'' is the consistent meaning that OFCCP desires to convey 
throughout this provision. The proposed language implied a different 
meaning. Thus, the final rule provides, in relevant part, ``Employees 
who work at locations other than that of the manager to whom they 
report, must be included in the affirmative action program of their 
manager.''
    Paragraph (e) of the proposed regulation explains how to identify 
employees who are included in AAPs at establishments other than where 
they are located. AAPs created according to paragraphs (d)(1) through 
(3) must identify these employees according to paragraph (e). Paragraph 
(d)(4) is not included in the requirements of paragraph (e) because the 
reporting formats for ``functional'' AAPs will be addressed on a case-
by-case basis as part of the approval process.
    One commenter, a law firm, suggested that the requirement to 
annotate where the employees are located would present an additional 
burden. As noted in the NPRM, the purpose of the proposed subparagraph 
was to clarify that the AAP at the establishment where the selection 
decision is made is the appropriate establishment for inclusion of 
their selectees. OFCCP does not agree that this requirement creates 
additional burden; it simply clarifies the agency's current policy and 
practice. Paragraph (e) of the proposal is adopted in the final rule as 
proposed.
    Several commenters stated that OFCCP's use of more than one term 
when referring to a contractor's ``establishment'' or ``location'' was 
inconsistent or confusing. OFCCP agrees that using one term is clearer. 
Therefore, the final rule replaces the term ``location'' with 
``establishment'' whenever ``location'' was used as a synonym for 
``establishment.'' OFCCP replaced ``location'' with ``establishment'' 
in Secs. 2.1 and 2.30.

Section 60-2.2  Agency Action

    Paragraph (a) deals with agency approval of AAPs. In the NPRM, 
OFCCP proposed revising paragraph (a) for clarity. One proposed change 
was to state that a contractor's AAP would be deemed to be accepted by 
the Government ``at the time OFCCP notifies the contractor of the 
completion of the compliance evaluation or other action''; the existing 
provision says that the AAP is deemed accepted ``at the time the 
appropriate OFCCP * * * office has accepted such plan. * * *'' A 
commenter expressed concern that the change in paragraph (a) resulted 
in a change in the acceptance requirements. That is not the case. OFCCP 
has not changed the acceptance date requirements in paragraph (a). The 
only changes were for clarity.
    OFCCP proposed in the NPRM to delete paragraphs (c) and (d) of the 
current Sec. 60-2.2 which address show cause notices and other 
enforcement procedures for a contractor's failure to develop an AAP as 
prescribed in the regulations. OFCCP stated that since these subjects 
are addressed in Secs. 60-1.26 and 60-1.28 there was no reason to 
repeat them in Sec. 60-2.2.
    Four commenters representing the interests of contractors objected 
to the deletion of these paragraphs. They expressed concern that the 
deletion of these paragraphs eliminates contractors' due process 
protections and the procedural safeguards of the show cause notice 
(SCN) process. They stated that without the SCN procedure, OFCCP could 
proceed directly to enforcement without offering contractors the 
opportunity to cure apparent violations.
    OFCCP is persuaded that the proposed deletion may not have the 
limited impact originally contemplated by the agency. Therefore, the 
final rule restores the provisions in paragraphs (c) and (d) of 
Sec. 60-2.2 with a minor change; paragraph (c)(1) has been modified to 
reflect the existing exceptions in Sec. 60-1.26(b)(1) to the general 
rule that a show cause notice will be issued whenever

[[Page 68026]]

administrative enforcement is contemplated.
    The existing exceptions in Sec. 1.26(b)(1) are as follows:

    * * * 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.

Subpart B--Purpose and Contents of Affirmative Action Programs

Section 60-2.10  General Purpose and Contents of Affirmative Action 
Programs

    A complete rewrite of Sec. 60-2.10 was proposed. The rewrite was 
intended to convey that an AAP should be considered a management tool--
an integral part of the way a corporation conducts its business. 
Further, the intent of the proposed revision was to encourage self-
evaluation in every aspect of employment by establishing systems to 
monitor and examine the contractor's employment decisions and 
compensation systems to ensure that they are free of discrimination.
    Two commenters opposed portions of this section: One stated the 
belief that the proposed section was redundant; and the other asserted 
that it was ``not aware of any authority for the OFCCP to dictate or 
prescribe the `management approach' or policies of firms that perform 
federal contracts.''
    One commenter, a civil rights organization, supported the proposal, 
stating that ``wholly integrating the monitoring and evaluative 
components of the AAP will ensure that contractors are assuming full 
responsibility for meaningful compliance as opposed to merely complying 
with a paperwork obligation.''
    OFCCP continues to believe that this introductory section should 
emphasize the philosophy that an affirmative action program is ``more 
than a paperwork exercise. * * * Affirmative action, ideally, is a part 
of the way the contractor regularly conducts its business.'' 
Accordingly, Sec. 60-2.10 is adopted as proposed.

Section 60-2.11  Organizational profile

    The current Sec. 60-2.11 is entitled ``Required utilization 
analysis.'' It contains an introductory paragraph which identifies 
broad job areas (EEO-1 categories) in which racial and ethnic 
minorities and women are likely to be underutilized, and sets forth in 
lettered paragraphs the core contents of a written AAP.
    This final rule addresses only paragraph (a) of the current 
Sec. 60-2.11, which deals with the workforce analysis. Paragraph (b) of 
the current regulations, which addresses the job group analysis, has 
been revised and moved to new 60-2.12 discussed below in this preamble. 
The introductory paragraph of current Sec. 60-2.11 has been deleted as 
outdated and unnecessary.
    Paragraph (a) of the current Sec. 60-2.11 provides that a workforce 
analysis is a listing of job titles (not job groups) ranked from the 
lowest paid to highest paid within each department or similar 
organizational unit. The workforce analysis also shows lines of 
progression or promotional sequences of jobs, if applicable. If no 
lines of progression or usual promotional sequences exist, job titles 
are listed by departments, job families or disciplines, in order of 
wage rates or salary ranges. For each job title, the workforce analysis 
must reflect the wage rate or salary range, and the number of 
incumbents by race, ethnicity, and sex. In short, the workforce 
analysis is a map pinpointing the location of jobs and incumbent 
employees and their relationship to other jobs and employees in the 
contractor's workforce.
    In the NPRM, OFCCP proposed to ``reengineer'' the workforce 
analysis into a shorter, simpler format called an ``organizational 
profile.'' In basic terms, the organizational profile was an 
organization chart showing each of the organizational units and their 
relationships to one another, and the gender, racial, and ethnic 
composition of each organizational unit. Unlike the current workforce 
analysis, the proposed profile focused only on organizational units and 
did not require the identification of individual job titles with the 
exception of the supervisor, if any. Likewise, reporting of race, sex, 
and salary information by job title would be eliminated using the 
organizational profile.
    Eleven commenters stated that the organizational profile would be 
more burdensome than the workforce analysis. A number of commenters 
indicated that most of their companies either did not have an 
organizational chart or that if they had such charts, the charts only 
reflected the top levels of the organization. Other commenters 
indicated that the organizational structure of their companies was so 
fluid that charts would become quickly outdated. Many commenters 
representing or servicing the contractor community indicated that the 
current workforce analysis was not a burden to produce because their 
systems are configured to produce the analysis with very little effort. 
These commenters also indicated that there are numerous software 
products that facilitate the creation of a workforce analysis. Ten 
commenters specifically recommended that OFCCP permit contractors the 
option of continuing to use the workforce analysis if the contractor 
found this less burdensome.
    In addition, some commenters, including women's and civil rights 
groups and a labor organization, raised concerns that adoption of the 
organizational profile, in lieu of the workforce analysis, might result 
in the loss of valuable compliance information. Others supported the 
organizational profile but cautioned against any further simplification 
because of the potential of the loss of important information.
    OFCCP proposed the adoption of an organizational profile, in part, 
to decrease the burden on contractors. Prior to the publication of the 
NPRM, many stakeholders had raised concerns about the workforce 
analysis and had indicated that it was burdensome. However, since many 
contractors have now indicated that there is very little burden in 
preparing a workforce analysis and that there may be more burden for 
them in preparing an organizational profile, in this final rule OFCCP 
permits contractors to submit either the old style workforce analysis 
or an organizational display as the organizational profile. OFCCP 
believes that this is responsive to concerns about burden and to 
concerns that OFCCP not further simplify the organizational profile.
    A number of commenters from the contractor community objected to 
the requirement that the proposed organizational profile be presented 
as a ``detailed organizational chart or similar graphical 
representation.'' Five commenters indicated that the creation of a 
graphical representation would be burdensome because they did not have 
the software or systems to create such a chart and significant manual 
work would be required. In response to these concerns, OFCCP has made 
the provision of a ``graphical representation'' optional. The final 
rule permits contractors choosing the organizational display to use 
``detailed graphical or tabular chart, text, spreadsheet, or similar 
presentation of the contractor's organizational structure'' for 
displaying the required information.
    Following is a sample organizational display. This sample is 
provided for illustrative purposes only, and should

[[Page 68027]]

not be construed to represent a required format or template.
BILLING CODE 4510-15-P

[[Page 68028]]

[GRAPHIC] [TIFF OMITTED] TR13NO00.000

BILLING CODE 4510-45-C

[[Page 68029]]

    Under the final rule, the organizational display would still not 
require the itemization of individual job titles, or the reporting of 
gender, race, ethnicity, and salary information by job title. Thus, the 
volume of the organizational display should be less than the volume of 
a workforce analysis (which often is one of the largest sections of the 
AAP).
    Some commenters requested that OFCCP specify that it intends for 
the organizational profile to reflect the organization down to the 
level of the first line supervisor. It is OFCCP's intent that each 
organizational unit and all subordinate units, including the first-line 
supervisor level be accounted for in the organizational profile. OFCCP 
believes that the language of Sec. 60-2.11 accomplishes this.
    Some commenters questioned the usefulness of the proposed 
organizational profile. Contractors who feel it would be more helpful 
for their self-audit and affirmative action purposes to continue to 
develop a workforce analysis are at liberty to do so under the final 
rule. However, for those contractors electing to submit an 
organizational display, OFCCP believes that the display will provide a 
representation of where minorities and women may be underrepresented or 
concentrated, which permits preliminary review for potential 
discrimination and the need for affirmative action. This representation 
will be useful to many contractors engaging in self-analysis, and it is 
useful to OFCCP's compliance evaluation process. By introducing the 
flexibility to continue using the current workforce analysis or to 
adopt an organizational display that is not necessarily a graphic 
representation, OFCCP allows contractors to elect the method that is 
most meaningful for the particular contractor.
    As noted in the NPRM, in subsection (c)(4), the minority group 
designations conform to the designations of minorities currently used 
in the EEO-1 report. OFCCP intends the racial and ethnic designations 
used in the regulations at 41 CFR Chapter 60, to be consistent with the 
revised standards set forth by OMB. OFCCP will coordinate any changes 
in these designations with the Equal Employment Opportunity Commission 
(EEOC) so that record keeping and reporting requirements for both 
agencies are compatible.

Section 60-2.12  Job Group Analysis

    The NPRM would provide much greater guidance and clarification on 
how to structure job groups than is contained in the current regulation 
at Sec. 60-2.11(b). Many commenters supported the majority of the 
proposal but added specific recommendations, especially for paragraph 
(e).

Section 60-2.12(a)  Purpose

    Job group analysis is the first step in comparing the 
representation of minorities and women in the contractor's workforce 
with the estimated availability of qualified minorities and women who 
could be employed. When the representation of minorities or women 
within a job group is less than their availability by some identifiable 
measure (see discussion of Sec. 60-2.16, below) the contractor must 
establish goals.
    No comments were received regarding proposed paragraph (a) and it 
is adopted without change.

Section 60-2.12(b)

    The reason for combining job titles is to organize the workforce 
into manageable size groups to facilitate analysis, while still 
maintaining elements of commonality among the jobs grouped together. 
The jobs included in a job group must have three elements in common, 
i.e., similar job duties, similar compensation, and similar 
opportunities for advancement within the contractor's workforce. 
Contractors have considerable discretion in determining which jobs to 
combine, but the resulting job groups must contain jobs with the 
requisite common elements. If the job groups are inappropriately drawn, 
the availability and utilization analyses based on those job groups 
will be flawed.
    As was noted in the NPRM, some view the current instruction to 
combine jobs by similar content, wage rates, and opportunities as too 
general to provide clear, consistent guidance. Therefore, as proposed, 
paragraph (b) of the final rule describes similarity of content and 
similarity of opportunities, the two criteria most open to divergent 
interpretations. This rule states ``similarity of content refers to the 
duties and responsibilities of the job titles which make up the job 
group.'' In addition, it provides that ``similarity of opportunities 
refers to training, transfers, promotions, pay, mobility, and other 
career enhancement opportunities offered by the jobs within the job 
group.'' One commenter desired an explanation of similar wage rates. 
However, OFCCP believes ``wage rates'' to be a generally understood 
term. Moreover, the degree of similarity in wage rates appropriate for 
job group formation varies depending upon the size of a contractor's 
workforce and the structure of its compensation system.
    Two other comments were received concerning paragraph (b). One 
explicitly expressed support for OFCCP's traditional method of job 
group formation based on similarity of jobs' content, wage rates, and 
opportunities, an approach that is continued in this final rule. The 
other commenter wanted the regulation to state that contractors have 
discretion in forming their job groups. However, such a provision is 
unnecessary, since contractors themselves decide which job titles are 
appropriately grouped to produce job groups, given the three regulatory 
parameters. Paragraph (b) is adopted as proposed.

Section 60-2.12(c)

    Paragraph (c) of the final rule provides that a contractor's job 
group analysis must include a list of the job titles comprising each 
job group, a requirement that OFCCP's experience demonstrates most 
contractors already incorporate into their affirmative action programs. 
No comments were received on this provision.
    Paragraph (c) also would reflect the provisions of Secs. 60-2.1(d) 
and (e) relating to jobs located at another establishment. 
Specifically, new Sec. 60-2.1(d) requires inclusion of each employee in 
the affirmative action program of the establishment at which he or she 
works, with exceptions made for employees who normally work at 
establishments other than that of the manager to whom they report, 
employees at establishments with fewer than 50 employees, and employees 
for whom selection decisions are made at a higher level establishment. 
Then, for identification purposes, Sec. 60-2.1(e) requires contractors 
to annotate their affirmative action programs to indicate when 
employees are included in affirmative action programs for 
establishments other than where they are physically located. Five 
commenters objected to having to annotate the job group analysis as too 
burdensome. Most contractors would have to make only a small number of 
annotations. Without notations showing who is accountable for personnel 
actions affecting particular employees, or which affirmative action 
programs cover specific workers, it is difficult for designated 
contractor official(s) to adequately monitor progress or address 
problem areas. Similarly, OFCCP needs the ability to easily identify 
where responsibility lies for each of a contractor's employees in order 
to carry out its regulatory obligations during compliance evaluations. 
For these reasons, paragraph (c) is adopted in the final rule without 
change.

