by Keli Wilson, Senior Consultant, DCI Consulting

Effective June 14, 2011, OFCCP released a much anticipated new FAAP directive, outlining the application process to seek approval for and develop an affirmative action plan by a business function or unit rather than establishment. The OFCCP Director (Director Shiu) will determine final approval of the Functional Affirmative Action Plan (FAAP) agreement and written approval will be provided to the federal contractor. Expiration of the functional AAP agreement is now three years and, similar to establishment based AAP(s), FAAP(s) will be exempt from another compliance evaluation for 24 months from the date of closure of the previous compliance evaluation.

Requesting a Functional AAP agreement

The directive outlines specific protocol to follow when requesting a FAAP agreement. The federal contractor must submit a written request to the OFCCP Director explaining why it believes that use of a functional AAP would be most appropriate with timeframes in which it will take to move from establishment based to functional. The contractor must identify a corporate representative, name and contact information, responsible for overseeing the FAAP request. Also, the following criteria of a function or business unit must be met in order to be considered eligible for the FAAP program:

  1. Currently exist and operate autonomously.

  2. Include at least 50 employees.

  3. Have its own managing official.

  4. Have the ability to track and maintain its own personnel activity.

The request must be received no later than 120 calendar days prior to the expiration of the current corporate headquarters AAP or within 120 days from the award of the Federal contract if this is a first-time contractor or else the agreement will be denied by OFCCP. The OFCCP FAAP unit will provide a written acknowledgement of the request within 10 days, but this receipt will not constitute approval. OFCCP will send a letter requesting a conference within 30 days of receiving the request. The federal contractor must provide additional information on the people representing the contractor during the conference and must submit documents outlined in Attachment B of the directive. Additionally, Attachment C in the directive outlines discussion points the corporate representative must be prepared to discuss during the conference. Past compliance will be reviewed for determining if corrections have been made or if there are recurring violations. The OFCCP Director will review and approve the agreement once the federal contractor and FAAP Unit reach agreement. Until approval is granted, contractors are required to create establishment AAP(s) and if an establishment based AAP compliance evaluation is scheduled prior to final approval of FAAP agreement then the contractor must undergo the establishment based AAP compliance evaluation.

Additional key items to note that will be taken under consideration by the OFCCP when applying for FAAP approval:

  1. Current reporting structure under the requirements of a conciliation agreement.

  2. EEO violations of the requesting contractor for the past three years from the date of the application, including EEO violations from other local, state and federal government agencies.

  3. Federal contractors may still choose to request a combination of establishment and functional based AAP(s) through the functional AAP program.

  4. Demonstration by Federal contractor that recordkeeping and affirmative action responsibilities can be managed for all functional or business units regardless of size.

  5. Agreement to submit personnel activity in acceptable electronic formats if requested during a compliance evaluation (e.g., Acess/Excel).

Modifying an Approved Functional AAP Agreement

The OFCCP Director and the FAAP Director must be notified in writing within 30 calendar days of any significant changes which alter the original agreement (to determine whether the agreement needs to be modified or amended) or else OFCCP may terminate the FAAP agreement. If the agreement is modified, the agreement will still not extend the three year term.

Updating a Functional AAP Agreement

Contractors are required to report at least once a year within 30 days following the anniversary of its agreement any minor changes and if the contractor fails to submit an annual update then OFCCP may schedule the contractor for a compliance evaluation [emphasis added by author].

Renewing a Functional AAP Agreement

To be eligible for renewal, a contractor must have had at least two functional units undergo a compliance evaluation during the three year term [emphasis added by author]. If the contractor only has one functional unit then that unit must undergo a compliance evaluation during the three year term. OFCCP will use administratively neutral selection criteria to select at least two functional or business units to be audited during the three year agreement term. Must submit a renewal request no later than 120 calendar days prior to the expiration of the current functional AAP agreement. The agreement will expire at the end of the three year term if the contractor fails to request a renewal.

Termination of Functional AAP Agreement

Either party may terminate the functional AAP agreement with a 90 calendar day written notice including a brief explanation of the reason(s) for the termination and the effective date of the termination. Examples of why OFCCP may terminate agreement include violation of the laws and regulations enforced by OFCCP (e.g., employment discrimination, failure to develop and maintain an AAP, failure to maintain accurate records, failure to permit OFCCP access, failure to make good faith efforts, failure to account for all employee’s in an AAP, or failure to notify OFCCP of any modifications). If terminated by OFCCP, the contractor may not reapply for another FAAP agreement for a period of three years and all employees would need to be covered by establishment based AAP(s) within 120 days from notification of termination.

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