OMB Approves OFCCP’s New FAAP Directive

On December, 11, 2012, the Office of Management and Budget (OMB) approved the OFCCP’s proposal to establish standard application procedures for contractors seeking to use Functional Affirmative Action Plans (FAAP). The approved OFCCP proposal revises Directive 296, issued by Patricia Shiu on June 14, 2011. According to the OFCCP, the newly approved directive was created  to guide contractors in the FAAP approval process. It explains the data and documents required by the OFCCP in order to determine whether or not an organization can use FAAPs.

The information required in the new FAAP approval process is listed below and is found in Attachments B & C of the revised directive found on RegInfo.gov.

The items below are to be submitted to the OFCCP prior to the FAAP conference:

  • A statement of how the contractor is a covered federal contractor or subcontractor including specific information regarding at least one federal contract or subcontract of $50,000 or more, identifying the name of the federal contracting agency, the contract number, the contract period, and the name of the prime contractor if the contractor is a subcontractor;
  • A copy of the qualifying federal contract or subcontract of $50,000 or more;
  • A copy of the contractor’s most recent Consolidated EEO-1 Report;
  • An organizational chart that clearly identifies all of the proposed functional or business units and how they are related to each other within the corporation’s overall structure.
  • A narrative description of the “business or function” of each proposed FAAP unit and how it meets the definition of a functional or business unit set forth above;
  • The total number of employees by location (city and state) within each proposed functional or business unit, including the identification of the managing official of each functional or business unit;
  • A statement addressing the location, to include city and state, where each proposed FAAP unit will maintain its employee personnel records and applicant processing activities;
  • If the contractor proposes to maintain some establishment-based AAPs, provide: a list of the locations including the physical address, number of employees, and the phone number of the establishment’s managing official, AAP contact and the EEO-1 unit number for each establishment;
  • The dates of the proposed AAP year for the functional programs; and
  • Copies of personnel policies relevant to evaluating the proposed functions or business units, including organizational and unit-specific policies related to recruitment; hiring; promotion; compensation; and termination.

 During the FAAP conference, contractors are required to provide the following information:

  • The reporting hierarchy of the functional or business units;
  • Personnel procedures including recruitment; hiring; promotion; compensation; termination; record retention and data analysis as they apply to each functional or business unit, including identification of units that have differing personnel or compensation practices;
  • How each functional unit manages its human resources and equal employment opportunity responsibilities;
  • How the contractor plans to transition from establishment-based AAPs to FAAPs, and timeframes for completion;
  • Any ongoing or past EEO violations from local, state and federal agencies (over the last three years); and
  • How the contractor anticipates complying with the requirements of Section 503 of the Rehabilitation Act of 1973 and the affirmative action requirements of the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 within its functional or business units.

Renewing a FAAP Agreement:

A contractor with an approved FAAP Agreement must, at a minimum, have had two functional units undergo a compliance evaluation during the three-year term of the agreement to be eligible for a renewal.  OFCCP will use administratively neutral selection criteria to select the contractor’s functional or business units for compliance evaluation. In the event that OFCCP fails to review at least two of a contractor’s functional units during the three-year term of the FAAP Agreement, OFCCP may extend the term of the existing agreement until the contractor has had two functional units undergo a compliance evaluation.

More Information:

Download:
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If you have any questions regarding the new FAAP directive or Functional Affirmative Action Plans, please contact us. We’re happy to help.

Functional Affirmative Action Plans (FAAP)

Many employers ask about creating FAAPs (Functional Affirmative Action Plans). For some, this seems like a reasonable approach to creating an AAP because the FAAP might align the personnel selections better with the decision makers who make them. However, it is wise to read the fine print before you or your employer considers going down the FAAP path. As found on the OFCCP’s FAQs regarding FAAPs, FAAP contractors are “guaranteed” to receive at least two (2) audits within the three (3) year FAAP agreement window.

Consider the below excerpt from the OFCCP FAAP FAQs:

“What is a Functional Affirmative Action Program?

Each covered non-construction (supply and service) contractor must develop and maintain an affirmative action program (AAP) in accordance with 41 CFR Part 60-2. For a majority of contractors, establishment-based AAPs are developed and maintained. However, for some multi-establishment contractors that have large business or functional units such as a Sales Division or Research and Development function that span across establishments located in different states or regions, an AAP may be developed by functional or business units. These functional AAPs or FAAPs will allow the contractor to examine whether its personnel practices and affirmative action efforts are sufficient to ensure equal employment opportunity for applicants and employees of a functional or business unit, rather than a particular establishment.”

“Will other functional or business units of my company get evaluated during the current year?

That is possible. As stated earlier, OFCCP uses administratively neutral selection criteria to select functional or business units for compliance evaluation, and more than one unit may be selected in a given year. In addition, FAAP contractors must have at least two functional or business units undergo a compliance evaluation during the three-year term of the FAAP agreement before an existing agreement is renewed. To meet this requirement, OFCCP will use administratively neutral selection criteria to select the contractor’s functional or business units, and will conduct compliance evaluations of at least two of the contractor’s functional or business units during the three-year term of its functional AAP agreement. Contractors with only one functional or business unit covered under a functional AAP must have this unit undergo a compliance evaluation before they are eligible to renew their FAAP Agreements, and OFCCP will conduct a compliance evaluation of the contractor’s functional or business unit during the three-year term.”

If the audit guarantee isn’t scary enough, click the link below to read more about the approval and change notification process to determine whether or not FAAPs are worth considering.