[Federal Register Volume 79, Number 54 (Thursday, March 20, 2014)]
[Rules and Regulations]
[Pages 15551-15554]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-05846]
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DEPARTMENT OF THE TREASURY
48 CFR Parts 1022 and 1052
RIN 1505-AC40
Department of the Treasury Acquisition Regulations; Contract
Clause on Minority and Women Inclusion in Contractor Workforce
AGENCY: Departmental Offices, Treasury.
ACTION: Final rule.
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SUMMARY: The Department of the Treasury (the Department) is amending
the Department of the Treasury Acquisition Regulation (DTAR) to include
a contract clause on minority and women inclusion, as required by the
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the
Dodd-Frank Act).
DATES: Effective Date: April 21, 2014.
FOR FURTHER INFORMATION CONTACT: Lorraine Cole, Director, Office of
Minority and Women Inclusion, 202-927-8181 (this is not a toll-free
number) or [email protected].
SUPPLEMENTARY INFORMATION:
I. Background and Proposed Rule
Section 342 of the Dodd-Frank Act, 12 U.S.C. 5452, established an
Office of Minority and Women Inclusion (OMWI) within certain agencies,
including the Departmental Offices of the Department of the Treasury.
Section 342(c)(2) provides that covered agencies shall require
contractors to provide a written statement that the ``contractor shall
ensure, to the maximum extent possible, the fair inclusion of women and
minorities in the workforce of the contractor, and as applicable,
subcontractors.'' This rule will implement the statement required by
the Dodd-Frank Act through a contract clause.
The contract clause, which is similar to those adopted by other
OMWI agencies, requires that a contractor make good faith efforts to
include minorities and women in its workforce. This standard is derived
from section 342(c)(3) of the Dodd-Frank Act, which provides for
remedies, including termination, against a contractor that fails to
make good faith efforts to include minorities and women in its
workforce. Treasury interprets ``good faith efforts'' to mean efforts
consistent with the Equal Protection Clause of the Constitution, Title
VII of the Civil Rights Act of 1964, and Executive Order 11246, as
amended, such as the identification and elimination of employment
barriers, the widespread publication of employment opportunities, and
other forms of outreach to minorities and women.
Section 342 applies to ``all contracts . . . for services of any
kind,'' but the section does not define the term ``contract.'' Treasury
applies the clause to all service contracts above the simplified
acquisition threshold. Further, as noted above, section 342 applies to
Treasury Departmental Offices (DO). DO does not currently include an
office responsible for operational procurement; acquisitions in support
of DO are performed primarily by the Internal Revenue Service Office of
Treasury Procurement Services. The clause will be included in all
service contracts in support of requirements originating from DO,
regardless of the Treasury component performing the acquisition.
II. This Final Rule
In its August 21, 2012, proposed rule, the Department solicited
public comments on all aspects of the proposal. This comment period
closed on October 22, 2012, and eight comment letters were received.
Comments were received from interest groups, private citizens, and law
students. This section sets out significant comments raised by the
commenters and the Department's response to these comments. As set
forth below, the Department has considered the comments and is adopting
the proposed rule with two minor changes in response to comments
received, which are noted below.
Public Comments and Department Responses
One commenter suggested that the clause should apply only to
subcontracts subject to reporting under FAR clause 52.204-10. The
Department declines to adopt this suggestion. It is, however, the
Department's intent that the clause should be required only in
subcontracts that are awarded to support a covered contract. To clarify
this point, Treasury has modified the language of the clause to require
flow-down only to ``subcontracts awarded under'' the contract.
One commenter suggested inserting the language ``including Title
VII of the 1964 Civil Rights Act'' after ''To implement this
commitment, the Contractor shall ensure, to the maximum extent possible
consistent with applicable law, the fair inclusion of minorities and
women in its workforce.'' The commenter contends that, without the
insertion, there is a danger of discrimination against men and non-
minorities.
The Department does not believe that a specific reference to Title
VII is necessary. The Department believes that its contractors are
aware of their obligations under that statute. Further, our contracts
contain a separate clause, FAR 52.222-26, Equal Opportunity, that
expressly prohibits discrimination.
