[Federal Register Volume 71, Number 13 (Friday, January 20, 2006)]
[Proposed Rules]
[Pages 3374-3379]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-646]
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Part III
Department of Labor
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Office of Federal Contract Compliance Programs
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41 CFR Part 60-2
Affirmative Action and Nondiscrimination Obligations of Contractors and
Subcontractors; Equal Opportunity Survey; Proposed Rule
Federal Register / Vol. 71 , No. 13 / Friday, January 20, 2006 /
Proposed Rules
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DEPARTMENT OF LABOR
Office of Federal Contract Compliance Programs
41 CFR Part 60-2
RIN 1215-AB53
Affirmative Action and Nondiscrimination Obligations of
Contractors and Subcontractors; Equal Opportunity Survey
AGENCY: Office of Federal Contract Compliance Programs, Labor.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Office of Federal Contract Compliance Programs (OFCCP)
commissioned two studies to determine whether data submitted by
contractors in response to the Equal Opportunity Survey (EO Survey)
could be used to develop an effective and efficient tool to target
those contractors most likely to be discriminating. The first study
failed to find a correlation between the predictive variables generated
from the EO Survey and determinations of noncompliance. The second
study showed that the EO Survey did not provide sufficiently useful
data for enforcement targeting purposes. In light of these findings,
together with a review of both the costs associated with the EO Survey
and the utility of the EO Survey in accomplishing any of its stated
objectives, OFCCP is proposing to remove the current requirement for
nonconstruction federal contractors to file the EO Survey under Section
60-2.18. This proposed change is intended to more effectively focus
enforcement resources and to eliminate a regulatory requirement that
fails to provide value to either OFCCP enforcement or contractor
compliance. OFCCP's resources could be better directed for the benefit
of victims of discrimination, the government, contractors, and
taxpayers.
DATES: Comments must be received on or before March 21, 2006.
ADDRESSES: You may submit comments, identified by RIN number 1215-AB53,
by any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
E-mail: [email protected]. Include ``RIN number 1215-
AB53'' in the subject line of the message.
Fax: (202) 693-1304 (for comments of 6 pages or fewer).
Mail: Director, Division of Policy, Planning, and Program
Development, Office of Federal Contract Compliance Programs, Room
N3422, 200 Constitution Avenue, NW., Washington, DC 20210.
Receipt of submissions will not be acknowledged; however, the
sender may request confirmation that a submission has been received by
telephoning OFCCP at (202) 693-0102 (voice) or (202) 693-1337 (TTY)
(these are not toll-free numbers).
All comments received, including any personal information provided,
will be available for public inspection during normal business hours at
Room C3325, 200 Constitution Avenue, NW., Washington, DC 20210. People
needing assistance to review comments will be provided with appropriate
aids such as readers or print magnifiers. Copies of this Notice of
Proposed Rulemaking will be made available in the following formats:
Large print; electronic file on computer disk; and audiotape. To
schedule an appointment to review the comments and/or to obtain this
Notice of Proposed Rulemaking in an alternate format, contact OFCCP at
the telephone numbers or address listed above.
FOR FURTHER INFORMATION CONTACT: Director, Division of Policy,
Planning, and Program Development, Office of Federal Contract
Compliance Programs, 200 Constitution Avenue, NW., Room N3422,
Washington, DC 20210. Telephone: (202) 693-0102 (voice) or (202) 693-
1337 (TTY).
SUPPLEMENTARY INFORMATION:
I. Background
A. History of Equal Opportunity Survey
Executive Order 11246, as amended, requires that Federal Government
contractors and subcontractors ``take affirmative action to ensure that
applicants are employed, and that employees are treated during
employment, without regard to their race, color, religion, sex, or
national origin.'' Section 202(1). Affirmative action under the
Executive Order means more than passive nondiscrimination; it requires
that contractors take affirmative steps to identify and eliminate
impediments to equal employment opportunity. The affirmative steps
include numerous recordkeeping obligations designed to assist the
contractor, in the first instance, and also OFCCP in monitoring the
contractor's employment practices. For example, contractors are
generally required to maintain employment and personnel records for two
years, to file annually an EEO-1 Report, and to develop an affirmative
action program (AAP) that includes several quantitative analyses,
identification of problem areas, development and execution of an
action-oriented program to correct any problems identified, and
development and implementation of an auditing system to periodically
measure the effectiveness of the AAP. See 41 CFR 60-1.7, 60-1.12(a),
60-2.1, 60-2.10, and 60-2.17. Today's notice proposes no changes to
these requirements.
