[Code of Federal Regulations] [Title 23, Volume 1] [Revised as of April 1, 2002] From the U.S. Government Printing Office via GPO Access [CITE: 23CFR230.409] [Page 63-68] TITLE 23--HIGHWAYS CHAPTER I--FEDERAL HIGHWAY ADMINISTRATION, DEPARTMENT OF TRANSPORTATION PART 230--EXTERNAL PROGRAMS--Table of Contents Subpart D--Construction Contract Equal Opportunity Compliance Procedures Sec. 230.409 Contract compliance review procedures. (a) General. A compliance review consists of the following elements: (1) Review Scheduling (Actions R-1 and R-2). (2) Contractor Notification (Action R-3). (3) Preliminary Analysis (Phase I) (Action R-4). (4) Onsite Verification and Interviews (Phase II) (Action R-5). (5) Exit Conference (Action R-6). (6) Compliance Determination and Formal Notification (Actions R-8, R-9, R-10, R-11, R-12). The compliance review procedure, as described herein and in appendix D provides for continual monitoring of the employment process. Monitoring officials at all levels shall analyze submissions from field offices to ensure proper completion of procedural requirements and to ascertain the effectiveness of program implementation. (b) Review scheduling. (Actions R-1 and R-2). Because construction work forces are not constant, particular attention should be paid to the proper scheduling of equal opportunity compliance reviews. Priority in scheduling equal opportunity compliance reviews shall be given to reviewing those contractor's work forces: (1) Which hold the greatest potential for employment and promotion of minorities and women (particularly in higher skilled crafts or occupations); (2) Working in areas which have significant minority and female labor forces within a reasonable recruitment area; (3) Working on projects that include special training provisions; and (4) Where compliance with equal opportunity requirements is questionable. (Based on previous PR-1391's (23 CFR part 230, subpart A, appendix C) Review Reports and Hometown Plan Reports). In addition, the following considerations shall apply: (5) Reviews specifically requested by the Washington Headquarters shall receive priority scheduling; (6) Compliance Reviews in geographical areas covered by areawide plans would normally be reviewed under the Consolidated Compliance Review Procedures set forth in Sec. 230.415. (7) Reviews shall be conducted prior to or during peak employment periods. (8) No compliance review shall be conducted that is based on a home office work force of less than 15 employees unless requested or approved by Washington Headquarters; and (9) For compliance reviews based on an area work force (outside of areawide plan coverage), the Compliance Specialist shall define the applicable geographical area by considering: (i) Union geographical boundaries; (ii) The geographical area from which the contractor recruits employees, i.e. reasonable recruitment area; (iii) Standard Metropolitan Statistical Area (SMSA) or census tracts; and (iv) The county in which the Federal or Federal-aid project(s) is located and adjacent counties. (c) Contractor notification (Action R-3). (1) The Compliance Specialist should usually provide written notification to the contractor of the pending compliance review at least 2 weeks prior to the onsite verification and interviews. This notification shall include the scheduled date(s), an outline of the mechanics and basis of the review, requisite interviews, and documents required. (2) The contractor shall be requested to provide a meeting place on the day [[Page 64]] of the visit either at the local office of the contractor or at the jobsite. (3) The contractor shall be requested to supply all of the following information to the Compliance Specialist prior to the onsite verification and interviews. (i) Current Form PR-1391 developed from the most recent payroll; (ii) Copies of all current bargaining agreements; (iii) Copies of purchase orders and subcontracts containing the EEO clause; (iv) A list of recruitment sources available and utilized; (v) A statement of the status of any action pertaining to employment practices taken by the Equal Employment Opportunity Commission (EEOC) or other Federal, State, or local agency regarding the contractor or any source of employees; (vi) A list of promotions made during the past 6 months, to include race, national origin, and sex of employee, previous job held, job promoted into; and corresponding wage rates; (vii) An annotated payroll to show job classification, race, national origin and sex; (viii) A list of minority- or female-owned companies contacted as possible subcontractors, vendors, material suppliers, etc.; and (ix) Any other necessary documents or statements requested by the Compliance Specialist for review prior to the actual onsite visit. (4) For a project review, the prime contractor shall be held responsible for ensuring that all active subcontractors are present at the meeting and have supplied the documentation listed in Sec. 230.409(c)(3). (d) Preliminary analysis (Phase I) (Action R-4). Before the onsite verification and interviews, the Compliance Specialist shall analyze the employment patterns, policies, practices, and programs of the contractor to determine whether or not problems exist by reviewing information relative to: (1) The contractor's current work force; (2) The contractor's relationship with referral sources, e.g., unions, employment agencies, community action agencies, minority and female organizations, etc.; (3) The minority and female representation