OFCCP Issues Directive on Functional Affirmative Action Program Application and Approval Procedures

The Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) has issued a new Directive updating the application and approval procedures for Functional Affirmative Action Program (FAAP) Agreements. OFCCP regulations allow federal supply and service contractors to develop affirmative action programs (AAPs) that are based on their business function or unit instead of establishments based on physical location. In order to do so, contractors must get prior OFCCP approval. In essence, the OFCCP Director must determine that “the contractor’s overall operational structure, compliance history, and proposed functional AAPs meet the criteria” set forth in the new Directive, effective June 14, 2011.

The Directive, which supersedes the prior one issued in 2002, outlines the criteria a contractor must meet to be eligible to implement a functional AAP, the elements that must be included in a functional AAP, the basic principles of functional AAP agreements, and the procedures for requesting, modifying, updating, reviewing or terminating a functional AAP agreement. In addition, the Directive includes examples of how an establishment-based and functional AAP could be developed, and checklists of documentation that must be submitted as part of the application and approval process.

According to the agency, significant changes instituted in this Directive include the requirement that a contractor obtain prior written approval by the OFCCP director before developing FAAP agreements, which eliminates the prior process allowing for automatic approval if the OFCCP failed to act upon the request within 120 days. Other changes of note include decreasing the expiration date for each agreement from five to three years, at which point a renewal will have to be approved, and providing for possible compliance audits if the contractor fails to submit the required annual updates to their agreements.

A contractor with an approved functional AAP must have had at least two functional units undergo a compliance evaluation during the three year term of the agreement to be eligible for a renewal of the FAAP agreement. If the contractor has only one FAAP, that FAAP will be selected for a compliance review during the three-year term of the FAAP.

Additional guidance on the updated FAAP can be found here.