On November 13, 2000, OFCCP published a final rule (165 FR 68046)
revising regulations found at 41 CFR parts 60-1 and 60-2 relating to
affirmative action programs and recordkeeping. Section 60-2.18 of the
final rule requires that nonconstruction contractor establishments
designated by OFCCP prepare and file an Equal Opportunity Survey (EO
Survey). The EO Survey contains information about personnel activities,
compensation and tenure data, and certain information about the
contractor's affirmative action program. OFCCP recordkeeping rules
require contractors to maintain information necessary to complete the
EO Survey, although not in the format called for by the survey
instrument. See 65 FR 26100 (May 4, 2000). The EO Survey had three
major objectives:
(1) To improve the deployment of scarce federal government
resources toward contractors most likely to be out of compliance;
(2) To increase agency efficiency by building on the tiered-review
process already accomplished by OFCCP's regulatory reform efforts,
thereby allowing better resource allocation; and
(3) To increase compliance with equal opportunity requirements by
improving contractor self-awareness and encourage self-evaluations.
See 165 FR 68039 (Nov. 13, 2000); see also 65 FR 26101 (May 4,
2000).
The development of the EO Survey began in March 1999. During the
initial development stage, discussions were held with OMB and meetings
were held with contractors and contractor representatives, civil rights
groups, and women's groups. A version of the EO Survey was field tested
beginning in August 1999.
In April 2000, a pilot EO survey was sent to 7,000 contractors.
After receipt of pilot EO Survey responses, OFCCP commissioned a study
to determine whether the pilot EO Survey results could be used to
predict whether a contractor would have findings of non-compliance.
Bendick & Eagan Economic Consultants, Inc., The Equal Opportunity
Survey: Analysis of a First Wave of Survey Responses (September 2000)
(Bendick Report). The Bendick Report failed to find a correlation
between the predictive variables, generated from the EO Survey, and
determinations of noncompliance. Data problems prevented Bendick from
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conducting a full-scale analysis of the pilot EO Survey's predictive
power. The report stated that the EO Survey results might in the future
be a way of finding contractors that discriminate, but the pilot EO
Survey was not. Bendick Report at 18-27.\1\ The EO Survey sent to
contractors in December 2000 was not substantively different from the
pilot EO Survey.
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\1\ Although the Executive Summary of the Bendick Report states
that the EO Survey could enhance the efficiency and effectiveness of
OFCCP's monitoring of contractor compliance, the report itself does
not find data to support that statement. It acknowledges that the
April 2000 pilot EO Survey, which the report reviews, ``does not
offer circumstances in which the full predictive power of the survey
can be revealed.'' Bendick Report at 20. It explains that the report
``presents only a preliminary examination of the ability of selected
variables drawn from the EO Survey to differentiate establishments
likely to have non-compliance findings from those not likely to have
such outcomes.'' Bendick Report at 22. The report concludes only
that given the limitations of the study there are ``preliminary
positive indications'' of predictive power that could ``eventually''
be demonstrated in the future. However, the report could not fully
validate the predictive powers of the EO Survey. Bendick Report at
25.
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OFCCP mailed 53,000 EO Surveys between December 2000 and March
2001, 10,000 in December 2002, 10,000 in December 2003, and 10,000 in
December 2004.
B. Analysis of the Equal Opportunity Survey
In January 2003, OFCCP published a Notice in the Federal Register
seeking a two-year extension of the PRA clearance that stated: ``Time
constraints and a number of data problems affected an earlier pilot
study of the EO Survey data in such a way so as not to be able to
assess the Survey's predictive power. To perform a study that is not
limited by these obstacles, OFCCP has engaged an outside contractor to
study the Survey data. The contractor will assess data from the EO
Survey submissions as part of its study.''
OFCCP contracted with Abt Associates, Inc. (Abt), of Cambridge,
Massachusetts, to study whether EO Survey data could be used to develop
a model to more effectively target those contractors engaging in
systemic discrimination. OFCCP conducted compliance evaluations of a
sample of supply and service contractor establishments completing the
2002 EO Survey.\2\ Ultimately the study focused on 1,888 establishments
that had completed compliance reviews and had reliable EO Survey data.