[[Page 68030]]

Section 60-2.12(d)

    The NPRM proposed in Sec. 60-2.12(d) that all jobs located at an 
establishment must be included in that establishment's job group 
analysis, except as provided in Sec. 60-2.1(d). Just two commenters 
opposed the proposal, on the grounds that it would be too restrictive 
by preventing contractors from forming ``functional'' job groups across 
establishments. The discussion of functional AAPs in the preamble 
discussion of Sec. 60-2.1 above addresses this issue. OFCCP adopts 
Sec. 60-2.12(d) without change in the final rule.

Section 60-2.12(e)  Smaller Employers

    As a way of reducing unnecessary burden, the final rule makes 
explicit that a contractor with fewer than 150 employees may choose to 
utilize EEO-1 categories as job groups. The agency considers job 
grouping by EEO-1 category to be simpler both for smaller employers and 
for OFCCP.
    Most commenters welcomed this regulatory revision for reducing the 
burden on smaller contractors when preparing their affirmative action 
programs. However, some felt the revision carried risks by going too 
far, while a few maintained the change should apply to a wider group of 
contractors.
    Five commenters wrote that this proposal should go further. For 
example, a law firm and a contractor wanted to extend the optional use 
of EEO-1 categories to small establishments of larger employers. 
Another law firm would have OFCCP expand the option so as to grant it 
to any contractor with no more than fifty employees in an EEO-1 
category. Finally, a municipality and a consultant recommended widening 
the option so that all contractors, regardless of size, could choose to 
use EEO-1 categories as job groups.
    These recommendations are problematic. The agency is concerned with 
reducing burden on smaller employers, which lack the financial and 
human resources larger contractors possess. However, inappropriate 
mingling of many highly disparate jobs in large EEO-1 category-based 
job groups would likely occur for larger employers. Such mingling risks 
ignoring potentially vast differences in job content, wage rates and 
opportunities.
    Here is an example of what happens if a larger contractor uses EEO-
1 categories for job groups: Contractor Y has 450 employees. Of the 450 
employees, 300 are classified as EEO-1 Professional. The breakdown is 
as follows:

----------------------------------------------------------------------------------------------------------------
                                                    Total
                                                  number of    Number of     Females     Number of    Minorities
                                                  employees     females     (percent)    minorities   (percent)
----------------------------------------------------------------------------------------------------------------
Accountants....................................           25           10           40            5           20
Financial Analysts.............................           25            5           20            5           20
Human Resource Specialists.....................           50           40           80           10           20
Computer Programmers...........................          100           30           30           50           50
Electrical Engineers...........................           50           10           20           20           40
Systems Analysts...............................           50            5           10           10           20
----------------------------------------------------------------------------------------------------------------

    A job group analysis by content, wage rate, and opportunities would 
look something like this: (Job Groups are in bold with Job Titles 
underneath)

Accountants                           Financial analysts                    Human resource specialists
  Accountant I                          Jr. Financial analyst                 Staffing specialists.
  Accountant II                         Sr. Financial analyst                 Benefits specialists.
  Accountant III                      ....................................    Payroll specialists.
 


Computer programmers                  Electrical engineers                  Systems analysts
  Computer programmer I                 Electrical engineer I                 Jr. Systems analyst.
  Computer Programmer II                Electrical Engineer II                Sr. Systems analyst.
  Computer programmer III               Electrical engineer III             ....................................
 

    If jobs are grouped by EEO-1 category, all professional jobs go 
into one Job Group as follows: (Job Groups are in bold with Job Titles 
underneath)

Professionals
    Accountant I
    Accountant II
    Accountant III
    Computer Programmer I
    Computer Programmer II
    Computer Programmer III
    Electrical Engineer I
    Electrical Engineer II
    Electrical Engineer III
    Jr. Systems Analyst
    Sr. Systems Analyst
    Jr. Financial Analyst
    Sr. Financial Analyst
    Staffing Specialists
    Benefits Specialists
    Payroll Specialists

    The problem with using EEO-1 categories for job groups becomes 
clear when the percentages of employees, availability, and utilization 
data are examined:
    A job group analysis using content, wage rates, and opportunities 
looks like this:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Total                     Female         Females                    Minority
                      Job group                         number of    Percent of  availability  underutilized?   Percent of  availability    Minorities
                                                        employees     females      (percent)                    minorities    (percent)   underutilized?
--------------------------------------------------------------------------------------------------------------------------------------------------------
Accountants..........................................           25           40            24              N            20            28              Y
Financial Analysts...................................           25           20            32              Y            20            16              N
Human Resource Specialists...........................           50           80            54              N            20            30              Y
Computer Programmers.................................          100           30            30              N            50            65              Y
Electrical Engineers.................................           50           20            28              Y            40            40              N
Systems Analysts.....................................           50           10            10              N            20            36              Y
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 68031]]

    EEO-1 based grouping looks like this:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Total                     Female         Females                    Minority      Minorities
                      Job group                         number of    Percent of  availability  underutilized?   Percent of  availability  underutilized?
                                                        employees     females      (percent)                   minorities    (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Professionals........................................          300           33            30              N            33            43              Y
--------------------------------------------------------------------------------------------------------------------------------------------------------

    EEO-1-based grouping masks the utilization problems in six areas:
     Female utilization problems in Financial Analysts and 
Electrical Engineers.
     Minority utilization problems in Accountants, Human 
Resource Specialists, Computer Programmers, and Systems Analysts.
    With EEO-1 based grouping:
     There do not appear to be any utilization problems among 
female professionals, which is incorrect. Grouping all female 
professionals together masks the utilization problems and the need to 
set goals for female Financial Analysts and Electrical Engineers.
     There appear to be utilization problems among all minority 
professionals, which is incorrect. Grouping all minority professionals 
together makes it unlikely that the contractor will focus affirmative 
action efforts on the four job areas in which utilization problems 
actually occur.
    Five commenters urged OFCCP to limit its burden reduction proposal 
to contractors with total workforces of 100 or fewer employees, instead 
of 150. The 150 threshold is consistent with the threshold for smaller 
employers in the record keeping provisions of part 60-1. Two women's 
organizations and a labor organization were concerned that allowing 
larger employers to use EEO-1 categories would sacrifice ``meaningful 
data, (given that) proper job groupings are central to the aims of 60-2 
and vital to the mission of OFCCP.'' Two consultants were more specific 
about their worries, fearing that even smaller employers could mask 
discrimination. One pointed out that a smaller contractor might easily 
have two or three levels of management in its officials and managers 
job group. For example, a chief executive officer, a chief financial 
officer, and a vice president could be joined with a director of the 
mailroom, hiding potential race or gender discrimination.
    While these concerns may be valid in some instances, they must be 
balanced with the goal of reducing contractors' burdens whenever 
possible without undue sacrifice to the agency's ability to enforce its 
mission. Section 60-2.12(e) is adopted as proposed.

Section 2.13  Placement of Incumbents in Job Groups

    No comments were received on this section. It is adopted without 
change.

Section 60-2.14  Determining availability

(Current Sec. 60-2.14 entitled ``Program summary'' is found at Sec. 60-
2.31.)
    Section 60-2.14 in the final rule, contains the guidelines for 
determining availability and replaces the current regulations at 
Secs. 60-2.11(b)(1) and (2). The purpose of the availability analysis 
is to determine the representation of minorities and women among those 
qualified (or readily qualifiable) for employment for each job group in 
the contractor's workforce. Availability is the yardstick against which 
the actual utilization of minorities or women in the contractor's job 
group is measured.
    In the current rule, the contractor is required to compute 
availability, separately for minorities and for women, for each job 
group. In determining availability, the contractor considers each of 
eight factors listed in the regulations. The factors are similar, but 
not identical, for minorities and women. Although contractors are 
required to consider all eight factors, they are not required to 
utilize each factor in determining the final availability estimate. 
Only the factors that are relevant to the actual availability of 
workers for the job group in question are to be used. Most contractors 
actually use only a few of the eight factors to compute the final 
availability estimates.
    The ``eight-factor analysis'' for determining availability is one 
of the most frequently criticized elements of the Executive Order 11246 
program. Common complaints among contractors are that the requirements 
are unnecessarily complex and not sufficiently focused. As proposed in 
the NPRM, this section simplifies the availability computations by 
reducing the number of factors from eight to two. These two factors are 
the same for minorities and for women.
    Under this final rule, as under the current regulation, the 
contractor is required to compute availability, separately for 
minorities and for women, for each job group.
    Fourteen commenters specifically supported the proposed reduction 
from eight factors to two. The proposed rule was equally popular among 
contractors, contractor associations, consultants, and civil rights and 
women's organizations.
    One commenter association recommended that a reasonableness 
standard be included in the definition of ``trainable'' described in 
the second of the two factors. This commenter noted that the current 
regulation contains such a standard. Without this limitation, the 
commenter was concerned that the calculation of availability would be 
rendered impractical.
    The inclusion of individuals who are ``trainable'' is intended to 
address the recommendations of civil rights and women's groups that the 
availability computation include consideration of training 
opportunities. It is a refinement of the requirement in the previous 
regulations (Secs. 60-2.11(b)(1)(viii) and (b)(2)(viii)) that the 
contractor consider the degree of training which it is reasonably able 
to undertake as a means of making all job classes available to 
minorities and to women.
    In response to this comment, OFCCP has revised the final rule to 
restore a reasonableness standard regarding the concept of ``trainable 
employees.'' OFCCP believes that this modification will make it easier 
for contractors to calculate ``trainable employees'' while achieving 
the goal of requiring contractors to consider this pool of available 
workers.
    The final rule now provides at Sec. 60-2.14(c) that the two factors 
to be considered in determining availability are:
    (1) The percentage of minorities or women with requisite skills in 
the reasonable recruitment area. The reasonable recruitment area is 
defined as the geographical area from which the contractor usually 
seeks or reasonably could seek workers to fill the positions in 
question.
    (2) The percentage of minorities or women among those promotable, 
transferable, and trainable within the contractor's organization. 
Trainable refers to those employees within the contractor's 
organization who could, with appropriate training which the contractor 
is reasonably able to provide,

[[Page 68032]]

become promotable or transferable during the AAP year.
    Contractors would be required to determine the percentages in 
Sec. 60-2.14(c)(2), by undertaking one or both of the following steps:
    1. Determine which job groups are ``feeder pools'' for the job 
group in question. The feeder pools are job groups from which 
individuals are promoted.
    2. Ascertain which employees could be promoted or transferred with 
appropriate training which the contractor is reasonably able to 
provide.

    Example #1: a contractor has a job group of Engineering 
Managers. Over the past year, all individuals who have been promoted 
into the Engineering Managers job group have been promoted from only 
two other job groups: Chemical Engineering Project Leaders and 
Petroleum Engineering Project Leaders. The Chemical Engineering 
Project Leaders job group has 100 incumbents, of whom 20 are 
minority and 25 are female. The Petroleum Engineering Project Leader 
job group also has 100 incumbents, of whom 15 are minority and 20 
are female. The ``feeder pool'' availability is the total number of 
minority or female incumbents divided by the total number of 
incumbents for the two job groups.

------------------------------------------------------------------------
                                    Total       Minority        Female
           Job Group             Incumbents    Incumbents    Incumbents
------------------------------------------------------------------------
Chem.E PL.....................           100            20            25
Pet.E PL......................           100            15            20
------------------------------------------------------------------------

Minority Availability (20+15)/(100+100)=17.5%
Female Availability (25+20)/(100+100)=22.5%

    Example #2: A contractor has a job group of Entry Level 
Managers. This contractor has a management training program. A 
review of the training program shows that of the 200 employees in 
the program last year, 100 completed the program and are eligible 
for Entry Level Manager positions this AAP year. Of those 100 who 
completed the program, 45 are minority and 40 are female. The 
availability in this example is the percentage of minorities or 
females that completed the training program.

