[Federal Register: May 4, 2000 (Volume 65, Number 87)]
[Proposed Rules]               
[Page 26087-26109]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04my00-20]                         


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Part IV





Department of Labor





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Office of Federal Contract Compliance Programs



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41 CFR Parts 60-1 and 60-2



Government Contractors, Affirmative Action Requirements; Proposed Rule


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DEPARTMENT OF LABOR

Office of Federal Contract Compliance Programs

41 CFR Parts 60-1 and 60-2

RIN 1215-AA01

 
Government Contractors; Affirmative Action Requirements

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

ACTION: Notice of proposed rulemaking.

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

DATES: To be assured of consideration, comments must be in writing and 
must be received on or before July 3, 2000.

ADDRESSES: Comments should be sent to James I. Melvin, Director, 
Division of Policy, Planning and Program Development, OFCCP, Room C-
3325, 200 Constitution Avenue, N.W., Washington, D.C. 20210.
    As a convenience to commenters, public comments transmitted by 
facsimile (FAX) machine will be accepted. The telephone number of the 
FAX receiver is (202) 693-1304. To assure access to the FAX equipment, 
only public comments of six or fewer pages will be accepted via FAX 
transmittal. Receipts of FAX transmittals will not be acknowledged, 
except that the sender may request confirmation of receipt by calling 
(202) 693-0102 (voice), (202) 693-1308 (TTY).

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

SUPPLEMENTARY INFORMATION:

Background

a. History of the Part 60-2 Regulations

    Executive Order 11246, as amended, requires that Federal Government 
contractors and subcontractors ``take affirmative action to ensure that 
applicants are employed, and that employees are treated during 
employment, without regard to their race, color, religion, sex, or 
national origin.'' Affirmative action under Executive Order 11246, as 
amended, connotes more than passive nondiscrimination; it requires that 
contractors take affirmative steps to identify and eliminate 
impediments to equal employment opportunity.
    The principles and concepts underlying the current blueprint for 
affirmative action under Executive Order 11246, as amended, have their 
origins in Plans for Progress (PfP), conceived and successfully 
implemented in 1961 by a group of 300 leading corporations committed to 
achieving equal employment opportunity through voluntary affirmative 
action. Each company adopted a ``plan for progress'' for the 
corporation as a whole and for each of its individual establishments. 
These plans for progress, as a management tool for achieving equal 
employment opportunity, were the precursors to the current written 
affirmative action programs (AAPs).
    In July 1969, after having successfully tested this model over an 
eight-year period, PfP merged with the National Alliance of Business, 
and turned its focus to youth employment. Seven months later, on 
February 7, 1970, the Office of Federal Contract Compliance 
incorporated PfP's Guidelines on Affirmative Action as the centerpiece 
of its affirmative action program regulations applicable to larger 
Federal nonconstruction contractors. These regulations--41 CFR Part 60-
2--have served as reasonable and successful tools that aid in breaking 
down barriers to equal employment opportunity for women and minorities 
without impinging upon the rights and reasonable expectations of other 
members of the workforce.

b. Overview of the Affirmative Action Program

    The current regulations require Federal Government nonconstruction 
contractors and subcontractors with 50 or more employees and a contract 
of $50,000 or more to prepare and implement a written AAP for each of 
their establishments. The basic elements of the AAP are discussed in 
more detail in the Section-by-Section Analysis which follows, but an 
overview is provided here for ease of understanding.
    Under the current regulations, the written AAP must contain several 
elements. One element of the AAP is a ``workforce analysis,'' which 
essentially is a snapshot of all employment at the establishment. The 
snapshot shows all the job titles, arranged by department or other 
organizational unit, and reveals the number of employees in each job by 
gender, race, and ethnicity. Examination of the employment patterns 
documented in the workforce analysis is intended to

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alert the contractor to potential problems of discrimination and 
inadequate affirmative action.
    The current written AAP also must contain a multi-step analysis to 
identify whether minorities or women are being employed at a rate that 
would be expected based upon their availability for employment. This 
analysis is focused on contractor-defined ``job groups,'' which consist 
of one or a group of jobs that are similar in content, wage rates, and 
opportunities. The contractor utilizes census and other available 
demographic data to conduct a prescribed ``eight factor analysis,'' to 
calculate the number of qualified women and minorities that should be 
available in the labor market to work in each job group. The contractor 
then compares the number of minorities and women it actually employs in 
each job group against the calculated ``availability'' for that group 
to determine whether minorities and women are being employed at a rate 
reasonably expected given their availability to work in those jobs. If 
so, the analysis is concluded. If women and minorities are being 
employed at a rate lower than reasonably would be expected given their 
availability to work in those jobs, the contractor determines that 
``underutilization'' exists. Underutilization means that the 
representation of minorities or women in a specific job group is less 
than reasonably would be expected given the availability of candidates.
    If these analyses show underutilization in certain job groups, the 
contractor must analyze its policies, practices, and procedures to 
determine possible causes, and take corrective action that is designed 
to overcome the underutilization. For example, the AAP would include 
outreach and other affirmative steps precisely tailored to eliminate 
barriers to equal employment opportunity, and, when necessary, goals 
and organizational objectives to measure success toward achieving that 
result.
    In addition to the quantitative analyses, the current AAP contains 
an explanation of the nondiscrimination and equal opportunity policies 
the contractor has established, the methods elected to implement and 
disseminate those policies, and the recruitment and community outreach 
programs implemented. The contractor is instructed to identify various 
problem areas in the AAP together with plans for appropriate solutions.
    The affirmative action measures prescribed by the regulations, 
including the establishment of goals, are intended to implement 
Executive Order 11246 that contractors ``take affirmative action to 
ensure that applicants are employed, and that employees are treated 
during employment, without regard to their race, color, religion, sex 
or national origin.'' These requirements are rooted in many significant 
governmental interests, including: that Federal funds may not be used 
to support discrimination (e.g., Cannon v. University of Chicago, 441 
U.S. 677 (1979)); that the Federal Government may rightfully fix the 
terms upon which it will make needed purchases, including that it may 
expect more of Government contractors than is expected of employers 
generally (e.g., Perkins v. Lukens Steel Co., 310 U.S. 113 (1940)); and 
that the Federal Government's suppliers should not increase the costs 
of Government work and delay programs by excluding from the labor pool 
available minority and female workers (Contractors Association of 
Eastern Pennsylvania v. Secretary of Labor, 442 F2d 159 (3d Cir. 1971), 
cert. denied, 404 U.S. 854 (1971)).
    The goals component of the AAP was not designed for, nor may it 
properly or lawfully be interpreted as, permitting or requiring 
unlawful preferential treatment or quotas with respect to persons of 
any race, color, religion, sex, or national origin. The regulations 
specifically prohibit employment discrimination based on these factors, 
and affirmative action goals may not be used to impose a quota or 
preference based on race, color, religion, sex, or national origin.
    The policy and practice of the agency is to measure the compliance 
of the contractor by evaluating the steps the contractor took to 
analyze its policies, practices, and procedures, and the good faith 
efforts the contractor has undertaken to overcome any underutilization 
found and to meet the goals established to correct underutilization. 
Under that policy and practice, moreover, a contractor will not be 
charged with a violation of the Executive Order solely because the 
goals were not met.

c. The Proposed Revision

    The basic structure of the Part 60-2 written AAP regulations has 
remained essentially unchanged since the regulations first were 
promulgated in 1970. Feedback over the years, from the regulated 
community of contractors, from groups representing minorities and 
women, and from OFCCP field staff, suggested that portions of the 
regulations should be improved. For instance, contractors and some 
OFCCP staff as well, long have been critical of the eight factors that 
must be considered in determining the ``availability'' of minorities 
and women for employment in the contractor's workplace. In addition, 
the workforce analysis requirement has received its share of criticism 
as being the most expensive and time consuming portion of the AAP, 
while also being an analytical tool out of touch with the changing 
nature of the workforce. Therefore, under the umbrella of Executive 
Order 12866 and the Clinton Administration's Reinventing Government 
Initiative, a regulatory team was appointed several years ago to review 
the Part 60-2 regulations.
    The regulatory team began work with a number of objectives. These 
included eliminating outdated, duplicative and unnecessary provisions; 
eliminating unnecessary compliance burdens by reducing paperwork, 
providing more flexibility to contractors, and seeking greater 
consistency between compliance requirements and standard business 
practices; improving the quality and effectiveness of contractors' 
affirmative action efforts, and the rate of voluntary compliance; 
making it easier for contractors to understand and comply with the 
regulations by simplifying the requirements and stating them as clearly 
as possible; enhancing the ability of OFCCP personnel to monitor 
compliance in a time of smaller Government and diminishing resources; 
and reducing unnecessary friction between contractors and OFCCP 
compliance officers.
    More recently, an additional objective of the proposed revision has 
been to advance the Department of Labor's goal of pay equity; that is, 
ensuring that employees are compensated equally for performing equal 
work. Today working women earn just 76.5 cents on the dollar compared 
to men. Black women earn 64 cents on the dollar compared to White men, 
and Hispanic women earn only 55 cents. The pay disparity exists even 
after accounting for differences in jobs, education, and experience. 
This NPRM encourages contractors to analyze their own compensation 
packages to ensure that all their employees are being paid fairly.
    As is prescribed by Executive Order 12866, and in accordance with 
the established rulemaking practices of OFCCP, prior to drafting this 
notice of proposed rulemaking (NPRM) OFCCP engaged in extensive 
consultations with its stakeholders regarding the regulatory 
requirements for the AAP. In the fall of 1994, officials in OFCCP 
invited contractors, civil rights groups, and women's rights groups to 
participate in roundtable discussions as to whether and to what extent 
the required contents of the AAP should be changed. Front

