By: Bill Osterndorf
On November 29, 2024, a proposal was issued in the Federal Register to change thresholds regarding laws enforced by the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) and other agencies. This proposal would affect Section 503 of the Rehabilitation Act of 1973 (Section 503) and the Vietnam Era Veterans Readjustment Assistance Act of 1974 (VEVRAA) among other laws.
FAR Council Action
The proposal to change thresholds was made by the Federal Acquisition Regulatory (FAR) Council. The FAR Council includes representatives of the Department of Defense, the General Services Administration, and NASA. The FAR Council controls the federal acquisition regulations (FARs), which govern much of the procurement of products and services done by the federal government.
The Federal Register notice issued by the FAR Council affects many federal agencies and programs. The FAR Council is required to update certain sections of the FARs every five years in order to adjust monetary thresholds in federal regulations to keep pace with inflation. The most recent updates to monetary thresholds occurred in federal fiscal year 2020.
There is a table in the latest FAR proposal that shows how monetary thresholds are updated. An example in that table relates to thresholds for programs where statutory language has a threshold between $10,000 and $99,999. Based on inflation calculations, a threshold in this category could be increased to the nearest $5,000.
Thresholds are not necessarily increased every five years. For example, in fiscal year 2020 many thresholds were not increased because of the low level of inflation in the previous five years. With higher inflation starting in 2022, the FAR Council is proposing increases in thresholds starting in federal fiscal year 2026, which starts October 1, 2025.
Impact on OFCCP
The FAR Council’s proposed changes would impact federal contractors and subcontracts subject to Section 503 and VEVRAA.
- The statutory language in Section 503 states that federal contractors and subcontractors have certain obligations when they have a contract or subcontract of $10,000 or more. The most recent change to the FARs regarding Section 503 lifted this amount to $15,000. The November 29 proposal would lift this requirement to $20,000.
- The statutory language in VEVRAA states that federal contractors and subcontractors have certain obligations when they have a contract or subcontractor of $100,000 or more. The most recent change to the FARs regarding VEVRAA lifted this amount to $150,000. The November 29 proposal would lift this requirement to $200,000.
The thresholds above are associated with requirements that federal contractors and subcontractors have regardless of number of employees. Among these requirements are the following:
- Include certain language in contracts and purchase orders
- Avoid discrimination based on disability status
- Provide reasonable accommodation to individuals with a disability
- Avoid discrimination based on protected veteran status
- List employment openings with the relevant state employment delivery system
For contractors and subcontractors with 50 or more employees and a contract or subcontract of $50,000 or more, there are additional requirements under Section 503 including the requirement to collect statistical data on applicants and employees and to prepare affirmative action plans regarding individuals with disabilities. It appears that the FAR Council’s proposal does NOT impact this $50,000 threshold.
For contractors and subcontractors with 50 or more employees and a contract or subcontract of $150,000 or more, there are additional requirements under VEVRAA including the requirement to collect statistical data on applicants and employees and to prepare affirmative action plans regarding protected veterans. It appears the FAR Council’s proposal WOULD impact this $150,000 threshold, raising it to $200,000.
No Effect on Executive Order 11246
OFCCP enforces a third law, Executive Order 11246 (EO 11246). Like Section 503 and VEVRAA, EO 11246 includes certain thresholds for compliance. However, these thresholds are exempt from the FAR Council requirements regarding the indexing of thresholds to inflation. This means that one of the critical thresholds affecting federal contractors and subcontractors, the threshold requiring a single contract or subcontract of $50,000 before affirmative action plans must be produced, would NOT be changed by the FAR Council’s proposal.
Comments Due by January 28, 2025
The public is allowed to provide comments on proposed changes to the FAR thresholds. Comments must be submitted by January 28, 2025 at https://www.regulations.gov/docket/FAR-2024-0001. Federal contractors and subcontractors may want to submit comments supporting these changes since they potentially decrease regulatory burdens on small organizations and on organizations that have smaller federal contracts or subcontracts.
DCI has a previous blog describing the most recent FAR changes in 2016 that affected OFCCP that may be of interest to readers. DCI will continue to monitor the status of the FAR proposal and provide information to readers when these thresholds will actually be changing.