----------------------------------------------------------------------------------------------------------------
                                                    Minorities        Females        Minority         Female
    Total individuals eligible for promotion       eligibile for   eligible for    availability    availability
                                                     promotion       promotion       (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
100.............................................              45              40              45              40
----------------------------------------------------------------------------------------------------------------

    OFCCP's experience has shown that these factors are the ones most 
contractors use to compute availability estimates. Taken together, they 
reflect contractors' assertions of who is qualified and available for 
employment.
    Section 60-2.14(e) requires a contractor to define its reasonable 
recruitment area so as not to exclude minorities and women, and to 
develop a brief written rationale for selection of that recruitment 
area. On occasion, defining the recruitment area in a slightly 
different way can significantly enlarge or reduce the proportion of 
minorities or women with requisite skills available for employment. In 
such a case, the contractor is required to assure that the recruitment 
area chosen will not have the effect of excluding minorities or women.
    Three commenters, a contractor and two consultants, expressed 
concern about the prohibition against drawing the reasonable 
recruitment area in a way that has the effect of excluding minorities 
or women. One noted that even if such exclusion is unintentional, 
contractors will be found in violation. Accordingly, the commenters 
recommended adding the term ``unreasonably'' or ``intentionally'' in 
front of the word ``excluding.'' OFCCP does not agree that this change 
is necessary or desirable. The objective of this section of the 
regulations is to have the contractor compute, as accurately as 
possible, the availability of minorities and women for employment. 
Accurate computation of availability is essential to the entire goal 
setting process. Improper drawing of the reasonable recruitment area 
has the effect of misstating availability. The effect is the same, 
whether the improper drawing is intentional or inadvertent, and it 
cannot be accepted. If a contractor is found in violation for 
unintentionally drawing its recruitment area in a way that excludes 
minorities or women, it will be given ample opportunity to correct the 
error before the conclusion of the compliance evaluation.
    Section 60-2.14(f) requires that contractors define the pool of 
promotable, transferable, and trainable employees in such a way as not 
to exclude minorities or women, and to develop a brief documented 
rationale for the selection of the pool. One commenter recommended a 
clarification that this subsection will not be interpreted to mean that 
contractors will be found in violation for defining feeder groups in a 
way that unintentionally has the effect of excluding minorities or 
women. For reason similar to that discussed above, OFCCP declines to 
add this clarification.
    Further, Sec. 60-2.14(d) requires that the contractor use the most 
current and discrete statistical data to conduct its availability 
analyses. This is addressed in Section 2G05(e) and Appendix 2B of the 
FCCM. Examples of such information include census data, data from local 
job service offices, and data from colleges and other training 
institutions. One commenter asserted that it is difficult to identify 
the most current statistical data in practice because few contractors 
have access to data more current than the decennial census. Sections 
2G04 and 2G05 of the FCCM provide guidance on other sources of 
availability data. Moreover, decennial census data or some variant 
thereof often will satisfy the requirement to use the most current 
information ``available.'' Another commenter asserted that determining 
availability is laborious for large, national companies that hire from 
the top educational institutions across the nation for professional 
ranks. OFCCP disagrees as to the difficulty of this task. Data on 
college and university graduates are readily available in private 
publications, from the U.S. Department of Education, and from the 
schools themselves.
    When a job group is composed of job titles with different 
availability rates, Sec. 60-2.14(g) requires the contractor to compute 
a composite availability estimate. The composite availability figure 
would represent a weighted

[[Page 68033]]

average of the availability estimates for all the job titles in the job 
group.
    The composite weighted average availability is computed by 
determining the percentage of total job group incumbents represented by 
the incumbents in each job title, multiplying each incumbent percentage 
by the corresponding availability for that job title, and summing the 
results.
    The computation is illustrated by the following job group of 
professionals with a total of 80 incumbents:

------------------------------------------------------------------------
                                             Number of     Availability
                Job Title                   incumbents       (percent)
------------------------------------------------------------------------
Accountant..............................              20              35
Auditor.................................              40              20
Analyst.................................              20              15
------------------------------------------------------------------------

1. Accountant=20/80 incumbents, or .25 Auditor=40/80 incumbents, or .5 
Analyst=20/80 incumbents, or .25
2. Accountant=.25 x .35=.0875 Auditor=.5 x .20=.1 Analyst=.25 x 
.15=.0375
3. Composite Availability=.0875+.1+.0375=.225 or 22.5%.
    A comment from a law firm representing a business association urged 
OFCCP to delete the composite availability requirement entirely, or to 
at least clarify it to provide that determining availability for each 
job title is not required when a contractor uses ``appropriate census 
data that encompasses a broader range of job titles and/or occupational 
categories.'' The basis for the request was the commenter's assertion 
that ``census data already encompasses a range of job titles'' and 
``already represents ``composite'' availability data when applied to a 
specific job group.'' OFCCP does not object, per se, to the use of 
aggregated census data in lieu of the job title by job title 
computation of composite availability, when the aggregated data truly 
represent composite availability data for the job group in question. 
However, in order for the use of aggregated census data to be 
acceptable, there must be a close match between the actual jobs 
included in the census data and those in the contractor's job group. 
Additionally, so as to remain true to the concept of weighted 
averaging, the percentage representation of each job in the census 
group must closely match the percentage representation of the 
corresponding job in the contractor's job group.
    In the NPRM, OFCCP requested comments concerning whether 
contractors should be required to compute availability separately for 
individual minority subgroups as a general rule. Five commenters--two 
law firms, a contractor, a contractor representative, and an individual 
consultant-- expressed opposition to computing availability separately 
for individual minority subgroups. One of these commenters expressed 
concern that it would cause confusion in that employees or applicants 
could identify themselves with multiple ethnic or racial 
characteristics. A law firm indicated that it would create rivalry 
between minority subgroups.
    One commenter, a consultant, noted examples where it may be 
beneficial to calculate minority subgroups. This commenter stated that 
using total minorities allows the masking of discrimination against 
specific minority subgroups. This commenter indicated this practice of 
discriminating against minority subgroups could be self-perpetuating 
because management hires new employees as a result of referrals from 
current employees, with the effect of excluding other groups.
    The regulation retains the requirement that contractors determine 
the availability of total minorities. The language in the proposal, 
which does not require calculating availability separately by 
individual minority subgroup, was not modified and has been adopted in 
the final rule.

Section 60-2.15  Comparing incumbency to availability

    (Current Sec. 60-2.15 entitled ``Compliance status'' was revised 
and moved to Sec. 60-2.35, discussed below in the preamble.)
    Section 60-2.15 addresses an aspect of the current regulations that 
is referred to as the ``utilization analysis,'' and replaces one 
portion of the current Sec. 60-2.11(b). Section 60-2.15(a) requires the 
contractor to compare the representation of minorities and women in 
each job group with their representation among those available to be 
employed in that group. During compliance reviews, OFCCP typically 
finds that more minorities and women are available for employment in 
particular occupations and job groups than are actually employed in 
those positions. If the availability for a job group is greater than 
incumbency, and the difference is of a sufficient magnitude, the 
contractor must establish a goal.
    The current regulation refers to the difference between 
availability and incumbency as ``underutilization,'' defined as 
``having fewer minorities or women in a particular job group than would 
reasonably be expected by their availability.'' When this condition 
exists, the contractor must establish a goal. As noted in the preamble 
to the NPRM, OFCCP traditionally has permitted contractors to identify 
underutilization using a variety of methods, including: The ``any 
difference'' rule, i.e., whether any difference exists between the 
availability of minorities or women for employment in a job group and 
the number of such persons actually employed in the job group; the 
``one person'' rule, i.e., whether the difference between availability 
and the actual employment of minorities or women equals one person or 
more; the ``80 percent rule,'' i.e., whether actual employment of 
minorities or women is less than 80 percent of their availability; and 
a ``two standard deviations'' analysis, i.e., whether the difference 
between availability and the actual employment of minorities or women 
exceeds the two standard deviations test of statistical significance.
    Seven commenters addressed the standards for comparing incumbency 
to availability. Five of the seven commenters--two organizations 
representing women, a consultant, an association and a labor 
organization-- advocated that OFCCP adopt some variation of the ``any 
difference'' standard across the board. They argued that contractors 
should be required to set placement goals for women and minorities 
whenever analysis demonstrates any difference between availability and 
utilization. They indicated that allowing contractors to choose the 
standard by which they will be evaluated introduces unnecessary 
inconsistency to the process, resulting in similarly situated 
establishments being held to different measures in assessing their 
employment of women and minorities. Another civil rights

[[Page 68034]]

membership organization commented that contractors should be required 
to set placement goals whenever analysis reveals a difference of one 
person between availability and utilization. One commenter, a 
consultant, stated that the proposal does not address the 
``inappropriate nature'' of using the standard deviation approach when 
either the job groups or availability are too small. The commenter 
further stated that OFCCP continues to avoid implementing a regulation 
regarding determination of underutilization.
    Conversely, two commenters, both law firms, recommended that OFCCP 
continue to permit contractors flexibility, arguing that the various 
acceptable methods be included in the regulatory text.
    On balance, OFCCP believes that retaining the current practice of 
permitting various methods for determining availability is the 
appropriate approach to take. OFCCP further believes that the proposed 
wording of Sec. 60-2.15 is sufficient to suggest to the contractor 
community when there exists the need to establish a goal. Therefore, 
the provision, Sec. 60-2.15(b), is adopted without change.
    Finally, current Sec. 60-2.11(b) specifies that the AAP shall 
contain ``(a)n analysis of all major job groups'' for which 
underutilization determinations will be made (emphasis added). The 
regulations do not define ``major,'' nor do they distinguish major job 
groups from other job groups. Most contractors have treated all job 
groups as major, and have conducted the analyses for each. In the NPRM 
OFCCP proposed to discontinue the use of the word ``major,'' thereby 
requiring that contractors determine availability, compare incumbency 
to availability, and set placement goals (where comparison of 
availability to incumbency indicates a need to do so) for all job 
groups.
    In the preamble of the NPRM, OFCCP expressly solicited comments on 
the proposal to drop the word ``major'' in reference to job groups. 
OFCCP received a comment from a law firm representing a business 
association objecting to the proposal to drop the term major. This 
commenter stated this change would ``make little practical difference 
to large contractors'' but would ``negatively impact small 
contractors.'' This commenter further stated that small contractors, 
``relied on the current language to reasonably conclude they need not 
assess utilization of those job groups that are too small to permit 
meaningful analysis.'' This commenter concluded that the deletion of 
``major'' would ``only add work, but no additional value, to a small 
contractor's AAP.'' OFCCP believes that this concern becomes less of an 
issue inasmuch as Sec. 60-2.12 allows smaller contractors to use EEO-1 
categories as their job groups.
    In contrast, another association commented that it anticipated no 
added burden because contractors already have a practice of treating 
all job groups as ``major'' and stated that contractors already perform 
these analyses on each job group. A labor organization commented that 
requiring that underutilization analysis be performed for each job 
group rather than just ``major'' job groups is a sound step, consistent 
with the program's goals of promoting equal opportunity.
    This section is adopted as proposed in the NPRM. This language 
assures that no one is excluded when comparing incumbency to 
availability because of the size of the job group.

Section 60-2.16  Placement Goals

    The earlier sections of the final rule require a Federal contractor 
to analyze its workforce and evaluate its employment practices for the 
purpose of identifying and correcting gender-, race-, and ethnicity-
based obstacles to equal employment opportunity. Where the need for 
corrective action is revealed, the AAP must include outreach and other 
steps precisely tailored to eliminate the barriers disclosed, and 
placement goals to target and measure the effectiveness of efforts 
directed towards achieving that result. In the preamble to the NPRM, 
OFCCP provided a brief history of how it has addressed the question of 
goals and how the regulatory provisions requiring goals fits into that 
history.
    Section 60-2.16(a) sets out the purpose of placement goals. It 
explains that goals ``serve as objectives or targets reasonably 
attainable by every good faith effort.'' It also explains that goals 
are used to measure progress toward equal employment opportunity.
    One contractor association commented that in its view there was no 
meaningful distinction between the use of goals and the use of quotas. 
The commenter stated, ``OFCCP requires contractors to pursue a race-
based or gender-based hiring and promotion system.'' The commenter 
suggested that goals could only be justified by a demonstration that 
they are needed to remedy specifically identified past discrimination. 
Absent evidence of such demonstration, the commenter suggests that 
there is no ``compelling governmental interest'' that would justify the 
setting of goals and that to do so would violate the equal protection 
clause of the U.S. Constitution. The commenter cites a number of court 
decisions to support its position.
    OFCCP disagrees with this commenter. OFCCP does not require 
contractors to pursue a race- or gender-based hiring and promotion 
system. As noted in the NPRM, what OFCCP requires is that contractors 
engage in outreach and other efforts to broaden the pool of qualified 
candidates to include minorities and women. Contrary to the suggestion 
made by the commenter, goals are not a device to achieve proportional 
or equal results; rather the goal setting process is used to target and 
measure the effectiveness of affirmative action efforts to eradicate 
and prevent barriers to equal employment opportunity. OFCCP's position 
with respect to goals is explained more fully in an OFCCP 
Administrative Notice entitled ``Numerical Goals under Executive Order 
11246,'' which was issued in December 1995.
    A contractor association questioned whether the first sentence of 
Sec. 2.16(b) was necessary, since Sec. 60-2.15 discusses when a goal 
must be set and Sec. 60-2.16(c) establishes the level at which a goal 
must be set. Another commenter requested clarification of terms in this 
same sentence. In response to these comments, OFCCP has deleted the 
first sentence of Sec. 60-2.16(b) in the final rule.
    Another commenter urged OFCCP to ``state loud and clear, that there 
is no presumption of discrimination'' based on the fact that a 
contractor is required under the regulations to set a goal. OFCCP 
believes that the statement at Sec. 60-2.16(b) that ``A contractor's 
determination under Sec. 2.15 that a placement goal is required 
constitutes neither a finding nor an admission of discrimination'' is a 
very ``loud and clear'' statement of this point.
    Commenters, generally, raised no concerns about Sec. 60-2.16(c). 
This provision is adopted without change in the final rule.
    Two commenters representing a number of contractors raised a 
concern about the statement at Sec. 60-2.16(d) that ``In the event of a 
substantial disparity in the utilization of a particular minority 
group, a contractor may be required to establish separate goals for 
those groups.'' The commenter was concerned because the term 
``substantial disparity'' is not defined and feared that the 
requirement ``will have the practical result of producing quotas and 
will, no doubt pit one minority group against another.''
    As indicated in Sec. 60-2.16(d), setting a single goal for all 
minorities is expected

[[Page 68035]]

to continue to be the norm for most contractors. The purpose of the 
additional language concerning substantial disparities for a particular 
group is intended to address specific situations where a particular 
minority group, or men and women of a particular minority group, are 
substantially underutilized. This approach is taken directly from 
OFCCP's current regulations at Sec. 60-2.12(l). In appropriate 
circumstances, OFCCP will continue to require separate goals for 
particular minority groups or by gender within minority groups. It is 
not intended to represent a change. Therefore, OFCCP has not changed 
this language in the final rule.

Section 60-2.17  Additional Required Elements of Affirmative Action 
Programs

    The preceding sections of the regulations have focused primarily on 
the diagnostic component of written AAPs--the statistical analyses of 
the contractor's workforce to identify equal employment opportunity 
problems. However, meaningful affirmative action also requires that the 
contractor develop and carry out action-oriented programs to eliminate 
the identified problems, and establish procedures for monitoring its 
employment activities to determine whether the AAP is effective.
    The existing regulations address the action-oriented and evaluative 
components of AAPs in a section designated ``Additional required 
ingredients of affirmative action programs.'' That provision appears at 
Sec. 60-2.13 in the existing regulations. OFCCP has eliminated a number 
of elements that no longer need to be specifically and separately set 
forth in regulatory form. The remaining provisions have been moved to 
Sec. 60-2.17 and are now named ``Additional required elements of 
affirmative action programs.'' Although OFCCP has eliminated these 
provisions from the mandatory requirements of the AAP, the contractor 
may voluntarily choose and is encouraged to retain these elements in 
its program.
    In the final rule, OFCCP has deleted, as specific required 
elements, the following items:

Sec. 60-2.13(a)--reaffirmation of the contractor's EEO policy in all 
personnel matters;
Sec. 60-2.13(b)--formal internal and external dissemination of the 
contractor's EEO policy;
Sec. 60-2.13(e)--establishment of goals and objectives by 
organizational units and job groups, including timetables for 
completion;
Sec. 60-2.13(i)--active support of local and national community action 
programs and community service programs; and
Sec. 60-2.13(j)--consideration of minorities and women not currently in 
the workforce having requisite skills.