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line staff in regional and district offices of OFCCP also submitted 
recommendations for changing the regulatory requirements for the AAP. 
As a result of these preliminary discussions and recommendations, the 
agency identified a number of issues desirable to address through 
regulatory reforms.
    In the Spring of 1995, OFCCP officials convened a series of public 
meetings with the agency's stakeholders to elicit their recommendations 
for clarifying and simplifying the regulations at 41 CFR Part 60-2. 
Several hundred representatives from the contractor, civil rights, and 
women's rights communities attended these ``partnership'' meetings, 
which were held in Dallas, Pittsburgh, San Diego, and Chicago. In 
addition, during this consultation process, interested parties 
submitted written comments and suggestions for revising the regulatory 
requirements for the AAP. Thus, over an 18 month period OFCCP engaged 
in broad consultations that focused on changing the regulatory 
requirements for the AAP. Further stakeholder meetings, at which 
elements of the regulatory package were discussed, have been held over 
the past year.
    OFCCP analyzed the comments and recommendations that were received. 
Then OFCCP thoroughly examined and pilot-tested the available options 
for effecting the desired changes in the regulations. Based on this 
analysis, OFCCP drafted the NPRM being published today.
    This is the second step in revising the basic regulations 
implementing Executive Order 11246, as amended. First, on August 19, 
1997, OFCCP published (62 FR 44174) revisions to the regulations at 41 
CFR Part 60-1, which eliminated a certification requirement, clarified 
sanction authority, streamlined the compliance evaluation process, and 
made several other changes. Those revisions are improving agency 
efficiency and enforcement effectiveness, while reducing burdens on 
contractors.
    Today's proposal covers the regulations at 41 CFR Part 60-2, which 
address the content of AAPs. We also propose a corresponding revision 
of Sec. 60-1.12, which covers records that must be retained, and 
Sec. 60-1.40, which covers who must develop and maintain an AAP.
    This proposal represents a significant departure from OFCCP's 
existing approach to implementing Government contractor 
nondiscrimination and affirmative action obligations under Executive 
Order 11246. After drafting and considering several alternative 
revisions of Part 60-2 we opted in favor of this new direction, which 
we believe will greatly benefit the interests of contractors, 
minorities and women, and OFCCP itself. Our proposed new approach to 
the nondiscrimination and affirmative action regulations is based upon 
the following principles:
    <bullet> Contractor workplaces should be free of discrimination.
    <bullet> Contractors should have greater freedom to design their 
AAPs around their unique business structure and needs.
    <bullet> OFCCP would like to place greater focus on contractors' 
actual nondiscrimination and affirmative action activities, and less 
focus on item-by-item review of whether contractor AAPs meet detailed 
technical standards.
    <bullet> OFCCP can do a better job of enforcing the Executive Order 
if it has detailed and up-to-date data up-front about the contractor's 
hiring and advancement of minorities and women and its affirmative 
action performance.
    <bullet> The regulatory requirements should lead to heightened 
awareness by contractor officials of each establishment's equal 
employment opportunity and affirmative action performance.
    <bullet> Heightened awareness of performance, coupled with 
increased compliance presence by OFCCP, should dramatically improve the 
level of compliance.
    Accordingly, as we outline in more detail in the Section-by-Section 
Analysis below, the proposal contains a number of new approaches.
    We propose to greatly reduce the number of elements required to be 
included in contractor AAPs. Beyond the required elements, contractors 
would include in their AAPs those elements and actions that they 
considered necessary and appropriate to carry out the nondiscrimination 
and affirmative action commitments of their Government contracts.
    We propose to make it easier for contractors to prepare the 
remaining required elements of an AAP in two ways. First, we have 
sought to streamline requirements, for example, by proposing that 
contractors consider only two availability factors instead of the 
current eight. Second, we have sought to enhance contractor 
understanding of the rules by stating the requirements in clear terms, 
and by providing in the preamble explanations and illustrations of how 
the requirements are intended to be applied.
    As the proposal makes clear, an AAP consists of a diagnostic 
component through which the contractor analyzes its workforce to 
determine whether there are problems of underutilization that need to 
be addressed, an action-oriented programs component through which the 
contractor takes steps to address the identified problems, and an 
evaluative component through which the contractor establishes and uses 
internal auditing and reporting systems to ensure that the diagnostic 
and action-oriented components of the AAP are effective.
    Under the proposed regulations, an AAP is effective when the 
diagnostic component is accurately identifying problem areas, and when 
good faith efforts are being actively undertaken through action-
oriented programs to effectively address those areas. Together, these 
components would form the cornerstone of the new AAP.
    To help OFCCP better monitor compliance, and to further the 
objective of contractor self-analysis, we propose a new Equal 
Opportunity Survey, to be submitted by a subset of nonconstruction 
establishments each year. The Survey would provide OFCCP with the data 
necessary to more effectively identify contractor establishments that 
may have problems with their Executive Order 11246 obligations, and to 
select those contractors for further evaluation under OFCCP's new 
compliance evaluation procedures.
    Finally, the proposal performs several ``housekeeping'' functions 
with respect to the Part 60-2 regulations. A final rule was published 
on December 30, 1980 (45 FR 86215; corrected at 46 FR 7332, January 23, 
1981), but was stayed in accordance with Executive Order 12291 on 
January 28, 1981 (46 FR 9084). This rule later was stayed indefinitely 
on August 25, 1981 (46 FR 42865), pending action on an NPRM published 
on that same date (46 FR 42968; supplemented at 47 FR 17770, April 23, 
1982). No further action on the August 25, 1981, proposal, or 
consequently on the 1980 stayed final rule, has been taken. Both the 
1980 final rule and the 1981 proposal addressed 41 CFR Part 60-2. To 
avoid conflict with the NPRM published today, OFCCP proposes to 
withdraw Part 60-2 of the 1980 final rule, and hereby withdraws the 
1981 and 1982 NPRMs in their entirety. Additionally, consistent with 
the President's 1998 ``Plain Language'' Memorandum, we have replaced 
the word ``shall'' with ``must'' or ``will'' as appropriate to the 
context.

Section-by-Section Analysis

Section 60-1.12  Record Retention

    OFCCP published a final rule revising 41 CFR Part 60-1 on August 
19, 1997. The revision proposed today would

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further amend the record retention provisions in Sec. 60-1.12 to 
harmonize them with the proposed changes to Part 60-2.
    Current paragraph (b) recites that contractors subject to the 
``written'' affirmative action program (AAP) requirement shall maintain 
and preserve their current and immediately prior AAPs and documentation 
of good faith effort. Consistent with today's proposed changes to Part 
60-2, which de-emphasize the written nature of the AAPs, we propose to 
remove the modifier ``written'' from this section.
    Paragraphs (c) and (d) would be redesignated as paragraphs (d) and 
(e) respectively, and the first sentence of the newly designated 
paragraph (d) would reflect the addition of a new paragraph (c). The 
new paragraph (c) would require that the contractor be able to 
identify:
    <bullet> the gender, race, and ethnicity of each employee; and,
    <bullet> where possible, the gender, race, and ethnicity of each 
applicant

in any records the contractor maintains pursuant to this section. In 
addition, the contractor would be required to supply this information 
to OFCCP upon request. This provision is necessary for OFCCP to verify 
EEO data. Although not expressly stated in the regulations, OFCCP 
traditionally has required contractors to maintain and submit upon 
request information about the gender, race, and ethnicity of their 
applicants and employees. See, for example, OFCCP's Federal Contract 
Compliance Manual at Section 2H01 and Figure 2-2. Methods for 
collecting data on gender, race, and ethnicity are discussed in 
Question and Answer 88 in the ``Adoption of Questions and Answers to 
Clarify and Provide a Common Interpretation of the Uniform Guidelines 
on Employee Selection Procedures,'' 44 F.R. 11996, 12008 (March 2, 
1979).

Section 60-1.40  Affirmative Action Programs

    Current Sec. 60-1.40 describes at paragraph (a) which contractors 
are required to develop ``written'' AAPs. Paragraph (a) also discusses 
the importance of identification of problem areas and the evaluation of 
opportunities for the utilization of minority employees. Finally, 
paragraph (a) requires that AAPs contain specific steps for addressing 
identified problems, and a table of job classifications detailing jobs, 
duties, rates of pay, and other pertinent information. Paragraph (b) of 
the current regulation describes utilization evaluations, and paragraph 
(c) describes when AAPs are to be developed and how they are to be 
maintained. Current paragraph (c) also indicates that the required 
information pertaining to the AAP is to be made available to 
representatives of the Director of OFCCP.
    We propose several modifications to Sec. 60-1.40. The proposal 
retains in paragraph (a) current standards for who must develop and 
maintain an AAP, although the standards are slightly edited for 
clarity. Additionally, as we proposed for Sec. 60-1.12(b), we would 
remove from paragraph (a) references to ``written'' AAPs.
    The remainder of existing paragraph (a), as well as all of current 
paragraphs (b) and (c), would be removed from this section. Much of the 
material is outdated, in that it references only employment problems 
relating to minorities, and not those relating to women. As 
appropriate, we have updated the material and incorporated it into Part 
60-2 with the rest of the regulatory material relating to contents of 
AAPs.
    In addition, to further consolidate requirements relating to AAPs 
in Part 60-2, specific information as to when the obligation to develop 
and maintain an AAP arises, which is addressed in current paragraph 
(c), has been significantly abbreviated and moved to proposed Sec. 60-
2.1(c). Finally, we are proposing a new paragraph (b), which directs 
construction and nonconstruction contractors to the regulations that 
establish the affirmative action requirements applicable to each.

Part 60-2

Subpart A--General

Section 60-2.1  Scope and Application

    Existing Sec. 60-2.1 describes the purpose and scope of the 
regulations contained in 41 CFR Part 60-2. Current paragraph (a) 
specifies which contractors are required to develop AAPs and provides a 
general overview of the regulations contained in Part 60-2. Paragraph 
(b) of the current regulation states that relief, including back pay 
where appropriate, must be provided for an affected class in all 
conciliation agreements entered into to resolve violations uncovered 
during a compliance review. Paragraph (b) also states that an 
``affected class'' problem must be remedied in order for a contractor 
to be considered in compliance, and indicates that a contractor may be 
subject to the enforcement procedures set forth in Sec. 60-2.2 for its 
failure to remedy past discrimination.
    Consistent with the goals of streamlining and simplifying the 
regulations, the proposal would revise and restructure Sec. 60-2.1. The 
proposal would revise paragraph (a) by limiting the language to a brief 
description of the scope of the regulations contained in Part 60-2.
    The proposal would delete as redundant the contents of paragraph 
(b) of current Sec. 60-2.1, because the requirement that conciliation 
agreements include provisions for back pay and other remedies also is 
set forth in Sec. 60-1.33. The removal of the back pay and affected 
class language from paragraph (b), however, is not intended to affect 
OFCCP's ability to recover back pay or other affirmative relief for 
victims of discrimination.
    The proposal also would delete the historical reference to 
``Revised Order No. 4,'' the predecessor to the current Part 60-2, as 
it would not be appropriate or necessary in light of the changes 
proposed to be made to Part 60-2.
    Paragraph (b) in proposed Sec. 60-2.1 would specify who must 
develop an AAP; it would repeat the standards found in Sec. 60-1.40, 
because recitation of the scope of coverage is important for 
completeness in both parts of the regulation.
    The proposal would add a paragraph (c) that specifies that AAPs 
must be developed by the contractor within 120 days from the 
commencement of the contract. This requirement was previously set out 
in 41 CFR 60-1.40(c). Since Part 60-2 addresses the requirements of 
AAPs, it appears more appropriate to include information specifying 
when the obligation to develop AAPs begins as part of Part 60-2.
    The proposal would add a paragraph (d) describing who is included 
in affirmative action programs. Proposed subparagraph (2) provides 
three options for contractors with fewer than 50 employees at a 
particular establishment to account for those employees for AAP 
purposes. Proposed subparagraph (3) is designed to clarify that the AAP 
at the establishment that makes the selection decision is the 
appropriate establishment for inclusion of their selectees. This is 
particularly important for corporate headquarters AAPs, since selection 
decisions are likely to be made at corporate headquarters for employees 
who are assigned to other establishments within the corporation. This 
reflects OFCCP's ``corporate initiative'' (53 FR 24830, June 28, 1988). 
Paragraph (e) of the proposed regulation explains how to identify 
employees who

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are included in AAPs at establishments other than where they are 
located.

Section 60-2.2  Agency Action

    Paragraph (a) of existing Sec. 60-2.2 deals with agency approval of 
AAPs. The entire paragraph would be revised for clarity, and a few 
technical changes (such as substituting ``Deputy Assistant Secretary'' 
for ``Director'') would be made as well. No substantive change is 
intended.
    Paragraph (b) of existing Sec. 60-2.2 deals with responsibility 
determinations. A few technical changes similar to those in paragraph 
(a) would be made, but no substantive changes are proposed for 
paragraph (b) at this time. Pursuant to the authority set forth in 5 
U.S.C. 552(b)(3)(A), which allows Federal agencies to alter ``rules of 
agency organization, procedure, or practice'' without notice and 
comment, OFCCP is not accepting comments on paragraph (b).
    Paragraphs (c) and (d) of the current Sec. 60-2.2 address show 
cause notices and other enforcement procedures for a contractor's 
failure to develop an AAP as prescribed in the regulations. Consistent 
with the goals of streamlining and simplifying the regulations, the 
proposal would delete as superfluous paragraphs (c) and (d) because the 
subjects are also addressed in Secs. 60-1.26 and 60-1.28.

Subpart B--Purpose and Contents of Affirmative Action Programs

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

    The current Sec. 60-2.10 describes an AAP as a set of specific and 
result-oriented procedures to which a contractor commits itself to 
apply every good faith effort. It generally describes the contents of 
AAPs and states that the good faith efforts must be directed to correct 
the deficiencies and achieve prompt and full utilization of minorities 
and women.
    A complete rewrite of Sec. 60-2.10 is proposed. The rewrite is 
intended to convey that an AAP should be considered a management tool--
an integral part of the way a corporation conducts its business. The 
proposed revision emphasizes the philosophy OFCCP intends to convey 
throughout the regulation, that affirmative action is not to be a mere 
paperwork exercise but rather a dynamic part of the contractor's 
management approach. Paragraph (a) of proposed Sec. 2.10 states that 
the premise underlying AAPs is that absent discrimination, a 
contractor's workforce would be expected to generally reflect the 
available qualified labor force. The proposed revision explains that, 
in addition to identifying and correcting underutilization, AAPs also 
are intended to institutionalize the contractor's commitment to 
equality in every aspect of employment. AAPs institutionalize the 
contractor's commitment to equality by establishing procedures to 
monitor and examine the contractor's employment decisions and 
compensation systems. AAPs establish these procedures to ensure that 
the contractor's employment decisions and compensation systems are free 
of discrimination.
    Paragraph (b) of proposed Sec. 60-2.10 outlines the required 
elements of an AAP. Contractors, thus, at the outset, can get a general 
sense of what is required for an AAP. It may also prove useful when a 
contractor is checking to see if all of the required AAP elements have 
been addressed in its AAP.
    Finally, the proposal would add a paragraph (c) requiring that 
contractors maintain and make available to OFCCP documentation of their 
compliance with Secs. 60-2.11 through 2.17.

