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

Jurisdiction


As a reinsurer for the Federal Employees Group Life Insurance (FEGLI) program, are we a Federal Government subcontractor?

Yes. Reinsurance entities that have subcontracted with the prime contractor to FEGLI are considered to be government subcontractors within the meaning of the regulations implementing Executive Order 11246, as amended, the Vietnam Era Veterans' Readjustment Assistance Act of 1974 (VEVRAA), as amended, 38 U.S.C. 4212, and Section 503 of the Rehabilitation Act of 1973 (Section 503), as amended.

The implementing regulations for Executive Order 11246 at 41 CFR 60-1.3, for VEVRAA at 60-300.2 and for Section 503 at 60-741.2, consistently define a government contract as any agreement or modification thereof between any contracting agency and any person for the purchase, sale or use of personal property or nonpersonal services. The term nonpersonal services includes, but is not limited to, the following services: utilities, construction, transportation, research, insurance, and fund depository. This definition thus explicitly includes agreements for insurance, which would cover FEGLI contracts.

The same regulations generally define a government subcontract as any agreement or arrangement between a contractor and any person (in which the parties do not stand in the relationship of an employer and an employee) for the purchase, sale or use of personal property or nonpersonal services which, in whole or in part, is necessary to the performance of any one or more contracts; or under which any portion of the contractor's obligation under any one or more contracts is performed, undertaken or assumed. This definition includes any reinsurance agreement related to FEGLI.

All contractors and subcontractors who hold a federal contract in excess of $10,000 are subject to regulatory requirements under one or more of the laws enforced by OFCCP depending upon the amount of the contract.


What entities are subject to the requirements of Executive Order 11246?

If a business or organization has a Federal contract, subcontract, or federally assisted construction contract it may be subject to the requirements of Executive Order 11246. Generally speaking, any business or organization that (1) holds a single Federal contract, subcontract, or Federally assisted construction contract in excess of $10,000.00; (2) has Federal contract or subcontracts that combined total in excess of $10,000.00 in any 12-month period; or (3) holds Government bills of lading, serves as a depository of Federal funds, or is an issuing and paying agency for U.S. savings bonds and notes in any amount will be subject to requirements under one or more of the laws enforced by OFCCP.


If a State or local government has Government contracts, is it subject to the requirements of Executive Order 11246?

Yes, if the contracts meet the threshold for coverage. However, the requirements of Executive Order 11246 apply only to the agency, instrumentality or subdivision of the State or local government that participates in work on or under the Government contract or subcontract. Further, except for universities and medical facilities, a State or local government agency, instrumentality, or subdivision that has a Government contract is exempt from the requirement to develop and maintain a written affirmative action program.


Our business operates as a fund depository, and an issuing and paying agent for U.S. Saving Bonds and savings notes; therefore, are we required to comply with the Affirmative Actions Program (AAP) obligations under Executive Order (E.O.) 11246, as amended, the Vietnam Era Veterans' Readjustment Assistance Act of 1974 (VEVRAA), as amended, 38 U.S.C. 4212 and Section 503 of the Rehabilitation Act of 1973 (Section 503), as amended?

The E.O. 11246 implementing regulations at 41 CFR 60-1.40(a) and 60-2.1(b) state, in relevant part, that any nonconstruction (Supply and Service) contractor that serves as a depository of Government funds in any amount or a financial institution which is an issuing and paying agent for U.S. saving bonds and saving notes in any amount must develop an affirmative action program.

Under Section 503, a Government contractor with 50 or more employees and a Government contract of $50,000 or more must develop a Section 503 affirmative action program. 41 CFR 60-741.40(a). The Section 503 regulations define a Government contract as "any agreement or modification thereof between any contracting agency and any person for the purchase, sale or use of personal property or nonpersonal services." 41 CFR 60-741.2(i). The term "nonpersonal services" as used in this section includes fund depository. 41 CFR 60-741.2(i)(4). Thus, the agreement to serve as a Federal funds depository is a "Government contract."

Under Section 503, however, all government contracts must meet the dollar threshold amount of $50,000 for coverage. Therefore, if you serve as a depository for Federal funds of $50,000 or more, or have an agreement valued at $50,000 or more to be an issuing and paying agent for savings bonds and notes, you would be obligated to develop and maintain a Section 503 affirmative action program.

The same holds true under VEVRAA as under Section 503 for any Government contractor with 50 or more employees and a contract of $50,000 or more to serve as a depository of Federal funds or as an issuing and paying agent for savings bonds and notes, if the Government contract was entered into before December 1, 2003. To view the regulation, click on 60 CFR 300.2(i)(4).

However, the Jobs for Veterans Act (JVA) amended VEVRAA by raising the dollar threshold amount required for contract coverage to $100,000. The new threshold applies to contracts entered on or after December 1, 2003. Accordingly, if your business or organization became a fund depository or an issuing and paying agent for savings bonds and notes on or after December 1, 2003, it would also be subject to the written AAP requirement under VEVRAA if the contract is for $100,000 or more.