Of these 1,888 cases, OFCCP found systemic discrimination in 67 cases
(3.5%). Results of the compliance reviews and EO Surveys were analyzed
to determine whether a model could be developed that would predict
which contractors in the sample were engaged in systemic discrimination
based solely on the EO Survey data submitted. An Evaluation of OFCCP's
Equal Opportunity Survey (Abt Report) at 12-37.
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\2\ As a basis for the Abt study, the 2002 EO Survey was sent to
a statistical sample of 10,018 supply and service contractor
establishments. A random subsample of 6,400 of these establishments
was designated for compliance evaluations. Of these 6,400, only
3,723 establishments responded to the EO Survey. Of these 3,723,
only 2,651 had data that allowed OFCCP to complete a compliance
evaluation. Thus, OFCCP completed about 2,651 compliance
evaluations. However, of the 2,651, a significant number, 763, had
missing or incoherent data on the EO Survey, and were not used in
the study. Ultimately the study focused on 1,888 cases that had
completed compliance reviews and had reliable EO Survey data. An
Evaluation of OFCCP's Equal Opportunity Survey (Abt Report) at 5-6,
10-14, 28; Abt Report, Appendix E, Tables A and B.
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In summer 2005, Abt Associates presented OFCCP with its report
reviewing the 2002 EO Survey in the Abt Report. The Abt Report is
posted on OFCCP's Web site at http://www.dol.gov/esa/ofccp/index.htm
and is available for public inspection during normal business hours at
Room C3325, 200 Constitution Avenue, NW., Washington, DC 20210.
Abt utilized standard statistical techniques to determine if there
was any relation between the data reported on the EO Surveys and the
determinations of systemic discrimination found through OFCCP
compliance reviews. Abt developed potential predictor variables from
Part B (personnel activity by EEO-1 category) and Part C (compensation
data by EEO-1 category) of the EO Survey for the purpose of developing
a statistical model aimed at targeting establishments that are more
likely to be engaged in systemic discrimination.\3\ Nearly all the
predictor variables fell into two broad groups. One group attempted to
measure the treatment of females relative to males within the same
establishment. Another group of variables, in a parallel fashion,
compared the treatment of minorities with that of non-minorities within
the same establishment. Corresponding comparative variables were also
developed to reflect the extent to which an individual establishment
departs from other establishments in its comparison group, defined by
industry and geography. Id. at 15-20.
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\3\ Abt also considered previous work on discrimination
including the data from the 2000 Pilot Test of the EO Survey,
carried out by OFCCP, and the Bendick Report.
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After insuring data quality and performing a preliminary analysis
on the data, Abt constructed a total of 125 potential predictor
variables, derived from all reported aspects of personnel activity,
compensation, and tenure. The first phase of analysis examined the
relation between the findings of systemic discrimination in compliance
reviews and each of the predictor variables. Most predictor variables
derived from the EO Survey data were found to have no relation to
findings of systemic discrimination. No single variable was found to
have a high level of predictive ability. Id. at 21-24. Further, those
establishments with findings of systemic discrimination did not share
any combination of modeled characteristics that set them apart from
establishments with findings of no systemic discrimination. Id. at 39.
Only 22 of the 125 potential predictor variables were found to have
``some association'' with the systemic discrimination
determinations.\4\ Combinations of the 22 predictors were examined both
by including all of those variables in a multiple-variable logistic
regression model and by a stepwise logistic regression model.\5\ Abt
identified, and used in a final model, only four variables, out of the
initial 125 potential predictor variables, that when used in
combination, were related to the presence or absence of systemic
discrimination:
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\4\ Abt broadly defined ``some association'' to take into
account the possibility that several predictors, each individually
having a very weak association, may combine to make a strong
contribution in a multiple-variable model.
\5\ A stepwise regression model considers, at each iteration,
whether any variable should be added to the model and then considers
whether any variables in the model should be removed.
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Whether the establishment reported more than 200 full-time
employees;
The average (over EEO-1 categories) of the ratio of
average tenure among minority employees to average tenure among non-
minority employees;
The absolute value of the difference between the
proportion of female employees and the proportion of male employees in
EEO-1 Category 3 (technicians);
The average (over EEO-1 categories) of the ratio of the
female-to-male tenure ratio to the median of those ratios in the
establishment's comparison group (defined by industry and geography).
Id. at 24-38.