Section 60-2.11  Organizational Profile

    The current Sec. 60-2.11 is entitled ``Required utilization 
analysis.'' It contains an introductory paragraph which identifies 
broad job areas (EEO-1 categories) in which racial and ethnic 
minorities or women are likely to be underutilized, and sets forth in 
lettered paragraphs the core contents of a written AAP. Proposed 
Sec. 60-2.11 would address only paragraph (a) of the current 
regulation, which deals with the workforce analysis. Paragraph (b) of 
the current regulation, which addresses the job group analysis, would 
be revised and moved to new Sec. 60-2.12 discussed below in this 
preamble. The introductory paragraph of current Sec. 60-2.11 would be 
deleted as outdated and unnecessary.
    Paragraph (a) of current Sec. 60-2.11 provides that a workforce 
analysis is a listing of job titles (not job groups) ranked from the 
lowest paid to highest paid within each department or similar 
organizational unit. The workforce analysis also shows the lines of 
progression or promotional sequences of jobs, if applicable. If no 
lines of progression or usual promotional sequences exist, job titles 
are listed by departments, job families or disciplines, in order of 
wage rates or salary ranges. For each job title, the workforce analysis 
must reflect the wage rate or salary range, and the number of 
incumbents by race, ethnicity, and sex. In short, the workforce 
analysis is a map pinpointing the location of jobs and incumbent 
employees and their relationship to other jobs and employees in the 
contractor's workforce.
    During the consultation process, several contractor representatives 
criticized the current workforce analysis regulation. Some felt that 
the requirement to present a hierarchical array of jobs by job title 
and by pay for departments or organizational units, along with lines of 
progression, is too burdensome. These contractor representatives 
recommended that the workforce analysis be eliminated as a required 
element of the AAP.
    Other contractor representatives contended that the current 
regulation does not permit contractors to capture the structural 
characteristics of today's workforces, and that in many instances 
contractors develop ``artificial'' workforce analyses solely for the 
purpose of complying with the regulations. Specifically, they asserted 
that the current regulation does not recognize the increasing use of 
the fluid team structure (e.g., a multi-disciplinary team drawn from 
several components of an organization to work for a limited time on a 
project), does not allow contractors to indicate that a job is part of 
a chain of command outside of the establishment (e.g., sales personnel 
who report directly to a sales manager in another office), and is not 
meaningful when small numbers of employees work at remote locations 
(e.g., small branch banks). These critics of the current workforce 
analysis urged OFCCP to revise the regulations to permit contractors to 
base their workforce analyses on how their businesses actually are 
organized, using data that are readily available and compiled to meet 
other business needs. To that end, they urged removal of the current 
geographical restriction that the workforce analysis (indeed the entire 
AAP) cover a single establishment, and revision of the workforce 
analysis regulation so as to permit contractors to: (1) Include several 
small locations in one workforce analysis (and corresponding AAP; this 
sometimes is referred to as a ``consolidated'' AAP); (2) prepare a 
workforce analysis (and AAP) for a group or groups within a single 
establishment; or (3) prepare a single workforce analysis (and AAP) 
based on a business function or a line of business, without regard to 
the geographic locations of the establishments and employees (sometimes 
referred to as a ``functional'' AAP).
    Other contractor representatives were satisfied with the current 
workforce analysis requirement. Some observed that ``wholesale 
changes'' in the AAP format could be costly for those

[[Page 26093]]

contractors that have been developing the AAP for many years in 
accordance with the current regulatory requirements.
    A central function of the workforce analysis, and any substitute, 
is to provide a picture of a contractor's organizational structure. The 
picture enables an individual reviewing equal employment opportunity at 
the establishment to understand how the establishment functions. Adding 
gender, race, and ethnicity to the picture provides a graphic 
representation of where minorities and women may be underrepresented or 
concentrated, which permits preliminary review for potential 
discrimination and the need for affirmative action. This graphic 
representation is useful to contractors engaging in self analysis, and 
it is useful to OFCCP's compliance officers. OFCCP believes that the 
concept is well worth retaining.
    In response to the concerns discussed above, however, OFCCP has 
attempted to ``reengineer'' the workforce analysis into a shorter, 
simpler format which we propose to call an ``organizational profile.'' 
The organizational profile is described in proposed Sec. 60-2.11(b)(1). 
In basic terms, the organizational profile is an organization chart for 
the establishment, showing each of the organizational units and their 
relationships to one another, and the gender, race, and ethnic 
composition of each organizational unit. Unlike the current workforce 
analysis, the profile would focus only on organizational units; it 
would not require the identification of individual job titles with the 
exception of the supervisor, if any. Likewise, reporting of race, sex, 
and salary information by job title would be eliminated.
    In drafting the proposed rule we have attempted to avoid a minutely 
itemized prescription for the organizational profile. Thus, we specify 
only that the profile is ``a detailed organizational chart or similar 
graphical presentation of the contractor's organizational structure,'' 
and that it must identify: each organizational unit; the job title, 
gender, race, and ethnicity of the unit supervisor; and the gender, 
race, and ethnic composition of the total employees in each unit. Our 
intent is that the profile be presented in a visual, rather than 
narrative, format, and that it account for all elements of the 
establishment's workforce.
    Beyond those basic requirements, however, the proposal leaves 
contractors substantial latitude to present the organizational profile 
in a manner that best fits their operational needs. In most cases, 
contractors should be able to use existing organizational charts as the 
core for their profiles. The only additional work required would be to 
annotate the charts with information about supervisors, and with the 
gender, race, and ethnic composition of each unit.
    A key definitional question is what is meant by the term 
``organizational unit.'' As we set forth in section (b)(2) of the 
proposed rule, an organizational unit is any component that is part of 
the contractor's corporate structure. In a more traditional 
organization, an organizational unit might be a department, division, 
section, branch, group, or similar unit. Typically, such a unit would 
be headed by a supervisor. In a less traditional organization, an 
organizational unit might be a project team, job family, or similar 
unit. Such a unit might not have a direct supervisor.
    Following is a sample organizational profile. This sample is 
provided for illustrative purposes only, and should not be construed to 
represent a required format or template.

[[Page 26094]]

[GRAPHIC] [TIFF OMITTED] TP04MY00.001

    In OFCCP's estimation the proposed organizational profile 
simplifies and improves upon the existing workforce analysis. The 
proposed rule's focus on actual organizational units, and particularly 
the notion that the core of

[[Page 26095]]

the organizational profile can be the contractor's actual 
organizational chart, should result in the profile being more accurate, 
more useful, easier for contractors to produce, and significantly 
shorter, than the workforce analysis it would replace. These changes 
should benefit both contractors and OFCCP.
    During the consultations it was asserted that the current 
regulations do not provide contractors the flexibility to report on 
their organizations as they actually exist, and that this results in 
contractors creating special report formats solely for AAP purposes. 
Because the proposed rule permits, indeed encourages, the use of 
existing organizational structures and organizational charts, the 
asserted practice of creating special report formats should diminish, 
thus reducing contractor burden. In turn, if the organizational profile 
more closely reflects the actual organization of the establishment, it 
should be a more useful and reliable analytical tool.
    Finally, as noted above, under the proposal the organizational 
profile would not require the itemization of individual job titles, or 
the reporting of gender, race, ethnicity, and salary information by job 
title. This will greatly reduce the volume of the organizational 
profile, as compared to the existing workforce analysis (which often is 
one of the largest sections of the AAP).
    Regarding the structure of the AAP, except as provided in 60-
2.1(d), OFCCP decided not to adopt the recommendation that would allow 
for the development of a ``consolidated'' or ``functional'' AAP at this 
time. Although some of the concepts may have merit, they appear to also 
have shortcomings that will require lengthy and substantive 
consultation among stakeholders.
    Finally, in subsection (c)(4), the minority group designations 
would be changed to conform to the designations of minorities currently 
used in the EEO-1 report. At a later date, OFCCP intends to revisit the 
racial and ethnic designations used in the regulations at 41 CFR 
Chapter 60 to render them consistent with the revised standards set 
forth in OMB's Statistical Policy Directive No. 15, Race and Ethnic 
Standards for Federal Statistics and Administrative Reporting (62 FR 
58782, October 30, 1997). OFCCP will coordinate any changes in these 
designations with the Equal Employment Opportunity Commission (EEOC) so 
that recordkeeping and reporting requirements for both agencies are 
compatible.

Section 60-2.12  Job Group Analysis.

    [Current Sec. 60-2.12 entitled ``Establishment of goals and 
timetables'' would be revised, renamed, and moved to Sec. 60-2.16 as 
discussed below in the preamble.]
    Contractors use the job group analysis for combining job titles in 
their workforce. This is the first step in comparing the representation 
of minorities and women in the contractor's workforce with the 
estimated availability of qualified minorities and women who could be 
employed. When the representation of minorities or women within a job 
group is less than their availability by some identifiable measure (see 
discussion of Sec. 60-2.16, below) the contractor must establish goals.
    The reason for combining job titles is to organize the workforce 
into manageable size groups to facilitate analysis, while still 
maintaining elements of commonality among the jobs grouped together. 
The jobs included in a job group must have elements in common, i.e., 
similar job duties, similar compensation, and similar opportunities for 
advancement within the contractor's workforce. Contractors have 
considerable discretion in determining which jobs to combine, but the 
resulting job groups must contain jobs with the requisite common 
elements. If the job groups are inappropriately drawn, the availability 
and utilization analyses based on those job groups will be flawed.
    The current regulations (Sec. 60-2.11(b)) define a job group as one 
or more jobs having similar content, wage rates and opportunities. The 
structure of the job group analysis in the current regulation often is 
criticized by contractors and by OFCCP compliance staff. Some view the 
instruction to combine jobs by similar content, wage rates and 
opportunities as too general to provide clear, consistent guidance. The 
result, according to this appraisal, is inconsistent interpretations 
among different OFCCP offices, and needless disagreements between 
contractors and compliance officers about the grouping of particular 
jobs. Others say that the current regulation does not give larger 
contractors enough flexibility to tailor the job group analysis to the 
idiosyncrasies of different organizational structures, places too much 
emphasis on tracking lines of progression, and precludes compliance 
officers from making fair and accurate evaluations of contractor 
achievements. Further, critics claim that for smaller contractors, the 
existing job group analysis regulation often results in the formation 
of job groups that are too small to conduct a meaningful utilization 
analysis.
    Despite the criticisms of the current job group regulation, 
contractors and OFCCP staff have expressed divergent views on whether 
it should be revised, and if so, how. During the consultation process, 
some contractor representatives recommended that OFCCP retain the job 
group regulation as it currently exists. Those who favored keeping the 
current regulatory approach observed that the current approach of 
contractor-developed job groups can best accommodate the diversity in 
organizational structures that exists among contractor establishments.
    Other contractor representatives supported the idea of basing job 
grouping on the standard EEO-1 categories, a concept which OFCCP 
explored during the consultation process. The term ``EEO-1 categories'' 
refers to nine broad occupational groupings: officials and managers, 
professionals, technicians, sales workers, office and clerical, craft 
workers (skilled), operatives (semi-skilled), laborers (unskilled), and 
service workers. These groupings are used in the EEO-1 report (the 
Employer Information Report), which most employers file annually with 
the Joint Reporting Committee (an entity composed of OFCCP and the 
EEOC).
    Proponents of the EEO-1 job grouping approach observed that most 
contractors and employers already are familiar with the EEO-1 
categories and that, in practice, those categories already serve as the 
baseline for most job groups. They asserted that another advantage of 
EEO-1 category job grouping is that, in many cases, it would address 
the problem of job groups with too few employees to conduct a 
meaningful utilization analysis.
    Still other contractor representatives recommended that OFCCP 
revise the regulations in a manner that would allow contractors the 
option of selecting either approach--the contractor-developed job group 
prescribed by the current regulations or the EEO-1 category-based job 
group.
    After considerable thought about the wide range of views described 
above, OFCCP has decided to continue the traditional approach to the 
job group analysis, as reflected in current Sec. 60-2.11(b), for larger 
employers (contractors with 150 or more employees). Accordingly, 
proposed Sec. 60-2.12(b) states that jobs at the establishment with 
similar content, wage rates, and opportunities, must be combined to 
form job groups. OFCCP is proposing, at Sec. 60-2.12(e), that smaller 
employers (contractors with fewer than 150

[[Page 26096]]

employees) may use EEO-1 categories as job groups.
    In response to criticisms that the current regulations provide 
inadequate guidance, the proposed regulation would further explain the 
criteria that the contractor must consider when determining which jobs 
to combine into job groups. Proposed Sec. 60-2.12(b) states 
``similarity of job content refers to the duties and responsibilities 
of the job titles which make up the job group.'' Further, the proposed 
regulation provides that ``similarity of opportunities refers to 
training, transfers, promotions, pay mobility, and other career 
enhancement opportunities offered by the jobs within the job group.'' 
Although OFCCP's Federal Contract Compliance Manual contains detailed 
guidance on job group formation, the agency believes the expanded 
regulatory definition will address many of the issues that arise when 
decisions are being made about job groups.
    Once the appropriate job groups are determined, proposed Sec. 60-
2.12(c) would require the contractor to prepare a list of the job 
titles that comprise each job group. The paragraph also would reflect 
the provisions of proposed Secs. 60-2.1(d) and (e) relating to jobs 
located at another establishment.
    Proposed Sec. 60-2.12(d) would provide that all jobs located at an 
establishment must be included in the establishment's job group 
analysis, except as provided in Sec. 60-2.1(d).
    Finally, as noted above, proposed Sec. 60-2.12(e) permits smaller 
employers to use EEO-1 categories as job groups. OFCCP considers job 
grouping by EEO-1 category to be simpler both for smaller employers and 
for OFCCP than grouping by similarity of content, wage rates and 
opportunities (the scheme found in Sec. 60-2.11(b) of the current 
regulations and Sec. 60-2.12(b) of this proposal). Contractors that are 
smaller employers tend to have so few employees that to subdivide them 
into smaller job groups than required by the EEO-1 categories would 
make goal setting unreliable. We are expressly soliciting comments on 
this issue.

