[Federal Register Volume 85, Number 128 (Thursday, July 2, 2020)]
[Rules and Regulations]
[Pages 39834-39847]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-11934]


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DEPARTMENT OF LABOR

Office of Federal Contract Compliance Programs

41 CFR Parts 60-1, 60-300, and 60-741

RIN 1250-AA08


Affirmative Action and Nondiscrimination Obligations of Federal 
Contractors and Subcontractors: TRICARE Providers

AGENCY: Office of Federal Contract Compliance Programs, Labor.

ACTION: Final rule.

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SUMMARY: The U.S. Department of Labor's (DOL's or Department's) Office 
of Federal Contract Compliance Programs (OFCCP) publishes this final 
rule to amend its regulations pertaining to its authority over TRICARE 
health care providers. The final rule is intended to increase access to 
care for uniformed service members and veterans and to provide 
certainty for health care providers who serve TRICARE beneficiaries. It 
is also anticipated that this final rule will result in cost savings 
for TRICARE providers. In a reconsideration of its legal position, the 
final rule provides that OFCCP lacks authority over Federal health care 
providers who participate in TRICARE. In the alternative, the final 
rule establishes a national interest exemption from Executive Order 
11246, Section 503 of the Rehabilitation Act of 1973, and the Vietnam 
Era Veterans' Readjustment Assistance Act of 1974 for health care 
providers with agreements to furnish medical services and supplies to 
individuals participating in TRICARE. Thus, even if OFCCP had authority 
over Federal health care providers who participate in TRICARE (which 
this rule clarifies it does not), OFCCP has determined that special 
circumstances in the national interest justify granting the exemption 
as it would improve uniformed service members' and veterans' access to 
medical care, more efficiently allocate OFCCP's limited resources for 
enforcement activities, and provide greater uniformity, certainty, and 
notice for health care providers participating in TRICARE. Under the 
final rule, OFCCP will retain authority over health care providers 
participating in TRICARE if they hold a separate covered Federal 
contract or subcontract that is not for providing health care services 
under TRICARE. TRICARE providers that fall outside of OFCCP's authority 
under this final rule remain subject to all other Federal, state, and 
local laws prohibiting discrimination and providing for equal 
employment opportunity.

DATES: This regulation is effective August 31, 2020.

FOR FURTHER INFORMATION CONTACT: Tina Williams, Director, Division of 
Policy and Program Development, Office of Federal Contract Compliance 
Programs, 200 Constitution Avenue NW, Room C-3325, Washington, DC 
20210. Telephone: (202) 693-0104 (voice) or (202) 693-1337 (TTY).

SUPPLEMENTARY INFORMATION:

I. Executive Summary

    On November 6, 2019, OFCCP issued a notice of proposed rulemaking 
(NPRM) to clarify the scope of OFCCP's authority \1\ under Executive 
Order

[[Page 39835]]

11246, as amended (E.O. 11246),\2\ Section 503 of the Rehabilitation 
Act of 1973, as amended (Section 503),\3\ and the Vietnam Era Veterans' 
Readjustment Assistance Act of 1974, as amended (VEVRAA); \4\ and, to 
dispel any legal uncertainty, and further the national interest by 
explicitly exempting certain health care providers from OFCCP's 
enforcement activities. Specifically, in the E.O. 11246, VEVRAA, and 
Section 503 regulations, OFCCP would revise its definition of 
``subcontractor''--meaning subcontractors regulated by OFCCP--to 
exclude health care providers with agreements to furnish medical 
services and supplies to individuals participating in TRICARE.
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    \1\ OFCCP often refers to the scope of its authority to enforce 
equal employment opportunity requirements as its jurisdiction. For 
this final rule, OFCCP believes the word authority is more precise, 
since OFCCP does not have adjudicative power.
    \2\ E.O. 11246, 30 FR 12319 (Sept. 24, 1965).
    \3\ 29 U.S.C. 793.
    \4\ 38 U.S.C. 4212.
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    During the 30-day comment period, OFCCP received sixteen comments 
on the proposed rule.\5\ Comments came from a wide variety of 
organizations, including health care providers, contractor 
associations, civil rights organizations, state attorneys general, and 
members of Congress. The comments addressed various aspects of the 
NPRM. These comments were considered thoroughly and are addressed in 
the discussion that follows. Where appropriate, this preamble 
reproduces some of the portions of the preamble to the proposed rule 
for ease of reference and to facilitate discussion of the public 
comments.
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    \5\ One of these comments was found to be non-responsive to the 
NPRM.
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    This final rule adopts in large part the reasoning and proposed 
regulatory text as set forth in the NPRM. It concludes that removing 
TRICARE health providers from OFCCP's authority is appropriate and 
consistent with previously enacted legislation on the issue and in the 
national interest.
    This final rule is an E.O. 13771 deregulatory action because it is 
expected to reduce compliance costs and potentially the cost of 
litigation for regulated entities.

II. Legal Authority

    Federal law requires government contractors to refrain from 
discriminating on the basis of race, sex, and other grounds.\6\ 
Additionally, government contractors must take affirmative action to 
ensure equal employment opportunity.\7\ OFCCP, situated in the 
Department of Labor, enforces these contracting requirements. OFCCP 
requires government contractors to furnish information about their 
affirmative action programs (AAPs) and related employment records and 
data so OFCCP can ascertain compliance with the laws it enforces.\8\
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    \6\ As used in this preamble, the term contractor includes, 
unless otherwise indicated, federal government contractors and 
subcontractors. When used in reference to E.O. 11246, it also 
includes federally assisted construction contractors and 
subcontractors.
    \7\ See E.O. 11246, section 202(1); 29 U.S.C. 793(a); 38 U.S.C. 
4212(a)(1); 41 CFR 60-1.40, -2.1 through -2.17; id. -60-300.40 
through -300.45; id. -60-741.40 through -741.47.
    \8\ E.O. 11246, section 202(6); 41 CFR 60-1.4(a)(6), -1.43; id. 
-60-300.40(d), -300.81; id. -60-741.40(d), -741.81; see also 
Chrysler Corp. v. Brown, 441 U.S. 281, 286 (1979).
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    OFCCP enforces three equal employment opportunity laws that apply 
to covered Federal contractors: E.O. 11246, Section 503, and VEVRAA. In 
1965, President Lyndon B. Johnson signed E.O. 11246, which (as amended) 
prohibits discrimination on the basis of race, color, religion, sex, 
sexual orientation, gender identity, and national origin, as well as 
discrimination against applicants or employees because they inquire 
about, discuss, or disclose their compensation or that of others, 
subject to certain limitations. Congress covered disability as a 
protected class through Section 503 of the Rehabilitation Act in 1973. 
Congress also covered veterans through the Vietnam Era Veterans' 
Readjustment Assistance Act of 1974, which prohibits discrimination on 
the basis of veteran status. All three laws also require Federal 
contractors to take affirmative steps to ensure equal employment 
opportunity in their employment practices.
    OFCCP has rulemaking authority under all three laws.\9\ 
Additionally, OFCCP has authority to exempt a contract from E.O. 11246, 
VEVRAA, and Section 503 if the Director of OFCCP determines that 
special circumstances in the national interest require doing so.\10\ 
OFCCP's regulations allow the Director to grant national interest 
exemptions to groups or categories of contracts where he or she finds 
it impracticable to act upon each request for an exemption individually 
or where the exemption will substantially contribute to convenience in 
the administration of the laws.\11\ These categorical exemptions follow 
the principle that an agency, whenever permitted, need not 
``continually . . . relitigate issues that may be established fairly 
and efficiently in a single rulemaking proceeding'' that ``could invite 
favoritism, disunity, and inconsistency.'' \12\ These long-standing 
regulatory provisions allowing for categorical national interest 
exemptions are owed deference.\13\ The provision permitting categorical 
exemption from E.O. 11246 was part of the original notice-and-comment 
regulation that implemented the Order, and has been in place for over 
fifty years.\14\ The provisions permitting categorical exemptions from 
VEVRAA and Section 503 are patterned similarly and have been in place 
for decades as well.\15\ Additionally, E.O. 11246's predecessor, E.O. 
10925, contained a similarly-worded exemption provision which was 
implemented through a regulation providing a substantially similar 
categorical exemption.\16\ OFCCP has granted categorical exemptions in 
the national interest in the past.\17\ OFCCP also may exercise 
prosecutorial discretion in determining its enforcement priorities.\18\
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    \9\ E.O. 11246 section 201; 38 U.S.C. 4212(a)(2); 29 U.S.C. 
793(a); E.O. 11758, Sec.  2; Sec'y Order 7-2009, 74 FR 58834 (Nov. 
13, 2009).
    \10\ E.O. 11246 section 204; E.O. 11758 Sec. Sec.  2-3, as 
amended; 29 U.S.C. 793(c)(1); 41 CFR 60-300.4(b)(1). E.O. 11246 
refers to an ``exemption'' while VEVRAA and Section 503 use the term 
``waiver.'' This final rule uses the term ``exemption'' to refer to 
both.
    \11\ 41 CFR 60-1.5(b)(1), -300.4(b)(1), -741.4(b)(1).
    \12\ Heckler v. Campbell, 461 U.S. 458, 467 (1983); see also 
Lopez v. Davis, 531 U.S. 230, 243-44 (2001); Am. Hosp. Ass'n v. 
NLRB, 499 U.S. 606, 612 (1991) (``[E]ven if a statutory scheme 
requires individualized determinations, the decision maker has the 
authority to rely on rulemaking to resolve certain issues of general 
applicability unless Congress clearly expresses an intent to 
withhold that authority.'' (discussing Campbell, 461 U.S. at 467; 
FPC v. Texaco, Inc., 377 U.S. 33, 41-44 (1964); United States v. 
Storer Broad. Co., 351 U.S. 192, 205 (1956)).
    \13\ Cf., e.g., United States v. Cleveland Indians Baseball Co., 
532 U.S. 200, 220 (2001) (``We do not resist according such 
deference in reviewing an agency's steady interpretation of its own 
61-year-old regulation implementing a 62-year-old statute. Treasury 
regulations and interpretations long continued without substantial 
change, applying to unamended or substantially reenacted statutes, 
are deemed to have received congressional approval and have the 
effect of law.'') (quoting Cottage Sav. Ass'n v. Commissioner, 499 
U.S. 554, 561 (1991)).
    \14\ See 33 FR 7804, 7807 (May 28, 1968); see also 33 FR 3000, 
3003 (Feb. 15, 1968) (notice of proposed rulemaking).
    \15\ See 39 FR 20566, 20568 (June 11, 1974); 41 FR 26386, 26387 
(June 25, 1976).
    \16\ See E.O. 10925 section 303; 41 CFR 60-1.3(b)(1) (1962).
    \17\ See OFCCP, COVID-19 National Interest Exemption, https://www.dol.gov/agencies/ofccp/national-interest-exemption (last 
accessed April 23, 2020); OFCCP, Hurricane Recovery National 
Interest Exemptions, https://www.dol.gov/ofccp/hurricanerecovery.htm 
(last accessed April 23, 2020).
    \18\ See 5 U.S.C. 701(a)(2); Heckler v. Chaney, 470 U.S. 821, 
831 (1985); Andrews v. Consol. Rail Corp., 831 F.2d 678, 687 (7th 
Cir. 1987); Clementson v. Brock, 806 F.2d 1402, 1404-05 (9th Cir. 
1986); Carroll v. Office of Fed. Contract Compliance Programs, U.S. 
Dep't of Labor, 235 F. Supp. 3d 79, 84 (D.D.C. 2017).

