8_-_Fed_Reg_for_FAR_52_222-23.pdf

federal register

Friday October 3, 1980

Part VIII

Department of Labor Office of Federal Contract Compliance Programs

Construction Contractors, Affirmative Action Requirements;

Construction Industry, Goals for Minority Participation

Page 1 of 49Federal Register Notice

5/24/2016https://www.dol.gov/ofccp/TAguides/fedreg100380.htm

Attachment # 8

Federal Register / Vol.45 No. 194 / Friday, October 3, 1980 / Rules and Regulations 65976

DEPARTMENT OF LABOR

Office of Federal Contract Compliance Programs

41 CFR Part 60-4

Construction Contractors, Affirmative Action Requirements

AGENCY: Office of Federal Contract Compliance Programs, Labor.

ACTION: Final rule.

SUMMARY. The regulations published today clarify the existing requirement in 41 CFR 60-4.1 that a nonexempt construction contractor's total construction workforce is covered under 41 CFR Part 60-4 even though some of the contractor's employees perform work on non-Federal or nonfederally assisted construction contracts or subcontracts and even though such nonfederally related work may occur in geographical areas where the contractor does not currently have work on Federal or federally assisted construction projects.

EFFECTIVE DATE: These regulations shall take effect November 3, 1980.

FOR FURTHER INFORMATION CONTACT: James Cisco, Acting Director, Division of Program Policy, Office of Federal Contract Compliance Programs, Room C-3324, U.S. Department of Labor, 200 Constitution Avenue, NW, Washington. D.C. 20210, Telephone (202) 523-9426.

SUPPLEMENTARY INFORMATION: On September 7,1979, the Office of Federal Contract Compliance Programs (OFCCP), U.S. Department of Labor, published for comment in the Federal Register (44 FR 52283) a proposal to clarify 41 CFR Part 60-4, regulations for the construction industry, pursuant to Executive Order 11246, as amended. (30 FR 12319, 32 FR 14303, 43 FR 14888.) Also published for comment was a proposed Notice and Appendix to establish goals for minority employment for each SMSA and EA (44 FR 52348). That Notice and Appendix are published in final form today elsewhere in the Federal Register. Comments were received until November 6, 1979, on each proposal.

One hundred fifty-four written comments were submitted by individuals and groups during the comment period. The comments were directed either to the proposed clarification, the proposed minority employment goals or to both proposals. Each submission has been thoroughly reviewed, and each criticism and each suggestion has been given careful consideration. Additional comments received and postmarked after November 6, 1979, were analyzed and considered, but are not included in the above count. None of the 154 comments dealt with the proposed clarification of 41 CFR 60-4.6, and only 34 dealt with the proposed clarification of paragraph 7q of 41 CFR 60-4.3. The

Page 2 of 49Federal Register Notice overwhelming majority of the comments dealt solely with the proposed nationwide minority goals contained in the separate September 7, 1979, Federal Register Notice.

Summary of Comments

1. Several contractors and contractor associations objected to coverage of nonfederally involved construction projects. Contractors and their associations contended that the clarifying proposal is in reality a major change in the regulations. They contended further that such coverage would be inflationary, would place them in a poor competitive position with respect to companies without Federal contracts, would make companies reluctant to bid on Federal contracts in the future, and would be an intrusion in private sector affairs.

2. Contractor associations contended that there will be additional and burdensome reporting requirements associated with monitoring activity on private sector projects.

3. Both contractors and individuals recognized the industry's legal obligations to take affirmative action., but objected to the $10,000 jurisdictional amount for goals coverage; some suggested instead that the jurisdictional amount be raised to $50,000 or $100,000.

4. Contractor associations contended that the net result of implementing section 7q and nationwide goals will be a decrease in the number of minority employees, and in some instances "reverse discrimination" as contractors attempt to meet specific goals.

5. One comment proposed that the regulation apply to private sector projects only after a Federal award has been made, i.e. prospectively, and then only to private projects in areas where a contractor has Federal or federally assisted construction.

6. Several public interest groups, advocacy groups, and Government agencies praised the proposal.

However they expressed concern about OFCCP's ability to monitor compliance adequately on private sector projects, and called for the establishment of improved employee reporting mechanisms.