Section 60-2.13  Placement of Incumbents in Job Groups

    [Current Sec. 60-2.13 entitled ``Additional required ingredients of 
affirmative action programs'' would be revised, renamed, and moved to 
Sec. 60-2.17 as is discussed below in the preamble.]
    This proposed new section would require the contractor to record 
separately the percentage of minorities and women it employs within 
each job group. The current regulations (Sec. 60-2.11) do not directly 
address this procedure. This step may seem obvious, but it is expressly 
included here in an effort to make the process of preparing an AAP 
clearer to first-time and infrequent users of the regulations and to 
casual readers.

Section 60-2.14  Determining Availability

    [Current Sec. 60-2.14 entitled ``Program summary'' would be moved 
to Sec. 60-2.31.]
    Proposed Sec. 60-2.14 contains the guidelines for determining 
availability and would replace the regulations that are currently found 
at Secs. 60-2.11(b)(1) and (2). The purpose of the availability 
analysis is to determine the representation of minorities and women 
among those qualified (or readily qualifiable) for employment for each 
job group in the contractor's workforce. Availability is the yardstick 
against which the actual utilization of minorities or women in the 
contractor's job group is measured.
    Under the current regulation, the contractor is required to compute 
availability, separately for minorities and for women, for each job 
group. In determining availability, the contractor must consider each 
of eight factors listed in the regulations. The factors are similar, 
but not identical, for minorities and women. Although the contractor 
must consider all eight factors, it is not required to utilize each 
factor in determining the final availability estimate. Only the factors 
that are relevant to the actual availability of workers for the job 
group in question must be used. Most contractors actually use only a 
few of the eight factors to compute the final availability estimates.
    The ``eight-factor analysis'' for determining availability is one 
of the most frequently criticized elements of the Executive Order 11246 
program. Common complaints among contractors are that the requirements 
are unnecessarily complex and not sufficiently focused. For instance, 
critics suggest that factors such as the minority population of the 
labor area surrounding the facility (factor (1)(i)), the size of the 
minority and female unemployment force in the labor area surrounding 
the facility (factors (1)(ii) and (2)(i)), and the percentage of the 
minority and female workforce as compared with the total workforce in 
the immediate labor area (factors (1)(iii) and (2)(ii)), are 
inappropriately broad because they do not focus on the skills needed to 
perform the particular jobs in the contractor's workplace. Even for 
jobs for which no special skill is needed, the factor on minority 
population is criticized because it commingles those who are ready to 
work with those who are under 16 or over 65 years of age, completely 
unable to work due to disability, or otherwise unavailable. Similarly, 
consideration of the existence of training institutions capable of 
training persons in the requisite skills (factors (1)(vii) and 
(2)(vii)) is said to focus on those who may be available several years 
in the future and not on those who can work now. Why, contractors ask, 
is it necessary to analyze or consider these factors if it is improper 
to use them?
    Accordingly, contractors frequently recommend that the number of 
factors be limited to the few most commonly used. Contractors further 
suggest that for ease of application the same availability factors be 
used for minorities and for women. During our consultations, groups 
representing minorities and women were not strongly opposed to 
collapsing the list of factors to concentrate on those that best 
identify persons available for employment. However, the civil rights 
and women's groups felt strongly that the concept of affirmative action 
required consideration of those who reasonably could be trained for a 
job, as well as those who already have the skills.
    Today's proposal would simplify the availability computations by 
reducing the number of factors from eight to two. The proposed 
regulation would use the same factors for minorities and for women, but 
availability would be computed separately for minorities and women for 
each job group, as is done under the current regulations. Under 
proposed Sec. 60-2.14(c), the following factors would be considered in 
determining availability:
    (1) The percentage of minorities or women with requisite skills in 
the reasonable recruitment area, where ``reasonable recruitment area'' 
refers to the geographical area from which the contractor usually seeks 
or reasonably could seek workers to fill the positions in question; and
    (2) The percentage of minorities or women among those promotable, 
transferable, and trainable within the contractor's organization, where 
``trainable'' refers to employees who could, with appropriate training, 
become promotable or transferable within the AAP year.
    To determine the percentages in Sec. 60-2.14(c)(2), the contractor 
would undertake one or both of the following steps:
    <bullet> Determine which job groups are ``feeder pools'' for the 
job group in question. The feeder pools are job

[[Page 26097]]

groups from which individuals are promoted.
    <bullet> Ascertain which employees could be promoted or transferred 
with appropriate training.

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

----------------------------------------------------------------------------------------------------------------
                                                                                     Minority         Female
            Job group                  Total         Minority         Female        promotables    
promotables
                                    incumbents      incumbents      incumbents     (in percent)    (in
percent)
----------------------------------------------------------------------------------------------------------------
Chem.E PL.......................             100              20              25              20             
25
Pet.E PL........................             100              15              20              15              20
----------------------------------------------------------------------------------------------------------------

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

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


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

    Our experience has shown that these factors are the ones most 
contractors use to compute availability estimates. Taken together, they 
reflect contractors' assertions of who is qualified and available for 
employment. In addition to the percentage of minorities or women in the 
reasonable recruitment area and within the contractor's workforce who 
already possess the requisite skills, proposed Sec. 60-2.14(c) would 
require the contractor to consider the percentage of minorities or 
women among its employees who could, with appropriate training, become 
promotable or transferable during the AAP year, when determining 
availability. This provision is intended to address the recommendations 
of civil rights and women's groups that the availability computation 
include consideration of training opportunities. It is a refinement of 
the requirement in the current regulations (Secs. 60-2.11(b)(1)(viii) 
and (b)(2)(viii)) that the contractor consider the degree of training 
which it is reasonably able to undertake as a means of making all job 
classes available to minorities and to women.
    Proposed Sec. 60-2.14(e) would require a contractor to define its 
recruitment area reasonably so as not to exclude minorities and women, 
and to develop a brief written rationale for selection of that 
recruitment area. On occasion, defining the recruitment area in a 
slightly different way can significantly enlarge or reduce the 
proportion of minorities or women with requisite skills available for 
employment. In such a case, the contractor would be required to assure 
that the recruitment area chosen would not have the effect of excluding 
minorities or women.
    Proposed Sec. 60-2.14(f) would require contractors to define the 
pool of promotable, transferable, and trainable employees in such a way 
as not to exclude minorities or women, and to develop a brief 
documented rationale for the selection of the pool. This provision 
responds to concerns expressed by civil rights and women's groups that 
a contractor may have relatively low levels of available incumbent 
minorities and women due to prior discrimination in access to training 
and employment opportunities in general, and, perhaps, within the 
contractor's workforce. When barriers to equal employment opportunity 
have prevented minorities and women from entering the pipeline to 
promotional consideration, contractors must critically evaluate the 
criteria they use to identify candidates. Otherwise, generations of 
minority and female workers, barred from equal consideration in the 
past, may continue to experience the effects of prior discrimination 
and lack of affirmative action.
    Further, proposed Sec. 60-2.14(d) would require contractors to use 
the most current and discrete statistical data to conduct its 
availability analyses. This is addressed in Section 2G05(e) and 
Appendix 2B of the Federal Contract Compliance Manual. Examples of such 
information include census data, data from local job service offices, 
and data from colleges and other training institutions.
    When a job group is composed of job titles with different 
availability rates, proposed Sec. 60-2.14(g) would require the 
contractor to compute a composite availability estimate. The composite 
availability figure would represent a weighted average of the 
availability estimates for all the job titles in the job group.
    The composite weighted average availability is computed by 
determining the percentage of total job group incumbents represented by 
the incumbents in each job title, multiplying each incumbent percentage 
by the corresponding availability for that job title, and summing the 
results. The computation is illustrated by the following job group of 
professionals with a total of 80 incumbents:

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

1. Accountant = 20/80 incumbents, or .25
Auditor = 40/80 incumbents, or .5
Analyst = 20/80 incumbents, or .25
2. Accountant = .25  x  .35 = .0875
Auditor = .5  x  .20 = .1
Analyst = .25  x  .15 = .0375
3. Composite Availability = .0875 + .1 + .0375 = .225 or 22.5%


[[Page 26098]]


    The proposed regulation would retain the requirement that 
contractors determine the availability of total minorities. OFCCP 
requests comments on whether the regulation should be changed to 
require the contractor to compute availability for individual minority 
subgroups and invites commenters to address the following questions:
    1. Should contractors be required to compute availability 
separately for individual minority subgroups as a general rule?
    2. Should contractors be required to compute availability for 
individual minority subgroups only when the minority subgroup 
represents a specified percentage of the population in the immediate 
labor area?
    3. How large must the minority subgroup population be before the 
contractor is required to compute the separate availability for 
minority subgroups?

Section 60-2.15  Comparing Incumbency to Availability

    [Current Sec. 60-2.15 entitled ``Compliance status'' would be 
revised and moved to Sec. 60-2.35, discussed below in the preamble.]
    Proposed Sec. 60-2.15 addresses an aspect of the existing 
regulations that is referred to as the ``utilization analysis,'' and 
would replace one portion of existing Sec. 60-2.11(b). Proposed 
Sec. 60-2.15(a) would require the contractor to compare the 
representation of minorities and women in each job group with their 
representation among those available to be employed in that group. 
During compliance reviews, OFCCP typically finds that more minorities 
and women are available for employment in particular occupations and 
job groups than are actually employed in those positions. Indeed, OFCCP 
Regional Directors report that virtually every AAP reviewed by their 
offices contains one or more job groups in which availability exceeds 
actual employment. If the availability for a job group is greater than 
incumbency, and the difference is of a sufficient magnitude, the 
contractor must establish a goal.
    The current regulation refers to the difference between 
availability and incumbency as ``underutilization,'' which is defined 
as ``having fewer minorities or women in a particular job group than 
would reasonably be expected by their availability.'' When this 
condition exists, the contractor must establish a goal. Under the 
current practice, contractors are permitted to identify 
underutilization using a variety of methods, including: the ``any 
difference'' rule, i.e., whether any difference exists between the 
availability of minorities or women for employment in a job group and 
the number of such persons actually employed in the job group; the 
``one person'' rule, i.e., whether the difference between availability 
and the actual employment of minorities or women equals one person or 
more; the ``80 percent rule,'' i.e., whether actual employment of 
minorities or women is less than 80 percent of their availability; and 
a ``two standard deviations'' analysis, i.e., whether the difference 
between availability and the actual employment of minorities or women 
exceeds the two standard deviations test of statistical significance. 
We propose no substantive change from the current regulation. The 
proposal, which is slightly reworded for clarity, appears at Sec. 60-
2.15(b).
    Finally, current Sec. 60-2.11(b) specifies that the AAP shall 
contain ``[a]n analysis of all major job groups'' for which 
underutilization determinations will be made (emphasis added). The 
regulations do not define ``major,'' nor do they distinguish major job 
groups from other job groups. Most contractors have treated all job 
groups as major, and have conducted the analyses for each. This 
approach correctly reflects that no job groups are so insignificant 
that further analysis of them should not be performed. Any job group of 
such insignificance probably should not be considered a job group at 
all. Accordingly, OFCCP proposes to drop the word ``major,'' thereby 
requiring that contractors determine availability, compare incumbency 
to availability, and set placement goals (where comparison of 
availability to incumbency indicates a need to do so) for all job 
groups. OFCCP is soliciting comments concerning dropping the word 
``major'' from job groups.