For your additional information, there is an interactive electronic tool called the Federal Contract Compliance Advisor, also referred to as Elaws Advisor, to assist Federal contractors and subcontractors in understanding basic coverage and the requirements for compliance with the laws administered by OFCCP. This electronic tool can be accessed E-Laws Federal Contractor Compliance Advisor. You may wish to consult the Elaws Advisor if you have additional questions about coverage.


Is a financial institution that is covered by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Association (NCUA) with deposit insurance subject to the Affirmative Actions Program (AAP) requirements under Executive Order 11246, as amended, the Vietnam Era Veterans' Readjustment Assistance Act of 1974 (VEVRAA), as amended, 38 U.S.C. 4212 and Section 503 of the Rehabilitation Act of 1973 (Section 503), as amended?

Yes. Financial institutions with federal share and deposit insurance are considered to be government contractors within the meaning of the regulations implementing Executive Order 11246, as amended, the Vietnam Era Veterans' Readjustment Assistance Act of 1974 (VEVRAA), as amended, 38 U.S.C. 4212 and Section 503 of the Rehabilitation Act of 1973 (Section 503), as amended. These three programs enforced by the Office of Federal Contract Compliance Programs (OFCCP) require equal employment opportunity by government contractors.

The implementing regulations for Executive Order 11246 at 41 CFR 60-1.3 have consistently defined a government contract as any agreement or agreement modification between any contracting agency and any person for the purchase, sale or use of personal property or nonpersonal services. The term "nonpersonal services" includes, but is not limited to, the following services: utilities, construction, transportation, research, insurance, and fund depository. This definition thus explicitly includes agreements for insurance.

The implementing regulations for VEVRAA and Section 503, found at 41 CFR 60-250.2, 60-300.2 and 60-741.2, respectively, also define a government contract as any agreement or agreement modification between any contracting agency and any person for the purchase, sale or use of personal property or nonpersonal services. Like the Executive Order regulations, these regulations also state that the term "nonpersonal services" includes, but is not limited to the following services: utilities, construction, transportation, research, insurance, and fund depository. Therefore, financial institutions with federal share and deposit insurance are considered to be government contractors.


Is a hospital or other health care provider covered under the laws enforced by OFCCP as a result of the reimbursements it receives for medical care and services provided to Medicare or Medicaid patients?

The provider agreements, pursuant to which hospitals and other health care providers receive reimbursement for services covered under Medicare Parts A and B, and the provider agreements that hospitals and other health care facilities have entered into with State Medicaid agencies, are not covered Government contracts under the laws enforced by OFCCP. Accordingly, a hospital or other health care provider is not covered under the laws enforced by OFCCP if its only relationship with the Federal government is as a participating provider under Medicare Parts A and B and Medicaid. Please note that a hospital or other health care provider may be a covered contractor because of other contractual arrangements, such as providing health care to active or retired military under a contract with the Department of Veterans' Affairs or the Department of Defense. Likewise, a teaching hospital doing research for a university that has a contract with the Federal government may be covered.


Is an insurance company that supplies worker’s compensation insurance to a federal contractor subject to the requirements of Executive Order 11246?

No, an insurance company that supplies worker’s compensation insurance to a federal contractor does not need to meet the requirements of Executive Order 11246; however, if such insurance company has a separate covered Federal contract or subcontract other than providing worker compensation insurance, they may be subjected to the requirements of Executive Order 11246. Liberty Mutual Insurance Co. v. Friedman, 639 F. 2d 164 (4th Cir. 1980).


For covered insurance contracts, does OFCCP use the insurance premium or the face value of the policy to determine whether a federal contractor is required to develop and maintain an Executive Order 11246 affirmative action plan (AAP)?

OFCCP will use the insurance premium to determine if the covered insurance contract meets the $50,000 threshold requirement necessary to obligate the federal contractor to develop and maintain an Executive Order 11246 AAP, not the face value of the policy. OFCCP v. Safeco Insurance Co. of America, Secretary of Labor’s Decision, July 31, 1984.


Are Federal Reserve Banks subject to the affirmative action and equal employment opportunity laws OFCCP enforces?

No, Federal Reserve Banks are not subject to OFCCP’s equal employment opportunity and affirmative action laws because they are federal entities and not federal contractors. Federal Reserve Bank of Boston v. Commissioner of Corporations and Taxation of the Commonwealth of Massachusetts, 499 F.2d 60 (1st Cir. 1974).



If my company is a federal contractor in the State of California, does California’s Proposition 209 mean that I do not need to meet the requirements of Executive Order 11246?

No, as a federal contractor in the State of California you will still need to meet the requirements of Executive Order 11246. Proposition 209 amended California’s constitution to prohibit the state from discriminating against or granting preferential treatment to any individual or group on the basis of race, sex, color, ethnicity, or national origin in the operation of public employment, public education or public contracting. While Proposition 209 is enforceable in California, it does not affect the application of Executive Order 11246. If a conflict develops for a contractor who is subject to both Executive Order 11246 and Proposition 209, the requirements of Executive Order 11246 should prevail under the U.S. Constitution´s Supremacy Clause – the Executive Order is federal law and Proposition 209 is state law. Therefore, federal contractors in the State of California must comply with the Executive Order and its affirmative action requirements.