When We Act Affirmatively

The jurisdictional threshold for the Executive Order’s AAP requirements is unchanged since 1968, with 50 years’ worth of inflation occurring, and additional requirements (including the quantifiable results component) added on, since.

The inflation adjusted equivalent of $50,000 in 1968 is more than $350,000 today.1 To be consistent with the original percentage of total contracts covered by the AAP requirements, the single contract value threshold today would also be much closer to, if not more than $350,000.   A more consistent threshold value might be the Simplified Acquisition Threshold (contracts below that value are subject to simplified procedures and reserved for small businesses) which was raised to $250,000 in 2018, and is increased for inflation by the FAR Council periodically, as the value to be recognized for contracts subject to the FAR.

The 50+ employees threshold acts as a built-in limitation to reduce the burden on smaller businesses regardless of inflation, except it hasn’t.  In May 1968, the OFCC issued regulations for the EO that contained the current AAP jurisdictional threshold, and at that time the results-awareness component of the AAP requirements was solely to perform a subjective annual review of: minority representation in all job categories, outreach efforts and hiring practices.  Today, the AAP regulations require a results-awareness component of a quantified analysis of availability to incumbents, and the setting of objective placement goals for any group not represented as would reasonably be expected given their availability.  When adding the goals and timetables requirements in 1970, the agency provided no commentary on the additional time or cost of complying, and since that time, has similarly offered little discussion of their costs.2  Like most regulations, complying with the AAP requirements is disproportionally harder on smaller businesses.  A company with 55 employees will not have the same resources to engage in the more thorough and documented analysis now required, and / or the typical pricing of outside compliance services produces a higher per employee cost than it does for, a company with 550 employees.  With the additional requirements brought about since 1968, a more reasonable AAP threshold today might be 100+ employees, which is also the employee threshold for the required disparate impact analysis under the UGESP; and, that should also increase the threshold for EEO-1 reporting to 100+ employees like any other employer since the requirement to file at 50+ for contractors is currently equal to the AAP threshold.

As for Section 503 and VEVRAA, in 1992 the OFCCP proposed amended regulations for Section 503 to conform them to the (then) new EEOC regulations for the ADA.  The OFCCP’s Proposed Rule also provided for increasing the AAP jurisdictional threshold to $150,000+ and 150+ employees (57 Fed. Reg. 48084, at 48096), and signaled the agency’s intent to do the same with VEVRAA’s AAP threshold as well.  In that Proposed Rule, the agency offered thorough commentary on the propriety of increasing the threshold, including the consideration of inflation between 1976 (when the Section 503 AAP threshold was set) and 1992.  In the Final Rule, 3 ½ years later (61 Fed. Reg. 19336, at 19344), the agency somewhat summarily rejected their own proposal, and retained the AAP jurisdictional thresholds from 1976 that remain in place today.3

One recent change from the agency in its selection methodology - raising the minimum number of employees in the establishment to be eligible for a scheduled review, provides some relief for smaller establishments.4 In contrast, DIR 2018-07 announced the agency’s intent to investigate a process for requiring contractors to “certify” annually that an AAP is in place and reviewed annually as required, and / or possibly reviewing annual certifications related to AAPs in SAM to select establishments for review.  The agency will limit the scope of their selection criteria, but police more closely those establishments that fall within the criteria, and those who don’t certify compliance.

11968-2018 inflation adjustment bls.gov

2In September 1968, the agency also issued an “Order” (33 Fed. Reg. 14392) requiring validation of selection procedures for contractors subject to the EO (the precursor to the UGESP in 1978 whose validation requirements apply to all employers with 100+ employees).  The 1968 regulations, 1968 Order and the 1970 AAP regulatory changes all occurred before various legislation and executive orders (Regulatory Flexibility Act and Paperwork Reduction Act, both 1980 and EO 12883, 1993) required commentary of the time or costs of complying, or alternate less intrusive means of achieving the same goal.  When timetables were removed in 2000, the agency did not address in the amended rules commentary, the costs / benefits of goal setting, nor the cost savings or benefits of removing timetables.  EO 13563 (2011) required a look back at major rules already promulgated for consideration of the same things, and required agencies to issue proposed plans to review such rules - the agency did not include the AAP regulations among those to be reviewed 2011 Fall URA, at page 10, and has not addressed the AAP regulations as part of EO 13777 (2017) review requirements.

3The basic coverage thresholds for Section 503 and VEVRAA are set by statute.  The basic coverage threshold for the EO and the AAP coverage thresholds for all 3 are set by the OFCCP.  In 50 years, the agency has not initiated a raise to a threshold (basic or AAP) for any of the thresholds it controls.  Section 503 regulations in 1976 set the AAP threshold at 50+ employees and a $50,000 contract (41 Fed. Reg. 16147, at 16150), Section 503 (statutory) general coverage threshold was: $2,500 in 1976, $10,000 in 1992 (increased for inflation to $15,000 in 2010 by the FAR Council and recognized by the OFCCP).  VEVRAA (initial) regulations in 1976 also set the AAP threshold at 50+ employees and a $50,000 contract (41 Fed. Reg. 26386, at 26388), VEVRAA (statutory) general coverage threshold was: $10,000 in 1976, $25,000 in 1998, and $100,000 in 2003 (creating only the 50+ employee requirement for the AAP threshold if covered by VEVRAA - the general coverage threshold for VEVRAA was increased for inflation to $150,000 in 2015 by FAR Council and recognized by the OFCCP).

4The methodology excludes for review all “Direct Establishments” (primary establishment fulfilling contract) with fewer than 70 employees, and “Associate Establishments” (other establishments of the same contractor not fulfilling a contract) with fewer than 100 employees.  The change does not eliminate the AAP requirement, it just for now indicates that they will not be reviewed unless part of an individual complaint.