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[[Page 39836]]

III. Administrative and Regulatory Background

A. Overview of OFCCP's Areas of Authority

    E.O. 11246, VEVRAA, and Section 503 apply to entities holding 
covered government contracts and subcontracts.\19\ OFCCP has authority 
to enforce the requirements of these three laws and their implementing 
regulations. Contractors agree to those requirements in the equal 
opportunity clauses included in their contracts with the Federal 
Government, clauses which also require contractors to ``flow down'' 
these requirements to any subcontractors. The text of these clauses is 
set forth in E.O. 11246 section 202 and the implementing regulations 
for all three programs, and is also found in part 52 of title 48 of the 
Code of Federal Regulations, which contains the Federal Acquisition 
Regulation's standard contract clauses.\20\ Federal law provides that 
these clauses ``shall be considered to be part of every contract and 
subcontract required by [law] to include such a clause.'' \21\ This is 
true ``whether or not the [equal opportunity clause] is physically 
incorporated in such contracts.'' \22\ Persons who have no contractual 
(or subcontractual) relationship with the Federal Government, however, 
have no obligation to adhere to OFCCP's substantive requirements.\23\
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    \19\ See E.O. 11246 section 202; 29 U.S.C. 793(a); 38 U.S.C. 
4212(a)(1).
    \20\ See 48 CFR 52.222-26, -35, -36.
    \21\ 41 CFR 60-14(e), -741.5(e), -250.5(e).
    \22\ Id.
    \23\ See 41 CFR 60-1.1 (``The regulations in this part apply to 
all contracting agencies of the Government and to contractors and 
subcontractors who perform under Government contracts, to the extent 
set forth in this part.''); see also id. -300.1(b), -741.1(b).
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    OFCCP's regulations define ``government contract'' as any agreement 
or modification thereof between a department or agency of the Federal 
Government and any person for the purchase, sale, or use of personal 
property or nonpersonal services.\24\ Agreements pertaining to programs 
or activities receiving Federal financial assistance, however, are not 
considered covered contracts, nor are other noncontract government 
programs or activities.\25\ Federally assisted construction contracts, 
however, do come within OFCCP's authority under E.O. 11246.\26\
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    \24\ Id. 60-1.3, -300.2(n), -741.2(k).
    \25\ See id. 60-1.1, -300.1(b), -741.4(a). Programs and 
activities receiving federal financial assistance must comply with 
various other nondiscrimination laws, including Title VI of the 
Civil Rights Act of 1964 (prohibiting discrimination on the basis of 
race, color, or national origin) and Section 504 of the 
Rehabilitation Act of 1973 (prohibiting discrimination on the basis 
of disability).
    \26\ 41 CFR 60-1.1.
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    As defined in regulation, a covered ``contract'' includes a 
``contract or a subcontract.'' \27\ A prime contract is an agreement 
with the Federal Government agency itself. A ``subcontract'' is
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    \27\ Id. 60-1.3, -300.2, -741.2.

any agreement or arrangement between a contractor and any person (in 
which the parties do not stand in the relationship of an employer 
and an employee):
    (1) For the purchase, sale or use of personal property or 
nonpersonal services which, in whole or in part, is necessary to the 
performance of any one or more contracts; or
    (2) Under which any portion of the contractor's obligation under 
any one or more contracts is performed, undertaken or assumed.\28\
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    \28\ Id. 60-1.3, -300.2(x), -741.2(x).

    Although, in general, organizations holding a contract or 
subcontract as defined are covered under E.O. 11246, Section 503, and 
VEVRAA, some exemptions apply. Contractors that hold only contracts 
below OFCCP's basic monetary thresholds are exempt.\29\ Certain 
affirmative action requirements only apply depending on the type and 
dollar value of the contract held as well as the contractor's number of 
employees.\30\ The regulations also exempt some categories of contracts 
under certain circumstances or for limited purposes, including those 
involving work performed outside the United States; certain contracts 
with state or local governments; contracts with religious corporations, 
associations, educational institutions or societies; educational 
institutions owned in whole or in part by a particular religion or 
religious organization; and contracts involving work on or near an 
Indian reservation.\31\
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    \29\ Id. 60-1.5(a)(1), -300.4(a)(1), -741.4(a)(1). E.O. 11246's 
basic obligations apply to businesses holding a government contract 
in excess of $10,000, or government contracts which have, or can 
reasonably be expected to have, an aggregate total value exceeding 
$10,000 in a 12-month period. E.O. 11246 also applies to government 
bills of lading, depositories of federal funds in any amount, and to 
financial institutions that are issuing and paying agents for U.S. 
Savings Bonds. Section 503 applies to federal contractors and 
subcontractors with contracts in excess of $15,000. VEVRAA applies 
to federal contractors and subcontractors with contracts of $150,000 
or more. The coverage thresholds under Section 503 and VEVRAA 
increased from those listed in the statutes and OFCCP's regulations 
in accordance with the inflationary adjustment requirements in 41 
U.S.C. 1908. See 80 FR 38293 (July 2, 2015); 75 FR 53129 (Aug. 30, 
2010).
    \30\ 41 CFR 60-1.40, -300.40, -741.40.
    \31\ See id. 60-1.5, -300.4, -741.4.
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    Additionally, as discussed earlier in this final rule, OFCCP has 
authority to exempt entities and categories of entities from E.O. 
11246, VEVRAA, and Section 503 if the Director of OFCCP determines that 
special circumstances in the national interest require doing so.\32\
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    \32\ E.O. 11246, section 204; 29 U.S.C. 793(c)(1); 41 CFR 60-
300.4(b)(1).
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B. Overview of Prior Treatment of Health Care Providers Participating 
in TRICARE

    OFCCP has audited health care providers who are government 
contractors, and it will continue to do so under this final rule.\33\ 
Provided below is a brief overview of TRICARE and developments 
regarding OFCCP's interpretations and practice regarding its authority 
over health care providers participating in TRICARE.
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    \33\ As noted throughout this final rule, health care providers 
who are prime government contractors, or who hold subcontracts apart 
from their provider relationship to a government health care program 
included in this rule, would remain under OFCCP's authority.
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1. Background on TRICARE
    TRICARE is the Federal health care program serving uniformed 
service members, retirees, and their families.\34\ TRICARE is managed 
by the Defense Health Agency, which contracts with managed care support 
contractors to administer each TRICARE region. The managed care support 
contractors enter into agreements with individual and institutional 
health care providers in order to create provider networks for fee-for-
service, preferred-provider, and health maintenance organization (HMO)-
like programs. Fee-for-service plans reimburse beneficiaries or the 
health care provider for the cost of covered services. The TRICARE HMO-
like program involves beneficiaries generally agreeing to use military 
treatment facilities and designated civilian providers and to follow 
certain managed care rules and procedures to obtain covered services.
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    \34\ See 32 CFR 199.17(a).
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2. OFCCP and Health Care Providers Participating in TRICARE
    In 2007, OFCCP for the first time in litigation asserted 
enforcement authority over a health care provider based solely on the 
hospital's delivery of medical care to TRICARE beneficiaries. The 
provider in this case, a hospital in Florida, disagreed with OFCCP's 
view, and OFCCP initiated enforcement proceedings in 2008 under the 
caption OFCCP v. Florida Hospital of Orlando. In 2010, an 
administrative law judge (ALJ) found for the agency.\35\
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    \35\ OFCCP v. Fla. Hosp. of Orlando, No. 2009-OFC-00002, 2010 WL 
8453896 (ALJ Oct. 18, 2010).

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[[Page 39837]]