    In addition, OFCCP has deleted existing Sec. 60-2.13(h)--compliance 
of personnel policies and practices with the Sex Discrimination 
Guidelines (41 CFR part 60-20). The Sex Discrimination Guidelines are 
an independent regulatory requirement to which contractors are subject, 
regardless of whether the Guidelines are mentioned as ``additional 
required elements.'' Eliminating redundancy by not referencing the 
Guidelines in Sec. 60-2.17, therefore, in no way affects the 
contractor's obligation to comply with the Guidelines nor OFCCP's 
commitment to enforcing the Guidelines.
    OFCCP has retained four of the original 10 ``additional required 
ingredients.'' OFCCP believes that these remaining items capture the 
essence of effective affirmative action, including subsuming many 
aspects of the specific ``ingredients'' that were deleted. They should 
energize and encourage contractors to improve upon and eliminate any 
weaknesses in their equal employment opportunity performance. The 
following elements in the existing Sec. 60-2.13 are retained in the new 
Sec. 60-2.17:

Sec. 60-2.13(c)--establishment of responsibilities for implementation 
of the contractor's AAP (codified as Sec. 60-2.17(a));
Sec. 60-2.13(d)--identification of problem areas by organizational 
units and job groups (codified as Sec. 60-2.17(b));
Sec. 60-2.13(f)--development and execution of action-oriented programs 
designed to eliminate problems and further designed to attain 
established goals and objectives (codified as Sec. 60-2.17(c)); and
Sec. 60-2.13(g)--design and implementation of internal audit and 
reporting systems to measure effectiveness of the total program 
(codified as Sec. 60-2.17(d)).

    OFCCP proposed to modify the provision in Sec. 60-2.13(c) of the 
existing regulations (Sec. 60-2.17(a) of this rule) concerning the 
``establishment of responsibilities for implementation of the 
contractor's affirmative action program.'' This modification is derived 
from Sec. 60-2.22(a) of the existing regulations, which recommends, but 
does not require, that the contractor assign an executive as director 
or manager of company equal opportunity programs and give that person 
the management support and staffing to carry out the assignment. The 
proposal expressly requires that the contractor provide for the 
implementation of the affirmative action program by assigning 
responsibility and accountability to a company official. However, the 
official is not required to be an executive of the company.
    OFCCP received several comments on proposed subsection 60-2.17(a), 
the majority of which strongly supported the proposal. Those commenters 
stated, for example, that for the affirmative action program to be 
effectively implemented, adequate attention and resources must be 
devoted to its administration.
    One commenter, an organization representing contractors, agreed 
that management responsibility and accountability are important factors 
in implementing a successful affirmative action program, but noted that 
many experienced human resources professionals believe that an 
``affirmative action czar'' approach is not particularly effective. 
According to the commenter, this is because the czar model ``allows 
others in the organization to believe that nondiscrimination and 
affirmative action are the czar's responsibility not theirs.'' 
Therefore, the commenter argued, exactly how accountability and 
responsibility are to be accomplished should be left to the contractor. 
Another commenter took a different approach, writing, ``The OFCCP fails 
to recognize that frequently the person assigned with the 
responsibility for equal employment opportunity is often a staff member 
who serves in an advisory capacity, without the authority to implement 
these changes and therefore cannot be held accountable.''
    OFCCP certainly encourages contractors to hold all managers 
accountable for equal employment opportunity and affirmative action. 
However, OFCCP also feels strongly that a company official must oversee 
equal opportunity and affirmative action efforts, and must have the 
authority and responsibility to make them effective, lest no-one is 
held accountable and responsible.
    Finally, a few commenters expressed concern about the last sentence 
of subsection (a), which states that the official responsible for equal 
employment opportunity must have the authority, resources, support of 
and access to top management to ensure effective implementation of the 
AAP.

[[Page 68036]]

One wondered how a contractor would demonstrate to the compliance 
officer that the designated official has the required authority. OFCCP 
is confident that authority would be easily demonstrated by a few 
inquiries during the compliance evaluation process. The commenter also 
wondered whether, over time, this would lead to more boilerplate in 
AAPs designed to prove the necessary authority and access to top 
management. OFCCP considers this concern to be highly speculative.
    A contractor, a law firm, and several consultants and organizations 
representing contractors expressed concerns with proposed subsection 
(b). Subsection (b) requires the contractor to perform in-depth 
analyses of its total employment process to determine whether and where 
impediments to equal employment opportunity exist. Areas to be analyzed 
include: (1) The workforce by organizational unit and job group; (2) 
personnel activity; (3) compensation systems; (4) selection, 
recruitment, referral and other personnel procedures; and (5) other 
areas that might impact the success of the affirmative action program. 
Many of the comments focused on the requirement to review compensation 
systems, with several commenters asserting that OFCCP does not have 
authority to enforce equal pay concerns, that analysis of compensation 
systems is not required by the current regulations, that compensation 
analyses impose an additional burden, or that OFCCP did not specify the 
types of analyses it would find acceptable. However, one of the 
contract clauses that Executive Order 11246 requires be inserted in all 
government contracts requires that the contractor agree not to 
discriminate on the basis of race, color, religion, sex or national 
origin. Areas in which discrimination expressly is prohibited include 
``rates of pay and other forms of compensation.'' Section 202(1). Since 
the compensation analysis requirement is not new, it imposes no 
additional burden. The question of burden is also discussed in the 
Paperwork Reduction Act section below. In addition, contractors have 
the ability to choose a type of compensation analysis that will 
determine whether there are gender-, race-, or ethnicity-based 
disparities.
    Commenters also expressed confusion about how the information 
gained from the analyses conducted under subsection (b) should be used 
by contractors, and how the contractor's actions will be evaluated by 
OFCCP. Much of the answer is found in subsection (c), which requires 
the contractor to develop and execute action-oriented programs designed 
to correct any problem areas identified pursuant to subsection (b), and 
to demonstrate that it has made good faith efforts to remove identified 
barriers, expand employment opportunities, and produce measurable 
results. Of course, if the contractor's analyses disclosed 
discrimination, the contractor would be expected to eliminate the 
discriminatory practices and provide appropriate remedies.
    A few commenters asserted that little or no reduction of the burden 
or cost of implementing provisions of the rule would result from the 
revisions that were made to Sec. 60-2.17. See discussion of burden 
reduction in the section below addressing the Paperwork Reduction Act.

Section 60-2.18  Equal Opportunity Survey

    The proposed Sec. 60-2.18 requires that nonconstruction contractor 
establishments designated by OFCCP prepare and file an Equal 
Opportunity (EO) Survey. The EO Survey contains information about 
personnel activities, compensation and tenure data and specific 
information about the contractor's affirmative action programs.
    Virtually every commenter addressed the EO Survey. There were two 
general categories of comments: (1) comments on the Survey as a concept 
and its utility as an instrument to select contractors for compliance 
evaluations, including comments on the burden hours and (2) comments on 
the specific format and content of the Survey document.
    There were numerous comments from women's and civil rights groups, 
labor organizations, and a consultant in favor of the EO Survey as a 
useful instrument to select contractors for compliance evaluations. 
These comments indicated that it will enhance, strengthen, and improve 
enforcement efforts; it will increase contractor accountability; it 
will aid in disclosing possible discriminatory personnel and 
compensation practices; it will encourage contractor self-audits and 
corrective actions; it will aid OFCCP in tailoring its evaluation 
activities to those contractors that appear to need the most help; and 
it will not be a burden on contractors. However, there were also 
numerous comments from contractors, law firms, employer associations, 
and consultants that asserted that the EO Survey is not a useful 
instrument, or expressed other concerns about the EO Survey.
    One commenter asserted that the Administrative Procedure Act 
requires that OFCCP subject the actual EO Survey format to notice and 
comment rulemaking. OFCCP disagrees. As the Federal agency charged with 
enforcing Federal contractor compliance with Executive Order 11246, 
OFCCP has ample authority to investigate such compliance by, among 
other things, requesting general information relevant to whether a 
contractor is fulfilling its affirmative action duties or engaging in 
discriminatory employment practices. Section 202(5) of Executive Order 
11246, and the regulations promulgated thereunder, mandate as a 
condition of each Government contract, that the contractor agree to 
furnish all information required by the Executive Order and to permit 
the Secretary of Labor access to the contractor's books, records and 
accounts for purposes of investigation to ascertain compliance with the 
rules, regulations and orders. 41 CFR 60-1.4(a)(5). The requirements of 
Sec. 60-1.4(a) with respect to the production of data are not limited 
to information sought by OFCCP as part of a compliance evaluation. 
Nothing in the Administrative Procedure Act or elsewhere requires OFCCP 
to publish for notice and comment an enumeration of, or the format for, 
every item it will examine to determine whether contractors are 
complying with their contractual obligations. Moreover, OFCCP notes 
that public notice and comment on the Survey format were provided under 
the Paperwork Reduction Act.
    Several comments were related to OFCCP's projection of the burden 
hours that it should take contractors to complete the EO Survey. Three 
organizations representing contractors surveyed a sample of their 
members concerning the length of time it took to complete the EO 
Survey. One organization found that the average completion time was 23 
hours; the second, 30 hours, and the third stated that 80% of its 
sample took longer than 12 hours to complete the EO Survey. Given the 
newness of the EO Survey and the requisite learning curve of the 
individuals completing the EO Survey, the time required to complete a 
contractor establishment's initial EO Survey is undoubtedly greater 
than the time that will be required for subsequent EO Survey 
submissions. To take this learning curve into account, OFCCP has 
increased the estimated time to complete the EO Survey from 12 hours to 
21 hours for the first two years the Survey is distributed. See 
Paperwork Reduction Act section below.
    Several commenters believed OFCCP should explain how the EO Survey 
data would be used to select contractors for compliance evaluations. 
Another

[[Page 68037]]

commenter indicated that Part C of the EO Survey (which collects 
compensation data) is inadequate to help OFCCP select contractors for 
compliance evaluations. In actuality, the data in all three components 
of the EO Survey--Parts A, B and C--as well as other information, will 
be used in the contractor selection process.
    Each part of the Survey will provide indicators of potential 
compliance problems for which further inquiry may be appropriate. For 
example, negative answers to the questions in Part A about the 
contractor maintaining AAPs under each of the laws enforced by OFCCP 
might suggest the need for follow-up in that area. Likewise, Part C 
data that indicate possible disparities in pay between men and women in 
particular EEO-1 categories might suggest the need for closer scrutiny 
of actual pay practices. The Survey responses do not prove that a 
problem exists, but rather are used as an indicator to guide OFCCP 
compliance evaluations.
    One commenter suggested that construction contractors also be 
required to submit the EO Survey. Part 60-2 pertains solely to 
contractors with supply and service contracts. The current EO Survey 
was intended for nonconstruction contractors. OFCCP will, however, 
consider expanding the Survey to cover construction contractors in the 
future. It should be noted also that construction companies that have 
supply and service contracts, e.g., architectural, engineering, survey 
and the like, are subject to part 60-2.
    Several other commenters indicated that the Survey was not 
appropriate for colleges and universities because they complete the 
IPEDS or EEO-6 form rather than the EEO-1 form. Currently OFCCP is not 
requiring colleges and universities to complete the Survey and there 
are no current plans to expand the EO Survey to include higher 
education contractors; however, OFCCP will consider this comment if the 
Survey is subsequently expanded to include higher education 
contractors.
    A recurring concern of contractors is that information submitted to 
OFCCP, compensation information being the most frequently cited item, 
may be disclosed to competitors or the public under the Freedom of 
Information Act (FOIA).
    Paragraph (d) states that OFCCP will treat information contained in 
the Equal Opportunity Survey as confidential to the maximum extent the 
information is exempt from public disclosure under FOIA. OFCCP explains 
in paragraph (d) that its practice is not to release data where the 
contractor still is in business and where the contractor asserts, and 
through the Department of Labor review process it is determined, that 
the data are confidential and that disclosure would subject the 
contractor to commercial harm. Several comments suggested that neither 
regulations nor case law under FOIA is adequate to ensure protection of 
information in the EO Survey. However, the more specific the 
information is about a particular employer, the more protection it is 
afforded under FOIA. Moreover, the Department's FOIA regulations at 29 
CFR 70.26 require OFCCP to notify contractors on a case-by-case basis 
whenever a FOIA request is made. This notification gives contractors 
the opportunity to object to the disclosure of any data they consider 
confidential.
    Throughout its history OFCCP has routinely collected compensation 
information during the course of its compliance evaluations, and OFCCP 
is not aware of any instance in which compensation data were disclosed 
without the consent of the contractor. It has always been OFCCP's 
policy not to release data that is determined to be confidential or has 
the potential to subject the contractor to commercial harm if 
disclosed, and this policy will be applied to EO Survey data as well. 
OFCCP believes that the concerns about the security of EO Survey data 
are unfounded.
    Paragraph (b) of the NPRM provided that the Survey must be prepared 
in accordance with the format specified by the Deputy Assistant 
Secretary, but the specific format was not published in the NPRM. 
Paragraph (b) further stipulated that the Survey will include 
information that will allow for an accurate assessment of contractor 
personnel activities, pay practices, and affirmative action 
performance.
    The NPRM also indicated that the Survey ``may'' include data 
elements such as applicants, hires, promotions, terminations, and 
compensation by race and gender. In this final rule, this provision is 
made mandatory, because these data are essential to OFCCP's analyses of 
contractors' personnel and compensation practices.
    As use of the EO Survey develops and evolves, the Department may at 
some time determine that one or more of the data elements currently 
included in the EO Survey should be altered or deleted. In the event 
consideration is given to changing a data element requirement, the 
following circumstances must exist: (1) the Secretary must clearly 
demonstrate through statistical analyses of EO Survey submissions that 
the data element in question is no longer of value; and (2) the 
Secretary must follow Notice and Comment procedures.
    Many comments addressed the content (i.e., format, definitions, 
etc.) of the EO Survey form as it is being implemented by OFCCP. 
Because Sec. 60-2.18 does not provide for a specific format, OFCCP does 
not consider the specific contents of the Survey form now in use to 
have been part of the NPRM. Nevertheless, in the interest of full 
discussion of the EO Survey, OFCCP addresses those comments below.
    During the first implementation phase of the EO Survey, which began 
in April 2000, a Survey format, reviewed and approved by OMB, was sent 
to approximately 7,000 contractors to complete and submit. While many 
of the comments concerning the format were favorable, a number of 
comments from law firms, employer associations, consultants and one or 
two contractors were critical of the format for a variety of reasons. 
Some indicated that the use of EEO-1 categories rather than job groups 
renders the data too broad to be meaningful in identifying 
noncompliance, as an indicator for potential problems, or as a self-
auditing tool for contractors. Some other commenters said that using 
EEO-1 data would require companies to maintain two sets of data: one 
set for the AAP based on job groups and one for the EO Survey. On 
August 31, 2000, four organizations representing contractors met 
pursuant to Executive Order 12866 with OMB and OFCCP to discuss the 
Survey. These four organizations asserted that reporting Survey data by 
EEO-1 category represented an additional burden, because contractors 
usually maintain data by job groups.
    OFCCP proposed the use of the nine EEO-1 job categories because (1) 
they are well known to Federal contractors, and have been in use for 
several decades; (2) many contractors now use the categories as job 
groups; (3) the categories are fixed and common across industries and 
therefore provide a ready means of comparing employment data from one 
contractor to another (this would not be the case with job groups, 
whose makeup varies from contractor to contractor); and, (4) job groups 
generally do not cross EEO-1 categories, which means that a contractor 
could determine EEO-1 category data simply by combining the data from 
several job groups. Additionally, OFCCP intends to use the EO Survey 
data to identify indicators of potential problems for purposes of 
scheduling and focusing compliance evaluations and not as evidence of 
discrimination, so detailed data are not necessary. While OFCCP's Equal 
Employment Data System (EEDS) is also based on EEO-1 data, the EO