Section 60-2.16  Placement Goals

    The procedures outlined in the preceding sections of this proposed 
rule would require a Federal contractor to analyze its workforce and 
evaluate its employment practices for the purpose of identifying and 
correcting gender-, race-and ethnicity-based obstacles to equal 
employment opportunity. Where the need for corrective action is 
revealed, the AAP must include outreach and other steps precisely 
tailored to eliminate the barriers disclosed, and placement goals to 
target and measure the effectiveness of efforts directed towards 
achieving that result.
    In 1970, when the goals requirement first was incorporated into the 
regulations, the then Office of Federal Contract Compliance recognized 
that some might misunderstand goals to be quotas which must be 
achieved, or that gender-, race-, and ethnicity-based preferences were 
permitted or required in the pursuit of goals. Accordingly, the Office 
of Federal Contract Compliance squarely addressed these issues in the 
regulations, stating that: quotas are expressly forbidden; compliance 
is judged by a contractor's efforts rather than whether goals have been 
met; and goals should not be used to discriminate against any employee 
or applicant because of race, color, religion, sex, or national origin. 
(See, for example, Secs. 60-2.12(e), 2.15 and 2.30 of the current 
regulations, respectively.)
    To further clarify and maintain the proper focus of affirmative 
action in the contract compliance program, OFCCP periodically issued 
supplemental guidance and instructions explaining the difference 
between permissible goals, on the one hand, and unlawful preferences, 
on the other. The latest such guidance is contained in an OFCCP 
Administrative Notice entitled ``Numerical Goals under Executive Order 
11246,'' which was issued in December 1995. The Administrative Notice 
reiterates a number of critical points about goals, including the 
following:
    <bullet> The goals component of the AAP is not designed to be, nor 
may it properly or lawfully be interpreted as, permitting unlawful 
preferential treatment and quotas with respect to persons of any race, 
color, religion, sex, or national origin.
    <bullet> Goals are neither quotas, set-asides, nor a device to 
achieve proportional representation or equal results; rather, the goal-
setting process is used to target and measure the effectiveness of 
affirmative action efforts to eradicate and prevent barriers to equal 
employment opportunity.
    <bullet> Goals under Executive Order 11246, as amended, do not 
require that any specific position be filled by a person of a 
particular gender, race, or ethnicity; instead, the requirement is that 
contractors engage in outreach and other efforts to broaden the pool of 
qualified candidates to include minorities and women.
    <bullet> The use of goals is consistent with principles of merit, 
because goals do not require an employer to hire a person who does not 
have the qualifications needed to perform the job successfully, hire an 
unqualified person in preference to another applicant who is qualified, 
or hire a less qualified person in preference to a more qualified 
person.
    <bullet> Goals may not be treated as a ceiling or a floor for the 
employment of members of particular groups.

[[Page 26099]]

    <bullet> A contractor's compliance is measured by whether it has 
made good faith efforts to meet its goals, and failure to meet goals, 
by itself, is not a violation of the Executive Order.
    Against this backdrop, OFCCP today proposes to revise its 
regulation on the establishment of goals by contractors. Goal setting 
currently is addressed in Sec. 60-2.12; today's proposal would move the 
goals provision to Sec. 60-2.16, and would revise the section to 
provide additional clarity on how to set goals and guidance regarding 
the use of goals. The substance of current Sec. 60-2.30 also is 
included in this section.
    Under the existing regulations, after determining that there is 
underutilization of minorities or women in a specific job group, the 
contractor must establish goals. Existing Secs. 60-2.10 and 60-2.12 
refer to ``goals and timetables'' to which a contractor's ``good faith 
efforts'' must be directed to correct deficiencies in the utilization 
of minorities or women.
    The current regulation provides general guidance regarding the 
establishment of goals. For instance, contractors are required to 
consider the availability of minorities or women for the job group as 
revealed by the requisite utilization analysis. Additionally, the 
current regulation provides that ``goals may not be rigid and 
inflexible quotas which must be met, but must be goals reasonably 
attainable by means of applying every good faith effort * * *.'' 
However, the regulation does not further define the term ``goals,'' nor 
explain how they should be set.
    In order to clarify that AAPs (including goals) involve annual 
planning, which accounts for changes in the contractor's business, 
proposed Sec. 60-2.16(c) would require the contractor to establish a 
``percentage annual placement goal'' for a particular job group. Thus, 
under proposed Sec. 60-2.16, the concept of ``timetables'' would not be 
retained because it implies a requirement of multi-year or ultimate 
goals.
    Further, proposed paragraph (c) would require the contractor to set 
goals at a level ``at least equal to the availability figure'' derived 
for minorities or women for the job group at issue. Proposed paragraph 
(c) is not a new requirement; it is consistent with OFCCP's current 
practice. To illustrate: If pursuant to Sec. 60-2.14 the contractor 
determined that the availability of women for employment in a 
particular job group was 17.3 percent, the contractor would set a goal 
to place women, during the current AAP year, in (at least) 17.3 percent 
of the openings in that job group.
    The focus on annual planning and the concomitant deletion of 
timetables in the proposal should not be misunderstood to mean that a 
contractor must fully resolve all differences between availability and 
actual utilization within the current AAP year. In many cases (for 
instance, few hiring opportunities during the year), it would be 
mathematically impossible to bridge that gap in such a short time. More 
important, however, is that compliance, as in the past, always is 
measured by good faith effort, and not by the achievement of a 
particular numerical result.
    The proposal would considerably strengthen existing language so as 
to reaffirm that goals prescribed by the regulations implementing 
Executive Order 11246, as amended, are not to be used as quotas which 
must be achieved through gender-, race-, or ethnicity-based 
preferences. Although OFCCP does not consider it necessary to repeat 
verbatim in the regulations the principles set forth in its December 
1995 policy statement, the proposed rule is intended to reflect those 
concepts. The proposed regulation would set forth the principles that 
govern the establishment and use of placement goals. Specifically, 
proposed paragraph (e) states that: (1) Quotas are expressly forbidden 
and that goals are neither a floor nor ceiling for the employment of 
particular groups; (2) employment selection decisions must be made in a 
nondiscriminatory manner, and that placement goals do not provide a 
contractor justification to extend a preference to any individual, 
select an individual, or to adversely affect an individual's employment 
status, on the basis of that person's race, color, religion, sex, or 
national origin; (3) placement goals do not create set-asides for 
specific groups, nor are they intended to achieve proportional 
representation or equal results; and (4) placement goals may not be 
used to supersede merit principles.
    Proposed paragraph (f) states that contractors extending an 
authorized preference for American Indians living on or near a 
reservation, may reflect such a preference in their placement goals. 
This provision appears at Sec. 60-2.12(j) of the current regulations. 
We have added the adjective ``American'' when referring to Indians.

Section 60-2.17  Additional Required Elements of Affirmative Action 
Programs

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

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

    Effective affirmative action is not a rote, or follow-the-numbers, 
exercise. As was suggested during the consultation process, overly 
prescriptive requirements sometimes lead to contractors simply going 
through the motions, and not really working to achieve affirmative 
action. Instead, effective affirmative action is intensely situation 
specific. The contractor must assess its individual circumstances--for 
example, the types of equal employment opportunity problems in 
evidence, how the problems developed, previous efforts to address the 
problems, and the types of resources available to the contractor--and 
devise mechanisms and programs to address those particular 
circumstances.

[[Page 26100]]

    In addition, OFCCP is proposing the deletion of Sec. 60-2.13(h)--
compliance of personnel policies and practices with the Sex 
Discrimination Guidelines (41 CFR Part 60-20). The Sex Discrimination 
Guidelines are an independent regulatory requirement to which 
contractors are subject, regardless of whether the Guidelines are 
mentioned as ``additional required elements.'' Eliminating redundancy 
by not referencing the Guidelines in proposed Sec. 60-2.17, therefore, 
would in no way affect the contractor's obligation to comply with the 
Guidelines nor OFCCP's commitment to enforcing the Guidelines.
    The proposed rule would retain four of the original 10 ``additional 
required ingredients.'' OFCCP intends that these remaining items 
capture the essence of effective affirmative action, including 
subsuming many aspects of the specific ``ingredients'' proposed to be 
deleted. They should energize and encourage contractors to improve upon 
and eliminate any weaknesses in their equal employment opportunity 
performance. The following elements in the current Sec. 60-2.13 would 
be retained:
Sec. 60-2.13(c)--establishment of responsibilities for implementation 
of the contractor's AAP (to be codified as Sec. 60-2.17(a));
Sec. 60-2.13(d)--identification of problems areas by organizational 
units and job groups (to be codified as Sec. 60-2.17(b));
Sec. 60-2.13(f)--development and execution of action-oriented programs 
designed to eliminate problems and further designed to attain 
established goals and objectives (to be codified as Sec. 60-2.17(c)); 
and
Sec. 60-2.13(g)--design and implementation of internal audit and 
reporting systems to measure effectiveness of the total program (to be 
codified as Sec. 60-2.17(d)).

    The ``required ingredients'' that would be retained in the proposed 
rule have been rewritten to enhance clarity. OFCCP is soliciting 
comments concerning the proposed deletion and retention of the 
additional required elements of the AAP. In addition, OFCCP proposes to 
modify the provision in Sec. 60-2.13(c) of the current regulations 
(proposed Sec. 60-2.17(a)) concerning the ``establishment of 
responsibilities for implementation of the contractor's affirmative 
action program.'' This proposed modification is derived from Sec. 60-
2.22(a) of the current regulations, which recommends, but does not 
require, that the contractor assign an executive as director or manager 
of company equal opportunity programs and give that person the 
management support and staffing to carry out the assignment. The 
revised provision would expressly require that the contractor provide 
for the implementation of the affirmative action program by assigning 
responsibility and accountability to a company official. However, the 
official is not required to be an executive of the company.
    OFCCP believes that responsibility and accountability are essential 
to an effective affirmative action program. Affirmative action programs 
are not self-executing; an official in the contractor's organization 
must be responsible for the development of the affirmative action 
program. Moreover, the official must be held responsible for the 
program's implementation and accountable for results. Accordingly, 
OFCCP proposes to make this provision mandatory.