Discussion

Some comments suggested that the application of Executive Order affirmative action requirements to nonfederally related construction projects is a new requirement. More specifically, they asserted that paragraph 7q constitutes a substantive change in the regulations rather than a clarification of existing requirements as stated in the September 7, 1979, Federal Register proposal (43 FR 52283). To the contrary, by its expressed terms, the proposal did not establish a new requirement. Rather the proposal simply clarified which goals (that is, the goals of a specific geographical area) are applicable to a contractor's workforce when the contractor is performing construction work in two or more locations and each location is subject to different goals (e.g., two separate SMSAs).

The relevant regulation is 41 CFR 60-4.1, which was promulgated as a final rule on April 7, 1978 (43 FR 14888), and which has been effective since May 8, 1978. That regulation provides, in pertinent part, as follows:

This part applies to all contractors and subcontractors which hold any Federal or federally assisted construction contract in excess of $10,000. The regulations in this part are applicable to all of a construction contractor's or subcontractor's construction employees who are engaged in onsite construction including those construction employees who work on a nonfederally funded or nonfederally assisted construction site * * * (Emphasis added.)

Page 3 of 49Federal Register Notice

Nothing in the language proposed as paragraph 7q would alter, by extension or otherwise, that basic obligation. Further, the Department of Labor's nationwide goals for female participation in the construction industry have, since their effective date (May 8, 1978), been applicable to a 'non-exempt contractor's total onsite construction workforce throughout the United States -regardless of whether the total workforce is employed on a federally related or non-federally related project (and regardless of whether there were specific goals in existence for minorities (43 FR 14899)). The regulation is consistent with the general approach under Executive Order 11246 regulations that a contractor's acceptance of a single covered contract makes all of that contractor's workforce and facilities covered unless otherwise specifically exempt. See, for example, 41 CFR Part 60-2 (Revised Order 4) under which each nonconstruction contractor subject to Revised Order 4 must comply with the written affirmative action program requirements at each of its establishments.

This same approach has been applicable to the construction industry since 1971. The Philadelphia Plan, for example, initially was limited to federally involved construction projects. Contractors at the time of a compliance review would shift their minority workers from private sites to federally involved projects. This practice was referred to as "bicycling." The Philadelphia Plan was amended in 1971 to cover the contractor and therefore covered both federally related and private projects. (See Nash, Affirmative Action Under Executive Order 11246, 46 N.Y.U.L Rev. 225, 240 (1971).)

The proposal then did not propose to establish new requirements; rather it was designed to eliminate confusion surrounding the phrase "covered area" as that phrase is used in 41 CFR Part 60-4 in referring to the various geographical units where goals have been established. Questions were raised, for example, as to whether a contractor which is awarded a federally involved construction contract in SMSA X should apply the goals established for SMSA X to its non-Federal work in SMSA Y or the goals established for SMSA Y to that non-Federal work in SMSA Y. Paragraph 7q merely was intended to explain that construction contractors and subcontractors were to apply the goals of the SMSA or EA where the contract was actually being performed. The proposed amendment to 41 CFR 60-4.6 was intended to achieve the same purpose. The proposal, as has been stated herein, would achieve the clarification in part by adding a new paragraph q to clause 7 of the Standard Federal Equal Employment Opportunity Construction Contract specifications. Upon reflection, however, paragraph 4 of the specifications appears to be a more appropriate point to add the amendment. Accordingly, paragraph 4 of the specifications has been amended rather than to add a paragraph q to paragraph 7.

The September 7, 1979, Federal Register notice did not propose an amendment to 41 CFR 60-4.2.

However, paragraph 2 of the "Notice of Requirement for Affirmative Action to Ensure Equal Employment Opportunity (Executive Order 11246)" (which follows 41 CFR 60-4.2(d)) also may need clarification on the same point. Accordingly, paragraph 2 of the Notice has been amended to make it clear that a covered construction contractor is subject to the goals applicable to the geographical location where the construction work is being performed and that all its projects, whether or not they are federally involved, are covered by the goal requirement.

The other comments which were received on the proposal and which have been summarized above simply are not on point. Each comment, as indicated above, however, has been considered. In addition those comments also have been treated in the Notice and Appendix regarding minority goals which are published elsewhere in the Federal Register today.

It has been determined that this document does not contain a major proposal requiring the preparation of a regulatory analysis under Executive Order 12044 (43 FR 12661) or under the Department's guidelines implementing Executive Order 12044.