However, Abt found the model's predictive power to be only slightly
better than chance. Screening on the basis of the model produced large
numbers of false positives, that is, the model predicted numerous
instances of systemic discrimination in the sample where OFCCP
identified none. Specifically, using a cutoff for the probability that
an establishment discriminates near the overall rate, the model
suggests that 637 out of the 1,888
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establishments in the study discriminate, yet only 42 (6.5%) of these
are true positives. Thus, of 637 establishments that would be
classified by the EO Survey results as suspected of having systemic
discrimination, 93% would be false positives. Id. at 33. Even at a
higher cutoff rate, where only 143 establishments are inspected, 127
were found to have no systemic discrimination, so the false positive
rate remains high at 89% (i.e., 127/143).
Furthermore, the EO Survey model wrongly classifies a significant
portion of true discriminators as non-discriminators, and thus would
not target them for compliance evaluations. If the 637 establishments
were chosen for review on the basis of the EO Survey model, 1,251
establishments would not have been reviewed. This group of 1,251
predicted by the EO Survey to lack discriminators would, in fact, have
contained 21 of the 63 cases (33%) of systemic discrimination. Under
the higher cutoff rate, about 75% of the establishments (47
contractors) that were found to have systemic discrimination would not
have been reviewed under the EO Survey model. Id. at 34-35.\6\
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\6\ The Abt Report stated that a model based on 4 out of a
possible 125 (see infra) predictor variables ``fit the data
reasonably well and had acceptable predictive ability.'' However,
this statement is purely in the context of statistical modeling, not
of enforcement utility. The Abt report continues that ``models tend
to be `tuned' to the data that are used in fitting them, and so
measures of their performance may be optimistic.'' It further
observed that ``the low prevalence of systemic discrimination in the
population of supply and service contractors, and its relation to
some of the predictor variables, however, limit the usefulness of
the model and the survey.'' Abt Report at pp. 38-39. While use of
these few predictor variables may have some statistical usefulness,
this does not imply that the EO Survey has statistical validity or
enforcement value. Rather, as discussed above, the Abt Report's
findings of a false positive rate of 93% and a false negative rate
of 33% demonstrate the EO Survey's lack of enforcement utility.
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In addition, two of the variables in the Abt model (whether the
establishment reported more than 200 full-time employees and the
absolute value of the difference between the proportion of female
employees and the proportion of male employees in EEO-1 Category 3) can
be obtained without the EO Survey from the EEO-1 form, which
contractors are required to submit to OFCCP pursuant to 41 CFR 60-1.7
and which OFCCP already uses in targeting its compliance activities.
The Abt Report concludes that a model based on the two data
elements that can be derived from EEO-1 forms has predictive ability
only ``slightly lower'' than the four-variable model. Id. at 37. The
Abt Report also suggests that OFCCP could explore developing a
selection model based on data collected during compliance reviews
rather than through an EO Survey. This approach would have several
advantages, including collection of more accurate and more pertinent
data than provided by the current EO Survey. Id. at 39.
C. Limited Utility of the EO Survey
As is discussed in more detail below, OFCCP has concluded that the
EO Survey misdirects valuable enforcement resources and does not meet
any of its three objectives set out in the November 13, 2000 preamble.
1. The EO Survey Does Not Improve the Deployment of Scarce Federal
Government Resources Toward Contractors Most Likely To Be Out of
Compliance
In promulgating the EO Survey requirement, OFCCP expected that it
would ``enable OFCCP to more effectively and efficiently select
contractor establishments that may have possible problems for
compliance evaluations, thus enhancing the agency's ability to focus
its enforcement resources on those establishments most likely to be out
of compliance.'' 65 FR 26100 (May 4, 2000). This expectation has not
been fulfilled. The Abt Report found selection models based on EO
Survey data would have predictive power only slightly better than
chance. EO Survey data does not in any meaningful way improve OFCCP's
ability to target for review those contractors engaging in systemic
discrimination. The vast majority of contractors identified for review
under an EO Survey-based selection model would not be found by OFCCP to
have engaged in systemic discrimination. In addition, the model would
not identify for review a significant portion of establishments where
OFCCP would in fact find systemic discrimination. A survey that
produces 93% false positives and misses a substantial percentage of the
cases of systemic discrimination is, in the language of the November
13, 2000 Preamble, ``no longer of value.'' \7\
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\7\ When promulgating the final rule, OFCCP anticipated that
some data elements may not be useful and suggested they could be
altered or deleted when ``the data element in question is no longer
of value.'' 165 FR 68037 (Nov. 13, 2000).