Section 60-2.18  Equal Opportunity Survey

    Proposed Sec. 60-2.18 would require that nonconstruction contractor 
establishments designated by OFCCP prepare and file an Equal 
Opportunity Survey. The Equal Opportunity Survey contains information 
about personnel activities and compensation concerning minorities and 
women, and the contractor's affirmative action programs. Contractors 
are already required to maintain information necessary for completing 
the Survey, although not in the precise format called for by the Survey 
instrument.
    This proposal codifies the Equal Opportunity Survey which has been 
under development since March 1999, with the assistance of other DOL 
agencies. During the initial development stage there were also 
discussions with OMB, and meetings with contractors and contractor 
representatives, civil rights groups, and women's groups. The Survey 
was also field tested beginning in August 1999.
    The data reported in the Survey will enable OFCCP to more 
effectively and efficiently select contractor establishments that may 
have possible problems for compliance evaluations, thus enhancing the 
agency's ability to focus its enforcement resources on those 
establishments most likely to be out of compliance. In addition, the 
Survey will streamline the compliance evaluation process by enabling 
OFCCP to obtain compliance information earlier in the process. This 
should also alleviate any potential undue burden on contractors under 
review by allowing more focused compliance evaluations. Finally, the 
Survey requirement is expected to heighten contractor awareness of each 
establishment's equal employment opportunity performance, which should 
encourage contractors to conduct self-audits of their performance and 
to make any necessary corrections and improvements in their equal 
employment opportunity programs. OFCCP expects that the heightened 
awareness of performance, along with increased monitoring presence, 
will improve the level of compliance.
    The proposal establishes as a base standard that OFCCP will require 
a substantial portion of all nonconstruction contractor establishments 
to submit the Survey each year. At this time, OFCCP contemplates 
sending the Survey to no less than 50% of all nonconstruction 
contractor establishments each year, which is the minimum number we 
consider necessary in order for the Survey to be a credible evaluation 
method. Although other models may be used, the most likely initial 
scenario is that OFCCP will require most contractor establishments to 
submit the Survey biennially, with approximately one half of all 
establishments submitting the Survey each year. This approach would 
enable OFCCP to obtain at least minimal information about the entire 
contractor universe every two years. Although the large majority of 
establishments will be required to submit the Survey only once every 
two years, OFCCP might also require additional Survey responses in 
special situations, including, but are not limited to: (1) annual 
follow-up on establishments that are not selected for compliance 
evaluation but whose survey responses indicate potential equal 
employment problems; and (2) one-time monitoring of all establishments 
in a particular industry that is suspected of having industry-wide 
equal employment problems. We do not contemplate requiring any 
establishment to submit the Survey more than once in a year. OFCCP is 
considering whether to include in the final rule codification of the 
``50% of nonconstruction establishments'' floor mentioned in this 
Preamble.
    Proposed paragraph (b) provides that the Survey must be prepared in 
accordance with the format specified by the Deputy Assistant Secretary. 
The paragraph further stipulates that the Survey will include 
information that will allow for an accurate assessment of contractor 
personnel activities, pay practices, and affirmative action 
performance. This may include data elements such as applicants, hires, 
promotions, terminations, and compensation by race and gender.
    Proposed paragraph (c) describes how, when, and where contractors 
must file the Equal Opportunity Survey. Contractors are encouraged to 
file the

[[Page 26101]]

Survey in electronic format. Submission in electronic format should 
result in savings for many contractors. It also will greatly expedite 
OFCCP's receipt and analysis of submitted data. Contractors also may 
mail or fax the Survey to OFCCP.
    A recurring concern of contractors is that information submitted to 
OFCCP may be disclosed to competitors or the public under the Freedom 
of Information Act (FOIA). Proposed paragraph (d) states that OFCCP 
will treat information contained in the Equal Opportunity Survey as 
confidential to the maximum extent the information is exempt from 
public disclosure under FOIA. OFCCP explains in proposed paragraph (d) 
that its practice is not to release data where the contractor still is 
in business and where the contractor asserts, and through the 
Department of Labor review process it is determined, that the data are 
confidential and that disclosure would subject the contractor to 
commercial harm.
    The Equal Opportunity Survey will require no additional 
recordkeeping on the part of a contractor. Current regulations already 
require a contractor to keep the information needed to complete the EO 
Survey.

Subpart C--Miscellaneous

    Subpart C of the current regulations contains suggested methods for 
implementing the required ingredients of AAPs. For instance, current 
Sec. 60-2.21 suggests steps that a contractor may take to disseminate 
its equal employment opportunity policy, both within the organization 
and externally. Section 60-2.22 suggests appropriate responsibilities 
for a corporate manager of equal opportunity programs. Although the 
provisions of Subpart C are intended to be advisory only, they 
frequently are confused as being mandatory. OFCCP is aware also that 
conflicts develop between compliance officers and contractors as to 
whether certain portions of Subpart C should be implemented. Some of 
the guidance also has been criticized as being outdated.
    The proposal would remove the contents of current Subpart C from 
the regulations. As is discussed above with respect to proposed 
Sec. 60-2.17, one goal of the proposal is to state the essence of an 
AAP, without binding contractors into prescriptive, one-size-fits-all 
solutions that may, at times, prove counterproductive to the objective 
of enhancing opportunity. OFCCP recognizes, however, that much of the 
information contained in current Subpart C is of value to many 
contractors. Accordingly, while the proposal would remove the 
provisions from the regulations, the agency intends to incorporate 
suggestions for implementing affirmative action programs in a technical 
assistance manual for contractors.
    The proposal would substitute for current Subpart C, a new Subpart 
C containing miscellaneous items. In current Subpart D (Miscellaneous), 
sections 2.31 (Preemption) and 2.32 (Supersedure) would move to 
proposed Subpart C in a modified form. The remainder of current Subpart 
D would be eliminated.

Section 60-2.30  Corporate Management Compliance Evaluations

    OFCCP pioneered the concept of corporate management--or ``glass 
ceiling''--compliance reviews almost ten years ago. This proposed new 
section draws upon OFCCP's experience in conducting glass ceiling 
reviews, addressing several issues that are unique to the corporate 
management environment.
    Proposed paragraph (a) briefly explains the purpose of corporate 
management compliance evaluations--to ascertain whether individuals are 
encountering artificial barriers to advancement into mid-level and 
senior corporate management positions. The term ``compliance 
evaluation'' is used in the proposed regulation to clarify that the 
agency may use any of the methods authorized under Sec. 60-1.20, i.e., 
compliance review, off-site review of records, compliance check and 
focused review, to investigate the employment practices at a corporate 
headquarters facility.
    Proposed paragraph (b) provides that OFCCP may expand the scope of 
a corporate management compliance evaluation beyond a company's 
headquarters establishment, if, during the course of a compliance 
evaluation, it comes to OFCCP's attention that compliance problems 
exist at other locations. This provision codifies longstanding OFCCP 
policy and practice concerning the appropriate scope of corporate 
management evaluations. The basic policy is stated in OFCCP's 
compliance manual, which provides that corporate management reviews may 
include analysis of positions at lower-level establishments, i.e., 
``feeder pools'' from which selections for management positions at the 
headquarters establishment may be made. See Federal Contract Compliance 
Manual, Section 5A04.
    The regulation currently at Sec. 60-2.30 (Use of goals) would be 
eliminated with its substance included in proposed Sec. 60-2.16 
Placement goals.
    In addition, OFCCP is considering including in the regulatory text 
a number of approaches we have found to be particularly effective in 
addressing glass ceiling problems. These approaches are drawn from 
OFCCP's report, ``The Glass Ceiling Initiative: Are There Cracks in the 
Ceiling?'' (June 1997). The approaches are the following:
    (1) commitment of top management to equal employment opportunity 
and affirmative action principles;
    (2) development of a system to identify high potential minority and 
female employees and track their progress;
    (3) management development programs, including early identification 
of senior management potential, developmental assignments, and special 
training opportunities;
    (4) succession planning, designed to identify and develop employees 
with management or executive potential so that individuals are trained 
and prepared to assume greater responsibility as opportunities arise;
    (5) mentoring programs;
    (6) active recruitment at colleges and universities with 
predominantly minority or female enrollment;
    (7) monitoring equal employment opportunity performance and 
reporting it to the Chief Executive Officer on a regular basis to 
ensure maximum accountability; and
    (8) making equal employment opportunity performance an evaluation 
factor for top level managers.
    OFCCP is soliciting comments concerning whether this list of 
approaches should be included in the regulations or in subregulatory 
guidance only.

Section 60-2.31  Program Summary

    The regulation currently at Sec. 60-2.14 (Program summary) would be 
redesignated at Sec. 60-2.31. In addition, the regulation would be 
revised to make one technical change--to substitute the title ``Deputy 
Assistant Secretary'' for ``Director.'' Pursuant to the authority set 
forth in 5 U.S.C. 552(b)(3)(a), which allows Federal agencies to alter 
``rules of agency organization, procedure, or practice'' without notice 
and comment, OFCCP is not accepting comments on this regulation. OFCCP 
intends to replace the program summary requirements at some point in 
the future should it be found to be duplicative of the Equal 
Opportunity Survey.

Section 60-2.32  Affirmative Action Records

    The proposed regulation would add a provision specifying that the 
contractor

[[Page 26102]]

must make relevant records, including records maintained pursuant to 
Secs. 60-1.12 and 2.10, available to OFCCP on request. This provision 
is derived from the last sentence of Sec. 60-1.40(c) of the current 
regulations. It is designed to ensure that OFCCP will have access to 
the records it needs to ascertain a contractor's compliance with its 
obligations under part 60-2.

Section 60-2.33  Preemption

    OFCCP intends to move this provision from Sec. 60-2.31 in the 
current regulations to Sec. 60-2.33 without alteration, except for 
several technical wording changes. Pursuant to the authority set forth 
in 5 U.S.C. 552(b)(3)(A), which allows Federal agencies to alter 
``rules of agency organization, procedure, or practice'' without notice 
and comment, OFCCP is not accepting comments on this regulation.

Section 60-2.34  Supersedure

    This provision would be moved from Sec. 60-2.32 in the current 
regulations to Sec. 60-2.34. OFCCP proposes to retain the first 
sentence of this section essentially as it appears in the current 
regulations. The second sentence, which references an old version of 
``Order No. 4'' (a precursor to the part 60-2 regulations), and the 
third sentence, which states that nothing in part 60-2 is intended to 
amend parts 60-3 and 60-20, are omitted as outdated and unnecessary at 
this time.

Section 60-2.35  Compliance Status

    This section would expand upon and restructure a provision that 
appears at Sec. 60-2.15 of the current regulations. The new section 
would begin, as does the current rule, with the assurance that no 
contractor's compliance status will be judged alone by whether the 
contractor reaches its goals.
    Consistent with the proposal contained in Sec. 60-2.16 above, we 
would remove from this section the existing reference to 
``timetables.'' We propose to further reinforce this point by adding a 
new sentence that restates OFCCP's longstanding position that the 
composition of the contractor's workforce does not, by itself, serve as 
the basis for imposing sanctions.
    The remainder of the section would address, in turn, compliance 
with affirmative action and nondiscrimination obligations. A sentence 
on affirmative action obligations would be similar to the second 
sentence of the current regulation, stating that a contractor's 
compliance status will be determined by the entirety of its affirmative 
action activities and good faith efforts. A sentence on compliance with 
nondiscrimination obligations would recite that a contractor's 
compliance status will be determined by analysis of statistical data 
and other non-statistical information that would indicate whether 
employees and applicants are being treated without regard to their 
race, color, religion, sex, or national origin. Examples of 
nonstatistical information are collective bargaining agreements, 
company policy statements, and training notices.

Regulatory Procedures

Executive Order 12866

    The Department is issuing this proposed rule in conformance with 
Executive Order 12866. This proposal has been determined to be 
significant for purposes of Executive Order 12866 and therefore has 
been reviewed by the Office of Management and Budget. This proposal 
meets the criteria of Section 3(f)(1) of Executive Order 12866 and 
therefore the information enumerated in Section 6(a)(3)(C) of that 
Order is contained in the Paperwork Reduction Act Section below. The 
proposed changes to the regulations in this NPRM will decrease the 
total estimated annualized cost to contractors of developing, updating, 
and maintaining an AAP by $147,950,698. The estimated average cost 
savings per establishment of developing, updating, and maintaining an 
AAP is $1378. See Paperwork Reduction Act section below.

Executive Order 13132

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

Regulatory Flexibility Act

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

Unfunded Mandates Reform Act

    For purposes of the Unfunded Mandates Reform Act of 1995, as well 
as Executive Order 12875, the proposed rule, if promulgated, will not 
include any Federal mandate that may result in increased expenditures 
by state, local, and tribal governments, or increased expenditures by 
the private sector, of $100,000,000 or more in any one year.