Page 4 of 49Federal Register Notice

This document was prepared under the direction and control of Weldon Rougeau, Director, Office of Federal Contract Compliance Programs.

Accordingly, 41 CFR Part 60-4 is amended as set forth below:

Dated: September 30, 1980.

Ray Marshall, Secretary of Labor.

John N. Gentry, Under Secretary.

Donald Elisburg, Assistant Secretary Employment Standards Administration.

Weldon 1. Rougeau, Director. Office of Federal Contract Compliance Programs.

(Secs. 201, 202, 205, 211, 301, 302, and 303 of E.O. 11246, as amended. 30 FR 12319; 32 FR

14303; 43 FR 46501)

1. 41 CFR 60-4.2(d) is amended by revising paragraph 2 of the "Notice of Requirement for Affirmative Action to Ensure Equal Employment Opportunity (Executive Order 11246)," to read as follows:

§60-4.2 Solicitations.

(d) The following notice shall be included in and shall be a part of, all solicitations for offers and bids on all Federal and federally assisted construction contracts or subcontracts in excess of $10,000 to be performed in geographical areas designated by the Director pursuant to § 60-4.6 of this part (see 41 CFR 60-4.2(a)):

Notice of Requirement for Affirmative Action To Ensure Equal Employment Opportunity (Executive Order 11246)

1. The Offeror's or Bidder's attention is called to the "Equal Opportunity Clause" and the "Standard Federal Equal Employment Specifications" set forth herein.

2. The goals and timetables for minority and female participation, expressed in percentage terms for the Contractor's aggregate workforce in each trade on all construction work in the covered areas are as follows:

Goals for minority Goals for female Timetables participation for participation in each each trade trade Insert goals for Insert goals for each year. each year.

Page 5 of 49Federal Register Notice

These goals are applicable to all the Contractor's construction work (whether or not it is Federal or federally assisted) performed in the covered area. If the contractor performs construction work in a geographical area located outside of the covered area, it shall apply the goals established for such geographical area where the work is actually performed. With regard to this second area, the contractor also is subject to the goals for both its federally involved and nonfederally involved construction.

The Contractor's compliance with the Executive Order and the regulations in 41 CFR Part 60-4 shall be based on its implementation of the Equal Opportunity Clause, specific affirmative action obligations required by the specifications set forth in 41 CFR 60-4.3(a), and its efforts to meet the goals. The hours of minority and female employment and training must be substantially uniform throughout the length of the contract, and in each trade and the contractor shall make a good faith effort to employ minorities and women evenly on each of its projects. The transfer of minority or female employees or trainees from Contractor to Contractor or from project to project for the sole purpose of meeting the Contractor's goals shall be a violation of the contract, the Executive Order, and the regulations in 41 CFR Part 60-4. Compliance with the goals will be measured against the total work hours performed.

3. The Contractor shall provide written notification to the Director of the Office of Federal Contract Compliance Programs within 10 working days of award of any construction subcontract in excess of $10,000 at any tier for construction work under the contract resulting from this solicitation. The notification shall list the name, address and telephone number of the subcontractor; employer identification number of the subcontractor; estimated dollar amount of the subcontract; estimated starting and completion dates of the subcontract; and the geographical area in which the subcontract is to be performed.

4. As used in this Notice, and in the contract resulting from this solicitation, the "covered area" is (insert description of the geographical areas where the contract is to be performed giving the state, county and city, if any).

2. 41 CFR 60-4.3(a) is amended by revising paragraph 4 of the Standard Federal Equal Employment Opportunity Construction Contract Specifications (Executive Order 11246) to read as follows:

§ 60-4.3 Equal opportunity clauses.

(a) * * *

Standard Federal Equal Employment Opportunity Construction Contract Specifications (Executive Order 11246)

4. The contractor shall implement the specific affirmative action standards provided in paragraphs 7 a through p of these specifications. The goals set forth in the solicitation from which this contract resulted are expressed as percentages of the total hours of employment and training of minority and female utilization the Contractor should reasonably be able to achieve in each construction trade in which it has employees in the covered area. Covered Construction contractors performing construction work in geographical areas where they do not have a Federal or federally assisted construction contract shall apply the minority and female goals established for the geographical area where the work is being performed. Goals are published periodically in the

Page 6 of 49Federal Register Notice

Federal Register in notice form and such notices may be obtained from any Office of Federal Contract Compliance Programs office or from Federal procurement contracting officers. The Contractor is expected to make substantially uniform progress in meeting its goals in each craft during the period specified.