Several commenters suggested that the Department require specified
documentation to demonstrate a ``good faith effort.'' These suggestions
are not adopted. The clause provides Treasury with the authority to
obtain
[[Page 15552]]
employment data and other information regarding good faith efforts to
the extent necessary for its review of a contractor's inclusion of
minorities and women in its workforce. Treasury does not believe that
requiring contractors to submit specific information absent a request
or predetermining what must be included in a request would serve any
useful purpose. Moreover, the focus of the clause, and of the relevant
provisions of section 342, is on a contractor's overall efforts to
reduce barriers to employment of minorities and women. Specific
information on individual employees will rarely, if ever, be required
for that purpose.
Two commenters suggested that the clause be modified to provide 60
days for contractors to provide information requested by the
contracting officer. The suggestion is not adopted. Section 342 and the
clause require contractors to engage in good faith efforts at all times
during contract performance, not merely in the 60 days preceding a
contracting officer's review. Because a good faith efforts plan should
be in place at all times during contract performance, 10 days will
normally be sufficient to forward a copy to the contracting officer.
The other data contemplated by the clause are factual in nature, and it
is reasonable for contractors to be prepared to provide them. Moreover,
the clause requires that information be provided within 10 business
days of a written request ``or such longer time as the contracting
officer determines.'' Contracting officers have a duty to act in good
faith in administering contracts. Thus, if unusual circumstances
existed or if there was a need for information not listed in the clause
and not immediately available, the contracting officer would be
required to provide the contractor a reasonable period of time in which
to respond to the request.
One commenter suggested that the rule be modified to expressly
provide that completion of the EEO-1 form and compliance with
applicable Office of Federal Contract Compliance Programs (OFCCP) rules
are sufficient to establish compliance with the requirements of the
clause. The Department declines to adopt this suggestion. With respect
to the EEO-1 form, item (1) of the clause provides that one type of
information the contracting officer may request is the total number of
the contractor's employees and the number of women and minority
employees by race, ethnicity, and gender. The EEO-1 form contains this
information; there is no need for an explicit statement that providing
the form will provide the information contemplated by this element of
the clause. With respect to a contractor's plan to make good faith
efforts, addressed by item (4) of the clause, the clause is drafted to
provide the contractor wide discretion to determine what efforts should
be made to remove barriers to the employment and of women and
minorities. In most instances, a contractor that establishes an
affirmative action program compliant with the OFCCP regulations will
not need to take any additional steps to comply with the good faith
requirement. However, expressly incorporating compliance with the OFCCP
regulations as a standard for meeting the good faith effort requirement
would place Treasury in the position of evaluating compliance with the
OFCCP regulations, something it has neither the expertise nor the
authority to do. Accordingly, the Department does not adopt the
suggested change. To clarify the relationship between compliance with
OFCCP regulations and the good faith requirement contained in the
clause, however, the Department does add language to the clause to the
effect that compliance with the clause neither satisfies contractors'
obligations under Executive Order 11246, as amended, nor precludes
OFCCP evaluations or enforcement actions undertaken pursuant to that
Order.
One commenter suggested that the clause should be modified to
expressly state that it applies only to contracts with the Department
of the Treasury. As the commenter acknowledges, the prescription at 48
CFR 1022.7000 requires that the clause be inserted only in contracts in
support of Treasury Departmental Offices. As with all FAR clauses, the
clause will apply only to the contracts in which it is inserted.
Language expressly providing that the clause does not form part of
contracts in which it does not appear (and in which its insertion is
not required by regulation) is unnecessary and would be potentially
confusing.
Two commenters suggested that the proposed rule only require
information from subcontractors to the extent that it is available. The
Department declines to adopt this suggestion. Treasury cannot fulfill
its statutory responsibilities without information concerning
subcontractors. Moreover, the flow down provision of the clause
establishes a required mechanism for ensuring that subcontractors are
contractually bound to provide necessary information to the prime
contractor.
