Our Company No Longer Has Federal Contracts: Should We Still Develop an AAP? by Jim Higgins, Ed.D

I was speaking with a client the other day and the question came up: “If a contractor loses their federal contract and they are no longer under obligation to the OFCCP, should they continue developing and using Affirmative Action Plans and other analyses as if we had a contract?”

This is an important question and it is highly perceptive of the company to ask it. While what I am about to say should not be considered legal advice as I am not an attorney (if you have any doubts, consult your legal counsel), following are points to consider.

Most companies find doing business with the federal government desirable—even if there are administrative complexities that come with federal contracts. While the best thing to do is to maintain a fully compliant Affirmative Action Plan because it makes good business sense, following at least some process that to help facilitate and monitor workplace diversity, documenting the validity of pre-employment selection devices, and monitoring the company’s compensation practices to ensure fairness can be a vital asset when competing for a new federal contract. Additionally, while the company may be able to simplify the procedures it follows to do this it will make it easier to build an existing system into one that is fully compliant when the new contract is awarded.

It is important, however, that your company NOT call your system an “Affirmative Action Plan” or in any way imply that it is “partially compliant” with OFCCP requirements. From the OFCCP’s perspective, there is no “Affirmative Action Plan Lite” (Truesdell, Secrets of Affirmative Action, 2007). From the OFCCP’s perspective, your company is either in compliance or it is not. Therefore, the company should call their system something that will not confuse it with an OFCCP compliant process. For example, it could be called the company’s “Employee Diversity and Equity Initiative.”

Even if there is no intent to compete for federal contracts in the future, a Diversity and Equity Initiative makes tremendously good business sense. Some reasons for this are presented below:

1. A diverse workforce will bring a diversity of ideas, skills, and perspectives to the company. This foster’s creativity and will result in novel solutions that may have never occurred to a workforce that is homogeneous.

2. Identifying groups that are underrepresented will help the company uncover barriers to employment that undermine diversity and reduce the creativity and productivity noted in bullet 1, above.

3. Evaluating and validating the company’s pre-employment tests, promotional examinations, and certification programs will both help ensure that the best person is placed in a job as well as serve as a bulwark against claims of employment discrimination. Conducting a job analysis, which is required to validate pre-employment tests and certification examinations, also provides the information to develop high quality training programs, performance appraisal systems, and developing high quality job descriptions.

4. Regularly monitoring employee compensation practices will help the company to build a positive, highly motivated, and committed workforce. It will also help the company defend against charges of compensation discrimination.
One advantage of setting up a Diversity and Equity Initiative in the absence of federal contracts and the requirement to report data to the OFCCP is that the company can build the system over time. This makes it cost-effective to create the highest quality system in an environment that is not “rushed” by the need to comply with contract requirements.

Should you have questions regarding Affirmative Action Plans, diversity initiatives, test-development, or compensation analysis, please visit our website at www.AffirmativeActionServices.com.