3. 41 CFR 60-4.6 is amended to read as follows:

§ 60-4.6 Goals and timetables.

The Director, from time to time, shall issue goals and timetables for minority and female utilization which shall be based on appropriate workforce demographic or other relevant data and which shall cover construction projects or construction contracts performed in specific geographical areas. The goals, which shall be applicable to each construction trade in a covered contractor's or subcontractor's entire workforce which is working in the area covered by the goals and timetables, shall be published as notices in the Federal Register, and shall be inserted by the contracting officers and applicants, as applicable, in the Notice required by 41 CFR 60-4.2. Covered construction contractors performing construction work in geographical areas where they do not have a Federal or federally assisted construction contract shall apply the minority and female goals established for the geographical area where the work is being performed.

DEPARTMENT OF LABOR

Office of Federal Contract Compliance Programs

Goals for Minority Participation In the Construction Industry

On September 7,1979, the Department of Labor published in the Federal Register (44 FR 52348) a notice requesting comments on proposed employment goals for minority workers in the construction industry. The proposed notice contemplated a single goal for minority employment, and an appendix was attached which proposed goals for minority utilization in each standard metropolitan statistical area and in each economic area. On October 5,1979, the Equal Employment Opportunity Commission (EEOC) published a related document in the Federal Register (44 FR 57491) requesting comments on the question of whether a specific and separate percentage goal should be established for each minority group.

This final Notice and the Appendix B-80 attached hereto, supersede Appendix B of the Notice issued on April 7, 1978, (43 FR 14899) and corrected on May 5, 1978, (43 FR 19473) and Appendix B-1 of the Notice issued on March 20, 1979, (44 FR 17116) which established goals under Executive Order 11246 for minorities working on construction projects located in certain areas. This Notice is issued pursuant to 41 CFR 60-4.6 and establishes goals under Executive Order 11246, as amended (30 FR 12319, 32 FR 14303 and 43 FR 46501), for minorities in the construction industry.

Background

Executive Order 11246, as amended, prohibits nonexempt Federal and federally assisted construction contractors and subcontractors from discriminating against any employee or applicant for employment because of race, color, religion, sex, or national origin. In addition, such contractors and subcontractors are required to take affirmative action to ensure that applicants are employed, and that

Page 7 of 49Federal Register Notice employees are treated during employment, without regard to their race, color, religion, sex or national origin. Section 201 of the Order provides that the Secretary of Labor shall adopt rules, regulations and orders as he deems necessary and appropriate to achieve the purposes of the Order.

Service and supply contractors (i.e., nonconstruction contractors) with at least 50 employees and a contract of at least $50,000 are required to develop and implement written affirmative action programs (see 41 CFR Part 60-2). These affirmative action programs, among other things, are required to contain separate goals and timetables for minorities and women. The goals reflect the difference between such contractors' rate of utilization of minority and female employees and the availability of those groups in the relevant labor area. Service and supply contractors for a number of years now have been under an obligation to implement the Executive Order's affirmative action requirement in this manner.

A different approach was developed with regard to construction contractors. Unlike service and supply contractors, construction contractors normally have not been required to develop, on an individual basis, written affirmative action programs. Rather, for the construction industry, written affirmative action programs have been developed by the local construction industry itself, subject to approval by the Department of Labor, or the Office of Federal Contract Compliance Programs would develop the affirmative action programs for various geographical areas. These programs did contain affirmative action goals. Nonexempt construction contractors working in those geographical areas would then be required to comply with the affirmative action programs. This requirement or obligation was imposed by incorporating the written area- wide affirmative action program into the contractor's contract.

All construction contractors traditionally were required to comply with the Executive Order's Equal Opportunity clause, published at 41 CFR 60-1.4(a) and (b), which mandates nondiscrimination and affirmative action. (See Executive Order 11246, § 202 and § 301.) Not all construction contractors were subject to goals and timetables, however, because these area-wide programs were not developed for each geographical area where construction was taking place.