    In December 2010--soon after the ALJ's decision in Florida 
Hospital--OFCCP issued a new directive on health care providers that 
superseded previous directives.\36\ Directive 293 asserted that OFCCP 
had authority over certain health care providers participating in 
TRICARE and other government health care programs.
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    \36\ See OFCCP, Directive 293, Coverage of Health Care Providers 
and Insurers (Dec. 16, 2010) (rescinded Apr. 25, 2012).
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    Congress responded the next year. The National Defense 
Authorization Act for Fiscal Year 2012 (NDAA) included a provision 
addressing the maintenance of the adequacy of provider networks under 
the TRICARE program and TRICARE health care providers as purported 
Government subcontractors. Sec. 715 of the NDAA provided that, for the 
purpose of determining whether network providers under TRICARE provider 
network agreements are Government subcontractors, a TRICARE managed 
care support contract that includes the requirement to establish, 
manage, or maintain a network of providers may not be considered to be 
a contract for the performance of health care services or supplies on 
the basis of such requirement.\37\
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    \37\ Public Law 112-81 section 715, 125 Stat. 1298, 1477 (2011), 
codified at 10 U.S.C. 1097b(a)(3).
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    In April 2012, 16 months after it had been issued, OFCCP formally 
rescinded Directive 293.\38\ Meanwhile, the Florida Hospital litigation 
continued. Six months after OFCCP formally rescinded Directive 293, in 
October 2012, the Department's Administrative Review Board (ARB or 
Board) held that the NDAA's amendment to the TRICARE statute precluded 
OFCCP from asserting authority over the Florida hospital.\39\ The Board 
dismissed OFCCP's administrative complaint against the hospital. Four 
of the five judges agreed that the hospital did not satisfy the second 
prong of OFCCP's regulatory definition of ``subcontract.'' Two judges, 
Judge Corchado and Judge Royce, would have found for the agency on the 
basis of the first prong of the regulatory definition of 
``subcontract.'' \40\
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    \38\ See Notice of Rescission No. 301 (Apr. 25, 2012).
    \39\ OFCCP v. FLA. Hosp. of Orlando, No. 11-011, 2012 WL 5391420 
(ARB Oct. 19, 2012).
    \40\ Judge Brown concluded that the question about the first 
prong was not properly before the Board.
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    The Board subsequently granted OFCCP's request for reconsideration. 
This time, a three-judge majority ruled for the agency. In July 2013, 
the Board concluded that the Florida hospital at issue satisfied the 
first prong of the agency's regulatory definition of ``subcontract.'' 
\41\ The Department's ARB remanded to the ALJ, however, to determine 
whether TRICARE constituted Federal financial assistance outside 
OFCCP's jurisdiction. Judge Igasaki and Judge Edwards dissented on the 
basis of their original opinion in the Board's first decision. They 
concluded that ``the enactment of Section 715 of the NDAA removes 
OFCCP's jurisdiction under either Prong One or Prong Two based on the 
specific contract at issue in this case.'' \42\
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    \41\ OFCCP v. Fla. Hosp. of Orlando, No. 11-011, 2013 WL 3981196 
(ARB July 22, 2013).
    \42\ Id. at *25 (Igasaki & Edwards, JJ., dissenting).
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    While the remand of Florida Hospital was pending, Congress 
introduced legislation to exempt all health care providers from OFCCP's 
enforcement activities and held a hearing regarding OFCCP's enforcement 
activities.\43\ The Secretary of Labor at the time, in a letter to the 
leaders of the House Committee on Education and the Workforce and the 
Subcommittee on Workforce Protection, stated that the leaders ``ha[d] 
made clear that, in [their] judgment, Congress intended to eliminate 
entirely OFCCP's jurisdiction over TRICARE subcontractors.'' \44\ The 
Secretary's letter proposed that ``in lieu of legislative action,'' 
OFCCP would ``exercise prosecutorial discretion over the next five 
years to limit its enforcement activities with regard to TRICARE 
subcontractors.'' \45\
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    \43\ H.R. 3633, Protecting Health Care Providers from Increased 
Administrative Burdens Act, Hearing Before the Subcomm. On Workforce 
Protections of the H. Comm. on Educ. & the Workforce, 113th Cong. 
(Mar. 13, 2014) [hereinafter ``2014 Hearing''].
    \44\ Id. at 3-5 (Sec'y of Labor Thomas E. Perez, Letter to 
Congressional Leaders, Mar. 11, 2014).
    \45\ Id. at 4.
    \46\ OFCCP, Directive 2014-01, TRICARE Subcontractor Enforcement 
Activities (May 7, 2014).
    \47\ OFCCP v. Fla. Hosp. of Orlando, No. 2009-OFC-00002 (ALJ 
Apr. 1, 2014).
    \48\ OFCCP, Directive 2018-02, TRICARE Subcontractor Enforcement 
Activities (May 18, 2018).
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    In May 2014, OFCCP issued Directive 2014-01, establishing a five-
year moratorium on enforcement of affirmative action obligations for 
health care providers deemed to be TRICARE subcontractors.\46\ OFCCP 
also administratively closed its open compliance reviews of contractors 
covered by the moratorium, which resulted in the dismissal of the 
Florida Hospital case.\47\ On May 18, 2018, OFCCP issued Directive 
2018-02, a two-year extension of the previous moratorium.\48\ Pursuant 
to this Directive, the moratorium will expire on May 7, 2021. OFCCP 
explained that it extended the moratorium out of concern that the 
approaching expiration of the moratorium and accompanying uncertainty 
over the applicability of the laws OFCCP enforces might contribute to 
the difficulties veterans and uniformed service members face when 
accessing health care. The Directive also explained that the extension 
would provide additional time to receive feedback from stakeholders. 
The Directive extended the scope of the moratorium to cover providers 
participating in the Department of Veterans Affairs' health benefits 
programs.\49\
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    \49\ Id. at 1 n.1.
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IV. Discussion of Public Comments

A. Length of Comment Period

    Some commenters criticized the 30-day comment period as 
impermissibly short. For example, a women's civil rights organization, 
on behalf of five other civil rights organizations, commented that a 
30-day comment period was inconsistent with the APA and applicable 
executive orders and provided insufficient time given the ``breadth and 
substance of the information sought.'' The organization also stated 
that a 30-day comment period is inconsistent with a November 18, 2019 
report by DOL's Office of Inspector General regarding rulemaking.
    A group of state attorneys general commented that ``executive 
agencies have followed a presumption that a minimum of sixty days is 
necessary to provide the affected public with a meaningful opportunity 
to comment on proposed agency regulations[.]'' A member of Congress 
commented that ``[a]pproximately 86 percent of rules (12 out of 14) 
proposed by OFCCP since 2000 have afforded the public an initial 
comment period of approximately 60 days and has even been extended in 
several instances.''
    These commenters also requested an extension to the comment period. 
After considering their requests, the Department determined that the 
original 30-day comment period provided adequate time for the public to 
comment on the proposed rule. Notably, the Administrative Procedure Act 
(APA) does not set forth a mandatory minimum time for public comments, 
but rather more generally requires an ``opportunity to participate in 
the rule making through submission of written

[[Page 39838]]

data, views, or arguments.'' \50\ Thirty-day public comment periods are 
broadly viewed as permissible under the APA, particularly where, as 
here, the proposal is fairly straightforward and is not detailed or 
highly technical in nature.\51\
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    \50\ 5 U.S.C. 553(c); see also Phillips Petroleum Co. v. U.S. 
E.P.A., 803 F.2d 545, 559 (10th Cir. 1986) (``The opportunity to 
participate is all the APA requires. There is no requirement 
concerning how many days the [agency] must allow for comment or that 
the [agency] must re-open the comment period at the request of one 
of the participants.'').
    \51\ See, e.g., Conn. Light & Power Co. v. Nuclear Regulatory 
Comm'n., 673 F.2d 525, 534 (D.C. Cir. 1982) (upholding a thirty-day 
comment period even though the ``technical complexity'' of the 
regulation was ``such that a somewhat longer comment period might 
have been helpful''); see also Conference of State Bank Supervisors 
v. Office of Thrift Supervision, 792 F. Supp. 837, 844 (D.D.C. 1992) 
(upholding the sufficiency of a thirty-day comment period).
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B. Reconsidering OFCCP's Authority Over TRICARE Providers

    Since bringing the Florida Hospital case over a decade ago, and as 
reiterated in its 2014 and 2018 moratoria, OFCCP has held the position 
that it holds authority over TRICARE providers. In preparing this final 
rule, OFCCP has carefully examined the authorities it administers, its 
legal position as stated in litigation and repeated public statements 
and guidance, the decisions in Florida Hospital, Congress's recent 
actions, and comments received in response to the NPRM. OFCCP has 
concluded that its recent assertions of authority over TRICARE 
providers warrant reconsideration.
    Some commenters agreed that Section 715 of the 2012 NDAA removed 
OFCCP's authority over TRICARE providers. For example, an employer 
association commented that ``the NDAA specifies that an agreement to 
provide health care services cannot be necessary to the establishment 
or maintenance of a health care network; under OFCCP's regulatory 
definitions, this means that such an agreement cannot be a 
subcontract.'' \52\ Likewise, a consortium of federal contractors and 
subcontractors commented that ``the proper interpretation of the NDAA 
excludes TRICARE providers from the definition of [`]subcontractor['] 
pursuant to the OFCCP's regulations.''
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    \52\ This organization also commented that the 2018 VA Mission 
Act, 38 U.S.C. 1703A(i)(1), provides additional statutory support to 
OFCCP's position.
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    Other commenters disagreed. An LGBT rights organization contended 
that the ARB correctly held in Florida Hospital that the NDAA did not 
remove OFCCP's authority. A women's civil rights organization, on 
behalf of seventeen other civil rights organizations, commented that 
``[t]he legislative history of Section 715 supports'' the ARB's 
decision in Florida Hospital. Specifically, the organization commented 
that an earlier draft of the NDAA included language that more clearly 
removed OFCCP's authority under both prongs of the subcontractor 
definition; this language was not included in the final bill. One 
member of Congress expressed the opinion that the ``enacted language, 
and the express rejection of language stating network providers are not 
considered subcontractors in the Senate-passed provision, demonstrates 
that Congress intended to create a narrow exception in certain 
instances--not a wholesale exemption.''
    Other commenters noted the salutary effect the rule change will 
have on the provision of health care services. A Catholic health care 
network wrote that it ``concurs that the proposed regulation amendment 
will accomplish the intended goal, and will ultimately increase or 
improve uniformed service members' and veterans' access to medical 
care.'' A consortium of federal contractors and subcontractors 
commented that ``[a]n express regulatory provision eliminating coverage 
for health care providers that provide supplies or services to TRICARE 
beneficiaries would remove this uncertainty and provide much needed 
clarity for this industry.'' Finally, a group of three members of 
Congress commented that the proposed rule ``will increase access to 
health care services for TRICARE beneficiaries.''
    OFCCP considered these comments. For the reasons set forth below, 
OFCCP interprets the 2012 NDAA to remove OFCCP's authority over TRICARE 
providers, and it is a proper use of OFCCP's regulatory authority to 
reconsider its previous position and conform its regulations to that 
legislative effort.
    When OFCCP issued Directive 293, asserting authority over these 
health care providers, Congress reacted quickly by enacting Section 715 
of the 2012 NDAA. ``Where an agency's statutory construction has been 
fully brought to the attention of the public and the Congress, and the 
latter has not sought to alter that interpretation although it has 
amended the statute in other respects, then presumably the legislative 
intent has been correctly discerned.'' N. Haven Bd. of Ed. v. Bell, 456 
U.S. 512, 535 (1982) (internal quotation marks omitted). OFCCP's 
history in this area shows the opposite with regard to TRICARE 
providers.
    The text and surrounding context of section 715 itself make clear 
that Congress sought to reverse OFCCP's assertion of authority over 
TRICARE providers. The section states, ``For the purpose of determining 
whether network providers''--e.g., hospitals and physicians--``are 
subcontractors . . . , a TRICARE managed care support contract that 
includes the requirement to establish, manage, or maintain a network of 
providers may not be considered to be a contract for the performance of 
health care services on the basis of such requirement.'' The ARB held 
in Florida Hospital that it could nonetheless deem a health care 
provider a subcontractor where the TRICARE regional administrator could 
not ``fulfill its contract to create an integrated health delivery 
system without the services from network providers like Florida 
Hospital.'' \53\ But, upon reconsideration, OFCCP now believes the 
dissenting opinion in Florida Hospital gave the better reading of the 
statute. The dissent explained that because the ``managed care prime 
contract . . . includes the requirement to maintain a network of 
providers, OFCCP's jurisdiction is removed. Under Section 715, the 
subcontract is no longer a `subcontract' under [OFCCP's regulatory 
definition] because the element of the contract that is `necessary to 
the performance of any one or more contracts' involves the provisions 
of health care network provider services to TRICARE beneficiaries.'' 
\54\ The dissent's reading would prevent the statute from becoming a 
nullity--since the purpose of creating a provider network is to provide 
health care.
---------------------------------------------------------------------------

    \53\ Fla. Hosp., 2013 WL 3981196, at *19.
    \54\ Id. at *29.
---------------------------------------------------------------------------

    Some commenters raised section 715's legislative history. The 
predominating fact in the legislative history of section 715 is that 
Congress enacted it in response to OFCCP's express claim of authority 
over TRICARE providers. A construction of the statute that would render 
it a nullity would not be consistent with congressional intent in light 
of this historical context. Further, little can be drawn from the 
legislative history noted by commenters, especially the vague Statement 
of Administration Policy.\55\ At best, it shows that (i) an earlier 
draft of the bill could have exempted TRICARE providers from OFCCP 
authority even if they held other, unrelated federal contracts, and 
(ii) the language was revised to clarify that TRICARE providers would 
not be subject to OFCCP by virtue of their TRICARE agreements, but 
could still be subject to OFCCP if they held other agreements outside 
of TRICARE.
---------------------------------------------------------------------------

    \55\ See Statement of Administration Policy, Executive Office of 
the Pres., Office of Mgmt. & Budget, S. 1867--National Defense 
Authorization Act for FY 2012 (Nov. 17, 2011), 
obamawhitehouse.archives.gov/sites/default/files/omb/legislative/sap/112/saps1867s_20111117.pdf.

