Are You at Risk of Losing Your Federal Contracts?

Are You at Risk of Losing Your Federal Contracts?

Every company that does business with the U.S. government agrees to follow federal affirmative action regulations as part of the deal. After the contract is signed and the work begins, however, some contractors neglect to prepare their affirmative action plans.

Contractors that do not take the required steps face two risks: They could lose their contracts, or face steep settlement costs to resolve problems identified in an audit.

Employers paid a total of more than $22 million in affirmative action settlements last year. The Office of Federal Contract Compliance Programs, an arm of the Labor Department, audits employer plans. Like an audit by the Internal Revenue Service, an audit by this office can be an especially harrowing experience for the unprepared.

The "glass ceiling" review is a new part of the affirmative action audit. It is designed to remove barriers that prevent qualified women and minorities from reaching positions at the upper levels of an organization. In carrying out its glass ceiling initiative, OFCCP has obtained major settlements of pay practice problems it found during its audits.

In the Washington region alone, OFCCP required contractors to pay close to $3 million in compensation to women and minorities in the past two years. This region includes D.C., Maryland, Pennsylvania, Virginia and West Virginia. The settlements highlight the agency's focus on ensuring fair pay practices as part of guaranteeing equal opportunity in the workplace.

Government contracts of $10,000 or more require the employer to certify that it will provide equal opportunity and furnish all information and reports the regulations require. These include the EEO-1, which describes the employer's work force, and the VETS-100, which reports on numbers of Vietnam-era veterans and disabled veterans.

The next level applies to employers that have a total of $50,000 or more in government contracts and 50 or more employees. These businesses promise in their contracts to develop a full written affirmative action plan within 120 days of the start of the contract and to update the plan each year. A contractor certifies in its plan that it maintains equal opportunity in the workplace and in all employment actions.

Detailed data and statistical analyses are used to document exactly where and how the contractor employs women and minorities. Local and national census data are used to compute affirmative action goals for minorities and women. The company then compares its goals to its actual data to see where "problem areas," if any, exist.

Political campaigns are full of misleading information about "goals" and "quotas." Simply put, affirmative action rules do not permit use of quotas. Employers determine for themselves how they will go about meeting their goals. Auditors judge employers on the good- faith efforts made to achieve the goals these businesses set for themselves.

An important part of the affirmative action plan is the contractor's statement of its "specific action-oriented programs." These are the procedures the employer uses to broaden the applicant pool and guard against discrimination. The programs must state who will accomplish each goal, and how the goal will be accomplished and when. The contractor should be able to explain its action-oriented programs and their results to an auditor.

It's no secret that preparation of a complete affirmative action plan is a time-consuming process. It can take many weeks, even with sophisticated software now available. Because the process is so complex, many employers choose to outsource preparations of their plans. This allows corporate staff to spend more time working face to face with employees to solve problems and improve equal opportunity.

Here's a partial list to check your own affirmative action plan's audit readiness:

• Does the plan contain a work force analysis?

• Are the goals reports complete, with a review of progress toward last year's goals?

• Is the narrative pertaining to women and minorities complete and accurate? Is there a narrative about veterans and the disabled?

• Are the records complete for applicant flow, new hires, promotions, transfers, training, terminations?

• Are the efforts taken to recruit women and minorities well-documented?

• Have employees been notified they may review the affirmative action plan?

• Has an equal employment opportunity clause been added to purchase orders, leases and contracts? Have suppliers and subcontractors been asked to comply with affirmative action requirements?

• Were employment sources notified in writing of the contractor's affirmative action obligations?