A common misunderstanding among federal construction contractors is that they never have to prepare written affirmative action plans (AAPs). They often base this on their not having to prepare written AAPs for minorities and women under Executive Order 11246. Unlike supply and service contractors, construction contractors do not prepare written AAPs for women and minorities, as discussed in last month’s article. The Office of Federal Contract Compliance Programs’ (OFCCP) regulations concerning written AAPs for protected veterans and individuals with disabilities apply to most construction contractors the same as non-construction contractors, however. This article will highlight protected veterans and individuals with disabilities obligations that covered construction contractors commonly overlook.

An important first point relates to the difference between a construction contract and a federally assisted construction contract. The obligations toward protected veterans or individuals with disabilities that OFCCP enforces do not apply to federally assisted contracts. 41 CFR § 60-300.2(n), § 60-741.2(k). Both types of contracts involve construction, rehabilitation, demolition or repair of buildings, highways, or other changes to federal land and buildings. With a federally assisted construction contract, however, the federal government is not a direct party to the contract. Instead, the federal government provides funds for the contract through a federal program. For example, the federal Department of Transportation often funds local highway construction or repair, but funnels the money through a state agency, which handles the construction bidding process and contract administration.

It is important that construction contractors know the types of contracts they are bidding on and winning. If a contractor is providing construction services on a contract in which a federal agency is not one of the contracting parties but the source of funds, then the contract is a federally assisted contract. The contractor must comply with OFCCP’s requirements in relation to protected veterans and individuals with disabilities if it meets the coverage thresholds. This conclusion is the same if the contractor is the prime contractor or a subcontractor.

Under Section 503 of the Rehabilitation Act, a construction contractor must comply with the written AAP requirements for individuals with disabilities if it has a federal construction contract or subcontract valued at $50,000 or more and has at least 50 employees. The requirements are the same for protected veterans under the Vietnam Era Veterans Readjustment Assistance Act of 1974, as amended, except that the contract or subcontract must be $150,000 or more. If there is no single covered contract for each of these thresholds, a construction contractor does not need to prepare a written AAP for protected veterans or individuals with disabilities.

Once a contractor is covered, it must assess its overall utilization of employees who are individuals with disabilities against the 7% incumbency goal established by OFCCP. 41 CFR § 60-741.45(d)(3). It also must assess its hiring of protected veterans against the 6.9% hiring benchmark set by OFCCP effective March 4, 2016. 41 CFR § 60-300.45. These mandatory quantitative assessments went into effect on March 24, 2014. (OFCCP regularly updates the protected veterans’ hiring benchmark.)

To perform these assessments, contractors must ask applicants and new hires to self-identify so contractors have the needed information. OFCCP issued mandatory language for the disability self-identification questions and suggested language for the protected veteran self-identification questions. Construction contractors need to confirm they are requesting self-identification information from applicants and new hires, their questions comply with OFCCP’s current regulations, and they are analyzing results against OFCCP’s mandatory metrics.

bq lquo If a contractor concludes its efforts were not effective…it must identify and implement alternative efforts. bq rquo

In addition, each year, a covered contractor must review its outreach and recruitment efforts to evaluate its effectiveness in identifying and recruiting qualified individuals with disabilities and protected veterans. The contractor must document each evaluation, which must provide the criteria to evaluate effectiveness, and the contractor’s conclusion. OFCCP states that a contractor’s conclusion must be reasonable. If a contractor concludes its efforts were not effective in identifying and recruiting qualified individuals with disabilities and protected veterans, it must identify and implement alternative efforts.

Covered contractors also must compute the number of applicants who self-identify as disabled or a protected veteran, the total number of job openings and total number of jobs filled, the total number of applicants for all jobs, the number of disabled and protected veteran applicants hired, and the total number of applicants hired. 41 CFR § 60-741.44(k), § 60-300.44(k). Contractors must retain these computations on applicants and hires for three years. OFCCP reviews these records in an audit.

Through these regulations, OFCCP is requiring contractors to implement outreach and recruitment efforts that measurably increase the numbers of applicants and employees who identify as protected veterans or as individuals with disabilities or appear likely to do so. In an audit, OFCCP reviews a construction contractor’s annual assessment. Construction contractors have the best chance of increasing their recruitment numbers of protected veterans and individuals with disabilities if they do so in the ordinary course of business and not in response to an audit notice.

Construction contractors should assess their contracts to determine whether they have to comply with OFCCP’s requirements for individuals with disabilities and protected veterans. If so, contractors’ affirmative action compliance for individuals with disabilities and protected veterans should begin with the items mentioned above. There is much more for them to do, but this starts them in the right direction.

If you have questions about federal construction contractor affirmative action obligations, please contact Pamela Ploor at 414-277-5661 or pamela.ploor@quarles.com.

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