This difference in treatment between construction industry contractors and service and supply contractors resulted because of the limitations of the three basic types of affirmative action programs which the Office of Federal Contract Compliance Programs (OFCCP) designed for the construction industry. The three basic types of affirmative action programs developed for the construction industry were (1) Imposed Plans, (2) Hometown Plans and (3) Special Bid Conditions. One of the basic limitations of these types of plans or affirmative action programs was that they were limited to a specific geographical area or, in the case of Special Bid Conditions, limited to specific construction projects. Accordingly, neither type of affirmative action program provided for a nationwide system of defined affirmative action goals. We turn now to a brief description and analysis of each of these types of plans.

Imposed Plans for the most part were implemented in major metropolitan areas where there was substantial Federal or federally assisted construction, and applied only to those projects which were valued in excess of $500,000. These areas included at one time or another Philadelphia, Washington DC, San Francisco, St. Louis, Atlanta, Camden, and Chicago. Imposed plans generally were published in 41 CFR Chapter 60 but the Philadelphia Imposed Plan was never codified in the Code of Federal Regulations.

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Hometown Plans were tripartite agreements among the contractors and the unions in an area and the local minority community. The three groups would develop a plan for compliance with the Executive Order and present it to the OFCCP for approval. If the OFCCP approved the plan, it constituted the contractors' obligations under the Executive Order and so long as they complied with the plan they also were in compliance with the Order. Presently, there are 27 approved Hometown Plans in operation.

Special Bid Conditions were developed to impose affirmative action obligations on construction contractors which were working on certain high impact projects which were being constructed in an area which was not covered, as a general rule, by a Hometown or Imposed Plan.

These three types of affirmative action plans were not implemented through a regulatory scheme applicable to the construction industry on a nationwide basis. Rather they were included in the solicitations which precede the award of contracts. One of the shortcomings of these approaches was that substantial federally involved construction was being conducted outside of the small number of geographical areas which had either an Imposed or Hometown Plan, and such construction therefore took place without benefit of specific affirmative action requirements. Also, contracting officers were confused by the different types of affirmative action plans and sometimes did not know which ones covered specific geographical areas or projects. In addition, some contracting agencies, perhaps because of the confusion, did not adhere to the different notices and formats developed by OFCCP.

As a consequence, construction contracts frequently were awarded which did not contain the notice indicating that they were subject to the Executive Order even though the contracts were subject to the Executive Order and were to be performed in an area which had either an Imposed or Hometown Plan. The Imposed Plans presented a special problem because a number of contractors sometimes failed to sign the certification which appeared in the appendix in Imposed Plans. Failure to sign the certification frequently was unrelated to the contractors' commitment to the affirmative action requirements. However, the certification was held to be a material part of the bid and those bids which did not contain a signed certification were rejected as nonresponsive. A number of these rejected bids were low bids, and the result was to increase the cost of construction to the Government.

Another deficiency in the old programs was that no specific affirmative action standards were applicable to women in the construction industry.

Under the old procedures, compliance agencies developed Special Bid Conditions for high impact projects for which they had compliance responsibility. OFCCP approved the Special Bid Conditions, but the Bid Conditions were applicable only to the project for which they were approved.

Accordingly, if a compliance agency failed to develop Special Bid Conditions for a project for which it had compliance responsibility, the project was not covered by an affirmative action plan(i.e., if the project was not otherwise in an area covered by a Hometown or an Imposed Plan). This would be true even though another project in the same labor market area may have been covered by Special Bid Conditions developed by another compliance agency. The Special Bid Conditions did apply, however, to a covered contractor's entire workforce working in the labor market area where the covered project was located although some employees may not have worked on the project.

To correct the deficiencies and limitations of the different types of affirmative action programs for construction contractors. the Department of Labor on April 7,1978, published a regulation (presently codified at 41 CFR Part 60-4) governing the employment practices of contractors which had construction contracts in excess of $10,000. In addition, the Imposed Plans were terminated.

Hometown Plans were retained but specified obligations were imposed with which signatories to the

Page 9 of 49Federal Register Notice plans were required to comply within a certain period of time in order to continue OFCCP's approval of the specific Hometown Plan. (See 43 FR 14890.) The Model EEO Bid Conditions, the procurement device by which the affirmative action obligation under the old system was placed on construction contractors, also were discontinued.