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The Abt Report suggests that selection models based on EEO-1 data
or data collected during compliance evaluations may be essentially
equivalent or better than the models based on the EO Survey. Models
based on these types of data would provide a significant administrative
and cost saving to OFCCP, allowing the agency to more vigorously
investigate systemic discrimination cases.
In addition, the development of the EO Survey was expensive.
Moreover, the distribution, collection, and processing of the EO Survey
has cost an average of $356,000 per year and this does not account for
the cost of validating the data, nor any of the time spent by OFCCP
personnel working on the EO Survey. This would be money well spent if
the EO Survey provided an accurate targeting model. However, as the Abt
Report explains, it does not. If OFCCP were to make the EO Survey a
focus of its targeting for compliance reviews, then a significant
amount of compliance officer time would be consumed by enforcing
compliance with the EO Survey reporting requirement, rather than
investigating systemic discrimination. Further, the Abt Report
demonstrates that using the EO Survey for targeting would direct
compliance officers away from contractors who are discriminating. In
addition, the EO Survey would direct them--93% of the time--to
contractors who are not discriminating. Such a broad implementation of
the EO Survey would divert scarce resources away from enforcement
methods that are effective.
In light of these EO Survey shortcomings and OFCCP's general
practice of continually improving its process, OFCCP has continued its
efforts to develop a selection model to better identify contractors who
may be engaging in systemic discrimination. The agency is in the
process of developing and implementing a new system for selecting
contractors for compliance evaluations, called the Federal Contractor
Selection System (FCSS). Although in the initial stages, OFCCP believes
that FCSS will better target compliance evaluations based on
indications of potential workplace discrimination. The new system is
based on a thorough study of data from 10 years of OFCCP compliance
evaluations to formally identify and characterize relationships between
reported EEO-1 workforce profiles and findings of discrimination. OFCCP
is currently working to refine the new selection model. OFCCP expects
that the improved targeting objective of the EO Survey can be better
achieved through another selection system, such as the FCSS, that is
more effective in identifying potential discrimination and is more cost
effective for the agency, than through a model based on the EO Survey.
Irrespective of the effectiveness of the FCSS, the Department has
determined that the EO Survey has, at best, only marginal value in
improving
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the deployment of scarce federal government resources toward
contractors most likely to be out of compliance. And any marginal value
is more than offset by the costs EO Survey, which divert scarce
resources away from effective enforcement programs.
2. The EO Survey Does Not Increase Agency Efficiency by Building on the
Tiered-review Process Already Accomplished by OFCCP's Regulatory Reform
Efforts, Thereby Allowing Better Resource Allocation
OFCCP anticipated that it would use the EO Survey to increase
agency efficiency by building on OFCCP's tiered review process. OFCCP
has found, however, that the EO Survey has not contributed to agency
efficiency in this manner. As discussed above, the Abt Report
demonstrates that EO Survey data does not improve OFCCP's ability to
target for review those contractors engaged in systemic discrimination.
These findings of the Abt Report lead OFCCP to conclude that the EO
Survey data would have similar disutility in predicting discrimination
in the context of an individual compliance evaluation. In other words,
because the EO Survey data has limited utility in predicting which
contractors are engaged in systemic discrimination, it follows that EO
Survey data would have limited utility in predicting whether and how
the selected contractors are discriminating.
Moreover, the EO Survey data is largely duplicative of the
information OFCCP receives during the first stages of a compliance
evaluation. Under the tiered review system, a compliance evaluation
consists of any one or any combination of the following investigative
procedures: Compliance checks, off-site review of records, focused
reviews and full compliance reviews. 41 CFR 60-1.20(a). The level of
agency resources expended on a review is based on the likelihood of
uncovering substantive violations as determined at the early stages of
the review.
A compliance evaluation generally begins with a review of the data
submitted by the contractor in response to a scheduling letter. OFCCP
refers to this tier of the review as the desk audit. The contractor
submits detailed establishment-specific information on personnel
activities such as hiring, promotion, and termination, organized by job
group or job title, and also submits detailed, establishment-specific
annualized compensation data, organized by salary range, rate, grade,
or level. OFCCP evaluates this data in the desk audit stage to
determine whether it discloses potential discrimination that warrants
more in-depth review.