One commenter suggested that the clause should not be limited to
contracts above $150,000, and asserted that interpreting the statutory
language to apply only to such contracts ``could place treasury in
noncompliance with the Dodd-Frank Act.'' Section 342 does not define
the term ``contract.'' While we are aware that the term is defined in
some contexts to include any legally binding procurement instrument, we
do not believe that Congress intended the good faith efforts
requirement to apply regardless of contract dollar value. The burden
imposed by the clause is proportionate to the size of the contractor's
workforce, not to the value of the contract in which the clause is
inserted. Thus, absent a contract value threshold, the clause could
impose a burden that is large in relation to the contract price and
make it difficult or impossible to retain contractors to perform
smaller requirements. Requiring the clause only in contracts above the
Simplified Acquisition Threshold, currently $150,000 in the FAR,
represents an appropriate balance between making the clause broadly
applicable and not including it where doing so would create a
disproportionate burden. Treasury has determined that it is appropriate
to interpret the statutory language to apply only to contracts above
that threshold.
One commenter suggested that there should be remedies for non-
compliance with the clause other than termination for default. Because
the clause will be a requirement of the contract in which it is
included, standard contractual remedies will be available in the event
of non-compliance. The specific remedies available will depend on the
nature of the underlying contract, but may include such options as
downward equitable adjustments, lowered or negative contractor
performance ratings, discontinuance or curtailment of new task order
awards, or non-exercise of options, withholding of progress payments,
termination of contracts, and debarment from receiving future
contracts. Termination for default remains the ultimate contractual
sanction in the event of an uncured failure to comply with the
requirements of the clause.
One commenter suggested that the definition of ``minorities'' in
the clause should be expanded. The clause incorporates the definition
set forth in section 342, from which Treasury declines to depart.
Two commenters noted that the term ``fair inclusion'' is not
defined in the statute or proposed contract language. One commenter
also noted that there appears to be no consequences ``for not reporting
or for poor numbers in a report.'' Treasury has considered providing a
more specific definition of good faith efforts, but determined that
doing so would not be feasible. The actions that might be appropriate
to
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eliminate barriers to the employment of minorities and women will vary
significantly depending on a particular contractor's organization and
workforce. The commenter is incorrect that there are no consequences
for failing to report required information. The clause will form part
of a contract, and Treasury will have available standard contract
remedies, up to and including termination of the contract for default
in case of an uncured failure. Under no circumstances, however, will
there be consequences for reporting ``poor'' numbers. While the
composition of a contractor's workforce may help inform a determination
of what barrier-reduction efforts are appropriate, the clause does not
require--and Treasury does not seek--any specific set of numbers, or
any specific changes in numbers over time. A contractor that makes good
faith efforts to identify and eliminate barriers to the employment of
minorities and women (and that complies with applicable reporting
requirements) will fully comply with the clause, regardless of the
ultimate effect of those efforts on its workforce.
One commenter suggested that the clause should be revised so as to
list examples of information a contractor could choose to submit in
order to establish that it has engaged in good faith efforts. This
suggestion is not adopted. Treasury has an obligation under section 342
to determine whether a contractor is in compliance with the applicable
good faith efforts requirements. While the information necessary to
demonstrate such compliance will vary significantly depending on a
contractor's organization and its approach to the requirement, Treasury
must have the ability to obtain the information it determines necessary
under the circumstances. Permitting a contractor to unilaterally
determine what information is necessary for Treasury's determination
would not accomplish the purpose of the clause.
One commenter suggested that there should be a cutoff beyond the
$150,000 threshold to limit the number of subcontractors to which the
clause applies. The commenter asserts that there may be many tiers of
subcontractors, ``hundreds (and possibly thousands) of subcontracts''
under a contract that exceed the threshold. We do not accept the
suggestion. First, the commenter's concern as to the number of possibly
affected subcontracts appears to be overstated. In Fiscal Year 2012,
only two contracts supporting Treasury Departmental Offices exceeded
$10 million. Given the relatively modest value of Departmental Offices
contracts, few if any will involve ``hundreds'' of subcontracts. More
importantly, we consider it appropriate that a firm accepting $150,000
in funds to perform a subcontract be subject to the good faith effort
requirement, regardless of the tier of its subcontract. While this will
result in prime contractors with larger contracts and more
subcontractors bearing a larger compliance burden, such a burden will
be roughly proportionate to the contract value.
