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Office of Federal Contract Compliance Programs
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Office of Federal Contract Compliance Programs (OFCCP)

Functional Affirmative Action Plan (FAAP)

What is a Functional Affirmative Action Program?

Each covered nonconstruction (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. See criteria for a Functional AAP in the Functional AAP Directive.

How can my company apply for an agreement allowing for the use of Functional Affirmative Action Programs?

Interested companies may apply by submitting a written request to the OFCCP Director explaining why it believes that use of functional AAPs would be most appropriate. This explanation should also describe in detail how the proposed functional AAPs correlate to the contractor's specific organizational structure and include a transition plan describing the process and timing by which the organization will move from establishment-based AAPs to functional AAPs. In addition, the request must include the name and contact information of the corporate representative who will be responsible for overseeing the request for a functional AAP agreement.

The request for a functional AAP agreement must be received by the OFCCP Director no later then 120 calendar days prior to the expiration of the current corporate headquarters AAP, or within 120 days from the award of the Federal contract if this is a first-time contractor. If this timeframe is not met, the request will be denied. The contractor may resubmit its request prior to the next AAP year.

How long does the application process take?

The process may take a few months as during this time OFCCP will evaluate application materials submitted, perform background research, and may request a meeting with company officials to discuss the application and the company profile.

Can my company have a Functional Affirmative Action Program and an establishment-based Affirmative Action Program?

All employees within the contractor's workforce must be included within an AAP. However, this does not mean that the entire workforce must be covered by functional AAPs when a contractor has a functional AAP agreement. In some cases, it may be appropriate for a contractor to use both functional AAPs and establishment-based AAPs. For example, a contractor has multi-establishments that are located in Seattle, Denver, and Washington, DC. Each of these establishments includes a Marketing unit, and Research functions. The functional AAP agreement might permit the contractor to develop and implement two functional AAPs: one for Marketing and one for Research. The remaining employees would be covered in separate establishment-based AAPs and reflected in the functional AAP agreement appendices.

How does OFCCP select a functional or business unit for a compliance evaluation?

As OFCCP does when selecting establishments for compliance evaluations, the agency uses administratively neutral selection criteria to select functional or business units for a compliance evaluation. In addition, a functional or business unit may be scheduled for a compliance evaluation if:

  • A complaint suggests equal employment opportunity issues that warrant a compliance evaluation;
  • An EEOC or state fair employment practices agency investigation reveals significant equal employment opportunity issues;
  • The OFCCP Director, acting upon a credible report of a violation of a law enforced by OFCCP, determines that a compliance evaluation is warranted; or
  • The contractor fails to submit the annual update of its Functional Affirmative Action Program Agreement specified in the Functional AAP Directive.

Which OFCCP office will send scheduling letters for the compliance evaluation of a functional or business unit, and where will I submit the written AAP and support data for my functional or business unit?

The FAAP Unit is located in OFCCP's national office in the Division of Program Operations in Washington, DC, and is responsible for sending scheduling letters and conducting the compliance evaluations of functional or business units. Contractors will submit their functional AAPs and support data to this office within thirty days of receipt of the scheduling letter.

What letter does OFCCP use to schedule compliance evaluations of functional or business units?

OFCCP will use the scheduling letter that has been approved by OMB for scheduling compliance evaluations.

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.

Does a compliance evaluation of a functional or business unit resemble an establishment-based evaluation?

In terms of the analytical techniques and procedures OFCCP uses to evaluate a contractor's equal employment opportunity compliance, compliance evaluations of functional or business units will look very much like compliance evaluations of establishments. For example, impact ratio analyses will be conducted on the personnel activity that occurs in your functional or business unit's job groups. If through such analyses, there are no indications of a potential problem, as may occur in many evaluations, the evaluation may close following a desk audit of the written AAP and support data submitted by the contractor for the functional unit. When an onsite review is necessary, OFCCP compliance officers will interview employees and supervisory personnel, analyze employment records, and inspect the facility(ies) for required posters and accessibility, as appropriate. In some cases, OFCCP will need to perform additional offsite analysis of some of your records following the onsite review. All of these activities already take place when OFCCP evaluates the compliance of contractor establishments.

How does a compliance evaluation of a functional or business unit differ from an establishment-based evaluation?

A compliance evaluation of a functional or business unit differs chiefly in the logistics necessary to carry it out. Since a functional or business unit's managers and employees may be spread widely across a region or even the entire country, OFCCP may need to travel to more than one contractor facility to conduct an onsite review. Alternatively, OFCCP's efficient use of resources may sometimes dictate that staff from a nearby regional, district, or area office perform certain aspects of a compliance evaluation on behalf of the national office.

Once a compliance evaluation has been completed, when can our company expect that functional or business unit to be evaluated again?

OFCCP will follow the policy adopted for establishments and will not revisit a functional or business unit within 24 months after the completion of a compliance evaluation. Thus, a functional or business unit would not be selected for a compliance evaluation for at least 24 months or longer following the date of the closure letter.