Monday, December 4, 2023: Without Notice, OFCCP Updated Its Construction Program and CSAL FAQs
OFCCP quietly updated two of its FAQ sections to address how it will handle enforcement of federal contractor compliance obligations where a single contract involves both Construction and Supply and Service (nonconstruction) work. The agency failed to make any public announcement of the changes, rather it merely changed the “last updated” date at the bottom of both FAQ sections to December 4, 2023. The agency also did not identify precisely what portions of each FAQ section it updated.
Background to Note
In June 2023, we reported that a new CSAL identifying 250 purported “Construction Contractors” for audit in FY 2023 was curious because among OFCCP’s selection of purported covered federal government “Construction Contractors” it listed for potential audits were Supply and Service Contractors undertaking construction contracts. However, both Executive Order 11246 and its implementing Rules provide legal authority for OFCCP to audit a company based only on the type of contractor it is – either a “Construction Contractor” or a “Supply and Service Contractor” (i.e., non-construction contractor) – and NOT based on the type of federal contract a contractor signs. Of course, any such change of OFCCP’s Rules would require formal Rulemaking.
Changes to Corporate Scheduling Announcement List (“CSAL”) FAQs
Prior to December 4, 2023, OFCCP last updated its Corporate Scheduling Announcement List (“CSAL”) FAQ section on September 8, 2023, when it sent its most recent round of Supply and Service (“S&S”) CSALs. Our September 11, 2023, WIR story discussed this most recent round of S&S CSALs and how OFCCP had revamped its CSAL FAQ section on September 8. The new changes to those September FAQs are that OFCCP added two entirely new FAQs – Items 19 and 20 – at the end of the section.
Item 19 reads as follows:
“19. How will OFCCP select a contractor for a compliance evaluation that has a single contract that involves both construction and nonconstruction (supply and service)?
In instances where a single contract involves both construction and supplies and services, OFCCP may select the contractor for a construction or supply and service compliance evaluation based on the information available at the time OFCCP develops the scheduling list and in accordance with the Federal Acquisition Regulations (FAR) 36.101(c).
OFCCP’s Division of Program Operations develops separate lists of construction contractors and subcontractors and supply and service contractors and subcontractors for compliance evaluations. (emphasis added: note that OFCCP admits that it identifies contractors for audit based on the type of contractor they are and not based on the type of contract the contractor signs) These lists are developed using neutral selection procedures. The methodology used to develop current lists can be found on OFCCP’s Methodologies webpage. OFCCP also issues Corporate Scheduling Announcement Lists to provide advance courtesy notification to contractors selected for a compliance evaluation. These lists can be found on the OFCCP Scheduling List Resources page.”
Item 20 discusses OFCCP compliance assistance efforts to “ensure contractors included in the FY 2023 CSAL Construction Scheduling List understand their affirmative action obligations under 41 CFR part 60-2 and 41 CFR part 60-4.” This is an OFCCP attempt to rewrite OFCCP’s Rules, their history and OFCCP’s longstanding interpretation of its Rules that characterize contractors as either “fish or fowl”: either a “Supply and Service Contractor” or a “Construction Contractor,” but not both, or either. This new FAQ is akin to a Hocus Pocus spell seeking to change silver into gold (i.e., change it into something it is not by simply declaring it so).
Changes to Construction Compliance FAQs
OFCCP made extensive changes to its Construction Compliance FAQ section on December 4, 2023. However, again, OFCCP did not identify the specific changes it made. In any event, we discuss below several provisions of note.
In the “Application of Legal Authorities” Section of this FAQ:
Item 6 states that “[t]he requirements set forth at 41 CFR part 60-4 apply to the workers who are engaged in on-site construction and functions incidental to the actual construction, such as supervision or inspection. The regulations define “construction work” and “site of construction” at 41 CFR 60-1.3.” [Editor’s Note: OFCCP’s Rules do not apply to “workers” (or even to “employees”). Rather, OFCCP’s Rules apply to covered federal Government contractors and subcontractors).
Item 8 provides that: “Consistent with applicable Federal Acquisition Regulations, a single contract, meeting applicable jurisdiction thresholds and including both construction work and nonconstruction (supply and service), must comply with the affirmative action obligations applicable to the predominant part of the work, or if the contract is divided into parts, the affirmative action obligations applicable to each portion.” [EDITOR’s NOTE: OFCCP must subject this guidance to formal Rulemaking since it is both a change in longstanding policies of the agency and because it has a substantial impact on contractor compliance, or non-compliance. Moreover, the federal Administrative Procedure Act (“APA”) requires definitions (of such words as “predominant” and “part”) to ensure that the regulated community knows how to comply with any substantive requirement and that the community has a common understanding of that requirement. The development of the Internet did not revoke the APA. When there is legal doubt, the APA allows the contractor’s interpretation of the Rule to prevail in the absence of a clear federal Rule defining the compliance obligation.]
Item 9 states that “[i]f questions arise about the type of contract a prime contractor should consult with their contracting officer and a subcontractor should consult with the prime contractor.”
In the “Investigating Discrimination” section of this FAQ:
Item 4 states, in part, that “OFCCP’s regulation at 41 CFR 60-4.3(a)7.m requires construction contractors to continually monitor their personnel practices to ensure their employees are not subject to unlawful discrimination. Personnel practices include actions taken by management related to decisions regarding their employees, for example, hiring, firing, layoff, promotion, transfer, demotion, compensation, salary increase, salary decrease, work assignments, and benefits. Contractors should also examine employee access to opportunities affecting compensation, such as higher-paying positions, job classifications, work assignments, training, preferred or higher-paid shift work, access to overtime hours, pay increases, and incentive compensation.”
[Editor’s Note: OFCCP’s Rule at 41 CFR 60-4.3(a)7 does not provide the specificity and expansive list of purported “requirements” as the above FAQ suddenly seeks to improperly impose. Again, to provide a “level-playing field” and to ensure that these “requirements” are the subject of public notice and comment, OFCCP would have to publish these requirements for formal APA Notice and Comment to allow them to be enforceable against contractors. Otherwise, OFCCP simply cannot enforce requirements it just makes up willy-nilly, even if those interpretations/“requirements” strike one or more persons as being reasonable and likely effective.] See Firestone Synthetic Rubber Latex Co. v. Marshall, 507 F. Supp. 1330 (E.D. Tex. 1981).
In the “Compliance Review Basics” section of this collection of FAQs, FAQ #3 discusses what types of “workers” are covered by the requirements set forth at 41 CFR part 60-4, stating that these requirements “apply to the workers who are engaged in on-site construction and functions incidental to the actual construction, for example, supervisors, inspectors, and forepersons.”
[Editor’s Note: One must read this FAQ #3 against the legal background that it is legally “goofy.” OFCCP does not have jurisdiction over “workers” (they do not sign covered federal Government contracts), nor of independent contractors, nor of any kind of “employee” (let alone all “employees,” let alone “employees” covered by the Wage Hour Division’s separate definition which brings those “workers” (neutral term) who are “economically dependent” on the employer into the definition of the term “employee” subject to the Fair Labor Standards Act, even if not a “Common law” “employee” for purposes of OFCCP’s programs. Moreover, “Common Law” “employees” of covered federal Government contractors/subcontractors are merely “third party beneficiaries” to that contractor’s/subcontractor’s contract with the federal government. OFCCP’s Rules do not reach or dictate compliance requirements to the Common Law employees of a covered federal Government contractor/Subcontractor. Moreover, OFCCP’s Rules speak NOT to “employees” (of any sort), but rather only to what a covered federal Government contractor or subcontractor must do or not do].