Department of Treasury Proposes Rule Aimed To Ensure Diversity In Its Contractor Workforce

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Consistent with the mandate under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Treasury Department issued a proposed rule that would require contractors doing business with the agency to confirm their commitment to equal opportunity in employment and contracting. The rule would amend the Department of the Treasury Acquisition Regulation to require any entity entering a contract with the agency to insert a statement in each contract that it has made affirmative efforts to include women and minorities in its workforce. If the contractor in turn enters into a subcontractor arrangement to carry out the government contract, the contractor must include the same provision in any such subcontract that has a monetary value of more than $150,000.

In addition to the specific contractual provisions, the proposed rule would provide the Treasury Department with an opportunity to request information from the contractor to demonstrate that the contractor has made a “good faith effort” to satisfy its commitment to diversity. The proposed regulation explains that the documentation that may be requested to demonstrate this “good faith effort” can include: (1) an EEO-1 report of the contractor’s employees, detailing the number of employees and the number of minority and women employees; (2) a list of subcontract awards under the contract at issue, including the dollar amount of such subcontract award, the date of the award, and the subcontractor’s race, ethnicity and gender; (3) EEO-1 data for subcontractors performing work under the contract; and (4) the contractor’s plan to ensure that minorities and women “have appropriate opportunities to enter and advance within its workforce, including outreach efforts.” Failing to comply with these obligations can result in loss of the contract.

While government contractors are accustomed to providing EEO-1 reports and other data in connection with their government contracts, the proposed requirements of obtaining this data from their subcontractors and affirmatively including specific diversity inclusion provisions into their subcontractor agreements would reflect an expansion of their existing obligations. Furthermore, while many financial institutions have affirmative action obligations, these rules likely will cover many more institutions who contract or subcontract to provide services to the Treasury Department.

The comment period for this proposed rule is open until October 22, 2012.