The data submitted in response to the EO Survey is largely
duplicative of desk audit data; indeed, the four EO Survey data
elements found to have some discrimination predictive ability are
available to OFCCP at the desk audit stage. The EO Survey data is
presented, however, in a less-detailed, aggregate form, whereas the
desk audit data is more detailed and tailored to an actual compliance
evaluation. To the extent the EO Survey data is not duplicative of the
desk audit data, the EO Survey data is presented in such an aggregate
form that it cannot be used to identify discrimination, and thus does
not contribute to the tiered review process.
OFCCP has continued its efforts to refine the tiered review process
to better identify systemic discrimination in general, and compensation
discrimination in particular, through methods other than use of the EO
Survey. In 2003, OFCCP introduced new Active Case Management (ACM)
procedures to be used in connection with desk audit reviews. Under ACM
procedures, OFCCP opens a larger number of reviews than in the past,
uses automated statistical methods, and ranks and prioritizes
establishments for a full review based on the probability that
discrimination would be uncovered during a more in-depth review. OFCCP
closes cases during the desk audit if no statistical indicators are
found that imply the presence of discrimination and thereby warrant
further attention. More resources are then focused on full scale
compliance evaluations of establishments where statistical indicators
of systemic discrimination are found.
Additionally, OFCCP is developing guidance for use by OFCCP and
contractors to assist in better identifying systemic compensation
discrimination. On November 16, 2004, OFCCP published in the Federal
Register, for notice and comment, a set of formal guidelines
``Interpreting the Nondiscrimination Requirements of Executive Order
11246 with Respect to Systemic Compensation Discrimination.'' 69 FR
67246 (Nov. 16, 2004). The proposed Interpretative Standards for
Systemic Compensation Discrimination under Executive Order 11246 are
intended to govern OFCCP's analysis of contractors' compensation
practices. In addition, these proposed standards are intended to
constitute a definitive interpretation of the Sex Discrimination
Guidelines, codified at 41 CFR 60-20, and EO 11246 with respect to
systemic compensation discrimination. The proposed standards govern how
OFCCP investigates systemic compensation discrimination, describing
when employees are similarly situated for purposes of evaluating
compensation decisions and when statistically significant compensation
disparities constitute evidence of discrimination. The data required to
make these judgments are not available in the EO Survey.
OFCCP expects that the improved tiered review procedures objective
of the EO Survey can be better achieved through new procedures such as
ACM and proposed compensation discrimination standards than through the
EO Survey. The new procedures promise to be more effective in
identifying potential discrimination and are more cost effective for
the agency.
3. The EO Survey Does Not Increase Compliance With Equal Opportunity
Requirements by Improving Contractor Self-Awareness and Encourage Self-
Evaluations
OFCCP expected that the EO Survey requirement would ``heighten
contractor awareness of each establishment's equal employment
opportunity performance, which should encourage contractors to conduct
self-audits of their performance and to make any necessary corrections
and improvements in their equal employment opportunity programs [and
that] the heightened awareness of performance, along with increased
monitoring presence, will improve the level of compliance.'' 65 FR
26100 (May 4, 2000). The data contained in the EO Survey includes
information, in summary form, about personnel activities, compensation
and tenure data, and information about the contractor's affirmative
action program. None of this information alone is sufficient to
indicate discrimination or the lack of discrimination at a contractor
establishment. As discussed above, the information lacks utility to
OFCCP in targeting contractors and in conducting compliance
evaluations. Similarly, the information would appear to provide no
additional insights to the contractor. As the EO Survey responses do
not indicate discrimination, they do not assist contractors in
correcting and improving their equal employment opportunity programs.
Moreover, since the EO Survey is only being sent to federal
contractors--a group already subject to extensive equal employment
opportunity and affirmative action obligations--it does not expand the
population of employers who would undertake self-evaluations.
Furthermore, in recent years, OFCCP has significantly increased its
compliance assistance efforts in order to
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heighten contractors' awareness of their equal opportunity obligations
and to encourage self-evaluations through methods other than the EO
Survey. OFCCP's compliance assistance includes over 1,000 regular
compliance assistance seminars and workshops conducted throughout the
country every year, and an extensive amount of compliance assistance
material has been updated and added to OFCCP's webpage since 2001. In
FY2005, OFCCP developed and made available to contractors on its
webpage an elaws advisory interactive electronic tool that permits
contractors to determine whether they are covered by the laws enforced
by OFCCP and, if so, identifies their specific obligations. The OFCCP
webpage contains extensive guidance about complying with OFCCP's laws,
including a copy of the OFCCP compliance manual, OFCCP directives,
compliance guides, and responses to frequently asked questions. OFCCP
has established a National Office telephone help desk and an e-mail
mailbox contractors can use to obtain specific compliance information
tailored to their individual needs.