In lieu of these procedures, the April 7, 1978, regulations developed new procedures for Federal agencies and procurement contracting officers to follow in awarding Federal and federally assisted construction contracts. In a separate action on that same day, goals were established for women in the construction industry on a nationwide basis. Although the Imposed Plans were terminated, the regulations continued in effect the goals which had been developed for minority workers under the Imposed Plans until new goals were adopted for such groups by OFCCP. The Imposed Plan goals applied only to minorities; however, a number of the plans defined minority to include minority women.

A key element of that regulation is 41 CFR 60-4.6. With regard to this section of the regulations, the preamble to the April 7, 1978 regulations stated in relevant part as follows (43 FR 14892):

This section requires the Director of OFCCP to issue goals and timetables for minority and female utilization which shall be based on appropriate workforce demographic or other relevant data. The goals shall cover specific construction projects or construction contracts performed in specific geographical areas. * * * It is anticipated that within the very near future OFCCP will propose standards and goals for minority utilization pursuant to 41 CFR 60-4.6 of the regulations published today. Until those goals are published in final form, the goals and timetables applicable under existing OFCCP requirements will continue to be effective.

Section 201 of Executive Order 11246, as amended, mandates the Secretary of Labor to adopt such rules and regulations and issue such orders as he deems necessary and appropriate to achieve the purposes * * * of the Executive Order. Section 202 of the Executive Order requires every nonexempt Federal contractor or subcontractor, including Federal and federally assisted construction contractors and subcontractors (see J 301 of the Order), to take affirmative action.

"The Department of Labor's experience with affirmative action has demonstrated that goals and timetables are the most concrete and effective system for implementing the affirmative action obligation contained in the Executive Order. Since goals and timetables were implemented as an affirmative action requirement, all Federal contractors and subcontractors. except construction contractors have been required to establish goals and timetables for women. Construction contractors, on the other hand, have been required to establish goals for minority workers, and then, only if the construction contract was being performed in a geographical area covered by a Hometown Plan or an Imposed Plan or if the contract was awarded subject to Special Bid Conditions. * * * Unlike nonconstruction contractors, who were and are required to develop detailed affirmative action programs (which include goals and timetables for women and minorities), the only implemented affirmative action obligation imposed on construction contractors had been the goals and timetables established in the Hometown Plans, Imposed Plans, or Special Bid Conditions. Nevertheless, all Government contractors and subcontractors, including construction contractors and subcontractors, agree in every contract to *** "take affirmative action to ensure that applicants are employed, and that employees are treated during employment without regard to their race, color, religion. sex or national origin." (Section 202. cl. 1. Executive Order 11246, as amended.)

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A number of methods and procedures for establishing goals and timetables for the construction industry have been considered and the OFCCP has concluded that this Notice form is the most reasonable and efficient way to inform construction contractors of their obligations and to protect workers under the Executive Order. First, the Hometown Plan concept contemplates that contractors, unions, and the local community voluntarily will agree to an affirmative action plan, submit it to the OFCCP for approval and, if approved, compliance with the plan will constitute compliance with the Executive Order. This process is time consuming and does not always guarantee agreement. Indeed, under this process only 62 Hometown Plans have been developed and approved and only 33 presently exist. These plans cover only a small fraction of the cities in the country and only a small portion of Federal and federally assisted construction. Similarly the imposed Plans require long and drawn out proceedings before they are implemented. These proceedings include public hearings in each area where the plan is imposed and subsequent publication in the Federal Register and codification in the Code of Federal Regulations. Moreover, the hearing process did not always produce reliable data upon which reasonable goals could be based thereby making it necessary for the OFCCP to develop the goals using Census Bureau prepared data. Through this process, seven plans have been imposed.

In order to cover some of the major Federal and federally assisted construction contracts being performed outside of Hometown and Imposed Plan areas, Special Bid Conditions were designed.

Under this concept the compliance agencies establish goals and timetables for construction contracts for which they have compliance responsibility and submit the Special Bid Conditions to the OFCCP for approval prior to the time the bids or offers were solicited. Special Bid Conditions unlike Hometown and Imposed Plans, however, are limited to the projects for which they were designed.

Accordingly, two projects being in close proximity would require separate Bid Conditions if the projects involved were assigned to different agencies for compliance purposes, or no Bid Conditions at all if the compliance agency did not act prior to the solicitation.

The three affirmative action methods previously used do not allow for an efficient system which provides a fair degree of protection for construction employees. The notice system, on the other hand, allows for the use of the best data available, which was not always forthcoming in hearings, and an efficient and prompt implementation of the goals which result from that data.