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[[Page 39839]]

    For these reasons, after careful consideration, OFCCP has 
reconsidered its position and now concludes that it does not have 
authority over TRICARE providers.

C. Establishing a National Interest Exemption for Health Care Providers 
Participating in TRICARE

    OFCCP believes that lasting certainty for TRICARE health care 
providers and patients is in the national interest. Therefore, through 
this final rule OFCCP is also establishing, as an alternative, an 
exemption from E.O. 11246, Section 503, and VEVRAA for health care 
providers with agreements to furnish medical services and supplies to 
individuals participating in TRICARE. Nothing in this action is 
intended to interfere with OFCCP's vital mission of enforcing equal 
employment opportunity in organizations that contract with the 
government. OFCCP will retain authority over a health care provider 
participating in such a network or arrangement if the health care 
provider holds a separate covered Federal contract or subcontract. But 
as explained below, OFCCP believes that there are several reasons why 
special circumstances in the national interest warrant an exemption for 
TRICARE health care providers who do not hold such separate contracts.
    First, OFCCP is concerned that the prospect of exercising authority 
over TRICARE providers is affecting or will affect the government's 
ability to provide health care to uniformed service members, veterans, 
and their families. Congressional inquiries and testimony, as well as 
amicus filings in the Florida Hospital litigation, and comments 
received in response to the NPRM, have brought to OFCCP's attention the 
risk that health care providers may be declining to participate in 
Federal health care programs that serve members of the military and 
veterans because of the presumed costs of compliance with OFCCP's 
regulations.\56\ The former president of a TRICARE managed care support 
contractor testified that he feared they would lose smaller providers 
in their network because of the administrative costs and burdens 
associated with OFCCP's requirements, and he predicted that it would 
make it ``much more difficult to build and retain provider networks.'' 
\57\ TRICARE managed care support contractors similarly stated in an 
amicus brief that subjecting TRICARE providers to OFCCP's requirements 
would ``make the already difficult task of finding health care 
professionals willing to act as network providers even more 
difficult.'' \58\ A partner of a law firm testified that he has seen 
health care provider clients choose not to participate in TRICARE and 
in other programs because of the costs of compliance.\59\ The American 
Hospital Association also testified that some hospitals may decline to 
participate out of concern that they could be found to be Federal 
contractors.\60\
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    \56\ 2014 Hearing, supra note 43; Examining Recent Actions by 
the Office of Federal Contract Compliance Programs, Hearing Before 
the Subcomm. on Workforce Protections of the H. Comm. on Education 
and the Workforce, 113th Cong. (2013) [hereinafter 2013 Hearing]; 
Reviewing the Impact of the Office of Federal Contract Compliance 
Programs' Regulatory and Enforcement Actions, Hearing Before the 
Subcomm. on Health, Emp't, Labor & Pensions of the H. Comm. on Educ. 
& the Workforce, 112th Cong. (2012).
    \57\ 2014 Hearing, supra note 43, at 24-26, 46-47, 149 (Prepared 
Statement and Testimony of Thomas Carrato, President, Health Net 
Federal Services).
    \58\ Amicus Brief of Humana Military Health Services, Inc., 
Health Net Federal Services, LLC, and TriWest Healthcare Alliance 
dated May 2, 2012, at 9, Fla. Hosp., 2013 WL 3981196; see also 
Amicus Brief of Human Military Health Services, Inc., Health Net 
Federal Services, LLC, and TriWest Healthcare Alliance dated 
December 29, 2010, at 2, Fla. Hosp., 2013 WL 3981196 (``Subjecting 
the network providers to Federal affirmative action requirements 
will make it more difficult for the [TRICARE managed care support] 
contractors to find and retain providers willing to sign network 
agreements due to the added compliance requirements.'').
    \59\ 2014 Hearing, supra note 43, at 34-35, 47 (Statement and 
Testimony of David Goldstein, Shareholder, Littler Mendelson P.C.).
    \60\ Id. at 17-18 (Prepared Statement of the American Hospital 
Association); 2013 Hearing, supra note 56, at 139 (Testimony of Curt 
Kirschner, Partner, Jones Day, on behalf of the American Hospital 
Association).
---------------------------------------------------------------------------

    Providers' decisions not to participate may exacerbate the well-
documented difficulties that uniformed service members, veterans, and 
their families have accessing health care.\61\ The unique nature of the 
health care system heightens OFCCP's concern about the refusal of 
providers to participate in health care programs for uniformed service 
members and veterans. Creating adequate networks of providers is a 
critical component of ensuring access to health care. These networks 
need to offer comprehensive services and cover all geographical areas 
where beneficiaries reside. An inadequate network may mean that 
beneficiaries are unable to obtain urgent and life-saving treatment. 
The willingness of health care providers to participate in TRICARE is 
thus especially important.
---------------------------------------------------------------------------

    \61\ See, e.g., Government Accountability Office Report, GAO-18-
361, TRICARE Surveys Indicate Nonenrolled Beneficiaries' Access to 
Care Has Generally Improved (Mar. 2018), available at https://www.gao.gov/assets/700/690964.pdf. The GAO found that, although 
there has been a slight improvement in TRICARE beneficiaries' access 
to care, 29 percent of nonenrolled beneficiaries still reported that 
they experienced problems finding a civilian provider. Nonenrolled 
beneficiaries are those that have not enrolled in TRICARE Prime, 
which is a managed care option that that mostly relies on military 
hospitals and clinics to provide care.
---------------------------------------------------------------------------

    OFCCP requested comments from stakeholders to help it more 
thoroughly evaluate the potential impact of OFCCP compliance on 
uniformed service members' and veterans' health care provider networks. 
In particular, OFCCP sought comments from health care providers 
regarding the impact of potential Federal subcontractor status on their 
decision to participate in health care programs for uniformed service 
members and veterans. These comments are discussed later in this 
section.
    Second, OFCCP believes that an exemption is in the national 
interest because pursuing enforcement efforts against TRICARE providers 
is not the best use of its and providers' resources. Given the history 
in this area, such attempts--which would occur in the absence of this 
final rule--could again meet with protracted litigation and unclear 
ultimate results: The Florida Hospital case proceeded for seven years 
and would have continued for some time into the future had it not been 
voluntarily dismissed. OFCCP believes its limited resources are better 
spent elsewhere, and it would be unreasonable to impose substantial 
compliance costs on health care providers when the legal justification 
for doing so would be open to challenge in light of the language in the 
NDAA and the question left unresolved in Florida Hospital as to whether 
TRICARE constitutes Federal financial assistance.
    Third, OFCCP believes an exemption would be in the national 
interest because it would provide uniformity and certainty in the 
health care community with regard to legal obligations concerning 
participation in TRICARE. OFCCP conducts a case-by-case inquiry as to 
whether a particular entity is a covered subcontractor. The proposed 
exemption would dispense with an agreement-by-agreement analysis and 
the attendant uncertainty, legal costs, and litigation risk. Providers 
could choose to furnish medical services to beneficiaries of different 
types of TRICARE programs without hiring costly lawyers and performing 
time-intensive contract analysis to determine, as best they can, 
whether they are a subcontractor or simply a provider.
    This exception would also harmonize OFCCP's approach with that of 
the Department of Defense. OFCCP is the office charged with 
administering and enforcing its authorities, but comity between 
agencies is desirable whenever possible, reduces confusion for the

[[Page 39840]]

public, and helps ensure evenhanded and efficient administration of the 
law. The Department of Defense stated in the Florida Hospital 
litigation that ``it would be impossible to achieve the TRICARE mission 
of providing affordable health care for our nation's active duty and 
retired military members and their families'' if all TRICARE providers 
were subject to OFCCP's requirements.\62\ The Department of Defense 
also classifies TRICARE as Federal financial assistance in DoD 
Directive 1020.1.\63\ A unified approach should reduce confusion for 
the public and assist coordination in regulating government contracts 
in the health care field.\64\
---------------------------------------------------------------------------

    \62\ OFCCP v. Fla. Hosp. of Orlando, No. 2009-OFC-002, 2010 WL 
8453896, at *2 (ALJ Oct. 18, 2010).
    \63\ See Dep't of Defense, Directive 1020.1, Nondiscrimination 
on the Basis of Handicap in Programs and Activities Assisted or 
Conducted by the Department of Defense, ] E1.1.2.21 (Mar. 31, 1982).
    \64\ Note that this regulation would not affect health care 
entities' obligations under Title VII of the Civil Rights Act or 
other civil rights laws enforced by other agencies.
---------------------------------------------------------------------------

