As federal government contractors continue to generate and update their affirmative action plans, a storm of change is brewing. As we have reported in previous articles, the Office of Federal Contract Compliance Programs (OFCCP) has announced proposed changes to two central functions of its affirmative action enforcement programs.
Proposed changes to the regulations governing affirmative action for disabled individuals and development and implementation of a new compensation data collection tool could bring potentially huge changes to contractors’ affirmative action compliance efforts. Meanwhile, the contracting world waits.
Proposed changes to disability rules
OFCCP’s Notice of Proposed Rulemaking (NPRM), published in the Federal Register on December 9, 2011, contains proposed changes that would alter the way in which federal contractors and subcontractors would be required to act with regard to recruiting and training disabled individuals and veterans, as well as compliance with recordkeeping and policy requirements. Under the proposed rules, covered contractors would be required to take affirmative action measures for disabled individuals and veterans similar to those required for women and minorities.
Most notably, the NPRM proposes a “utilization goal” of 7 percent for the employment of individuals with disabilities in each job group of the contractor’s workforce. In lieu of a single national utilization goal, the OFCCP proposes a 4 percent and 10 percent “utilization range.” This particular proposed change has raised a considerable amount of opposition from the contractor community. Objections to the proposed rule range from a lack of reliable data regarding availability to the cost of implementation. For more information on the proposed disability changes, see Proposed Disability Rules Issued.
The expenses, well they’re expensive
According to OFCCP’s estimate, the new disability rule would cost $81.1 million, or $473 per contractor establishment. OFCCP’s cost estimate includes both onetime (first year only) costs of $29.5 million (or $172 per contractor establishment) and recurring annual costs of $51.6 million (or $301 per contractor establishment).
Contrary to OFCCP’s estimates, a recent study published by Applied Economic Strategies, LLC (AES), found that a more “complete and accurate” analysis of the proposed requirements suggests the cost of the NPRM will be at least $5.9 billion the first year and at least $2.6 billion per year in recurring costs. The rather large discrepancy in projected costs is due to the fact that “OFCCP’s cost estimate omitted a number of important requirements in the NPRM and underestimated other requirements,” says the AES study, published in July 2012.
New compensation data collection tool
A little over a year ago, the OFCCP issued an advance notice of proposed rulemaking (ANPRM) to invite public comment on the development and implementation of a compensation data collection tool. Possible uses of the data collected include providing insight into potential problems of compensation discrimination at the establishment level, conducting analyses at the establishment level, and identifying and analyzing industry trends, the ANPRM states.
It is still unclear what the new tool might look like, but it will most likely require an annual filing, include Web-upload capability, and be broader in scope than the EO survey. As many contractors recall, the EO survey is extremely burdensome to complete and did not effectively help contractors or the OFCCP evaluate whether contractors were successfully implementing their affirmative action plans.
Contractors are worried that the new tool could require more detailed information than in the past and that they might have to turn over detailed pay data into a system that they do not control, raising concerns about competitiveness, trade secrets, and confidentiality. Plus, the data they provide could trigger an audit. It is unlikely that contractors would be required to use a new compensation tool before the beginning of 2014, unless the OFCCP has a way to expedite the rulemaking process.
No doubt, the outcome of the presidential election will impact the time frame in which any regulatory changes are made, or if they are made at all. In the meanwhile, BLR® will continue to track these two significant proposed changes and report on any changes.
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