[[Page 68038]]

Survey provides more in-depth data than the EEDS does, thus greatly 
increasing OFCCP's ability to predict potential problems when using the 
EO Survey as the instrument to select contractors for compliance 
evaluations. By the same token, the EO Survey should also be a useful 
tool for self-auditing purposes, to enable companies to focus on 
specific potential problems that may exist.
    In response to the requests that OFCCP permit reporting by job 
group, and in the interest of flexibility, OFCCP has decided to allow 
contractors the option of submitting personnel activity and 
compensation data either by job group or by EEO-1 category. Contractors 
may submit EO Survey data by job group only under these circumstances:
    (1) Contractors must submit both personnel activity and 
compensation data by job groups.
    (2) Contractors may submit EO Survey data by job groups only via 
the Internet.
    (3) Contractors must identify the EEO-1 category to which each job 
group belongs.
    (4) Contractors may not submit a job group that crosses EEO-1 
category lines.
    One consultant asserted that the 30-day timeframe for completion of 
the Survey did not allow contractors sufficient time, and extensions 
beyond the May 31, 2000, due date were not granted. OFCCP will take 
this comment under advisement when determining the due date for future 
EO Survey submissions.
    Several commenters expressed concern over the fact that the EO 
Survey does not allow for the reporting of data on part-time employees. 
Some commenters felt that this lack of data would impair OFCCP's 
ability to identify areas of potential discrimination. One commenter 
asserted that since many women and minorities are part-time employees, 
excluding them on the Survey underrepresents the number of women and 
minorities employed by contractors. Others objected to the exclusion of 
part-time employees as it was inconsistent with their Affirmative 
Action Program reporting systems.
    OFCCP recognizes that excluding part-time employees from the EO 
Survey may restrict the Survey's effectiveness as a predictor of 
potential problems in the area of part-time employment. As a practical 
matter, including data on part-time incumbency and compensation would 
have increased the size of the EO Survey by several pages. OFCCP 
intends to use the EO Survey data as merely an indicator of potential 
problems and not as evidence of discrimination, so areas of potential 
discrimination concerning part-time employees can and will still be 
investigated during compliance evaluations.
    Several commenters complained that the definition of ``applicant'' 
contained in the EO Survey instructions is ambiguous, and were 
concerned with how contractors could obtain race/gender information. 
The definition of applicant contained in the EO Survey is the same 
definition OFCCP and other civil rights agencies have relied upon for 
more than 20 years. It is taken from and is consistent with the Uniform 
Guidelines on Employee Selection Procedures (refer to 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 (Qs and As), 44 FR 11996, 11998 (March 2, 1979)). With 
regard to obtaining race and gender information for reporting on the EO 
Survey, OFCCP notes that this is not a new requirement nor an 
additional burden, as contractors have had an affirmative obligation to 
ascertain the race and gender of their applicants, where possible, for 
as long as OFCCP has enforced Executive Order 11246. It is also 
consistent with Sec. 60-3.4 of the Uniform Guidelines on Employee 
Selection Procedures.
    Several commenters stated that they had problems with the 
definition of ``promotion'' used in the EO Survey, as it differed from 
the definition they used. The definition is consistent with previous 
guidance issued by OFCCP, as it was taken verbatim from the Glossary in 
Chapter 1 of OFCCP's FCCM. Promotions are to be captured within EEO-1 
categories as well as from one EEO-1 category to a higher category 
(e.g., from Professionals to Officials and Managers). To offer an 
alternative definition in the EO Survey would only create confusion and 
possibly additional burden on contractors.
    One commenter said that the definition of ``hire'' needed 
clarification. OFCCP did not include a definition of ``hire'' in the 
most recent EO Survey, as it was found during cognitive testing that 
the word was well understood and no definition was necessary. OFCCP 
recognizes that while there may be slight variations in the way hires 
are reported (i.e., the date the employee accepts the position, the 
date the employee first reports for work, etc.) from contractor to 
contractor, the variations are acceptable as long as the contractor is 
internally consistent. OFCCP does not see the need for a restrictive 
definition of this term.
    A number of comments addressed the compensation data requested by 
the EO Survey. Many commenters supported requesting compensation data, 
because of the role of compensation in employment discrimination. Other 
commenters were not in favor of including compensation data. One such 
commenter indicated that the EO Survey fails to identify compensation 
discrimination. Another indicated that the contractor should be allowed 
to explain all the factors that influence compensation. One commenter 
noted that tenure is not a good indicator of compensation 
discrimination. Another stated that the EO Survey erroneously assumes 
that tenure with a company is the only important pay variable. Still 
another commenter was of the opinion that only tenure within the 
position currently held was relevant to compensation analysis. Another 
indicated that salary data should be aggregated to protect the 
confidentiality of individual salary data.
    OFCCP believes that compensation data must be used in identifying 
potential problems as early in the process as possible and it, 
therefore, intends to retain compensation data in the EO Survey. 
Furthermore, the compensation data are used only as an indicator, a 
reason for further inquiry, not as evidence of discrimination. 
Therefore, OFCCP has decided to retain ``tenure'' in future versions of 
the EO Survey, and tenure is included as a required data element in 
Sec. 2.18(b). If a compliance evaluation is scheduled and compensation 
is a focus area, the contractor will have the opportunity to explain 
all the additional factors that influence compensation.
    Finally, the compensation information requested in the EO Survey is 
aggregated by gender and minority/non-minority status within each EEO-1 
category and does not contain identifying information on individuals.
    In the preamble to the NPRM OFCCP stated that it contemplated 
sending the Survey to no fewer than half of all nonconstruction 
contractor establishments each year; the most likely scenario was 
described as contractors submitting the Survey biennially, with 
approximately one half of all establishments submitting the Survey each 
year. OFCCP also stated that it was considering whether to codify this 
one half floor as part of the final rule. Several commenters, including 
women's organizations and labor unions, felt that codification of the 
number of Surveys was critical to the success of the project. OFCCP has 
decided that sending the Survey to half of all nonconstruction 
contractor establishments each year is the only way to ensure that the 
Survey will

[[Page 68039]]

continue to be a credible evaluation tool. Therefore, OFCCP will send 
the Survey to half of all nonconstruction contractor establishments 
each year. The final rule states that ``OFCCP will designate a 
substantial portion of all nonconstruction contractor establishments to 
prepare and file and Equal Opportunity Survey.'' OFCCP interprets ``a 
substantial portion'' to mean half of all nonconstruction contractor 
establishments. Interpreting ``substantial portion'' as ``half'' 
enhances OFCCP's ability to achieve the three stated objectives of the 
Survey:
    (1) To increase compliance with equal opportunity requirements by 
improving contractor self-awareness and encourage self-evaluations.
    (2) To improve the deployment of scarce federal government 
resources toward contractors most likely to be out of compliance.
    (3) To increase agency efficiency by building on the tiered-review 
process already accomplished by OFCCP's regulatory reform efforts, 
thereby allowing better resource allocation.
    Proposed paragraph (c) described how, when, and where contractors 
must file the Equal Opportunity Survey. The NPRM stated that 
contractors are encouraged to file the EO Survey in electronic format. 
Since ``electronic format'' may refer either to the means of 
transmission or the form in which the data are sent, OFCCP has 
clarified paragraph (c) to state that contractors are encouraged to 
submit the EO Survey via the Internet. Internet submission will greatly 
expedite OFCCP's receipt and analysis of submitted data. Contractors 
also may mail or fax the EO Survey to OFCCP. For clarification, 
paragraph (c) now states that the fax telephone number will be 
indicated in the EO Survey instructions. Two commenters suggested that 
the EO Survey due dates should be staggered. Staggered filing/
submission dates are currently under consideration by OFCCP.
    After considering all the comments received, the final rule adopts 
the EO Survey as a regulatory instrument. Certain issues such as the 
submission date and the time allowed for completion of the Survey are 
not part of this rule and will be addressed at a later date.

Section 60-2.30  Corporate Management Compliance Evaluations

    This new section draws upon OFCCP's experience in conducting glass-
ceiling reviews, addressing several issues that are unique to the 
corporate management environment.
    Paragraph (a) briefly explains that the purpose of Corporate 
Management Compliance Evaluations is to ascertain whether individuals 
are encountering artificial barriers to advancement into mid-level and 
senior corporate management positions.
    Paragraph (b) provided that OFCCP may expand the scope of a 
Corporate Management Compliance Evaluation beyond a company's 
headquarters establishment, if during the course of a compliance 
evaluation it comes to OFCCP's attention that compliance problems exist 
at other locations outside the corporate headquarters.
    A number of commenters endorsed this section. Other commenters 
endorsed or did not oppose the general concept of codifying Corporate 
Management Evaluations, even as they expressed concerns about a 
particular portion of the proposal.
    Several commenters, including a law firm, consultants, and 
organizations representing contractors, stated concern about paragraph 
(b) of the proposal. They felt that the provision would give OFCCP 
unlimited authority to expand the scope of Corporate Management 
Evaluations beyond corporate headquarters to any and all facilities 
within a corporation. OFCCP's purpose in looking beyond corporate 
headquarters is to examine ``glass ceiling'' barriers to promotional 
opportunities that are found at facilities outside the headquarters. 
For example, OFCCP may wish to analyze ``feeder pools'' at lower-level 
establishments from which selections for management positions at the 
headquarters establishment are made. See, generally, FCCM Section 5A04. 
It is not OFCCP's policy or practice to routinely expand corporate 
management compliance evaluations into broad-ranging reviews of 
subordinate facilities, or to audit for issues outside the scope of the 
glass ceiling. However, if in the course of pursuing a corporate 
management evaluation at a subordinate establishment, the agency learns 
of other practices or conditions that may violate the Executive Order 
(racially discriminatory graffiti in a restroom, for example), OFCCP 
believes that it has the right and the obligation to investigate those 
practices or conditions.
    In the preamble to the NPRM, OFCCP asked for comments on whether to 
incorporate into the regulatory text a number of approaches that the 
agency has found to be particularly effective in addressing glass-
ceiling problems. The comments were about equally divided between 
including the material in the regulations and including it in 
subregulatory guidance. Upon consideration, OFCCP finds persuasive the 
argument that inclusion in the regulations would be inconsistent with 
the objective of simplifying and streamlining the rules. OFCCP 
encourages contractors to seek guidance on eliminating barriers to the 
executive suite from publications on the subject of the glass ceiling, 
including OFCCP's 1997 report on the glass ceiling.

Section 60-2.31  Program Summary

    OFCCP proposed to redesignate the current regulation at Sec. 60-
2.14 (Program Summary) as Sec. 60-2.31, and to make one technical 
change to substitute the title ``Deputy Assistant Secretary'' for 
``Director.'' OFCCP stated that it would replace the program summary 
requirement at some point in the future should the summary be found to 
be duplicative of the Equal Opportunity Survey. Comments were not 
sought on this simple redesignation. The changes have been adopted.

Section 60-2.32  Affirmative action records

    This regulation adds a provision specifying that the contractor 
must make relevant records, including records maintained pursuant to 
Secs. 60-1.12 and 2.10, available to OFCCP on request. This provision 
is derived from the last sentence of Sec. 60-1.40(c) of the current 
regulations. It is designed to ensure that OFCCP will have access to 
the records it needs to ascertain a contractor's compliance with its 
obligations under part 60-2.
    Six organizations representing the interests of organized labor, 
women, minorities, and affirmative action officers characterized the 
proposal as reasonable and stated that it will aid OFCCP in enforcing 
the requirements of Executive Order 11246.
    On the other hand, one contractor and two consultants representing 
the interests of contractors were concerned that OFCCP would: request 
attorney-client privileged material; seek records and information 
``outside'' the compliance evaluation process thereby potentially 
violating the Fourth Amendment to the Constitution; and, not protect 
contractors' secret data and confidential information.
    There is no foundation for these concerns. Because OFCCP most 
commonly requests only the AAP and supporting documentation that are 
developed by the contractor pursuant to its contractual obligations, 
OFCCP does not usually request documents that would be subject to the 
attorney-client privilege. In fact, contractor personnel prepare most 
such documentation without the involvement of legal

[[Page 68040]]

counsel. Even when they involve legal counsel, it is clear that an 
enforcement agency must have access to pertinent records in order to 
carry out its lawful duties. OFCCP does not request material 
``outside'' the compliance evaluation process other than to investigate 
complaints of alleged violations of the regulations. The 
confidentiality of contractors' information is protected by the 
requirements of the Trade Secrets Act and the Freedom of Information 
Act, and the Department's regulations implementing the FOIA.
    The final rule adopts the proposal without change.

