United States: Federal Contractors And Subcontractors Facing New, Mandatory OFCCP Registration, Certification Of Affirmative Action Programs

Federal supply and service contractors and subcontractors that have 50 or more employees and one or more federal contracts or subcontracts of $50,000 or more ("Covered Contractors") are required to have in place (within 120 days of entering into a covered contract) a compliant affirmative action program for each employment location, including annual written affirmative action plans for women, minorities, individuals with disabilities and, for contractors and subcontractors with one or more awards of $150,000 or more, protected veterans. Until now, Covered Contractors have been on an "honor system" to implement and annually update their affirmative action programs; the only time this was checked was during a formal compliance review by the U.S. Department of Labor Office of Federal Contract Compliance Programs (OFCCP), and even then, only for the particular establishment under review.  

Effective this year, however, a significant change will occur, requiring Covered Contractors to affirmatively certify their compliance annually.

By June 30, 2022, Covered Contractors (excluding construction contractors) must register their companies and each establishment subject to affirmative action obligations through the OFCCP's new online contractor portal and certify that they have developed and maintained the required affirmative action program and written affirmative action plans for each establishment.   

Covered Contractors selected for OFCCP compliance review will also be required to use the portal to reply to OFCCP requests in connection with the review.

Background

In 2016, the U.S. Government Accountability Office conducted a study that revealed that many federal contractors and subcontractors were not meeting their affirmative action obligations, and many would prepare complete affirmative action plans only if and when they were audited: 

"OFCCP has no process for ensuring that the tens of thousands of establishments that have signed a qualifying federal contract have developed an AAP within 120 days of the commencement of the contract, or updated it annually." 

As a result of this study, the OFCCP in 2018 proposed an online portal through which Covered Contractors would register and annually certify their compliance with affirmative action obligations, and then requested approval from the Office of Management and Budget (OMB) for the online portal and verification process. In August 2021, OMB approved that request, and in December 2021, the OFCCP announced the timeline for registration (between February 1, 2022 and June 30, 2022) and certification (between March 31, 2022 and June 30, 2022). 

On February 1, 2022, the OFCCP introduced the newly opened contractor portal and provided guidance only on the registration process, promising that discussion of the certification process would be included in an informational session scheduled for March 31, 2022. Covered Contractors may wish to delay registration until after further information about the certification process becomes available.   

Notably, there are unresolved questions about the rulemaking process that OFCCP used to impose the registration and certification rules and whether the requirements can be enforced. Also, it remains unclear how OFCCP's assertion that unregistered Covered Contractors may be more likely to be audited can be reconciled with OFCCP's "neutral selection" process.

Certification Options 

The portal is not yet open for certification, and a guide providing direction on certification that was previously on the portal has been removed and not yet replaced. However, during a February 1 informational session, the OFCCP reinforced that registered Covered Contractors will be required to make one of the following familiar representations¹:   

• It has developed and maintained affirmative action programs at each establishment, as applicable, or for each functional or business unit. See 41 CFR Chapter 60. 
• It has been party to a qualifying federal contract or subcontract for 120 days or more and has not developed and maintained applicable affirmative action programs at each establishment, as applicable. See 41 CFR Chapter 60.
• It became a covered federal contractor or subcontractor within the past 120 days and therefore has not yet developed applicable affirmative action programs. See 41 CFR Chapter 60.

Impact

The new online registration and certification requirements do not change the requirements for Covered Contractors to implement affirmative action programs, including annually updated written affirmative action plans for each covered establishment. The portal presents additional requirements to register and certify compliance by June 30, 2022. Previously, no detailed information on all covered establishments was requested by or provided to the OFCCP outside of an audit, and there was no specific timeline required for completion of annual affirmative action plans.  

Covered Contractors without currently compliant affirmative action programs may face significant planning and implementation efforts in order to register and certify by the June 30 deadline.    

For covered subcontractors that are not also prime federal contractors, this is a very significant change, because there was previously no process through which covered subcontractors were identified to the OFCCP, except by checking a box on the annual "EEO-1" form, indicating that the company was either a prime federal contractor or first-tier federal subcontractor. Only prime federal contractors are required to register and complete certification to the U.S. government through the System for Award Management (SAM).  

What if Companies Do Not to Register and Certify?

It remains to be seen whether there will be legal challenges to these registration and certification requirements and whether OFCCP will prioritize unregistered companies for compliance audits.  

Should you need support, our affirmative action practice can assist you in reviewing your status as a federal contractor or subcontractor, assessing current compliance, and/or providing guidance on the new OFCCP portal.  

Footnote

1 These are the same representations federal contractors are required to select from within the System for Award Management (SAM), the federal procurement system database.