    As noted earlier, of course, the uniformed service members and 
veterans' health care providers discussed here would still be subject 
to OFCCP's authority if they are prime contractors or have a covered 
subcontract with a government contractor. For example, a teaching 
hospital that participates as a TRICARE provider but that also has a 
research contract with the Federal Government would still be considered 
a covered contractor subject to OFCCP authority.
    Several commenters supported a national interest exemption. For 
example, a veteran's health care organization wrote that it ``urges the 
adoption of the National Interest Exemption as described'' in the NPRM. 
An employer association commented that it ``agrees with the points 
OFCCP offers in support of its National Interest Exemption rationale'' 
because the high cost of compliance ``take[s] time away from patient 
care'' and causes providers to ``simply not participate in TRICARE.'' A 
consortium of federal contractors and subcontractors commented that 
complying with OFCCP's requirements ``can exponentially increase an 
organization's operating expenses. . . . [T]he prospect of complying 
with these additional regulatory burdens will discourage many valuable 
and important health care providers from becoming TRICARE providers.'' 
A Catholic health care network commented that the proposed rule ``would 
ultimately provide the desired outcome'' of increasing access to health 
care for veterans.
    Other commenters opposed a national interest exemption. For 
example, a women's civil rights organization, on behalf of seventeen 
other civil rights organizations, disagreed that the NPRM's rationales 
support the exemption. The organization viewed as anecdotal OFCCP's 
concerns that compliance requirements are unduly burdensome for TRICARE 
providers. A member of Congress commented that past exemptions have 
been issued only in response to ``earthquakes, wildfires, flooding, and 
hurricanes'' and that there were no such special circumstances here 
because there is no underlying natural disaster. Finally, an LGBT 
rights organization commented that the ``federal government must be in 
the business of eradicating discrimination'' and that the proposed rule 
falls short of this mandate.
    OFCCP agrees with the comments supporting a national interest 
exemption as an alternative basis for relieving TRICARE providers from 
complying with OFCCP's legal obligations. For the reasons discussed in 
this section, the Director of OFCCP has determined that the exemption 
proposed in the NPRM is justified by special circumstances in the 
national interest because it will increase access to care for uniformed 
service members and veterans, allow OFCCP to better allocate its 
resources, and provide uniformity and certainty for the government and 
for TRICARE health care providers. OFCCP's conclusions are not 
supported by insufficient evidence, as one commenter alleged, but 
rather are supported by evidence which includes Congressional 
testimony, evidence generated in the Florida Hospital litigation, and 
comments received in response to the NPRM. Finally, OFCCP's authority 
to issue national interest exemptions is not limited only to 
circumstances involving natural disasters. E.O. 11246, VEVRAA, Section 
503, and the implementing regulations of all three laws grant OFCCP 
broad authority to issue exemptions.\65\
---------------------------------------------------------------------------

    \65\ See notes 10 to 18.
---------------------------------------------------------------------------

    The Director of OFCCP has also determined that the requirements 
have been met for granting an exemption to a group or category of 
contracts. Since there are tens of thousands of providers that may be 
eligible for the exemption, it would be impracticable for OFCCP to act 
upon each provider's request individually and issuing a group exemption 
will substantially contribute to convenience in the administration of 
the laws.\66\
---------------------------------------------------------------------------

    \66\ 41 CFR 60-1.5(b)(1), -300.4(b)(1), -741.4(b)(1).
---------------------------------------------------------------------------

    A women's civil rights organization, on behalf of seventeen other 
civil rights organizations, commented that OFCCP lacks the legal 
authority to ``authorize a categorical exemption of the sort'' 
described in this final rule. The organization argued that E.O. 11246 
only allows for categorical exemptions in specifically enumerated 
circumstances, none of which apply in the instant case. However, as 
discussed above, the applicable regulations authorize the Director of 
OFCCP to exempt groups or categories of contracts when it would be 
impracticable for OFCCP to act on individual requests and where a group 
exemption would substantially contribute to the convenience in the 
administration of the laws. See 41 CFR 60-1.5(b)(1), -300.4(b)(1), -
741.4(b)(1); see also supra discussion at sections II (Legal 
Authority), III.A (Overview of OFCCP's Areas of Authority).

D. OFCCP's Authority Over FEHBP

    In the NPRM, OFCCP requested comments on whether health care 
providers participating in the Federal Employees Health Benefits 
Program (FEHBP) should not be covered by OFCCP's authority.\67\ OFCCP 
was interested in comments from stakeholders and health care providers 
that serve federal employees, such as FEHBP, about the impact of 
OFCCP's requirements and if there is difficulty attracting and 
retaining participating providers. In the past, some stakeholders have 
indicated that other government health care programs may face 
difficulties similar to TRICARE.
---------------------------------------------------------------------------

    \67\ FEHBP serves civilian federal employees, annuitants, and 
their dependents. 5 U.S.C. 8901 et seq. The program is administered 
by the U.S. Office of Personnel Management. FEHBP offers two general 
types of plans: Fee-for-service plans and HMO plans. The 
Department's Administrative Review Board held OFCCP did not have 
authority over a health care provider based on a reimbursement 
agreement with a health insurance carrier offering a fee-for-service 
FEHBP plan, but did have authority over a health care provider's 
agreement to provide services pursuant to a FEHBP HMO plan. See 
OFCCP v. UPMC Braddock, No. 08-048, 2009 WL 1542298 (ARB May 29, 
2009), aff'd, UPMC Braddock v. Harris, 934 F. Supp. 2d 238 (D.D.C. 
2013), vacated as moot, UPMC Braddock v. Perez, 584 F. App'x 1 (D.C. 
Cir. 2014); In re Bridgeport Hosp., No. 00-023, 2003 WL 244810 (ARB 
Jan. 31, 2003).
---------------------------------------------------------------------------

    Some commenters supported exempting FEHBP. An association of health 
care organizations commented that many hospitals participate in both 
TRICARE and FEHBP and that health care providers ``could drop out of 
FEHBP networks to preserve their TRICARE exemption, and access to care

[[Page 39841]]

for the federal employee population could be affected.'' An association 
of independent health care plans commented that ``a uniform OFCCP 
exemption for FEHB, similar to what is being proposed for TRICARE, 
would remove a potential barrier to provider contracting . . . .'' A 
consortium of federal contractors and subcontractors commented that 
``[a] uniform rule that applies to health care providers involved in 
federal government health care programs is necessary to avoid legal 
uncertainty for the medical field.'' A group of three members of 
Congress commented that the House Committee on Education and Labor held 
hearings in 2014 on legislation that would have removed OFCCP's 
jurisdiction over FEHBP.\68\ The testimony given during this hearing 
called on OFCCP to clarify which FEHBP plans require participating 
providers to be classified as subcontractors; asserted that Department 
of Defense and Office of Personnel Management regulations do not 
classify FEHBP participants as federal contractors; and noted the 
willingness of the then-Secretary of Labor to continue discussing 
enforcement of FEHBP participants. Congress did not ultimately pass 
legislation affecting OFCCP's authority over FEHBP.
---------------------------------------------------------------------------

    \68\ 2014 Hearing, supra note 43.
---------------------------------------------------------------------------

    Other commenters opposed exempting FEHBP providers. A women's civil 
rights organization, on behalf of several other civil rights 
organizations, commented that the NPRM failed to provide the terms or 
substance of an FEHBP exemption and that ``[a]ny regulation addressing 
other providers must be the subject of its own notice and comment 
rulemaking.''
    None of the comments received in response to the NPRM identified a 
legal basis to retain or disclaim jurisdiction over FEHBP providers. 
Accordingly, OFCCP does not adopt any regulatory change related to 
FEHBP providers. OFCCP has, however, carefully considered comments 
regarding the benefits of a uniform approach to all government health 
care plans and will consider additional sub-regulatory guidance as 
necessary.

E. OFCCP's Authority Over Veterans Administration Health Benefits 
Programs

    OFCCP received several comments requesting that it also remove from 
its authority health care service agreements between the U.S. 
Department of Veterans Affairs (VA) and various health care entities, 
including Veteran's Care Agreements (VCAs). Several commenters cited 
broad policy-based concerns. For example, a Lutheran health care 
provider that has several legacy contracts with the Veteran's 
Administration commented that it faces increased financial burdens 
preparing OFCCP compliance reports: ``the added cost and regulatory 
oversight explains why compliance as a federal contractor is a 
constraint that requires us to carefully consider each contract we 
enter into with the Veteran's Administration.'' An association of long-
term and post-acute care providers commented that ``[t]he result [of 
government regulations] has been limited long-term care options for 
veterans in their local communities, with some veterans having to 
choose between obtaining needed long-term care services in a distant VA 
facility and remaining near loved ones in their community.'' A long-
term health care provider that has entered into VCAs commented that 
``the ability to maintain the data requirements of an Affirmative 
Action plan would be burdensome and tedious for our facilities to 
maintain.''
    Some of these commenters also cited specific types of agreements 
they believed should be excluded from OFCCP's authority, and provided 
some legal rationale for this belief. Specifically, three commenters 
sought to have OFCCP exclude Veterans Care Agreements from its 
authority.\69\ Two of these commenters also wanted additional types of 
VA agreements excluded from OFCCP's authority, specifically citing 
Community Care Networks and legacy VA contracts.'' A final commenter 
supported excluding Veterans Affairs health benefits program providers 
generally from OFCCP's authority. As discussed below, OFCCP disagrees 
that there is a statutory basis for excluding these arrangements from 
OFCCP's authority entirely, but many of these arrangements do fall 
under the moratorium on enforcement that was announced in an OFCCP 
directive issued in May 2018.
---------------------------------------------------------------------------

    \69\ We note that a fourth commenter supported the TRICARE 
exemption without asking to expand it; however, they defined TRICARE 
as a VCA. This is inaccurate, as TRICARE and VCAs are entirely 
separate programs administered by different agencies. VCAs are 
agreements entered into by the VA, while TRICARE is a separate and 
distinct health care program under the Department of Defense (DoD).
---------------------------------------------------------------------------

    The Veterans Care Agreements (VCAs) referenced by the commenters 
are arrangements created pursuant to the 2018 VA MISSION Act.\70\ The 
2018 VA MISSION Act was intended generally to provide veterans with 
better access to care in a number of ways, and VCAs were one of the new 
arrangements created under the law for that purpose.\71\ The inclusion 
of VCAs in the 2018 VA MISSION Act gave VA the authority to enter into 
these arrangements to address gaps in care that may arise in hospital 
care, medical services, and/or extended care services. VCAs are 
executed when specific care is needed but cannot be obtained within the 
current VA provider networks. These agreements are intended to be used 
in limited circumstances when the care necessary for treatment is 
either insufficient or non-existent.
---------------------------------------------------------------------------

    \70\ 38 U.S.C. 1703A.
    \71\ See https://missionact.va.gov/ (last accessed April 23, 
2020).
---------------------------------------------------------------------------

    Some of the commenters raising this issue asserted that statutory 
language in the 2018 VA MISSION Act divests OFCCP of jurisdiction over 
VCAs because the Act states that such agreements are not ``contracts.'' 
\72\ However, there is an exception to this provision within the same 
subsection of the statute which provides that entities that enter into 
VCAs remain subject to ``all laws that protect against employment 
discrimination or that otherwise ensure equal employment 
opportunities.'' \73\ Accordingly, the statutory language of the 2018 
VA MISSION Act, standing alone, does not serve to remove these 
agreements from OFCCP's authority.
---------------------------------------------------------------------------

    \72\ See 38 U.S.C. 1703A(i)(1) (``A Veterans Care Agreement may 
be authorized by the Secretary or any Department official authorized 
by the Secretary, and such action shall not be treated as . . . a 
Federal contract for the acquisition of goods or services for 
purposes of any provision of Federal law governing Federal contracts 
for the acquisition of goods or services . . .'').
    \73\ Id. at 1703A(i)(2)(B)(ii).
---------------------------------------------------------------------------