Section 60-2.33  Preemption

    In the NPRM OFCCP stated its intent to move this provision from 
Sec. 60-2.31 in the current regulation to Sec. 60-2.33 without 
alteration, except for several technical wording changes. Notice and 
comment were not required, and comments were not solicited. The final 
rule adopts Sec. 60-2.33 without change.

Section 60-2.34  Supersedure

    OFCCP proposed to move this provision from Sec. 60-2.32 in the 
current regulation to Sec. 60-2.34, and to omit as outdated and 
unnecessary the second and third sentences of the current regulation. 
No comments were submitted.
    The final rule adopts Sec. 60-2.34 without change.

Section 60-2.35  Compliance Status

    OFCCP proposed to expand upon and restructure a provision that 
appears at Sec. 60-2.15 of the current regulations.
    One commenter, a law firm, objected to a proposed sentence 
providing that the contractor's compliance status will be determined by 
analysis of statistical data and other non-statistical information that 
would indicate whether employees and applicants are being treated 
without regard to their race, color, religion, sex, or national origin. 
The commenter felt that ``OFCCP's current approach to `statistical 
analyses' in the investigation or compliance process * * * does not 
provide for a reliable means to measure compliance status.'' The 
commenter referred to the ``median analysis'' OFCCP uses at the 
investigative stage to examine pay equity issues. OFCCP disagrees with 
the commenter's view. Median analysis is a valid tool for the first 
step of the investigative process and may demonstrate the need for 
further inquiry. The final rule adopts Sec. 60-2.35 as proposed.

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 
nonsignificant for purposes of Executive Order 12866. In the NPRM, 
OFCCP stated that the proposed changes to the regulations in this NPRM 
would decrease the total estimated annualized cost to contractors of 
developing, updating, and maintaining an AAP by $147,950,698 and that 
the estimated average cost savings per establishment of developing, 
updating, and maintaining an AAP would be $1378, therefore making this 
regulation significant for purposes of Executive Order 12866.
    Upon reviewing the comments to the NPRM concerning burden hours for 
the EO Survey and AAP, OFCCP has determined that this initial estimated 
decrease was too high. In the final rule, OFCCP is taking into account 
the reduction of the decrease in burden hours. Therefore, the changes 
to the regulations in this final rule will decrease the total estimated 
annualized cost to contractors of developing, updating, and maintaining 
an AAP by $89,357,163. The estimated average cost savings per 
establishment of developing, updating, and maintaining an AAP is $831. 
See Paperwork Reduction Act section below.

Congressional Review Act

    In view of the revised cost savings as discussed above, this 
regulation is not a major rule for purposes of the Congressional Review 
Act.

Executive Order 13132

    OFCCP has reviewed this rule in accordance with Executive Order 
13132 regarding federalism, and has determined that it does not have 
``federalism implications.'' The rule does not ``have substantial 
direct effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.''

Regulatory Flexibility Act

    The rule will not have a significant economic impact on a 
substantial number of small business entities.
    Permitting contractors to prepare either a traditional workforce 
analysis or the new-style organizational profile, allowing smaller 
contractors to use EEO-1 categories for their job groups, reducing the 
number of factors that must be considered to determine the availability 
of women and minorities from eight to two, and eliminating more than 
half of the additional required ingredients of the documentation of the 
AAP, will reduce costs associated with these provisions for all 
affected contractors. The Equal Opportunity Survey requirement will 
increase costs, but the overall result of the rule should be a 
reduction in the recordkeeping and reporting burden.
    Thus, the Department concludes that the rule will not have a 
significant economic impact on a substantial number of small entities. 
The Secretary has certified to the Chief Counsel for Advocacy of the 
Small Business Administration to this effect. Therefore, a regulatory 
flexibility analysis under the Regulatory Flexibility Act is not 
required.

Unfunded Mandates Reform Act

    For purposes of the Unfunded Mandates Reform Act of 1995, as well 
as Executive Order 13132, the rule does not include any Federal mandate 
that may result in increased expenditures by state, local, and tribal 
governments, or increased expenditures by the private sector, of 
$100,000,000 or more in any one year.

Paperwork Reduction Act

    This rule contains information collections which are subject to 
review by the Office of Management and Budget (OMB) under the Paperwork 
Reduction Act of 1995. The rule revises regulations which contain 
information collection requirements (ICR) which are currently approved 
under OMB No. 1215-0072. The rule codifies a new requirement, the Equal 
Opportunity Survey, which was reviewed and approved by OMB under OMB 
No. 1215-0196. The EO Survey burden is being adjusted to 21 hours. That 
ICR is being adjusted in conjunction with this final rule.
    The information collections affected by this final rule were 
identified in the NPRM. Those collections and their predicted effect on 
the recordkeeping hours contained in the approved 1215-0072 on file at 
OMB are summarized as follows:
     60-1.12  Record Retention--5 percent increase
     60-2.11  Organizational Profile--20 percent decrease
     60-2.12  Job Group Analysis--10 percent decrease for 
contractors with fewer than 150 employees
     60-2.14  Determining Availability--10 percent decrease
     60-2.17  Additional Required Elements of Affirmative 
Action Programs--20 percent decrease

[[Page 68041]]

    OFCCP invited the public to comment on whether each of the proposed 
collections of information: (1) Ensures that the collection of 
information is necessary to the proper performance of the agency, 
including whether the information will have practical utility; (2) 
estimates the projected burden, including the validity of the 
methodology and assumptions used, accurately; (3) enhances the quality, 
utility, and clarity of the information to be collected; and (4) 
minimizes the burden of the collection of information on those who are 
to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology (e.g., permitting electronic 
submission of responses).
    There were no responses that specifically addressed the issues 
listed above. However, a significant number of commenters representing 
the contractor community expressed opinions about the burdens 
associated with the organizational profile requirement in their 
comments on the regulatory provision. They indicated that the current 
workforce analysis, for most contractors, is a computer generated 
product that is easily updated from data routinely stored for other 
purposes. Furthermore, it was indicated that, for many contractors, 
creating an organizational profile may prove to be time consuming and 
costly because it is not something they currently do. There appears to 
be general agreement that moving from the work force analysis to the 
organizational profile will not result in the 20 percent burden 
reduction that OFCCP estimated in the NPRM. Upon further consideration, 
OFCCP agrees that the original estimate may be too high. In its final 
ICR submission to OMB, OFCCP is revising the organizational profile 
burden reduction from 20% to 10%. In the absence of experience data, we 
estimate 50% of the contractors will use the organizational profile, 
resulting in a reduction in the estimated burden savings from 20% to 
10%.
    A few commenters also argued that OFCCP overstated the expected 
cost savings from the changes in the ``Additional required elements'' 
section of the rule (Sec. 60-2.17), primarily based upon their notion 
that the ``required elements'' being retained impose new burdens. 
Contrary to the commenters' beliefs, virtually everything required of 
contractors under the new Sec. 60-2.17 already is required of 
contractors under existing regulations. Notably, no commenter disputed 
the basic proposition that the reduction in the number of required 
elements would reduce burdens. Further, OFCCP believes that the 
commenters disputing the size of the cost saving underestimate the 
efforts contractors should be making under the existing regulations.
    At this time, OFCCP records indicate that the number of 
establishments has increased from approximately 89,807 to 107,414. 
Application of the estimated changes in burden hours discussed above 
for Secs. 60-1.12, 60-2.11, 60-2.12, 60-2.14, and 60-2.17 results in 
the following burden estimates as compared with the current inventory 
under 1215-0072.

                                              Burden Change Summary
----------------------------------------------------------------------------------------------------------------
                                                                      Current
                                                                     inventory
                                                      Current      adjusted for       Revised         Changes
                                                     inventory       number of       estimate
                                                                       firms
----------------------------------------------------------------------------------------------------------------
AAP Development.................................         161,155         192,750         118,903         -73,847
AAP Updating....................................       6,658,288       7,963,670       5,268,677      -2,694,993
AAP Maintenance.................................       6,725,543       8,044,110       5,321,896      -2,722,214
                                                 ---------------------------------------------------------------
    Total Recordkeeping Burden..................      13,544,986      16,200,530      10,709,476      -5,491,054
Average hours per respondent....................            @150            @150             @99
----------------------------------------------------------------------------------------------------------------

    Section 60-2.18 requires contractors to submit an Equal Opportunity 
Survey to OFCCP. The information required for the Survey would come 
from the records contractors are required to retain by 41 CFR part 60. 
The Survey would not impose any new recordkeeping requirements. We 
estimate that this proposal would increase burden by 21 hours per 
respondent, for a total increased burden of 1,050,000 hours.
    The estimated annualized cost to respondents is based on Bureau of 
Labor Statistics data in the publication ``Employer Costs for Employee 
Compensation'' (USDL: 99-173), which lists total compensation for 
executive, administrative, and managerial as $35.18 per hour and 
administrative support as $16.63 per hour. OFCCP estimates that for the 
Survey, 25 percent of the burden hours will be executive, 
administrative, and managerial and 75 percent will be administrative 
support. OFCCP has calculated the total estimated annualized cost of 
the Survey as follows:

Executive 1,050,000  x  .25  x  $35.18 = $9,234,750
Admin. Supp. 1,050,000  x  .75  x  $16.63 = $13,096,125
Total annualized cost estimate = $22,330,875

    For Secs. 60-1.12, 60-2.11, 60-2.12, 60-2.14, and 60-2.17 
concerning AAP development, maintenance, and updating, OFCCP estimates 
that 20 percent of the burden hours will be executive, administrative, 
and managerial and 80 percent will be administrative support. OFCCP has 
calculated the total estimated annualized cost savings as follows:

Executive 5,491,054  x  .20  x  $35.18 = $38,635,056
Admin. Supp. 5,491,054  x  .80  x  $16.63 = $73,052,982
Total annualized cost savings estimate = $111,688,038
Total annualized cost savings estimate of sect;Sec. 60-1.12, 60-2.11, 
60-2.12, 60-2.14, and 60-2.17 = $111,688,038
Total annualized cost estimate of EO Survey = $22,330,875
Total annualized cost savings estimate = $89,357,163
Estimated average cost savings per respondent = $831

List of Subjects in 41 CFR Parts 60-1 and 60-2

    Civil rights, Discrimination in employment, Employment, Equal 
employment opportunity, Government contracts, and Labor.


[[Page 68042]]


    Signed at Washington, DC, this 3rd day of November, 2000.
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 60-2 of the rule amending 41 CFR Chapter 60 
published on December 30, 1980 (45 FR 86216), which was delayed 
indefinitely on August 25, 1981 (46 FR 42865), is hereby withdrawn; and 
Parts 60-1 and 60-2 of Title 41 of the Code of Federal Regulations are 
amended as follows.

PART 60-1--OBLIGATIONS OF CONTRACTORS AND SUBCONTRACTORS

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

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


    2. Section 1.12 is revised to read as follows:


Sec. 60-1.12  Record retention.

    (a) General requirements. Any personnel or employment record made 
or kept by the contractor shall be preserved by the contractor for a 
period of not less than two years from the date of the making of the 
record or the personnel action involved, whichever occurs later. 
However, if the contractor has fewer than 150 employees or does not 
have a Government contract of at least $150,000, the minimum record 
retention period shall be one year from the date of the making of the 
record or the personnel action involved, whichever occurs later. Such 
records include, but are not necessarily limited to, records pertaining 
to hiring, assignment, promotion, demotion, transfer, lay off or 
termination, rates of pay or other terms of compensation, and selection 
for training or apprenticeship, and other records having to do with 
requests for reasonable accommodation, the results of any physical 
examination, job advertisements and postings, applications and resumes, 
tests and test results, and interview notes. In the case of involuntary 
termination of an employee, the personnel records of the individual 
terminated shall be kept for a period of not less than two years from 
the date of the termination, except that contractors that have fewer 
than 150 employees or that do not have a Government contract of at 
least $150,000 shall keep such records for a period of not less than 
one year from the date of the termination. Where the contractor has 
received notice that a complaint of discrimination has been filed, that 
a compliance evaluation has been initiated, or that an enforcement 
action has been commenced, the contractor shall preserve all personnel 
records relevant to the complaint, compliance evaluation or enforcement 
action until final disposition of the complaint, compliance evaluation 
or enforcement action. The term ``personnel records relevant to the 
complaint,'' for example, would include personnel or employment records 
relating to the complainant and to all other employees holding 
positions similar to that held or sought by the complainant and 
application forms or test papers submitted by unsuccessful 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 and maintain a written 
affirmative action program (AAP) must maintain its current AAP and 
documentation of good faith effort, and must preserve its AAP and 
documentation of good faith effort for the immediately preceding AAP 
year, unless it was not then covered by the AAP requirement.
    (c) Contractor identification of record. (1) For any record the 
contractor maintains pursuant to this section, the contractor must be 
able to identify:
    (i) The gender, race, and ethnicity of each employee; and
    (ii) where possible, the gender, race, and ethnicity of each 
applicant.
    (2) The contractor must supply this information to the Office of 
Federal Contract Compliance Programs upon request.
    (d) Failure to preserve records. Failure to preserve complete and 
accurate records as required by paragraphs (a) through (c) 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.
    (e) Applicability. The requirements of this section shall apply 
only to records made or kept on or after December 22, 1997.
    3. Section 60-1.40 is revised to read as follows:


Sec. 60-1.40  Affirmative action programs.

