The Office of Federal Contract Compliance Programs (OFCCP) will soon require federal contractors and subcontractors to begin using a portal to certify the existence of their Affirmative Action Plans (AAPs). Additionally, the OFCCP has proposed two new rules that would require prime contractors to identify their subcontractors and change the way AAPs can be written. The combination of the portal and proposed rules presents a shifting landscape for government contractors in 2022.
Currently, federal contractors with more than 50 employees and federal contracts or subcontracts in excess of $50,000 must meet gender, race, and disability obligations as set forth in an AAP. AAPs covering veterans are also required for contractors and subcontractors with more than 50 employees and federal supply and service contracts or subcontracts over $150,000. Effective February 1, 2022, these companies will be required to certify compliance with all applicable AAP requirements. Construction contractors are exempt and expressly directed not to register for the new portal.
At this time, the OFCCP has provided only basic information on how the portal functions. The portal will allow contractors to certify compliance with AAP requirements and upload their AAP if the company is selected for an OFCCP audit. Absent an audit, there is no obligation to upload the actual AAP. The OFCCP has promised that more information will be available as the deadline approaches.
While the portal will open on February 1, 2022, for registration purposes, the certification feature will not be available until March 31, 2022. Contractors and subcontractors with existing AAP compliance obligations must certify their compliance by June 30, 2022. New contractors have 120 days after award of an applicable contract to first develop their AAP and then must register and certify their compliance through the portal within 90 days of developing that plan.
Separately, two new rules regarding the OFCCP are also under consideration. The first proposed rule will require all prime contractors to notify OFCCP of subcontractors under the prime award. Currently, only construction contractors awarding subcontracts over a certain threshold are required to notify the OFCCP. The second proposed rule would allow contractors to set specific goals based on race or ethnicity in an AAP rather than combining all races and ethnicities in a single goal. Both rules are currently being reviewed by the Office of Management and Budget and have not been formally published in the Federal Register.
The combination of the OFCCP portal and the proposed rules constitute notable changes in the federal government’s regulation of contractor employment practices and will undoubtedly increase the likelihood of OFCCP audits in the coming years for government contractors and their subcontractors if fully implemented.
We are monitoring the situation for developments and will share more details as they become available. If you have any questions about this legal update please contact the Government Contracts group.