of sources; (4) The availability of minorities and females with requisite skills in a reasonable recruitment area; (5) Any pending EEOC or Department of Justice cases or local or State Fair Employment Agency cases which are relevant to the contractor and/or the referral sources; and (6) The related projects (and/or contractor) files of FHWA regional or division and State Coordinator's offices to obtain current information relating to the status of the contractor's project(s), value, scheduled duration, written corrective action plans, PR-1391 or Manpower Utilization Reports, training requirements, previous compliance reviews, and other pertinent correspondence and/or reports. (e) Onsite verification and interviews (Phase II) (Action R-5). (1) Phase II of the review consists of the construction or home office site visit(s). During the initial meeting with the contractor, the following topics shall be discussed: (i) Objectives of the visit; (ii) The material submitted by the contractor, including the actual implementation of the employee referral source system and any discrepancies found in the material; and (iii) Arrangements for the site tour(s) and employee interviews. (2) The Compliance Specialist shall make a physical tour of the employment site(s) to determine that: (i) EEO posters are displayed in conspicuous places in a legible fashion; (ii) Facilities are provided on a nonsegregated basis (e.g. work areas, washroom, timeclocks, locker rooms, storage areas, parking lots, and drinking fountains); (iii) Supervisory personnel have been oriented to the contractor's EEO commitments; (iv) The employee referral source system is being implemented; (v) Reported employment data is accurate; (vi) Meetings have been held with employees to discuss EEO policy, particularly new employees; and [[Page 65]] (vii) Employees are aware of their right to file complaints of discrimination. (3) The Compliance Specialist should interview at least one minority, one nonminority, and one woman in each trade, classification, or occupation. The contractor's superintendent or home office manager should also be interviewed. (4) The Compliance Specialist shall, on a sample basis, determine the union membership status of union employees on the site (e.g. whether they have permits, membership cards, or books, and in what category they are classified [e.g., A, B, or C]). (5) The Compliance Specialist shall also determine the method utilized to place employees on the job and whether equal opportunity requirements have been followed. (6) The Compliance Specialist shall determine, and the report shall indicate the following: (i) Is there reasonable representation and utilization of minorities and women in each craft, classification or occupation? If not, what has the contractor done to increase recruitment, hiring, upgrading, and training of minorities and women? (ii) What action is the contractor taking to meet the contractual requirement to provide equal employment opportunity? (iii) Are the actions taken by the contractor acceptable? Could they reasonably be expected to result in increased utilization of minorities and women? (iv) Is there impartiality in treatment of minorities and women? (v) Are affirmative action measures of an isolated nature or are they continuing? (vi) Have the contractor's efforts produced results? (f) Exit conference (Action R-6). (1) During the exit conference with the contractor, the following topics shall be discussed: (i) Any preliminary findings that, if not corrected immediately or not corrected by the adoption of an acceptable voluntary corrective action plan, would necessitate a determination of noncompliance; (ii) The process and time in which the contractor shall be informed of the final determination (15 days following the onsite verification and interviews); and (iii) Any other matters that would best be resolved before concluding the onsite portion of the review. (2) Voluntary corrective action plans may be negotiated at the exit conference, so that within 15 days following the exit portion of the review, the Compliance Specialist shall prepare the review report and make a determination of either: (i) Compliance, and so notify the contractor; or (ii) Noncompliance, and issue a 30-day show cause notice. The acceptance of a voluntary corrective action plan at the exit conference does not preclude a determination of noncompliance, particularly if deficiencies not addressed by the plan are uncovered during the final analysis and report writing. (Action R-7) A voluntary corrective action plan should be accepted with the understanding that it only address those problems uncovered prior to the exit conference. (g) Compliance determinations (Action R-8). (1) The evidence obtained at the compliance review shall constitute a sufficient basis for an objective determination by the Compliance Specialist conducting the review of the contractor's compliance or noncompliance with contractual provisions pursuant to E.O. 11246, as amended, and FHWA EEO Special Provisions implementing the Federal-Aid Highway Act of 1968, where applicable. (2) Compliance determinations on contractors working in a Hometown Plan Area shall reflect the status of those crafts covered by part II of the plan bid conditions. Findings regarding part I crafts shall be transmitted through channels to the Washington Headquarters, Office of Civil Rights. (3) The compliance status of the contractor will usually be reflected by positive efforts in the following areas: (i) The contractor's equal employment opportunity (EEO) policy; (ii) Dissemination of the policy and education of supervisory employees concerning their responsibilities in implementing the EEO policy; [[Page 66]] (iii) The authority and responsibilities of the EEO officer; (iv) The contractor's recruitment activities, especially establishing minority and female recruitment and referral procedures; (v) The extent of participation and minority and female utilization in FHWA training programs; (vi) The contractor's review of personnel actions to ensure equal opportunities; (vii) The contractor's participation in apprenticeship or other training; (viii) The contractor's relationship (if any) with unions and minority and female union membership; (ix) Effective measures to assure nonsegregated facilities, as required by contract provisions; (x) The contractor's procedures for monitoring subcontractors and utilization of minority and female subcontractors and/or subcontractors with substantial minority and female employment; and (xi) The adequacy of the contractor's records and reports. (4) A contractor shall be considered to be in compliance (Action R- 9) when the equal opportunity requirements have been effectively implemented, or there is evidence that every good faith effort has been made toward achieving this end. Efforts to acheive this goal shall be result-oriented, initiated and maintained in good faith, and emphasized as any other vital management function. (5) A contractor shall be considered to be in noncompliance (Action R-10) when: (i) The contractor has discriminated against applicants or employees with respect to the conditions or privileges of employment; or (ii) The contractor fails to provide evidence of every good faith effort to provide equal opportunity. (h) Show cause procedures--(1) General. Once the onsite verification and exit conference (Action R-5) have been completed and a compliance determination made, (Action R-8), the contractor shall be notified in writing of the compliance determination. (Action R-11 or R-12) This written notification shall be sent to the contractor within 15 days following the completion of the onsite verification and exit conference. If a contractor is found in noncompliance (Action R-10), action efforts to bring the contractor into compliance shall be initiated through the issuance of a show cause notice (Action R-12). The notice shall advise the contractor to show cause within 30 days why sanctions should not be imposed. (2) When a show cause notice is required. A show cause notice shall be issued when a determination of noncompliance is made based upon: (i) The findings of a compliance review; (ii) The results of an investigation which verifies the existence of discrimination; or (iii) Areawide plan reports that show an underutilization of minorities (based on criteria of U.S. Department of Labor's Optional Form 66 ``Manpower Utilization Report'') throughout the contractor's work force covered by part II of the plan bid conditions. (3) Responsibility for issuance. (i) Show cause notices will normally be issued by SHA's to federally assisted contractors when the State has made a determination of noncompliance, or when FHWA has made such a determination and has requested the State to issue the notice. (ii) When circumstances warrant, the Regional Federal Highway Administrator or a designee may exercise primary compliance responsibility by issuing the notice directly to the contractor. (iii) The Regional Federal Highway Administrators in Regions 8, 10, and the Regional Engineer in Region 15, shall issue show cause notices to direct Federal contractors found in noncompliance. (4) Content of show cause notice. The show cause notice must: (See sample--appendix A of this subpart) (i) Notify the contractor of the determination of noncompliance; (ii) Provide the basis for the determination of noncompliance; (iii) Notify the contractor of the obligation to show cause within 30 days why formal proceedings should not be instituted; [[Page 67]] (iv) Schedule (date, time, and place) a compliance conference to be held approximately 15 days from the contractor's receipt of the notice; (v) Advise the contractor that the conference will be held to receive and discuss the acceptability of any proposed corrective action plan and/or correction of deficiencies; and (vi) Advise the contractor of the availability and willingness of the Compliance Specialist to conciliate within the time limits of the show cause notice. (5) Preparing and processing the show cause notice. (i) The State or FHWA official who conducted the investigation or review shall develop complete background data for the issuance of the show cause notice and submit the recommendation to the head of the SHA or the Regional Federal Highway Administrator, as appropriate. (ii) The recommendation, background data, and final draft notice shall be reviewed by appropriate State or FHWA legal counsel. (iii) Show cause notices issued by the SHA shall be issued by the head of that agency or a designee. (iv) The notice shall be personally served to the contractor or delivered by certified mail, return receipt requested, with a certificate of service or the return receipt filed with the case record. (v) The date of the contractor's receipt of the show cause notice shall begin the 30-day show cause period. (Action R-13). (vi) The 30-day show cause notice shall be issued directly to the noncompliant contractor or subcontractor with an informational copy sent