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The Office of Federal Contract Compliance Program (OFCCP) recently revised Directive 2013-01 on Functional Affirmative Action Plans (FAAPs). The changes in this third revision to the Directive are relatively minor. The occasion, however, provides a good opportunity to review whether a FAAP is appropriate for your program, including what level of effort is involved in maintaining the Plans.

What is a FAAP?

What is a FAAP? OFCCP’s Frequently Asked Questions (FAQ) states that a FAAP “permits the development of a program organized around functional or business units [which are] not generally defined by physical location, but rather refers to a component within an organization that operates autonomously in the ordinary course of the organization’s business.” By reporting operationally rather than by discrete work locations as in the more common ‘establishment’ (location-specific) reporting, “FAAPs allow contractors more flexibility in structuring their affirmative action programs to better align with [the] way in which their organization operates.”
The single work locations reported in establishment-based Affirmative Action Plans (AAPs) often gather employees from multiple business units who do not work together. As FAAPs reflect how a business is organized, they can better reveal related employees’ gender, race, veterans and disability profiles.
Contractors can utilize both FAAPs and establishment-based AAPs for different parts of their organizations.

What are the Changes Outlined in the Revised Directive?

Federal contractors cannot report via FAAPs without OFCCP approval. Under the updated Directive contractors must, among other things, notify OFCCP of changes to the FAAP point of contact (the “primary corporate contact” the contractor must identify for OFCCP) at least once per year; notify the Agency when it implements its newly approved FAAP; provide headquarters address and related identifying detail; and submit data regarding the FAAP in Excel or CSV format. OFCCP may now also request additional documentation when reviewing a FAAP application.

Why Are FAAPs Used So Little?

OFCCP states that it “currently has FAAP agreements with 86 contractors that cover 2,509 functional units.” Why is this? A significant issue is the administrative burden created by Directive on contractors who seek or maintain FAAPs.

Contractors must seek OFCCP approval to implement a FAAP. The voluminous information that contractors must provide when seeking permission to implement a FAAP is outlined at Attachment A to the revised Directive. OFCCP has, if anything, increased the complexity of the approval process. In addition to requesting additional when reviewing the FAAP application, OFCCP may also require a conference to review the application as part of the “negotiation process” outlined in Attachment B to the Directive. There is nothing simple about the negotiation’s discussion points, which may include:

  1. The reporting hierarchy of the functional or business units.
  2. Personnel procedures, including recruitment, hiring, promotion, compensation, termination, and 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.
  3. How the contractor anticipates complying with the affirmative action requirements of Executive Order 11246, Section 503, and VEVRAA.
  4. How each functional unit manages its human resources and equal employment opportunity responsibilities.

No Agency permission is required to maintain or modify an establishment-based Affirmative Action Plan (AAP). Contractors must also seek permission to modify FAAPS to reflect changes in business operations. Despite asking contractors to comment on the “burden” in maintaining a FAAP, OFCCP appears to continue to underestimate the level of effort involved in establishing and maintaining a FAAP.

OFCCP calculates that it takes approximately twenty-five hours of preparation for contractors to request permission to maintain a FAAP. It bases its estimate on tasks including describing the function of the business unit at issue; drafting a transition plan for moving from establishment-based AAP to FAAP; and being “prepared to discuss” personnel procedure for recruitment, hiring, etc. in the negotiation process. Twenty-five hours is about two-thirds of one person’s work week. OFCCP’s estimate does not factor in necessary internal activities such as legal review and securing leadership approval to request FAAPs. The estimate also does not include the time to negotiate permission to establish a FAAP. This, and other issues such as the burden estimate for modifying a FAAP (only 10 hours), hint at why the FAAP program is undersubscribed.

Conclusion

If you have multiple establishments and multiple business units within your company, your employer should consider FAAPs. They can provide views of your diversity profile and of patterns and trends in hiring, promotions and terminations useful in determining how best to ensure equal access to the workplace. However, expect to expend a lot of person hours to create and maintain the Plans.

Author

Paul McGovern
Managing Partner
Praxis Compliance

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