One commenter suggested that the regulation should include
provisions concerning the protection of sensitive data provided to the
government. As with all other sensitive data received in contract
administration, sensitive data provided under the clause is protected
by the Trade Secrets Act, 18 U.S.C. 1905. Proprietary information
received from a contractor is protected from disclosure under Exemption
4 of the FOIA. We do not see a need to promulgate special procedures
for contract administration data provided under this specific clause.
Further, Treasury lacks authority to issue a regulation that would
restrict the availability of information under the FOIA.
One commenter asserted that the clause would expand OFCCP's
jurisdiction. The regulation does no more than echo the provision of
section 342 setting forth referral to OFCCP as one option in the event
a contractor fails to comply with the good faith effort requirement.
Any effect section 342 may have on OFCCP's jurisdiction is beyond the
scope of Treasury's authority and this regulation.
One commenter asserted that the Department's Regulatory Flexibility
Act analysis does not provide an adequate factual basis to support the
certification in this proposal. Treasury believes that the Regulatory
Flexibility Act certification is fully supported. While application of
the clause to small business subcontractors will extend its reach
somewhat, the total number will remain small. Of those small businesses
affected, most will already be subject to OFCCP requirements. Finally,
the clause only applies to contracts above $150,000, ensuring that
compliance costs will not be disproportionate to the contract value and
will not have a significant economic impact on a substantial number of
small entities.
The commenter expressed concern that the proposed rule does not
increase contract spending by the agency with diverse owned businesses.
Increasing Departmental Offices' spend with specific businesses is
beyond the scope of the rulemaking, which concerns only the requirement
of section 342 that firms awarded contracts make good faith efforts to
include minorities and women in their workforces.
A commenter supported the $150,000 threshold as applied to
contracts with small businesses, but suggested that the clause should
apply to all contracts with large firms, regardless of dollar value. To
minimize the burden on all contractors, Treasury will apply this
requirement to service contracts over the simplified acquisition
threshold, $150,000.
III. Other Matters
Regulatory Flexibility Act Analysis
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) generally
requires agencies to prepare a regulatory flexibility analysis of any
rule subject to notice and comment rulemaking requirements under the
Administrative Procedure Act or any other statute, unless the agency
certifies that the rule will not have a significant economic impact on
a substantial number of small entities. It is hereby certified that
this rule will not have a significant economic impact on a substantial
number of small entities and thus no initial regulatory flexibility
analysis is required.
First, this rule will not affect a substantial number of small
entities. While this rule will affect all contracts for services above
the simplified acquisition threshold ($150,000), it will not affect a
substantial number of small entities because it will only apply to
those entities that actually contract with Departmental Offices. In
Fiscal Year 2011, DO contracted with 370 small businesses.
Additionally, the rule's economic impact is not expected to be
significant. The rule satisfies the statutory requirement that
contractors affirm a commitment to the fair inclusion of minorities and
women in the workforce, but does so in a way that minimizes burden on
contractors. The rule provides maximum flexibility for contractors in
implementing the statutory requirement because it does not impose any
specific requirements on contractor hiring. Further, most contractors
are already subject to and have implemented other FAR requirements that
will satisfy this rule's requirements. Essentially all contracts for
services to which this requirement applies are subject to FAR Clause
52.222-26, Equal Opportunity, which requires, among other things, that
contractors complete the EEO Form 1 containing workforce demographic
data. Thus, contractors are already required to compile and retain much
of the data
[[Page 15554]]
required by this clause. Further, contractors with supply and service
contracts of $50,000 or more and over 50 employees are required by
Department of Labor regulations to develop affirmative action programs;
a contractor that develops and implements such a program should be able
to provide documentation to demonstrate compliance with the clause.
Executive Order 12866
This rule is not a ``significant regulatory action'' for the
purposes of Executive Order 12866.
Paperwork Reduction Act
The information collections contained in the notice of proposed
rulemaking have been previously approved by the Office of Management
and Budget (OMB) and assigned control number 1505-0080. Under the
Paperwork Reduction Act (44 U.S.C. chapter 35), an agency may not
conduct or sponsor and a person is not required to respond to a
collection of information unless it displays a valid OMB control
number.