    (a)(1) Each nonconstruction (supply and service) contractor must 
develop and maintain a written affirmative action program for each of 
its establishments, if it has 50 or more employees and:
    (i) Has a contract of $50,000 or more; or
    (ii) Has Government bills of lading which in any 12-month period, 
total or can reasonably be expected to total $50,000 or more; or
    (iii) Serves as a depository of Government funds in any amount; or
    (iv) Is a financial institution which is an issuing and paying 
agent for U.S. savings bonds and savings notes in any amount.
    (2) Each contractor and subcontractor must require each 
nonconstruction subcontractor to develop and maintain a written 
affirmative action program for each of its establishments if it has 50 
or more employees and:
    (i) Has a subcontract of $50,000 or more; or
    (ii) Has Government bills of lading which in any 12-month period, 
total or can reasonably be expected to total $50,000 or more; or
    (iii) Serves as a depository of Government funds in any amount; or
    (iv) Is a financial institution which is an issuing and paying 
agent for U.S. savings bonds and savings notes in any amount.
    (b) Nonconstruction contractors should refer to Part 60-2 for 
specific affirmative action requirements. Construction contractors 
should refer to Part 60-4 for specific affirmative action requirements.

PART 60-2--AFFIRMATIVE ACTION PROGRAMS

    4. Part 60-2 is revised to read as follows:

Subpart A--General

Sec.
60-2.1   Scope and application.
60-2.2   Agency action.
Subpart B--Purpose and Contents of Affirmative Action Programs
60-2.10   General purpose and contents of affirmative action 
programs.
60-2.11   Organizational profile.
60-2.12   Job group analysis.

[[Page 68043]]

60-2.13   Placement of incumbents in job groups.
60-2.14   Determining availability.
60-2.15   Comparing incumbency to availability.
60-2.16   Placement goals.
60-2.17   Additional required elements of affirmative action 
programs.
60-2.18   Equal Opportunity Survey.
Subpart C--Miscellaneous
60-2.30   Corporate management compliance evaluations.
60-2.31   Program summary.
60-2.32   Affirmative action records.
60-2.33   Preemption.
60-2.34   Supersedure.
60-2.35   Compliance status.

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

Subpart A--General


Sec. 60-2.1  Scope and application.

    (a) General. The requirements of this part apply to nonconstruction 
(supply and service) contractors. The regulations prescribe the 
contents of affirmative action programs, standards and procedures for 
evaluating the compliance of affirmative action programs implemented 
pursuant to this part, and related matters.
    (b) Who must develop affirmative action programs.
    (1) Each nonconstruction contractor must develop and maintain a 
written affirmative action program for each of its establishments if it 
has 50 or more employees and:
    (i) Has a contract of $50,000 or more; or
    (ii) Has Government bills of lading which in any 12-month period, 
total or can reasonably be expected to total $50,000 or more; or
    (iii) Serves as a depository of Government funds in any amount; or
    (iv) Is a financial institution which is an issuing and paying 
agent for U.S. savings bonds and savings notes in any amount.
    (2) Each contractor and subcontractor must require each 
nonconstruction subcontractor to develop and maintain a written 
affirmative action program for each of its establishments if it has 50 
or more employees and:
    (i) Has a subcontract of $50,000 or more; or
    (ii) Has Government bills of lading which in any 12-month period, 
total or can reasonably be expected to total $50,000 or more; or
    (iii) Serves as a depository of Government funds in any amount; or
    (iv) Is a financial institution which is an issuing and paying 
agent for U.S. savings bonds and savings notes in any amount.
    (c) When affirmative action programs must be developed. The 
affirmative action programs required under paragraph (b) of this 
section must be developed within 120 days from the commencement of a 
contract and must be updated annually.
    (d) Who is included in affirmative action programs. Contractors 
subject to the affirmative action program requirements must develop and 
maintain a written affirmative action program for each of their 
establishments. Each employee in the contractor's workforce must be 
included in an affirmative action program. Each employee must be 
included in the affirmative action program of the establishment at 
which he or she works, except that:
    (1) Employees who work at establishments other than that of the 
manager to whom they report, must be included in the affirmative action 
program of their manager.
    (2) Employees who work at an establishment where the contractor 
employs fewer than 50 employees, may be included under any of the 
following three options: In an affirmative action program which covers 
just that establishment; in the affirmative action program which covers 
the location of the personnel function which supports the 
establishment; or, in the affirmative action program which covers the 
location of the official to whom they report.
    (3) Employees for whom selection decisions are made at a higher 
level establishment within the organization must be included in the 
affirmative action program of the establishment where the selection 
decision is made.
    (4) If a contractor wishes to establish an affirmative action 
program other than by establishment, the contractor may reach agreement 
with OFCCP on the development and use of affirmative action programs 
based on functional or business units. The Deputy Assistant Secretary, 
or his or her designee, must approve such agreements. Agreements 
allowing the use of functional or business unit affirmative action 
programs cannot be construed to limit or restrict how the OFCCP 
structures its compliance evaluations.
    (e) How to identify employees included in affirmative action 
programs other than where they are located. If pursuant to paragraphs 
(d)(1) through (3) of this section employees are included in an 
affirmative action program for an establishment other than the one in 
which the employees are located, the organizational profile and job 
group analysis of the affirmative action program in which the employees 
are included must be annotated to identify the actual location of such 
employees. If the establishment at which the employees actually are 
located maintains an affirmative action program, the organizational 
profile and job group analysis of that program must be annotated to 
identify the program in which the employees are included.


Sec. 60-2.2  Agency action.

    (a) Any contractor required by Sec. 60-2.1 to develop and maintain 
a written affirmative action program for each of its establishments 
that has not complied with that section is not in full compliance with 
Executive Order 11246, as amended. When a contractor is required to 
submit its affirmative action program to OFCCP (e.g., for a compliance 
evaluation), the affirmative action program will be deemed to have been 
accepted by the Government at the time OFCCP notifies the contractor of 
completion of the compliance evaluation or other action, unless within 
45 days thereafter the Deputy Assistant Secretary has disapproved such 
program.
    (b) If, in determining such contractor's responsibility for an 
award of a contract it comes to the contracting officer's attention, 
through sources within his/her agency or through the OFCCP or other 
Government agencies, that the contractor does not have an affirmative 
action program at each of its establishments, or has substantially 
deviated from such an approved affirmative action program, or has 
failed to develop or implement an affirmative action program which 
complies with the regulations in this chapter, the contracting officer 
must declare the contractor/bidder nonresponsible and so notify the 
contractor and the Deputy Assistant Secretary, unless the contracting 
officer otherwise affirmatively determines that the contractor is able 
to comply with the equal employment obligations. Any contractor/bidder 
which has been declared nonresponsible in accordance with the 
provisions of this section may request the Deputy Assistant Secretary 
to determine that the responsibility of the contractor/bidder raises 
substantial issues of law or fact to the extent that a hearing is 
required. Such request must set forth the basis upon which the 
contractor/bidder seeks such a determination. If the Deputy Assistant 
Secretary, in his/her sole discretion, determines that substantial 
issues of law or fact exist, an administrative or judicial proceeding 
may be commenced in accordance with the regulations contained in 
Sec. 60-1.26; or the Deputy Assistant Secretary may require the

[[Page 68044]]

investigation or compliance evaluation be developed further or 
additional conciliation be conducted: Provided, That during any pre-
award conferences, every effort will be made through the processes of 
conciliation, mediation, and persuasion to develop an acceptable 
affirmative action program meeting the standards and guidelines set 
forth in this part so that, in the performance of the contract, the 
contractor is able to meet its equal employment obligations in 
accordance with the equal opportunity clause and applicable rules, 
regulations, and orders: Provided further, That a contractor/bidder may 
not be declared nonresponsible more than twice due to past 
noncompliance with the equal opportunity clause at a particular 
establishment or facility without receiving prior notice and an 
opportunity for a hearing.
    (c)(1) Immediately upon finding that a contractor has no 
affirmative action program, or has deviated substantially from an 
approved affirmative action program, or has failed to develop or 
implement an affirmative action program which complies with the 
requirements of the regulations in this chapter, that fact shall be 
recorded in the investigation file. Except as provided in Sec. 60-
1.26(b)(1), whenever administrative enforcement is contemplated, the 
notice to the contractor shall be issued giving the contractor 30 days 
to show cause why enforcement proceedings under section 209(a) of 
Executive Order 11246, as amended, should not be instituted. The notice 
to show cause should contain:
    (i) An itemization of the sections of the Executive Order and of 
the regulations with which the contractor has been found in apparent 
violation, and a summary of the conditions, practices, facts, or 
circumstances which give rise to each apparent violation;
    (ii) The corrective actions necessary to achieve compliance or, as 
may be appropriate, the concepts and principles of an acceptable remedy 
and/or the corrective action results anticipated;
    (iii) A request for a written response to the findings, including 
commitments to corrective action or the presentation of opposing facts 
and evidence; and
    (iv) A suggested date for the conciliation conference.
    (2) If the contractor fails to show good cause for its failure or 
fails to remedy that failure by developing and implementing an 
acceptable affirmative action program within 30 days, the case file 
shall be processed for enforcement proceedings pursuant to Sec. 60-1.26 
of this chapter. If an administrative complaint is filed, the 
contractor shall have 20 days to request a hearing. If a request for 
hearing has not been received within 20 days from the filing of the 
administrative complaint, the matter shall proceed in accordance with 
part 60-30 of this chapter.
    (3) During the ``show cause'' period of 30 days, every effort will 
be made through conciliation, mediation, and persuasion to resolve the 
deficiencies which led to the determination of nonresponsibility. If 
satisfactory adjustments designed to bring the contractor into 
compliance are not concluded, the case shall be processed for 
enforcement proceedings pursuant to Sec. 60-1.26 of this chapter.
    (d) During the ``show cause'' period and formal proceedings, each 
contracting agency must continue to determine the contractor's 
responsibility in considering whether or not to award a new or 
additional contract.

Subpart B--Purpose and Contents of Affirmative Action Programs


Sec. 60-2.10  General purpose and contents of affirmative action 
programs.

    (a) Purpose. (1) An affirmative action program is a management tool 
designed to ensure equal employment opportunity. A central premise 
underlying affirmative action is that, absent discrimination, over time 
a contractor's workforce, generally, will reflect the gender, racial 
and ethnic profile of the labor pools from which the contractor 
recruits and selects. Affirmative action programs contain a diagnostic 
component which includes a number of quantitative analyses designed to 
evaluate the composition of the workforce of the contractor and compare 
it to the composition of the relevant labor pools. Affirmative action 
programs also include action-oriented programs. If women and minorities 
are not being employed at a rate to be expected given their 
availability in the relevant labor pool, the contractor's affirmative 
action program includes specific practical steps designed to address 
this underutilization. Effective affirmative action programs also 
include internal auditing and reporting systems as a means of measuring 
the contractor's progress toward achieving the workforce that would be 
expected in the absence of discrimination.
    (2) An affirmative action program also ensures equal employment 
opportunity by institutionalizing the contractor's commitment to 
equality in every aspect of the employment process. Therefore, as part 
of its affirmative action program, a contractor monitors and examines 
its employment decisions and compensation systems to evaluate the 
impact of those systems on women and minorities.
    (3) An affirmative action program is, thus, more than a paperwork 
exercise. An affirmative action program includes those policies, 
practices, and procedures that the contractor implements to ensure that 
all qualified applicants and employees are receiving an equal 
opportunity for recruitment, selection, advancement, and every other 
term and privilege associated with employment. Affirmative action, 
ideally, is a part of the way the contractor regularly conducts its 
business. OFCCP has found that when an affirmative action program is 
approached from this perspective, as a powerful management tool, there 
is a positive correlation between the presence of affirmative action 
and the absence of discrimination.
    (b) Contents of affirmative action programs. (1) An affirmative 
action program must include the following quantitative analyses:
    (i) Organizational profile--Sec. 60-2.11;
    (ii) Job group analysis--Sec. 60-2.12;
    (iii) Placement of incumbents in job groups--Sec. 60-2.13;
    (iv) Determining availability--Sec. 60-2.14;
    (v) Comparing incumbency to availability--Sec. 60-2.15; and
    (vi) Placement goals--Sec. 60-2.16.
    (2) In addition, an affirmative action program must include the 
following components specified in the Sec. 60-2.17 of this part:
    (i) Designation of responsibility for implementation;
    (ii) Identification of problem areas;
    (iii) Action-oriented programs; and
    (iv) Periodic internal audits.
    (c) Documentation. Contractors must maintain and make available to 
OFCCP documentation of their compliance with Secs. 60-2.11 through 60-
2.17.


Sec. 60-2.11  Organizational profile.

    (a) Purpose. An organizational profile is a depiction of the 
staffing pattern within an establishment. It is one method contractors 
use to determine whether barriers to equal employment opportunity exist 
in their organizations. The profile provides an overview of the 
workforce at the establishment that may assist in identifying 
organizational units where women or minorities are underrepresented or 
concentrated. The contractor must use either the organizational display 
or the workforce analysis as its organizational profile:
    (b) Organizational display. (1) An organizational display is a 
detailed graphical or tabular chart, text, spreadsheet or similar 
presentation of the contractor's organizational structure. The 
organizational display must

[[Page 68045]]

identify each organizational unit in the establishment, and show the 
relationship of each organizational unit to the other organizational 
units in the establishment.
    (2) An organizational unit is any component that is part of the 
contractor's corporate structure. In a more traditional organization, 
an organizational unit might be a department, division, section, 
branch, group or similar component. In a less traditional organization, 
an organizational unit might be a project team, job family, or similar 
component. The term includes an umbrella unit (such as a department) 
that contains a number of subordinate units, and it separately includes 
each of the subordinate units (such as sections or branches).
    (3) For each organizational unit, the organizational display must 
indicate the following:
    (i) The name of the unit;
    (ii) The job title, gender, race, and ethnicity of the unit 
supervisor (if the unit has a supervisor);
    (iii) The total number of male and female incumbents; and
    (iv) the total number of male and female incumbents in each of the 
following groups: Blacks, Hispanics, Asians/Pacific Islanders, and 
American Indians/Alaskan Natives.
    (c) Workforce analysis. (1) A workforce analysis is a listing of 
each job title as appears in applicable collective bargaining 
agreements or payroll records ranked from the lowest paid to the 
highest paid within each department or other similar organizational 
unit including departmental or unit supervision.
    (2) If there are separate work units or lines of progression within 
a department, a separate list must be provided for each such work unit, 
or line, including unit supervisors. For lines of progression there 
must be indicated the order of jobs in the line through which an 
employee could move to the top of the line.
    (3) Where there are no formal progression lines or usual 
promotional sequences, job titles should be listed by department, job 
families, or disciplines, in order of wage rates or salary ranges.
    (4) For each job title, the total number of incumbents, the total 
number of male and female incumbents, and the total number of male and 
female incumbents in each of the following groups must be given: 
Blacks, Hispanics, Asians/Pacific Islanders, and American Indians/
Alaskan Natives. The wage rate or salary range for each job title must 
be given. All job titles, including all managerial job titles, must be 
listed.