to any concerned prime contractors. (6) Conciliation efforts during show cause period. (i) The Compliance Specialist is required to attempt conciliation with the contractor throughout the show cause time period. Conciliation and negotiation efforts shall be directed toward correcting contractor program deficiencies and initiating corrective action which will maintain and assure equal opportunity. Records shall be maintained in the State, FHWA division, or FHWA regional office's case files, as appropriate, indicating actions and reactions of the contractor, a brief synopsis of any meetings with the contractor, notes on verbal communication and written correspondence, requests for assistance or interpretations, and other relevant matters. (ii) In instances where a contractor is determined to be in compliance after a show cause notice has been issued, the show cause notice will be recinded and the contractor formally notified (Action R- 17). The FHWA Washington Headquarters, Office of Civil Rights, shall immediately be notified of any change in status. (7) Corrective action plans. (i) When a contractor is required to show cause and the deficiencies cannot be corrected within the 30-day show cause period, a written corrective action plan may be accepted. The written corrective action plan shall specify clear unequivocal action by the contractor with time limits for completion. Token actions to correct cited deficiencies will not be accepted. (See Sample Corrective Action Plan--appendix B of this subpart) (ii) When a contractor submits an acceptable written corrective action plan, the contractor shall be considered in compliance during the plan's effective implementation and submission of required progress reports. (Action R-15 and R-17). (iii) When an acceptable corrective action plan is not agreed upon and the contractor does not otherwise show cause as required, the formal hearing process shall be recommended through appropriate channels by the compliance specialist immediately upon expiration of the 30-day show cause period. (Action R-16, R-18, R-19) (iv) When a contractor, after having submitted an acceptable corrective action plan and being determined in compliance is subsequently determined to be in noncompliance based upon the contractor's failure to implement the corrective action plan, the formal hearing process must be recommended immediately. There are no provisions for reinstituting a show cause notice. (v) When, however, a contractor operating under an acceptable corrective action plan carries out the provisions of the corrective action plan but the actions do not result in the necessary [[Page 68]] changes, the corrective action plan shall be immediately amended through negotiations. If, at this point, the contractor refuses to appropriately amend the corrective action plan, the formal hearing process shall be recommended immediately. (vi) A contractor operating under an approved voluntary corrective action plan (i.e. plan entered into prior to the issuance of a show cause) must be issued a 30-day show cause notice in the situations referred to in paragraphs (h) (7) (iv) and (v) of this section, i.e., failure to implement an approved corrective action plan or failure of corrective actions to result in necessary changes. (i) Followup reviews. (1) A followup review is an extension of the initial review process to verify the contractors performance of corrective action and to validate progress report information. Therefore, followup reviews shall only be conducted of those contractors where the initial review resulted in a finding of noncompliance and a show cause notice was issued. (2) Followup reviews shall be reported as a narrative summary referencing the initial review report. (j) Hearing process. (1) When such procedures as show cause issuance and conciliation conferences have been unsuccessful in bringing contractors into compliance within the prescribed 30 days, the reviewer (or other appropriate level) shall immediately recommend, through channels, that the Department of Transportation obtain approval from the Office of Federal Contract Compliance Programs for a formal hearing (Action R-19). The Contractor should be notified of this action. (2) Recommendations to the Federal Highway Administrator for hearing approval shall be accompanied by full reports of findings and case files containing any related correspondence. The following items shall be included with the recommendation: (i) Copies of all Federal and Federal-aid contracts and/or subcontracts to which the contractor is party; (ii) Copies of any contractor or subcontractor certifications; (iii) Copy of show cause notice; (iv) Copies of any corrective action plans; and (v) Copies of all pertinent Manpower Utilization Reports, if applicable. (3) SHA's through FHWA regional and division offices, will be advised of decisions and directions affecting contractors by the FHWA Washington Headquarters, Office of Civil Rights, for the Department of Transportation. (k) Responsibility determinations. (1) In instances where requests for formal hearings are pending OFCCP approval, the contractor may be declared a nonresponsible contractor for inability to comply with the equal opportunity requirements. (2) SHA's shall refrain from entering into any contract or contract modification subject to E.O. 11246, as amended, with a contractor who has not demonstrated eligibility for Government contracts and federally assisted construction contracts pursuant to E.O. 11246, as amended.