Lists of Subjects in 48 CFR Part 1022 and 48 CFR Part 1052
Government procurement.
Dated: February 28, 2014.
Iris B. Cooper,
Senior Procurement Executive, Department of the Treasury.
For the reasons set forth in the preamble, the Department amends 48
CFR Chapter 10 to read as follows:
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1. Add Subchapter D consisting of part 1022 to read as follows:
Subchapter D. Socioeconomic Programs
PART 1022--MINORITY AND WOMEN INCLUSION
Subpart 1022.7. Fair inclusion of minorities and women in contractor's
workforce
Sec.
1022.7000 Contract clause.
Authority: 12 U.S.C. 5452.
Subpart 1022.7. Fair inclusion of minorities and women
1022.7000 Contract clause.
Insert the clause at 1052.222-70, Minority and Women Inclusion, in
all solicitations and contracts in support of Departmental Offices for
services that exceed the simplified acquisition threshold.
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2. Add subpart 1052.2 to Subchapter H to read as follows:
Subchapter H. Clauses and Forms
PART 1052--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
Subpart 1052.2--Texts of Provisions and Clauses
Sec.
1052.222-70 Minority and Women Inclusion
Authority: 12 U.S.C. 5452(c)(2).
Subpart 1052.2--Texts of Provisions and Clauses
1052.222-70 Minority and Women Inclusion.
As prescribed in 1022.7000, insert the following clause:
MINORITY AND WOMEN INCLUSION (APR 2014)
``Contractor confirms its commitment to equal opportunity in
employment and contracting. To implement this commitment, the
Contractor shall ensure, to the maximum extent possible consistent
with applicable law, the fair inclusion of minorities and women in
its workforce. The Contractor shall insert the substance of this
clause in all subcontracts awarded under this Contract whose dollar
value exceeds $150,000. Within ten business days of a written
request from the contracting officer, or such longer time as the
contracting officer determines, and without any additional
consideration required from the Agency, the Contractor shall provide
documentation, satisfactory to the Agency, of the actions it (and as
applicable, its subcontractors) has undertaken to demonstrate its
good faith effort to comply with the aforementioned provisions. For
purposes of this contract, ``good faith effort'' may include actions
by the contractor intended to identify and, if present, remove
barriers to minority and women employment or expansion of employment
opportunities for minorities and women within its workforce. Efforts
to remove such barriers may include, but are not limited to,
recruiting minorities and women, providing job-related training, or
other activity that could lead to those results.
``The documentation requested by the contracting officer to
demonstrate ``good faith effort'' may include, but is not limited
to, one or more of the following:
1. The total number of Contractor's employees, and the number of
minority and women employees, by race, ethnicity, and gender (e.g.,
an EEO-1);
2. A list of subcontract awards under the Contract that
includes: dollar amount, date of award, and subcontractor's race,
ethnicity, and/or gender ownership status;
3. Information similar to that required in item 1, above, with
respect to each subcontractor; and/or
4. The Contractor's plan to ensure that minorities and women
have appropriate opportunities to enter and advance within its
workforce, including outreach efforts.
``Consistent with Section 342(c)(3) of the Dodd-Frank Wall
Street Reform and Consumer Protection Act (Pub. L. 111-203) (Dodd-
Frank Act), a failure to demonstrate to the Director of the Agency's
Office of Minority and Women Inclusion such good faith efforts to
include minorities and women in the Contractor's workforce (and as
applicable, the workforce of its subcontractors), may result in
termination of the Contract for default, other contractual remedies,
or referral to the Office of Federal Contract Compliance Programs.
Compliance with this clause does not, however, necessarily satisfy
the requirements of Executive Order 11246, as amended, nor does it
preclude OFCCP compliance evaluations and/or enforcement actions
undertaken pursuant to that Order.
``For purposes of this clause, the terms ``minority,''
``minority-owned business'' and ``women-owned business'' shall have
the meanings set forth in Section 342(g) of the Dodd-Frank Act.''
[FR Doc. 2014-05846 Filed 3-19-14; 8:45 am]
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