    Two commenters likewise requested that OFCCP remove from its 
authority VA Community Care Networks (CCNs). Though the term CCN is not 
consistently defined, the term as used by the commenters generally 
refers to a third-party network manager that is a prime contractor with 
VA. However, the CCN is a contract to create a network of providers and 
coordinate the provision of care, but is not a contract for the 
provision of care itself. Thus, it is distinguishable from the TRICARE 
providers that this final rule removes from OFCCP's authority. Rather, 
CCNs are typical, competitively bid Federal contracts, and unlike with 
the 2018 VA MISSION Act and VCAs, there is no statutory language 
defining the arrangements as non-contractual.
    In addition to advocating for an exemption to extend to VCAs and 
CCNs, one commenter urged the exemption of ``legacy VA contracts'' as 
well. Though this term is somewhat vague, our understanding based on 
discussions

[[Page 39842]]

with VA is that the commenter might be referring to any of various 
procurement instruments used by VA in recent years, prior to when VA 
began utilizing VCAs and its current generation of third-party 
administrator contracts, the aforementioned CCNs. Some of those 
procurement instruments are conventional procurement contracts. VA's 
previous generation of third-party administrator contracts, which are 
sometimes called Patient-Centered Community Care, or ``PC3,'' 
contracts, is one example. Generally, these agreements, like CCNs, are 
competitively bid Federal contracts without statutory exemptions, and 
thus there is no statutory basis for OFCCP to disclaim authority. 
However, to the extent that the comment intended ``legacy VA 
contracts'' to refer to Choice Provider Agreements, authorized by the 
Veterans Access, Choice, and Accountability Act of 2014, section 101(d) 
of that law provided that such agreements were specifically exempted 
from OFCCP jurisdiction.\74\
---------------------------------------------------------------------------

    \74\ Public Law 113-146, 101(d) (2014) (``During the period in 
which such entity furnishes care or services pursuant to this 
section, such entity may not be treated as a Federal contractor or 
subcontractor by the Office of Federal Contract Compliance Programs 
of the Department of Labor by virtue of furnishing such care or 
services.''). We note that the VA no longer has authority to enter 
into these Choice Provider Agreements given subsequent revisions to 
the Veterans Choice Act.
---------------------------------------------------------------------------

    In sum, with the exception of any remaining Choice Provider 
Agreements, the existing statutory framework does not provide support 
for removing VA health benefits contracts from OFCCP's authority. 
However, OFCCP has previously taken action with regard to such VA 
health benefit provider (VAHBP) agreements when it issued Directive 
2018-02 in May 2018. That directive, which extended the moratorium on 
the review of TRICARE health care providers originally issued in 2014, 
expanded the moratorium on scheduling to include these VAHBP 
agreements.\75\ Consistent with the handling of FEHBP, OFCCP will 
consider additional subregulatory guidance as necessary to provide 
certainty and clarity to the status of VAHBPs.
---------------------------------------------------------------------------

    \75\ OFCCP Directive 2018-02, TRICARE Subcontractor Enforcement 
Activities (May 18, 2018), available at https://www.dol.gov/ofccp/regs/compliance/directives/dir2018_02.html (last accessed April 20, 
2020).
---------------------------------------------------------------------------

    Accordingly, after a full review of the comments, OFCCP adopts this 
final rule incorporating the provisions proposed in the NPRM.

IX. Section-by-Section Analysis

Section 60-1.3 Definitions

    OFCCP proposed adding a sub-paragraph to the definition of 
subcontract in the E.O. 11246 regulations noting that a subcontract 
does not include an agreement between a health care provider and health 
organization pursuant to which the health care provider agrees to 
furnish health care services or supplies to beneficiaries of TRICARE. 
OFCCP also proposed adding definitions of ``agreement,'' ``health care 
provider,'' and ``health organization.'' For the reasons set forth 
above, the final rule adopts these changes as proposed in the NPRM.

Section 60-300.2 Definitions

    OFCCP proposed adding a sub-paragraph to the definition of 
subcontract in the VEVRAA regulations noting that a subcontract does 
not include an agreement between a health care provider and health 
organization pursuant to which the health care provider agrees to 
furnish health care services or supplies to beneficiaries of TRICARE. 
OFCCP also proposed adding definitions of ``agreement,'' ``health care 
provider,'' and ``health organization.'' For the reasons set forth 
above, the final rule adopts these changes as proposed in the NPRM.

Section 60-741.2 Definitions

    OFCCP proposed adding a sub-paragraph to the definition of 
subcontract in the Section 503 regulations noting that a subcontract 
does not include an agreement between a health care provider and health 
organization pursuant to which the health care provider agrees to 
furnish health care services or supplies to beneficiaries of TRICARE. 
OFCCP also proposed adding definitions of ``agreement,'' ``health care 
provider,'' and ``health organization.'' For the reasons set forth 
above, the final rule adopts these changes as proposed in the NPRM.

Regulatory Analysis

E.O. 12866 (Regulatory Planning and Review) and E.O. 13563 (Improving 
Regulation and Regulatory Review)

    Under E.O. 12866, the U.S. Office of Management and Budget's 
(OMB's) Office of Information and Regulatory Affairs (OIRA) determines 
whether a regulatory action is significant and, therefore, subject to 
the requirements of E.O. 12866 and OMB review. Section 3(f) of E.O. 
12866 defines a ``significant regulatory action'' as an action that is 
likely to result in a rule that: (1) Has an annual effect on the 
economy of $100 million or more, or adversely affects in a material way 
a sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or state, local, or tribal 
governments or communities (also referred to as economically 
significant); (2) creates serious inconsistency or otherwise interferes 
with an action taken or planned by another agency; (3) materially 
alters the budgetary impacts of entitlement grants, user fees, or loan 
programs, or the rights and obligations of recipients thereof; or (4) 
raises novel legal or policy issues arising out of legal mandates, the 
President's priorities, or the principles set forth in E.O. 12866. The 
Office of Management and Budget has determined that this final rule is 
a significant action under E.O. 12866 and has reviewed the final rule. 
Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), OIRA 
designated that this rule is not a ``major rule,'' as defined by 5 
U.S.C. 804(2).
    E.O. 13563 directs agencies to propose or adopt a regulation only 
upon a reasoned determination that its benefits justify its costs; 
tailor the regulation to impose the least burden on society, consistent 
with obtaining the regulatory objectives; and in choosing among 
alternative regulatory approaches, select those approaches that 
maximize net benefits. E.O. 13563 recognizes that some benefits are 
difficult to quantify and provides that, where appropriate and 
permitted by law, agencies may consider and discuss qualitatively 
values that are difficult or impossible to quantify, including equity, 
human dignity, fairness, and distributive impacts.

The Need for the Regulation

    The regulatory changes in this final rule are needed to provide 
clarity regarding OFCCP's authority over health care providers that 
provide services and supplies under TRICARE, improve uniformed service 
members' and veterans' access to medical care, more efficiently 
allocate OFCCP's limited resources for enforcement activities, and 
provide greater uniformity, certainty, and notice for health care 
providers participating in TRICARE. The final rule is intended to 
address concerns regarding the risk that health care providers may be 
declining to participate in TRICARE, which reduces the availability of 
medical services for uniformed service members, veterans, and their 
families. OFCCP is exempting health care providers with agreements to 
furnish medical services and supplies to individuals participating in 
TRICARE

[[Page 39843]]

from E.O. 11246, Section 503, and VEVRAA.

Discussion of Impacts

    In this section, OFCCP presents a summary of the costs and savings 
associated with the changes in this final rule. In line with recent 
assessments of other rulemakings, the agency has determined that either 
a Human Resources Manager (SOC 11-3121) or a Lawyer (SOC 23-1011) would 
review the rule. OFCCP estimates that 50 percent of the reviewers would 
be human resources managers and 50 percent would be in-house counsel. 
Thus, the mean hourly wage rate reflects a 50/50 split between human 
resources managers and lawyers. The mean hourly wage of a human 
resources manager is $62.29 and the mean hourly wage of a lawyer is 
$69.86.\76\ Therefore, the average hourly wage rate is $66.08 (($62.29 
+ $69.86)/2). OFCCP adjusted this wage rate to reflect fringe benefits 
such as health insurance and retirement benefits, as well as overhead 
costs such as rent, utilities, and office equipment. The agency used a 
fringe benefits rate of 46 percent \77\ and an overhead rate of 17 
percent,\78\ resulting in a fully loaded hourly compensation rate of 
$107.71 ($66.08 + ($66.08 x 46 percent) + ($66.08 x 17 percent). The 
estimated labor cost to contractors is reflected in Table 1, below.
---------------------------------------------------------------------------

    \76\ BLS, Occupational Employment Statistics, Occupational 
Employment and Wages, May 2019, https://www.bls.gov/oes/current/oes_nat.htm (last accessed April 3, 2020).
    \77\ BLS, Employer Costs for Employee Compensation, https://www.bls.gov/ncs/data.htm (last accessed March 17, 2020). Wages and 
salaries averaged $24.86 per hour worked in 2018, while benefit 
costs averaged $11.52, which is a benefits rate of 46 percent.
    \78\ Cody Rice, U.S. Environmental Protection Agency, ``Wage 
Rates for Economic Analyses of the Toxics Release Inventory 
Program,'' (June 10, 2002), https://www.regulations.gov/document?D=EPA-HQ-OPPT-2014-0650-0005 (last accessed March 17, 
2020).

                                               Table 1--Labor Cost
----------------------------------------------------------------------------------------------------------------
                                                                                                   Fully loaded
          Major occupational groups            Average hourly   Fringe benefit   Overhead rate        hourly
                                                 wage rate           rate                          compensation
----------------------------------------------------------------------------------------------------------------
Human Resources Managers and Lawyers........          $66.08              46%              17%          $107.71
----------------------------------------------------------------------------------------------------------------

Public Comments

    In this section, OFCCP addresses the public comments specifically 
received on the Regulatory Impact Analysis. The agency received three 
comments on the Regulatory Impact Analysis.
    One commenter, a Lutheran health care provider, addressed their 
reluctance to enter into contracts with the Veteran's Administration 
and stated, ``In some cases, we have reluctantly entered into these 
agreements because of the regulatory burden but have done so because we 
want to honor veterans who live close to one of our facilities.''
    Some commenters criticized OFCCP for not sufficiently analyzing the 
effect that removing OFCCP's authority over TRICARE providers will have 
on the provision of health care services. For example, a women's civil 
rights organization, on behalf of seventeen other civil rights 
organizations, commented that ``OFCCP makes no accounting for the costs 
to workers of loss of protections against discrimination and the 
increase in vulnerability to discrimination in the absence of OFCCP's 
systemic enforcement activities. It does not seek to quantify or 
otherwise address the ways in which discriminatory harassment and 
exploitation of health care workers can compromise patient care.'' A 
member of Congress echoed this concern, noting that a 2005 employment 
survey found that ``more than 60 percent of surveyed physicians, 
primarily women and minorities, reported experiencing workplace 
discrimination.'' However, the commenters provided no data that would 
allow for quantitative cost estimations of this final rule.