Paperwork Reduction Act

    This proposed rule contains information collections which are 
subject to review by the Office of Management and Budget (OMB) under 
the Paperwork Reduction Act of 1995. The proposed rule would revise 
regulations which contain information collection requirements which are 
currently approved under OMB No. 1215-0072. The proposal includes a new 
requirement, the Equal Opportunity Survey, which was reviewed and 
approved by OMB under OMB No. 1215-0196. The title and description of 
the information collections are shown below with an estimate of the 
effect the revised requirements would have on the recordkeeping hours 
contained in the approved 1215-0072 on file at OMB.
    The six information collections discussed below relate to Federal 
nonconstruction contractor and subcontractor responsibilities under 
Executive Order 11246, as amended, and its implementing regulations at 
41 CFR parts 60-1 and 60-2. Five of these collections are revisions of 
current methods and procedures used in developing and implementing an 
AAP. The sixth collection relates to the proposed annual Equal 
Opportunity Survey. The AAP is updated annually by the contractor.
    OFCCP invites the public to comment on whether each of the proposed

[[Page 26103]]

collections of information: (1) Ensures that the collection of 
information is necessary to the proper performance of the agency, 
including whether the information will have practical utility; (2) 
estimates the projected burden, including the validity of the 
methodology and assumptions used, accurately; (3) enhances the quality, 
utility, and clarity of the information to be collected; and (4) 
minimizes the burden of the collection of information on those who are 
to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology (e.g., permitting electronic 
submission of responses).
Title: 41 CFR 60-1.12  Record Retention
    Description: The proposed rule would amend the record retention 
provisions in Sec. 60-1.12(c) to add a requirement that contractors be 
able to identify the gender, race, and ethnicity of employees and 
applicants in any record the contractors maintain pursuant to this 
section, and submit this information to OFCCP on request. This 
proposal, it is estimated, would increase the burden of developing, 
maintaining, and updating an AAP by 5 percent.
Title: 41 CFR 60-2.11  Organizational Profile
    Description: This proposed rule would replace the current portion 
of 41 CFR 60-2.11(a) which describes the method to be used in 
developing a workforce analysis. The current rule requires a listing of 
job titles (not job groups) ranked from the lowest paid to highest paid 
within each department or similar organizational unit and the race and 
sex of incumbents. The proposal would not require listings of job 
titles, with the exception of supervisors; instead, the contractor 
would include in its AAP an organizational profile which shows each of 
the work units and their relationships to one another, and the gender, 
race, and ethnic composition of each work unit. In most cases, a 
contractor should be able to use its existing organizational chart as 
the core for its organizational profile. This proposal, it is 
estimated, would reduce the burden of developing, maintaining, and 
updating an AAP by 20 percent.
Title: 41 CFR 60-2.12  Job Group Analysis
    Description: For larger contractors, the proposed rule would 
continue the current practice of grouping jobs by similarity of 
content, wage rates, and opportunities. Thus, for contractors with 150 
or more employees there would be no change from the current regulation. 
For contractors with fewer than 150 employees, the proposal permits the 
use of the nine occupational groups used in the EEO-1 report rather 
than requiring such contractors to develop specific job groups. Many of 
these contractors are already grouping their employees this way for the 
annual EEO-1 report and the proposal would relieve them of any 
additional grouping analysis. This proposal, it is estimated, would 
decrease the burden of developing, maintaining, and updating an AAP by 
10 percent for smaller contractors.
Title: 41 CFR 60-2.14  Determining Availability
    Description: This proposed rule would replace the current portion 
of 41 CFR 60-2.11(b) which describes the method of determining the 
availability of minorities or women for each job group. The present 
method requires the contractor to assess each of eight factors, 
separately for minorities and women, to determine the availability for 
each job group. The proposal would reduce the number of factors to two. 
This proposal, it is estimated, would reduce the burden of developing, 
maintaining, and updating an AAP by 10 percent.
Title: 41 CFR 60-2.17  Additional Required Elements of Affirmative 
Action Programs
    Description: The proposed rule would replace the current 41 CFR 60-
2.13 which lists 10 required additional ingredients of affirmative 
action programs. The proposed rule would retain four of the items, some 
rewritten to enhance clarity, and one of which is modified slightly. 
OFCCP believes that these changes would reduce the burden of 
developing, maintaining, and updating an AAP by an estimated 20 
percent.
Title: 41 CFR 60-2.18  Equal Opportunity Survey
    Description: This proposal would require contractors to submit 
Affirmative Action Program, Personnel Activity, and Compensation Data 
information to OFCCP. The information required for the Equal 
Opportunity Survey would be drawn from the records required to be 
retained by 41 CFR part 60. The Equal Opportunity Survey would not 
impose any new recordkeeping requirements. The Equal Opportunity Survey 
was reviewed and approved by OMB under OMB No. 1215-0196. The format 
would be available from OFCCP in electronic form. The Equal Opportunity 
Survey would provide contractors with an economical means of assessing 
their affirmative action efforts and provide OFCCP with an improved 
basis for compliance evaluations. This proposal, it is estimated, would 
increase burden by 12 hours per respondent or 720,000 hours for the 
current estimate of 60,000 respondents (see Federal Register Notices 64 
FR 54056 (October 5, 1999) and 65 FR 5689 (February 4, 2000)).
Description of respondents: Nonconstruction Contractors and 
Subcontractors Subject to the Requirements of 41 CFR 60-1.40
    These estimates are an approximation of the average time expected 
to be necessary to accomplish the desired results. The personnel 
information being recorded and included in the AAP is currently 
available during the normal course of business. Estimated operating and 
maintenance costs are included below.
    OFCCP seeks comments on these estimates.
    The contractors subject to these proposed regulations are currently 
covered by the approved information collection request on file with OMB 
under No. 1215-0072. That document represents information collection 
requirements for 89,807 establishments which, on average, expend 
approximately 150 hours each on developing, maintaining, and updating 
the AAP.
    At this time, OFCCP records indicate that the number of 
establishments has increased from approximately 89,807 to 107,414. 
Application of the estimated changes in burden hours discussed above 
for Secs. 60-1.12, 60-2.11, 60-2.12, 60-2.14, and 60-2.17 results in 
the following burden estimates as compared with the current inventory 
under 1215-0072.

[[Page 26104]]



                                              Burden Change Summary
----------------------------------------------------------------------------------------------------------------
                                                                      Current
                                                      Current        inventory        Revised
                                                     inventory    adjusted for #     estimate        
Changes
                                                                      of firms
----------------------------------------------------------------------------------------------------------------
AAP Development.................................         161,155         192,750          99,624        
-93,126
AAP Updating....................................       6,658,288       7,963,670       4,391,335     
-3,572,335
AAP Maintenance.................................       6,725,543       8,044,110       4,435,692     
-3,608,418
    Total Recordkeeping Burden..................      13,544,986      16,200,530       8,926,651     
-7,273,879
Average hours per respondent....................            @150            @150             @83
----------------------------------------------------------------------------------------------------------------

    Section 60-2.18 requires contractors to submit an Equal Opportunity 
Survey to OFCCP. The information required for the Survey would come 
from the records contractors are required to retain by 41 CFR Part 60. 
The Survey would not impose any new recordkeeping requirements. 
Although we estimate that this proposal would increase burden by 12 
hours per respondent, these burden hours are not included in this NPRM. 
OFCCP has already included the Survey burden hours in a previous 
submission to OMB. See Federal Register Notices 64 FR 54056 (October 5, 
1999) and 65 FR 5689 (February 4, 2000).
    The estimated annualized cost to respondents is based on Bureau of 
Labor Statistics data in the publication ``Employer Costs for Employee 
Compensation'' (USDL: 99-173), which lists total compensation for 
executive, administrative, and managerial as $35.18 per hour and 
administrative support as $16.63 per hour. OFCCP estimates that 20 
percent of the burden hours will be executive, administrative, and 
managerial and 80 percent will be administrative support. We have 
calculated the total estimated annualized cost as follows:

Executive 7,273,879  x  .20  x  $35.18 = $51,179,012
Admin. Supp. 7,273,879  x  .80  x  $16.63 = $96,771,686
Total annualized cost savings estimate = $147,950,698
Estimated average cost savings per establishment is: $147,950,698/
107,414 = $1,378

    OFCCP estimates that contractors will have some operations and 
maintenance cost associated with this collection. For Supply & Service 
compliance evaluations, contractors copy their AAPs and mail the AAPs 
to OFCCP. We estimate an average copying cost of 8 cents per page. 
Under the proposed regulations, the size of an AAP will decrease, on 
average, by 85.5%, from 150 pages to 22 pages. This decrease is 
associated with a reduction in burden hours. The estimated total 
copying cost to contractors will be: 22 pages  x  $.08  x  2762 = 
$4861. In addition, we estimate an average mailing cost of $5.00 per 
contractor. The total mailing cost for contractors will be $5  x  2762 
= $13,810.
    A copy of this proposed rule has been submitted to OMB for its 
review and approval of these information collections. Interested 
persons are requested to send comments regarding this information 
collection, including suggestions for reducing this burden, to the 
Office of Information and Regulatory Affairs, OMB, New Executive Office 
Building, 725 17th Street NW, Room 10235, Washington, DC 20503, 
Attention: Desk Officer for DOL/ESA.

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

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

    Signed at Washington, DC, this 28th day of April 2000.
Alexis M. Herman,
Secretary of Labor.
Bernard E. Anderson,
Assistant Secretary for Employment Standards.
Shirley J. Wilcher,
Deputy Assistant Secretary for Federal Contract Compliance.
    Accordingly, part 60-2 of the rule amending 41 CFR Chapter 60 
published on December 30, 1980 (45 FR 86216), which was delayed 
indefinitely on August 25, 1981 (46 FR 42865), is proposed to be 
withdrawn; the proposed rule published on August 25, 1981 (46 FR 42968; 
supplemented at 47 FR 17770, April 23, 1982) is withdrawn in its 
entirety; and parts 60-1 and 60-2 of Title 41 of the Code of Federal 
Regulations are proposed to be amended as follows.

PART 60-1--OBLIGATIONS OF CONTRACTORS AND SUBCONTRACTORS

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

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

    1a. In Sec. 60-1.12, paragraph (b) is revised to read as follows:


Sec. 60-1.12  Record retention.

* * * * *
    (b) Affirmative action programs. A contractor establishment 
required under Sec. 60-1.40 to develop and maintain an affirmative 
action program (AAP) must maintain its current AAP and documentation of 
good faith effort, and must preserve its AAP and documentation of good 
faith effort for the immediately preceding AAP year, unless it was not 
then covered by the AAP requirement.
* * * * *
    2. In Sec. 60-1.12, paragraphs (c) and (d) are redesignated as 
paragraphs (d) and (e), respectively, and the first sentence of newly 
redesignated paragraph (d) is revised to read as follows:


Sec. 60-1.12  Record retention.

* * * * *
    (d) Failure to preserve records. Failure to preserve complete and 
accurate records as required by paragraphs (a) through (c) of this 
section constitutes noncompliance with the contractor's obligations 
under the Executive Order and this part.* * *
* * * * *
    3. In Sec. 60-1.12, a new paragraph (c) is added to read as 
follows:


Sec. 60-1.12  Record retention.

* * * * *
    (c)(1) In any record the contractor maintains pursuant to this 
section, the contractor must be able to identify:
    (i) The gender, race, and ethnicity of each employee; and
    (ii) Where possible, the gender, race, and ethnicity of each 
applicant.
    (2) The contractor must supply this information to the Office of 
Federal Contract Compliance Programs upon request.
* * * * *
    4. Section 60-1.40 is revised to read as follows:

[[Page 26105]]

Sec. 60-1.40  Affirmative action programs.

    (a) Each nonconstruction contractor that has 50 or more employees 
and has a contract of $50,000 or more; or has Government bills of 
lading which in any 12-month period, total or can reasonably be 
expected to total $50,000 or more; or serves as a depository of 
Government funds in any amount; or is a financial institution which is 
an issuing and paying agent for U.S. savings bonds and savings notes in 
any amount, must develop and maintain an affirmative action program for 
each of its establishments.
    Each contractor and subcontractor must require each nonconstruction 
subcontractor that has 50 or more employees and has a subcontract of 
$50,000 or more; or has Government bills of lading which in any 12-
month period, total or can reasonably be expected to total $50,000 or 
more; or serves as a depository of Government funds in any amount; or 
is a financial institution which is an issuing and paying agent for 
U.S. savings bonds and savings notes in any amount, to develop and 
maintain an affirmative action program for each of its establishments.
    (b) Nonconstruction contractors should refer to part 60-2 of this 
chapter for specific affirmative action requirements. Construction 
contractors should refer to part 60-4 of this chapter for specific 
affirmative action requirements.
    5. Part 60-2 is revised to read as follows:

PART 60-2--AFFIRMATIVE ACTION PROGRAMS

Subpart A--General
Sec.
60-2.1   Scope and application.
60-2.2   Agency action.
Subpart B--Purpose and Contents of Affirmative Action Programs
60-2.10   General purpose and contents of affirmative action 
programs.
60-2.11   Organizational profile.
60-2.12   Job group analysis.
60-2.13   Placement of incumbents in job groups.
60-2.14   Determining availability.
60-2.15   Comparing incumbency to availability.
60-2.16   Placement goals.
60-2.17   Additional required elements of affirmative action 
programs.
60-2.18   Equal Opportunity Survey.
Subpart C--Miscellaneous
60-2.30   Corporate management compliance evaluations.
60-2.31   Program summary.
60-2.32   Affirmative action records.
60-2.33   Preemption.
60-2.34   Supersedure.
60-2.35   Compliance status.