OFCCP compliance assistance materials include guidance about
performing contractor self-analyses. For example, OFCCP has made
available a sample affirmative action program on its webpage, as well
as a link to Census data that provides contractors with easy access to
statistical data on the availability of women and minorities in
particular occupational categories and geographic areas. This Census
data helps contractors to develop required availability analyses. OFCCP
has also proposed a set of general guidelines that contractors can use
to evaluate their compensation practices: ``Guidelines for Self-
Evaluation of Compensation Practices for Compliance with
Nondiscrimination Requirements of Executive Order 11246 with Respect to
Systemic Compensation Discrimination.'' 69 FR 67252 (Nov. 16, 2004).
Moreover, OFCCP regulations already require contractors to conduct
self-evaluations, including a compensation self-evaluation, see 41 CFR
60-2.10 et seq.
D. Burdens Imposed by the EO Survey
The EO Survey imposes a significant burden on the contractor
establishments that are required to complete the EO Survey. As
discussed in greater detail in the Paperwork Reduction Act section,
below, each EO Survey is estimated to take each respondent 21 hours to
complete. Based upon an estimated 10,000 respondents per year, the EO
Survey costs contractor establishments 210,000 hours per year. Using
data from the Bureau of Labor Statistics' 2004 National Compensation
Survey, the total annual cost imposed on the regulated community by the
EO Survey requirements approaches $6 million.
The EO Survey also consumes scarce OFCCP resources, diverting them
away from effective enforcement programs, as discussed above. In
addition, the development of the EO Survey was expensive. Moreover, the
distribution, collection, and processing of the EO Survey has cost an
average of $356,000 per year and this does not account for the cost of
validating the data, nor any of the time spent by OFCCP personnel
working on the EO Survey.
E. Proposal To Eliminate the EO Survey Requirement
OFCCP has concluded that the EO Survey has failed to provide the
utility anticipated when the regulation was promulgated in 2000, and
consequently does not provide sufficient programmatic value to be
maintained as a requirement. In light of the failure of the EO Survey
as an enforcement tool, OFCCP concludes that it is no longer of value
to accomplish the objectives it was designed to address. OFCCP has
developed, and will continue to develop, other more useful and cost
effective methods to accomplish these objectives. Therefore, OFCCP has
determined that continued use of the EO Survey cannot be justified and
proposes to eliminate this regulatory requirement as no longer of value
to OFCCP. Elimination of this requirement allows OFCCP to focus more
effectively its enforcement resources to further the overall goal of
the OFCCP program to promote and ensure equal opportunity for those
employed or seeking employment with Government contractors. 41 CFR 60-
1.1.
II. Authority
Authority: E.O. 11246, 30 FR 12319, and E.O. 11375, 32 FR 14303,
as amended by E.O. 12086, 43 FR 46501.
III. Overview of the Rule
OFCCP proposes eliminating the requirement under Section 60-2.18
that nonconstruction federal contractors file the EO Survey. OFCCP
proposes the removal of Section 60-2.18 from part 60-2. Elimination of
the EO Survey requirement will not affect any other regulatory
obligation to collect and maintain information or any other
recordkeeping or nondiscrimination requirement. See, e.g., 41 CFR 60-
1.7, 60-1.4, 60-1.12(a), 60-2.1, 60-2.10, and 60-2.17.
IV. Regulatory Procedures
A. Paperwork Reduction Act
The proposed rule eliminates an information collection which is
subject to review by the Office of Management and Budget (OMB) under
the Paperwork Reduction Act of 1995. The Equal Opportunity Survey was
reviewed and approved by OMB under OMB No. 1215-0196. The EO Survey
burden is estimated to be 21 hours per respondent. (The EO Survey does
not impose any recordkeeping requirements since the information
required for the EO Survey comes from the records contractors are
required to retain by 41 CFR Part 60.) Based upon an estimated 10,000
respondents per year, the proposed rule would reduce the total burden
by 210,000 hours per year (i.e., 21 hours times 10,000 respondents).