Sec. 60-2.12  Job group analysis.

    (a) Purpose: A job group analysis is a method of combining job 
titles within the contractor's establishment. This is the first step in 
the contractor's comparison of the representation of minorities and 
women in its workforce with the estimated availability of minorities 
and women qualified to be employed.
    (b) In the job group analysis, jobs at the establishment with 
similar content, wage rates, and opportunities, must be combined to 
form job groups. Similarity of content refers to the duties and 
responsibilities of the job titles which make up the job group. 
Similarity of opportunities refers to training, transfers, promotions, 
pay, mobility, and other career enhancement opportunities offered by 
the jobs within the job group.
    (c) The job group analysis must include a list of the job titles 
that comprise each job group. If, pursuant to Secs. 60-2.1(d) and (e) 
the job group analysis contains jobs that are located at another 
establishment, the job group analysis must be annotated to identify the 
actual location of those jobs. If the establishment at which the jobs 
actually are located maintains an affirmative action program, the job 
group analysis of that program must be annotated to identify the 
program in which the jobs are included.
    (d) Except as provided in Sec. 60-2.1(d), all jobs located at an 
establishment must be reported in the job group analysis of that 
establishment.
    (e) Smaller employers: If a contractor has a total workforce of 
fewer than 150 employees, the contractor may prepare a job group 
analysis that utilizes EEO-1 categories as job groups. EEO-1 categories 
refers to the nine occupational groups used in the Standard Form 100, 
the Employer Information EEO-1 Survey: Officials and managers, 
professionals, technicians, sales, office and clerical, craft workers 
(skilled), operatives (semiskilled), laborers (unskilled), and service 
workers.


Sec. 60-2.13  Placement of incumbents in job groups.

    The contractor must separately state the percentage of minorities 
and the percentage of women it employs in each job group established 
pursuant to Sec. 60-2.12.


Sec. 60-2.14  Determining availability.

    (a) Purpose: Availability is an estimate of the number of qualified 
minorities or women available for employment in a given job group, 
expressed as a percentage of all qualified persons available for 
employment in the job group. The purpose of the availability 
determination is to establish a benchmark against which the demographic 
composition of the contractor's incumbent workforce can be compared in 
order to determine whether barriers to equal employment opportunity may 
exist within particular job groups.
    (b) The contractor must separately determine the availability of 
minorities and women for each job group.
    (c) In determining availability, the contractor must consider at 
least the following factors:
    (1) The percentage of minorities or women with requisite skills in 
the reasonable recruitment area. The reasonable recruitment area is 
defined as the geographical area from which the contractor usually 
seeks or reasonably could seek workers to fill the positions in 
question.
    (2) The percentage of minorities or women among those promotable, 
transferable, and trainable within the contractor's organization. 
Trainable refers to those employees within the contractor's 
organization who could, with appropriate training which the contractor 
is reasonably able to provide, become promotable or transferable during 
the AAP year.
    (d) The contractor must use the most current and discrete 
statistical information available to derive availability figures. 
Examples of such information include census data, data from local job 
service offices, and data from colleges or other training institutions.
    (e) The contractor may not draw its reasonable recruitment area in 
such a way as to have the effect of excluding minorities or women. For 
each job group, the reasonable recruitment area must be identified, 
with a brief explanation of the rationale for selection of that 
recruitment area.
    (f) The contractor may not define the pool of promotable, 
transferable, and trainable employees in such a way as to have the 
effect of excluding minorities or women. For each job group, the pool 
of promotable, transferable, and trainable employees must be identified 
with a brief explanation of the rationale for the selection of that 
pool.
    (g) Where a job group is composed of job titles with different 
availability rates, a composite availability figure for the job group 
must be calculated. The contractor must separately determine the 
availability for each job title within the job group and must determine 
the proportion of job group incumbents employed in each job title. The

[[Page 68046]]

contractor must weight the availability for each job title by the 
proportion of job group incumbents employed in that job group. The sum 
of the weighted availability estimates for all job titles in the job 
group must be the composite availability for the job group.


Sec. 60-2.15  Comparing incumbency to availability.

    (a) The contractor must compare the percentage of minorities and 
women in each job group determined pursuant to Sec. 60-2.13 with the 
availability for those job groups determined pursuant to Sec. 60-2.14.
    (b) When the percentage of minorities or women employed in a 
particular job group is less than would reasonably be expected given 
their availability percentage in that particular job group, the 
contractor must establish a placement goal in accordance with Sec. 60-
2.16.


Sec. 60-2.16  Placement goals.

    (a) Purpose: Placement goals serve as objectives or targets 
reasonably attainable by means of applying every good faith effort to 
make all aspects of the entire affirmative action program work. 
Placement goals also are used to measure progress toward achieving 
equal employment opportunity.
    (b) A contractor's determination under Sec. 60-2.15 that a 
placement goal is required constitutes neither a finding nor an 
admission of discrimination.
    (c) Where, pursuant to Sec. 60-2.15, a contractor is required to 
establish a placement goal for a particular job group, the contractor 
must establish a percentage annual placement goal at least equal to the 
availability figure derived for women or minorities, as appropriate, 
for that job group.
    (d) The placement goal-setting process described above contemplates 
that contractors will, where required, establish a single goal for all 
minorities. In the event of a substantial disparity in the utilization 
of a particular minority group or in the utilization of men or women of 
a particular minority group, a contractor may be required to establish 
separate goals for those groups.
    (e) In establishing placement goals, the following principles also 
apply:
    (1) Placement goals may not be rigid and inflexible quotas, which 
must be met, nor are they to be considered as either a ceiling or a 
floor for the employment of particular groups. Quotas are expressly 
forbidden.
    (2) In all employment decisions, the contractor must make 
selections in a nondiscriminatory manner. Placement goals do not 
provide the contractor with a justification to extend a preference to 
any individual, select an individual, or adversely affect an 
individual's employment status, on the basis of that person's race, 
color, religion, sex, or national origin.
    (3) Placement goals do not create set-asides for specific groups, 
nor are they intended to achieve proportional representation or equal 
results.
    (4) Placement goals may not be used to supersede merit selection 
principles. Affirmative action programs prescribed by the regulations 
in this part do not require a contractor to hire a person who lacks 
qualifications to perform the job successfully, or hire a less 
qualified person in preference to a more qualified one.
    (f) A contractor extending a publicly announced preference for 
American Indians as is authorized in 41 CFR 60-1.5(a)(6) may reflect in 
its placement goals the permissive employment preference for American 
Indians living on or near an Indian reservation.


Sec. 60-2.17  Additional required elements of affirmative action 
programs.

    In addition to the elements required by Sec. 60-2.10 through 
Sec. 60-2.16, an acceptable affirmative action program must include the 
following:
    (a) Designation of responsibility. The contractor must provide for 
the implementation of equal employment opportunity and the affirmative 
action program by assigning responsibility and accountability to an 
official of the organization. Depending upon the size of the 
contractor, this may be the official's sole responsibility. He or she 
must have the authority, resources, support of and access to top 
management to ensure the effective implementation of the affirmative 
action program.
    (b) Identification of problem areas. The contractor must perform 
in-depth analyses of its total employment process to determine whether 
and where impediments to equal employment opportunity exist. At a 
minimum the contractor must evaluate:
    (1) The workforce by organizational unit and job group to determine 
whether there are problems of minority or female utilization (i.e., 
employment in the unit or group), or of minority or female distribution 
(i.e., placement in the different jobs within the unit or group);
    (2) personnel activity (applicant flow, hires, terminations, 
promotions, and other personnel actions) to determine whether there are 
selection disparities;
    (3) compensation system(s) to determine whether there are gender-, 
race-, or ethnicity-based disparities;
    (4) selection, recruitment, referral, and other personnel 
procedures to determine whether they result in disparities in the 
employment or advancement of minorities or women; and
    (5) any other areas that might impact the success of the 
affirmative action program.
    (c) Action-oriented programs. The contractor must develop and 
execute action-oriented programs designed to correct any problem areas 
identified pursuant to Sec. 60-2.17(b) and to attain established goals 
and objectives. In order for these action-oriented programs to be 
effective, the contractor must ensure that they consist of more than 
following the same procedures which have previously produced inadequate 
results. Furthermore, a contractor must demonstrate that it has made 
good faith efforts to remove identified barriers, expand employment 
opportunities, and produce measurable results.
    (d) Internal audit and reporting system. The contractor must 
develop and implement an auditing system that periodically measures the 
effectiveness of its total affirmative action program. The actions 
listed below are key to a successful affirmative action program:
    (1) Monitor records of all personnel activity, including referrals, 
placements, transfers, promotions, terminations, and compensation, at 
all levels to ensure the nondiscriminatory policy is carried out;
    (2) Require internal reporting on a scheduled basis as to the 
degree to which equal employment opportunity and organizational 
objectives are attained;
    (3) Review report results with all levels of management; and
    (4) Advise top management of program effectiveness and submit 
recommendations to improve unsatisfactory performance.


Sec. 60-2.18  Equal Opportunity Survey.

    (a) Survey requirement. Each year, OFCCP will designate a 
substantial portion of all nonconstruction contractor establishments to 
prepare and file an Equal Opportunity Survey. OFCCP will notify those 
establishments required to prepare and file the Equal Opportunity 
Survey. The Survey will provide OFCCP compliance data early in the 
compliance evaluation process, thus allowing the agency to more 
effectively identify contractor establishments for further evaluation. 
The Survey will also provide contractors with a useful tool for self-
evaluation.
    (b) Survey format. The Equal Opportunity Survey must be prepared in 
accordance with the format specified by the Deputy Assistant Secretary. 
The Equal Opportunity Survey will include

[[Page 68047]]

information that will allow for an accurate assessment of contractor 
personnel activities, pay practices, and affirmative action 
performance. At a minimum, this will include such data elements as 
applicants, hires, promotions, terminations, compensation, and tenure 
by race and gender. As use of the EO Survey develops and evolves, the 
Department may at some time determine that one or more of the data 
elements currently included in the EO Survey should be altered or 
deleted. In the event consideration is given to changing a data element 
requirement, the following circumstances must exist:
    (1) The Secretary must clearly demonstrate through statistical 
analyses of EO Survey submissions that the data element in question is 
no longer of value; and
    (2) The Secretary must follow Notice and Comment procedures.
    (c) How, when, and where to file. Contractors are encouraged to 
submit the Equal Opportunity Survey via the Internet. The Equal 
Opportunity Survey may also be submitted via facsimile to the telephone 
number indicated in the Survey instructions. Paper versions of the 
Equal Opportunity Survey must be mailed to the address indicated in the 
Survey instructions. The filing deadline will be specified by the 
Deputy Assistant Secretary.
    (d) Confidentiality. OFCCP will treat information contained in the 
Equal Opportunity Survey as confidential to the maximum extent the 
information is exempt from public disclosure under the Freedom of 
Information Act, 5 U.S.C. 552. It is the practice of OFCCP not to 
release data where the contractor is still in business, and the 
contractor indicates, and through the Department of Labor review 
process it is determined, that the data are confidential and sensitive 
and that the release of data would subject the contractor to commercial 
harm.

Subpart C--Miscellaneous


Sec. 60-2.30  Corporate management compliance evaluations.

    (a) Purpose. Corporate Management Compliance Evaluations are 
designed to ascertain whether individuals are encountering artificial 
barriers to advancement into mid-level and senior corporate management, 
i.e., glass ceiling. During Corporate Management Compliance 
Evaluations, special attention is given to those components of the 
employment process that affect advancement into mid-and senior-level 
positions.
    (b) If, during the course of a Corporate Management Compliance 
Evaluation, it comes to the attention of OFCCP that problems exist at 
establishments outside the corporate headquarters, OFCCP may expand the 
compliance evaluation beyond the headquarters establishment. At its 
discretion, OFCCP may direct its attention to and request relevant data 
for any and all areas within the corporation to ensure compliance with 
Executive Order 11246.


Sec. 60-2.31  Program summary.

    The affirmative action program must be summarized and updated 
annually. The program summary must be prepared in a format which will 
be prescribed by the Deputy Assistant Secretary and published in the 
Federal Register as a notice before becoming effective. Contractors and 
subcontractors must submit the program summary to OFCCP each year on 
the anniversary date of the affirmative action program.


Sec. 60-2.32  Affirmative action records.

    The contractor must make available to the Office of Federal 
Contract Compliance Programs, upon request, records maintained pursuant 
to Sec. 60-1.12 of this chapter and written or otherwise documented 
portions of AAPs maintained pursuant to Sec. 60-2.10 for such purposes 
as may be appropriate to the fulfillment of the agency's 
responsibilities under Executive Order 11246.


Sec. 60-2.33  Preemption.

    To the extent that any state or local laws, regulations or 
ordinances, including those that grant special benefits to persons on 
account of sex, are in conflict with Executive Order 11246, as amended, 
or with the requirements of this part, they will be regarded as 
preempted under the Executive Order.


Sec. 60-2.34  Supersedure.

    All orders, instructions, regulations, and memorandums of the 
Secretary of Labor, other officials of the Department of Labor and 
contracting agencies are hereby superseded to the extent that they are 
inconsistent with this Part 60-2.


Sec. 60-2.35  Compliance status.

    No contractor's compliance status will be judged alone by whether 
it reaches its goals. The composition of the contractor's workforce 
(i.e., the employment of minorities or women at a percentage rate 
below, or above, the goal level) does not, by itself, serve as a basis 
to impose any of the sanctions authorized by Executive Order 11246 and 
the regulations in this chapter. Each contractor's compliance with its 
affirmative action obligations will be determined by reviewing the 
nature and extent of the contractor's good faith affirmative action 
activities as required under Sec. 60-2.17, and the appropriateness of 
those activities to identified equal employment opportunity problems. 
Each contractor's compliance with its nondiscrimination obligations 
will be determined by analysis of statistical data and other non-
statistical information which would indicate whether employees and 
applicants are being treated without regard to their race, color, 
religion, sex, or national origin.

[FR Doc. 00-28693 Filed 11-9-00; 8:45 am]
BILLING CODE 4510-45-P