Cost of Regulatory Familiarization

    OFCCP acknowledges that 5 CFR 1320.3(b)(1)(i) requires agencies to 
include in the burden analysis the estimated time it takes for 
contractors to review and understand the instructions for compliance. 
To minimize the burden, OFCCP will publish compliance assistance 
materials including, fact sheets and responses to ``Frequently Asked 
Questions.'' OFCCP may also host webinars for the contractor community 
that will describe the new requirements and conduct listening sessions 
to identify any specific challenges contractors believe they face, or 
may face, when complying with the requirements.
    OFCCP believes that a human resources manager or lawyer at each 
health care contractor establishment or firm within its authority will 
be responsible for understanding or becoming familiar with the new 
requirements. The agency estimates that it will take a minimum of 30 
minutes (\1/2\ hour) for the human resources manager or lawyer to read 
the final rule, read the compliance assistance materials provided by 
OFCCP, or participate in an OFCCP webinar to learn more about the new 
requirements. Consequently, the estimated burden for rule 
familiarization is 43,654 hours (87,308 establishments x \1/2\ 
hour).\79\ OFCCP calculates the total estimated cost of rule 
familiarization as $4,701,972 (43,654 hours x $107.71/hour) in the 
first year, which amounts to a 10-year annualized cost of $535,160 at a 
discount rate of 3 percent ($6.13 per health care contractor firm) or 
$625,659 at a discount rate of 7 percent ($7.17 per health care 
contractor firm). Table 2, below, reflects the estimated regulatory 
familiarization costs for the final rule.
---------------------------------------------------------------------------

    \79\ The determination of the estimated number of health care 
contractor establishments is discussed under Cost Savings, below.

                Table 2--Regulatory Familiarization Cost
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Total number of health care contractor     87,308.
 establishments.
Time to review rule......................  30 minutes.
Human Resources Managers and Lawyers,      $107.71.
 fully loaded hourly compensation.
Regulatory familiarization cost in the     $4,701,972.
 first year.
Annualized cost with 3 percent             $535,160.
 discounting.
Annualized cost per health care            $6.13.
 contractor with 3 percent discounting.
Annualized cost with 7 percent             $625,659.
 discounting.

[[Page 39844]]

 
Annualized cost per health care            $7.17.
 contractor with 7 percent discounting.
------------------------------------------------------------------------

    The rule does not impose any additional costs because it adds no 
new requirements.

Cost Savings

    While the final rule does not impose any additional costs, the 
Department does anticipate cost savings as it reconsiders OFCCP's 
authority over health care providers with agreements to furnish medical 
services and supplies to individuals participating in TRICARE, and in 
the alternative, proposes a national interest exemption from E.O. 
11246, VEVRAA, and Section 503 for these health care providers, thus 
eliminating any requirements associated with developing, updating, and 
maintaining AAPs. As explained further below, the agency cannot 
quantify the cost savings due to lack of data on how many contractors 
may be obligated to maintain an AAP under contracts that are not 
exempted by this final rule. However, the information that follows sets 
forth relevant evidence and other helpful data that can be used to help 
assess cost savings as a result of changes in the final rule.
    To estimate the number of Federal contractors potentially impacted 
by the final rule, OFCCP identified the number of health care providers 
participating in TRICARE.\80\ The agency further refined this universe 
to those entities with 50 or more employees, since the greatest burdens 
associated with the E.O. 11246, VEVRAA, and Section 503 requirements 
are associated with developing, updating, and maintaining AAPs.\81\ 
OFCCP then determined the rate of compliance using OFCCP's compliance 
evaluation data from Fiscal Years 2012 through 2019. The data show that 
approximately 95 percent of health care providers scheduled for an 
OFCCP compliance evaluation during that period submitted their AAPs 
when requested and the remaining 5 percent submitted their AAPs after 
receiving a show cause notice. The scheduled health care providers 
included a range of contractors having from 50 to more than 501 
employees.
---------------------------------------------------------------------------

    \80\ OFCCP considered using its most recent EEO-1 numbers to 
conduct this analysis, but the reporting requirements are limited to 
prime contractors and first tier subcontractors. However, OFCCP's 
universe includes all tiers of subcontractors that meet the 
jurisdictional thresholds. Using EEO-1 data would underestimate the 
impact of the final rule. Thus, OFCCP relied upon the analysis 
described herein.
    \81\ The requirement to develop AAPs is based on having 50 or 
more employees and having a contract that meets specific thresholds. 
OFCCP does not have information regarding the value of the contracts 
or financial agreements. Thus, the estimated number of 
establishments may be overstated as it may include establishments 
that have contracts of less than $50,000 (E.O. 11246 and Section 
503) or have contracts of less than $150,000 (VEVRAA).
---------------------------------------------------------------------------

    OFCCP identified the number of health care providers in the U.S. 
Census Bureau's Statistics of U.S. Businesses, using North American 
Industry Classification System (NAICS) 621, 622, and 623. There are 
722,291 health care providers of which 29.2 percent or 210,909 have 50 
or more employees.\82\
---------------------------------------------------------------------------

    \82\ Number of Firms, Number of Establishments, Employment, and 
Annual Payroll by Enterprise Employment Size for the United States, 
All Industries: 2017, https://www2.census.gov/programs-surveys/susb/tables/2017/us_6digitnaics_2017.xlsx?# (last accessed April 3, 
2020).
---------------------------------------------------------------------------

    The Department of Defense's annual report to Congress stated that 
there were 155,500 TRICARE Primary Care Network Providers and 143,500 
TRICARE Specialist Network Providers in FY2019.\83\ OFCCP estimates 
that 29.2 percent of these providers have 50 or more employees. The 
agency believes that 87,308 providers ((155,500 + 143,500) x 29.2%)) 
are potentially impacted by the final rule.
---------------------------------------------------------------------------

    \83\ Evaluation of TRICARE Programs, Fiscal Year 2019, Report to 
Congress, https://www.health.mil/Military-Health-Topics/Access-Cost-Quality-and-Safety/Health-Care-Program-Evaluation/Annual-Evaluation-of-the-TRICARE-Program (last accessed April 3, 2020).
---------------------------------------------------------------------------

    Calculating cost savings is made more difficult because the savings 
may depend on whether the health care provider is still obligated to 
maintain an AAP under other contracts. Such obligations may come from 
many additional sources. For example, the health care provider would 
still be required to maintain an AAP if the provider qualified as a 
Federal contractor due to activities outside what is covered by this 
final rule or if the provider contracts with states that mandate AAPs 
for certain employers.\84\ Therefore, the estimate of affected TRICARE 
providers may overstate the number of entities that would actually 
realize cost savings as a result of this final rule.
---------------------------------------------------------------------------

    \84\ https://ballotpedia.org/Federal_and_state_affirmative_action_and_anti-discrimination_laws 
(last accessed March 17, 2020).
---------------------------------------------------------------------------

    The rule amends Sec.  60-1.3 to note that a subcontract does not 
include an agreement between a health care provider and a health 
organization pursuant to which the health care provider agrees to 
furnish services to beneficiaries of TRICARE. The clarification and 
amendment results in a cost savings, as some affected contractors would 
no longer be required to comply with E.O. 11246 requirements and to 
engage in such activities as creating, updating, or maintaining AAPs or 
providing notifications to employees, subcontractors, or unions. 
OFCCP's currently approved Information Collection Request (ICR) for its 
supply and service program (OMB Control No. 1250-0003) estimates an 
average of 91.44 hours per contractor to comply with the E.O. 11246 
requirements.
    The rule amends Sec.  60-300.2 to note that a subcontract does not 
include an agreement between a health care provider and a health 
organization pursuant to which the health care provider agrees to 
furnish services to beneficiaries of TRICARE. The clarification and 
amendment results in a cost savings, as some affected contractors would 
no longer be required to comply with VEVRAA requirements and to engage 
in such activities as creating, updating, or maintaining AAPs, listing 
job opportunity notices with the local or state employment service 
delivery systems, or providing notifications to employees, 
subcontractors, or unions. OFCCP's currently approved ICR for its 
VEVRAA requirements (OMB Control No. 1250-0004) estimates an average of 
16.86 hours per contractor to comply with the VEVRAA requirements.
    The rule amends Sec.  60-741.2 to note that a subcontract does not 
include an agreement between a health care provider and a health 
organization pursuant to which the health care provider agrees to 
furnish services to beneficiaries of TRICARE. The clarification and 
amendment results in a cost savings, as some affected contractors would 
no longer be required to comply with Section 503 requirements and to 
engage in such activities as creating, updating, or maintaining AAPs, 
or providing notifications to employees, subcontractors, or unions. 
OFCCP's currently approved ICR for its Section 503 requirements (OMB 
Control No. 1250-0005) estimates an average of 7.92 hours per 
contractor to comply with the Section 503 requirements.

Summary of Transfer and Benefits

    E.O. 13563 recognizes that some rules have benefits that are 
difficult to

[[Page 39845]]

quantify or monetize but are nevertheless important, and states that 
agencies may consider such benefits. This rule has equity and fairness 
benefits, which are explicitly recognized in E.O. 13563.
    The final rule is designed to achieve these benefits by providing 
clear guidance to contractors, and increasing contractor understanding 
of OFCCP's authority as it relates to heath care providers. If the 
final rule decreases the confusion of Federal contractors, this impact 
most likely represents a transfer of value to taxpayers (if contractor 
fees decrease because they do not need to engage third party 
representatives to interpret OFCCP's requirements).

Alternative Discussion

    A women's civil rights organization, on behalf of seventeen other 
civil rights organizations, commented that an extension of the current 
moratorium would be a more preferable policy than a ``categorical 
regulatory exclusion of TRICARE providers.'' OFCCP disagrees with this 
comment. In proposing this rule, the Department considered a non-
regulatory alternative: issuing moratoria or other sub-regulatory 
guidance in which OFCCP would exercise enforcement discretion and not 
schedule compliance evaluations of certain health care providers. The 
Department rejects this alternative, as it would result in much greater 
uncertainty among the regulated entities. Also, as discussed earlier in 
the preamble, the 2014 and 2018 moratoria were premised on OFCCP's 
conclusion that it had authority over TRICARE providers. An extension 
of the current moratorium is not feasible because OFCCP has concluded 
it does not have the legal authority to regulate TRICARE providers.