OFCCP estimated the annual cost reduction to the respondents based
on Bureau of Labor Statistics' 2004 National Compensation Survey, which
lists the hourly average wages for executive, administrative, and
managerial as $36.22 and the hourly average wages for administrative
support as $14.21. OFCCP then multiplied these figures by 1.4 to
account for fringe benefits to arrive at an annual hourly cost of
$50.71 for executive, administrative, and managerial and the hourly
average wages for administrative support as $19.89. As for the 2000
final rule, OFCCP estimates that for the EO Survey, 25% of the burden
hours will be executive, administrative, and managerial and 75% will be
administrative support.
OFCCP has calculated the total estimated annualized cost of the EO
Survey as follows:
Executive, Administrative, and Managerial: 210,000 x 0.25
x $50.71 = $2,662,275
Administrative Support: 210,000 x 0.75 x $19.89 =
$3,132,675
Total Estimated Annual Reduction in Respondent Costs =
$5,794,950
Thus, OFCCP estimates that the proposed elimination of the EO
Survey will reduce the costs for the respondents by almost $6 million
each year.
B. Executive Order 12866
This proposed rule has been drafted and reviewed in accordance with
Executive Order 12866, section 1(b), Principles of Regulation. The
Department has determined that this notice of proposed rulemaking is a
``significant regulatory action'' under Executive Order 12866, section
3(f), Regulatory Planning and Review. The Department has determined
that this
[[Page 3379]]
notice of proposed rulemaking is not ``economically significant'' as
defined in section 3(f)(1) of Executive Order 12866. Based on an
analysis of the data the proposed rule is not likely to: (1) Have an
annual effect on the economy of $100 million or more or adversely
affect in a material way the economy, a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or state, local, or tribal governments or communities; (2)
create a serious inconsistency or otherwise interfere with an action
taken or planned by another agency; or (3) materially alter the
budgetary impact of entitlements, grants, user fees, or loan programs
or the rights and obligations of recipients thereof. As was discussed
above in Section A, OFCCP estimates that the proposed elimination of
the EO Survey will reduce the costs for respondents by $6 million each
year. Therefore, the information enumerated in section 6(a)(3)(C) of
the order is not required. Pursuant to Executive Order 12866, this
proposed rule has been reviewed by the Office of Management and Budget.
C. Small Business Regulatory Enforcement Fairness Act
The Department has concluded that the proposed rule is not a
``major'' rule under the Small Business Regulatory Enforcement Fairness
Act of 1996 (5 U.S.C. 801 et seq.). In reaching this conclusion, the
Department has determined that the proposed rule will not likely result
in (1) an annual effect on the economy of $100 million or more; (2) a
major increase in costs or prices for consumers, individual industries,
Federal, State or local government agencies, or geographic regions; or
(3) significant adverse effects on competition, employment, investment,
productivity, innovation, or on the ability of United States-based
enterprises to compete with foreign-based enterprises in domestic or
export markets.
D. Executive Order 13132
OFCCP has reviewed the proposed rule in accordance with Executive
Order 13132 regarding federalism, and has determined that it does not
have ``federalism implications.'' The proposed rule does not ``have
substantial direct effects on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government.''
E. Unfunded Mandates Reform
Executive Order 12875--This proposed rule, if promulgated in final,
will not create an unfunded Federal mandate upon any State, local, or
tribal government.
Unfunded Mandates Reform Act of 1995--This proposed rule, if
promulgated in final, will not include any Federal mandate that may
result in increased expenditures by State, local, and tribal
governments, in the aggregate, of $100 million or more, or increased
expenditures by the private sector of $100 million or more.
List of Subjects in 41 CFR Part 60-2
Civil rights, Discrimination in employment, Employment, Equal
employment opportunity, Government contracts, and Labor.
Signed at Washington, DC, this 17th day of January, 2006.
Victoria A. Lipnic,
Assistant Secretary for Employment Standards.
Charles E. James, Sr.,
Deputy Assistant Secretary for Federal Contract Compliance.
In consideration of the foregoing the Office of Federal Contract
Compliance Programs, Employment Standards Administration, Department of
Labor, proposes to amend part 60-2 of Title 41 of the Code of Federal
Regulations as follows:
PART 60-2--AFFIRMATIVE ACTION PROGRAMS
1. The authority citation for part 60-2 continues to read as
follows:
Authority: E.O. 11246, 30 FR 12319, and E.O. 11375, 32 FR 14303,
as amended by E.O. 12086, 43 FR 46501.
Sec. 60-2.18 [Removed and reserved]
2. Remove and reserve Sec. 60-2.18.
[FR Doc. E6-646 Filed 1-19-06; 8:45 am]
BILLING CODE 4510-CM-P