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

Subpart A--General


Sec. 60-2.1  Scope and application.

    (a) General. The requirements of this part apply to nonconstruction 
contractors. The regulations prescribe the contents of affirmative 
action programs, standards and procedures for evaluating the compliance 
of affirmative action programs implemented pursuant to this part, and 
related matters.
    (b) Who must develop affirmative action programs. Each 
nonconstruction contractor that has 50 or more employees and has a 
contract of $50,000 or more; or has Government bills of lading which in 
any 12-month period, total or can reasonably be expected to total 
$50,000 or more; or serves as a depository of Government funds in any 
amount; or is a financial institution which is an issuing and paying 
agent for U.S. savings bonds and savings notes in any amount, must 
develop and maintain an affirmative action program for each of its 
establishments.
    Each contractor and subcontractor must require each nonconstruction 
subcontractor that has 50 or more employees and has a subcontract of 
$50,000 or more; or has Government bills of lading which in any 12-
month period, total or can reasonably be expected to total $50,000 or 
more; or serves as a depository of Government funds in any amount; or 
is a financial institution which is an issuing and paying agent for 
U.S. savings bonds and savings notes in any amount, to develop and 
maintain an affirmative action program for each of its establishments.
    (c) When affirmative action programs must be developed. The 
affirmative action programs required under paragraph (b) of this 
section must be developed within 120 days from the commencement of a 
contract and must be updated annually.
    (d) Who is included in affirmative action programs. Contractors 
subject to the affirmative action program requirements must develop and 
maintain an affirmative action program for each of their 
establishments. Each employee in the contractor's workforce must be 
included in an affirmative action program. Each employee must be 
included in the affirmative action program of the establishment at 
which he or she works, except that:
    (1) Employees who perform their normal and customary duties at 
locations other than that of the manager to whom they report, must be 
included in the affirmative action program of their manager.
    (2) Employees who work at an establishment where the contractor 
employs fewer than 50 employees, may be included under any of the 
following three options: in an affirmative action program which covers 
just that establishment; in the affirmative action program which covers 
the location of the personnel function which supports the 
establishment; or, in the affirmative action program which covers the 
location of the official to whom they report.
    (3) Employees for whom selection decisions are made at a higher 
level establishment within the organization must be included in the 
affirmative action program of the establishment where the selection 
decision is made.
    (e) How to identify employees included in affirmative action 
programs other than where they are located. If pursuant to paragraph 
(d) of this section employees are included in an affirmative action 
program for a location other than the one in which the employees are 
located, the organizational profile and job group analysis of the 
affirmative action program in which the employees are included must be 
annotated to identify the actual location of such employees. If the 
establishment at which the employees actually are located maintains an 
affirmative action program, the organizational profile and job group 
analysis of that program must be annotated to identify the program in 
which the employees are included.


Sec. 60-2.2  Agency action.

    (a) Any contractor required by Sec. 60-2.1 of this chapter to 
develop and maintain an affirmative action program for each of its 
establishments that has not complied with that section is not in full 
compliance with Executive Order 11246, as amended. When a contractor is 
required to submit its affirmative action program to OFCCP (e.g., for a 
compliance evaluation), the affirmative action program will be deemed 
to have been accepted by the Government at the time OFCCP notifies the 
contractor of completion of the compliance evaluation or other action, 
unless within 45 days thereafter the Deputy Assistant Secretary has 
disapproved such program.
    (b) If, in determining such contractor's responsibility for an 
award of a contract it comes to the contracting officer's attention, 
through sources within his/her agency or through the OFCCP or other 
Government agencies, that the contractor does not have an affirmative 
action program at each of its establishments, or has substantially 
deviated from such an approved

[[Page 26106]]

affirmative action program, or has failed to develop or implement an 
affirmative action program which complies with the regulations in this 
chapter, the contracting officer must declare the contractor/bidder 
nonresponsible and so notify the contractor and the Deputy Assistant 
Secretary, unless the contracting officer otherwise affirmatively 
determines that the contractor is able to comply with the equal 
employment obligations.
    Any contractor/bidder which has been declared nonresponsible in 
accordance with the provisions of this section may request the Deputy 
Assistant Secretary to determine that the responsibility of the 
contractor/bidder raises substantial issues of law or fact to the 
extent that a hearing is required. Such request must set forth the 
basis upon which the contractor/bidder seeks such a determination.
    If the Deputy Assistant Secretary, in his/her sole discretion, 
determines that substantial issues of law or fact exist, an 
administrative or judicial proceeding may be commenced in accordance 
with the regulations contained in Sec. 60-1.26; or the Deputy Assistant 
Secretary may require the investigation or compliance evaluation be 
developed further or additional conciliation be conducted: Provided, 
That during any pre-award conferences, every effort will be made 
through the processes of conciliation, mediation, and persuasion to 
develop an acceptable affirmative action program meeting the standards 
and guidelines set forth in this part so that, in the performance of 
the contract, the contractor is able to meet its equal employment 
obligations in accordance with the equal opportunity clause and 
applicable rules, regulations, and orders: Provided further, That a 
contractor/bidder may not be declared nonresponsible more than twice 
due to past noncompliance with the equal opportunity clause at a 
particular establishment or facility without receiving prior notice and 
an opportunity for a hearing.

Subpart B--Purpose and Contents of Affirmative Action Programs


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

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


Sec. 60-2.11  Organizational profile.

    (a) Purpose. An organizational profile is a snapshot of the 
staffing pattern within an establishment. It is one method contractors 
use to determine whether barriers to equal employment opportunity exist 
in their organizations. The profile provides an overview of the 
workforce at the establishment that may assist in identifying 
organizational units where women or minorities are underrepresented or 
concentrated.
    (b)(1) An organizational profile is a detailed organizational chart 
or similar graphical presentation of the contractor's organizational 
structure. The profile must identify each organizational unit in the 
establishment, and show the relationship of each organizational unit to 
the other organizational units in the establishment.
    (2) An organizational unit is any component that is part of the 
contractor's corporate structure. In a more traditional organization, 
an organizational unit might be a department, division, section, 
branch, group or similar component. In a less traditional organization, 
an organizational unit might be a project team, job family, or similar 
component. The term includes an umbrella unit (such as a department) 
that contains a number of subordinate units, and it separately includes 
each of the subordinate units (such as sections or branches).
    (c) For each organizational unit, the organizational profile must 
indicate the following:
    (1) The name of the unit;
    (2) The job title, gender, race, and ethnicity of the unit 
supervisor (if the unit has a supervisor);
    (3) The total number of male and female incumbents; and
    (4) The total number of male and female incumbents in each of the 
following groups: Blacks, Hispanics, Asians/Pacific Islanders, and 
American Indians/Alaskan Natives.


Sec. 60-2.12  Job group analysis.

    (a) Purpose. A job group analysis is a method of combining job 
titles within the contractor's establishment. This is the first step in 
the contractor's comparison of the representation of

[[Page 26107]]

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


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

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


Sec. 60-2.14  Determining availability.

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


Sec. 60-2.15  Comparing incumbency to availability.

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


Sec. 60-2.16  Placement goals.

    (a) Purpose. Placement goals serve as objectives or targets 
reasonably attainable by means of applying every good faith effort to 
make all aspects of the entire affirmative action program work. 
Placement goals also are used to measure progress toward achieving 
equal employment opportunity.
    (b) Placement goals must be designed to correct any identifiable 
deficiencies. A contractor's determination under Sec. 60-2.15 that a 
placement goal is required constitutes neither a finding nor an 
admission of discrimination.
    (c) Where, pursuant to Sec. 60-2.15, a contractor is required to 
establish a placement goal for a particular job group, the contractor 
must establish a percentage annual placement goal at least equal to the 
availability figure derived for women or minorities, as appropriate, 
for that job group.
    (d) The placement goal-setting process described above contemplates 
that contractors will, where required, establish a single goal for all 
minorities. In the event of a substantial disparity in the utilization 
of a particular minority group or in the utilization of men or women of 
a particular minority group, a contractor may be required to establish 
separate goals for those groups.
    (e) In establishing placement goals, the following principles also 
apply:
    (1) Placement goals may not be rigid and inflexible quotas, which 
must be met, nor are they to be considered as either a ceiling or a 
floor for the employment of particular groups. Quotas are expressly 
forbidden.
    (2) In all employment decisions, the contractor must make 
selections in a nondiscriminatory manner. Placement goals do not 
provide the contractor with a justification to extend a preference to 
any individual, select an individual, or adversely affect an 
individual's employment status, on the basis of that person's race, 
color, religion, sex, or national origin.

[[Page 26108]]

    (3) Placement goals do not create set-asides for specific groups, 
nor are they intended to achieve proportional representation or equal 
results.
    (4) Placement goals may not be used to supersede merit selection 
principles. Affirmative action programs prescribed by the regulations 
in this part do not require a contractor to hire a person who lacks 
qualifications to perform the job successfully, or hire a less 
qualified person in preference to a more qualified one.
    (f) A contractor extending a publicly announced preference for 
American Indians as is authorized in 41 CFR 60-1.5(a)(6) may reflect in 
its placement goals the permissive employment preference for American 
Indians living on or near an Indian reservation.


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

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


Sec. 60-2.18  Equal Opportunity Survey.

    (a) Survey requirement. Each year, OFCCP will designate a 
substantial portion of all nonconstruction contractor establishments to 
prepare and file an Equal Opportunity Survey. OFCCP will notify those 
establishments required to prepare and file the Equal Opportunity 
Survey. The Survey will provide OFCCP compliance data early in the 
compliance evaluation process, thus allowing the agency to more 
effectively identify contractor establishments for further evaluation. 
The Survey will also provide contractors with a useful tool for self-
evaluation.
    (b) Survey format. The Equal Opportunity Survey must be prepared in 
accordance with the format specified by the Deputy Assistant Secretary. 
The Equal Opportunity Survey will include information that will allow 
for an accurate assessment of contractor personnel activities, pay 
practices, and affirmative action performance. This may include data 
elements such as applicants, hires, promotions, terminations, and 
compensation by race and gender.
    (c) How, when, and where to file. Contractors are encouraged to 
submit the Equal Opportunity Survey in electronic format, i.e., a 
computerized version prepared in accordance with the requirements of 
this section. The Equal Opportunity Survey may be submitted in 
electronic format or via facsimile to the address indicated in the 
Survey instructions. Paper versions of the Equal Opportunity Survey 
must be mailed to the address indicated in the Survey instructions. The 
filing deadline will be specified by the Deputy Assistant Secretary.
    (d) Confidentiality. OFCCP will treat information contained in the 
Equal Opportunity Survey as confidential to the maximum extent the 
information is exempt from public disclosure under the Freedom of 
Information Act, 5 U.S.C. 552. It is the practice of OFCCP not to 
release data where the contractor is still in business, and the 
contractor indicates, and through the Department of Labor review 
process it is determined, that the data are confidential and sensitive 
and that the release of data would subject the contractor to commercial 
harm.

Subpart C--Miscellaneous


Sec. 60-2.30  Corporate management compliance evaluations.

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


Sec. 60-2.31  Program summary.

    The affirmative action program must be summarized and updated 
annually. The program summary must be prepared in a format which will 
be

[[Page 26109]]

prescribed by the Deputy Assistant Secretary and published in the 
Federal Register as a notice before becoming effective. Contractors and 
subcontractors must submit the program summary to OFCCP each year on 
the anniversary date of the affirmative action program.


Sec. 60-2.32  Affirmative action records.

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


Sec. 60-2.33  Preemption.

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


Sec. 60-2.34  Supersedure.

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


Sec. 60-2.35  Compliance status.

    No contractor's compliance status will be judged alone by whether 
it reaches its goals. The composition of the contractor's workforce 
(i.e., the employment of minorities or women at a percentage rate 
below, or above, the goal level) does not, by itself, serve as a basis 
to impose any of the sanctions authorized by Executive Order 11246 and 
the regulations in this chapter. Each contractor's compliance with its 
affirmative action obligations will be determined by reviewing the 
nature and extent of the contractor's good faith affirmative action 
activities as required under Sec. 60-2.17, and the appropriateness of 
those activities to identified equal employment opportunity problems. 
Each contractor's compliance with its nondiscrimination obligations 
will be determined by analysis of statistical data and other non-
statistical information which would indicate whether employees and 
applicants are being treated without regard to their race, color, 
religion, sex, or national origin.
[FR Doc. 00-10991 Filed
5-3-00; 8:45 am]
BILLING CODE 4510-45-P