Regulatory Flexibility Act and E.O. 13272 (Consideration of Small 
Entities)

    The agency did not receive any public comments on the Regulatory 
Flexibility Analysis.
    The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601 et seq., 
establishes ``as a principle of regulatory issuance that agencies shall 
endeavor, consistent with the objectives of the rule and applicable 
statutes, to fit regulatory and informational requirements to the scale 
of the business organizations and governmental jurisdictions subject to 
regulation.'' Public Law 96-354. The Act requires the consideration for 
the impact of a regulation on a wide range of small entities including 
small businesses, not-for-profit organizations, and small governmental 
jurisdictions.
    Agencies must perform a review to determine whether a final rule 
would have a significant economic impact on a substantial number of 
small entities.\85\ If the determination is that it would, then the 
agency must prepare a regulatory flexibility analysis as described in 
the RFA.\86\
---------------------------------------------------------------------------

    \85\ See 5 U.S.C. 603.
    \86\ Id.
---------------------------------------------------------------------------

    However, if an agency determines that a final rule is not expected 
to have a significant economic impact on a substantial number of small 
entities, section 605(b) of the RFA provides that the head of the 
agency may so certify and a regulatory flexibility analysis is not 
required. See 5 U.S.C. 605. The certification must include a statement 
providing the factual basis for this determination and the reasoning 
should be clear. OFCCP does not expect this final rule to have a 
significant economic impact on a substantial number of small entities. 
The annualized cost at a discount rate of seven percent for rule 
familiarization is $7.17 per entity ($50.33 in the first year) which is 
far less than one percent of the annual revenue of the smallest of the 
small entities affected by this final rule. Therefore, OFCCP certifies 
that this final rule will not have a significant impact on a 
substantial number of small affected entities.

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires 
that the Department consider the impact of paperwork and other 
information collection burdens imposed on the public. According to the 
1995 amendments to the Paperwork Reduction Act (5 CFR 
1320.5(b)(2)(vi)), an agency may not collect or sponsor the collection 
of information or impose an information collection requirement unless 
the information collection instrument displays a currently valid OMB 
control number. OFCCP has determined that there is no new requirement 
for information collection associated with this final rule. The 
information collection requirements contained in the existing E.O. 
11246, VEVRAA, and Section 503 regulations are currently approved under 
OMB Control No. 1250-0003 (OFCCP Recordkeeping and Reporting 
Requirements--Supply and Service), OMB Control No. 1250-0004 (OFCCP 
Recordkeeping and Reporting Requirements--38 U.S.C. 4212, Vietnam Era 
Veterans' Readjustment Assistance Act of 1974, as amended), and OMB 
Control No. 1250-0005 (OFCCP Recordkeeping and Reporting Requirements--
Section 503 of the Rehabilitation Act of 1973, as amended, 29 U.S.C. 
703). Consequently, this final rule does not require review by the 
Office of Management and Budget under the Paperwork Reduction Act of 
1995, 44 U.S.C. 3501 et seq.

E.O. 13132 (Federalism)

    OFCCP has reviewed this final rule in accordance with E.O. 13132 
regarding federalism, and has determined that it does not have 
``federalism implications.'' This rule will 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.''

E.O. 13175 (Consultation and Coordination With Indian Tribal 
Governments)

    This final rule does not have tribal implications under E.O. 13175 
that require a tribal summary impact statement. The final rule does not 
have substantial direct effects on one or more Indian tribes, on the 
relationship between the Federal Government and Indian tribes, or on 
the distribution of power and responsibilities between the Federal 
Government and Indian tribes.

List of Subjects

41 CFR Part 60-1

    Administrative practice and procedure, Equal employment 
opportunity, Government contracts, Reporting and recordkeeping 
requirements.

41 CFR Part 60-300

    Administrative practice and procedure, Civil rights, Employment, 
Equal employment opportunity, Government contracts, Government 
procurement, Individuals with disabilities, Investigations, Reporting 
and recordkeeping requirements, Veterans.

41 CFR Part 60-741

    Administrative practice and procedure, Civil rights, Employment, 
Equal employment opportunity, Government contracts, Government 
procurement, Individuals with disabilities, Investigations, Reporting 
and recordkeeping requirements.
    For the reasons set forth in the preamble, OFCCP amends 41 CFR 
parts 60-1, 60-300, and 60-741 as follows:

[[Page 39846]]

PART 60-1--OBLIGATIONS OF CONTRACTORS AND SUBCONTRACTORS

0
1. The authority citation for part 60-1 continues to read as follows:

    Authority:  Sec. 201, E.O. 11246, 30 FR 12319, 3 CFR, 1964-1965 
Comp., p. 339, as amended by E.O. 11375, 32 FR 14303, 3 CFR, 1966-
1970 Comp., p. 684, E.O. 12086, 43 FR 46501, 3 CFR, 1978 Comp., p. 
230, E.O. 13279, 67 FR 77141, 3 CFR, 2002 Comp., p. 258 and E.O. 
13672, 79 FR 42971.

Subpart A--Preliminary Matters; Equal Opportunity Clause; 
Compliance Reports

0
2. In Sec.  60-1.3, revise the definition of ``Subcontract'' to read as 
follows:


Sec.  60-1.3  Definitions.

* * * * *
    Subcontract. (1) Subcontract means any agreement or arrangement 
between a contractor and any person (in which the parties do not stand 
in the relationship of an employer and an employee):
    (i) For the purchase, sale or use of personal property or 
nonpersonal services which, in whole or in part, is necessary to the 
performance of any one or more contracts; or
    (ii) Under which any portion of the contractor's obligation under 
any one or more contracts is performed, undertaken, or assumed; and
    (2) Does not include an agreement between a health care provider 
and a health organization under which the health care provider agrees 
to provide health care services or supplies to natural persons who are 
beneficiaries under TRICARE.
    (i) An agreement means a relationship between a health care 
provider and a health organization under which the health care provider 
agrees to provide health care services or supplies to natural persons 
who are beneficiaries under TRICARE.
    (ii) A health care provider is a physician, hospital, or other 
individual or entity that furnishes health care services or supplies.
    (iii) A health organization is a voluntary association, 
corporation, partnership, managed care support contractor, or other 
nongovernmental organization that is lawfully engaged in providing, 
paying for, insuring, or reimbursing the cost of health care services 
or supplies under group insurance policies or contracts, medical or 
hospital service agreements, membership or subscription contracts, 
network agreements, health benefits plans duly sponsored or 
underwritten by an employee organization or association of 
organizations and health maintenance organizations, or other similar 
arrangements, in consideration of premiums or other periodic charges or 
payments payable to the health organization.
* * * * *

PART 60-300--AFFIRMATIVE ACTION AND NONDISCRIMINATION OBLIGATIONS 
OF FEDERAL CONTRACTORS AND SUBCONTRACTORS REGARDING DISABLED 
VETERANS, RECENTLY SEPARATED VETERANS, ACTIVE DUTY WARTIME OR 
CAMPAIGN BADGE VETERANS, AND ARMED FORCES SERVICE MEDAL VETERANS

0
3. The authority citation for part 60-300 continues to read as follows:

    Authority: 29 U.S.C. 793; 38 U.S.C. 4211 and 4212; E.O. 11758 (3 
CFR, 1971-1975 Comp., p. 841).

Subpart A--Preliminary Matters, Equal Opportunity Clause

0
4. In Sec.  60-300.2, revise paragraph (x) to read as follows:


Sec.  60-300.2  Definitions.

* * * * *
    (x) Subcontract. (1) Subcontract means any agreement or arrangement 
between a contractor and any person (in which the parties do not stand 
in the relationship of an employer and an employee):
    (i) For the purchase, sale or use of personal property or 
nonpersonal services which, in whole or in part, is necessary to the 
performance of any one or more contracts; or
    (ii) Under which any portion of the contractor's obligation under 
any one or more contracts is performed, undertaken, or assumed; and
    (2) Does not include an agreement between a health care provider 
and a health organization under which the health care provider agrees 
to provide health care services or supplies to natural persons who are 
beneficiaries under TRICARE.
    (i) An agreement means a relationship between a health care 
provider and a health organization under which the health care provider 
agrees to provide health care services or supplies to natural persons 
who are beneficiaries under TRICARE.
    (ii) A health care provider is a physician, hospital, or other 
individual or entity that furnishes health care services or supplies.
    (iii) A health organization is a voluntary association, 
corporation, partnership, managed care support contractor, or other 
nongovernmental organization that is lawfully engaged in providing, 
paying for, insuring, or reimbursing the cost of health care services 
or supplies under group insurance policies or contracts, medical or 
hospital service agreements, membership or subscription contracts, 
network agreements, health benefits plans duly sponsored or 
underwritten by an employee organization or association of 
organizations and health maintenance organizations, or other similar 
arrangements, in consideration of premiums or other periodic charges or 
payments payable to the health organization.
* * * * *

PART 60-741--AFFIRMATIVE ACTION AND NONDISCRIMINATION OBLIGATIONS 
OF FEDERAL CONTRACTORS AND SUBCONTRACTORS REGARDING INDIVIDUALS 
WITH DISABILITIES

0
5. The authority citation for part 60-741 continues to read as follows:

    Authority:  29 U.S.C. 705 and 793; E.O. 11758 (3 CFR, 1971-1975 
Comp., p. 841).

Subpart A--Preliminary Matters, Equal Opportunity Clause

0
6. In Sec.  60-741.2, revise paragraph (x) to read as follows:


Sec.  60-741.2   Definitions.

* * * * *
    (x) Subcontract. (1) Subcontract means any agreement or arrangement 
between a contractor and any person (in which the parties do not stand 
in the relationship of an employer and an employee):
    (i) For the purchase, sale or use of personal property or 
nonpersonal services which, in whole or in part, is necessary to the 
performance of any one or more contracts; or
    (ii) Under which any portion of the contractor's obligation under 
any one or more contracts is performed, undertaken, or assumed; and
    (2) Does not include an agreement between a health care provider 
and a health organization under which the health care provider agrees 
to provide health care services or supplies to natural persons who are 
beneficiaries under TRICARE.
    (i) An agreement means a relationship between a health care 
provider and a health organization under which the health care provider 
agrees to provide health care services or supplies to natural persons 
who are beneficiaries under TRICARE.
    (ii) A health care provider is a physician, hospital, or other 
individual

[[Page 39847]]

or entity that furnishes health care services or supplies.
    (iii) A health organization is a voluntary association, 
corporation, partnership, managed care support contractor, or other 
nongovernmental organization that is lawfully engaged in providing, 
paying for, insuring, or reimbursing the cost of health care services 
or supplies under group insurance policies or contracts, medical or 
hospital service agreements, membership or subscription contracts, 
network agreements, health benefits plans duly sponsored or 
underwritten by an employee organization or association of 
organizations and health maintenance organizations, or other similar 
arrangements, in consideration of premiums or other periodic charges or 
payments payable to the health organization.
* * * * *

    Signed at Washington, DC on May 27, 2020.
Craig E. Leen,
Director, Office of Federal Contract Compliance Programs.
[FR Doc. 2020-11934 Filed 7-1-20; 8:45 am]
BILLING CODE 4510-45-P