It was against this background that the Department of Labor published a notice in the Federal Register (44 FR 52348) an September 7, 1979, proposing to establish numerical goals for minority utilization in the construction industry pursuant to Section 202 of Executive Order 11246 and 41 CFR 60-4.6. In proposing the goals, the Department of Labor had several concerns. First, there was concern that standards, methodologies and procedures should be established which are not confusing to contracting agencies and procurement contracting officers at both the Federal and State and local government levels (in the case of federally assisted construction). In this connection, it was important that once such standards and methodologies are developed that they conveniently lend themselves to utilization by procurement contracting officers.

Second, it also was important that all covered construction be subject to the numerical goal requirements. In this connection, the Department of Labor was concerned that a system as uniform as possible be established so that all covered contractors are treated equally and that one does not enjoy advantages over others in competing for federally involved construction contracts.

Finally, the Department was concerned that numerical goals be based on a rational, reliable, valid and uniform information base. Accordingly, the Department of Labor proposed to use Census Bureau

Page 11 of 49Federal Register Notice prepared data and selected the Standard Metropolitan Statistical Area (SMSA) as the standard geographical unit for establishing goals. Where there was no SMSA, the Economic Area (EA) was selected as the standard geographical unit. The numerical goal itself was the minority percentage in the experienced civilian labor force of the SMSA or the EA, whichever is applicable in a given area.

Thus, a contractor performing a nonexempt construction contract in an SMSA with a 20 percent minority labor force would have a minority goal of 20 percent for each craft and trade employed by the contractor in the SMSA, and would be required to take every good faith step to ensure that 20 percent of its work hours were performed by minority workers.

One hundred fifty-four written comments were received by the Department of Labor during the comment period. The comments were directed both to the proposed notice regarding minority goals and to the proposed clarification of 41 CFR Part 60-4, published for comment on the same date (44 FR 52283). Each of the comments has been thoroughly reviewed and considered including comments which were received after the closing date. In addition, we have analyzed and given careful consideration to comments received by the Equal Employment Opportunity Commission (EEOC) pursuant to its October 5, 1979 (44 FR 57491), request for public comment on whether the proposed minority goals should be aggregated or disaggregated by individual minority subgroup. The comments received after the closing date and by EEOC are in addition to the 154 comments mentioned above.

Summary of Comments

1. A number of the contractor associations objected to the Economic Area (EA) and Standard Metropolitan Statistical Area (SMSA) as the basic geographical units on which goals are to be established. The associations expressed the view that their contractor members' respective EAs bore neither geographical nor economic relationships to SMSAs. Further, a significant number of associations contended that the commuting patterns in their members' localities were inverse to the models determined by the Bureau of the Census, i.e., the associations asserted that workers travel from EAs to SMSAs for employment opportunities, not from SMSAs (cities) to EAs (rural areas); and that minorities resist traveling to work sites in the large geographical units covered by the EAs from urban centers where they reside. As such, they argued that minority availability will not be sufficient to meet the proposed goals.

2. A number of comments objected to the use of 1970 Census data to determine goal levels.

Contractors and contractor associations stressed the need for data that are localized and based on requisite skills of workers. State, Federal and local government officials ("Government") and minority advocate groups contended that 1970 Census data are outmoded. Although these latter groups supported the suggestion that current, local data be utilized, or that 1980 data, when available, be used to set minority goals, they cited different reasons for their conclusions. Some comments also asserted that the 1970 Census data undercounted minorities, and that the resultant goals should, therefore, be higher than those proposed by OFCCP.

3. Government officials and advocacy groups also expressed concern for what they perceived to be a lessening of employment opportunities for minorities in the construction industry. These comments identified specific major cities where the proposed goals would be lower than existing Hometown Plan goals or locally legislated goals or the OFCCP's interim minority goals published at 43 FR 14888. Some comments suggested, and in some instances advocated, adoption of a three-goal concept (central city goal, SMSA goal, and EA goal). Other comments suggested that some form of "targeting" of critical areas would be preferable in order to maintain or increase minority gains in urban areas.

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4. Other comments, primarily from contractors, objected to the use of the 64 single goals for all crafts" concept. They contended that a single goal is unrealistic and ignores variations in skill levels and the actual availability of skilled workers.

As indicated above, on October 5, 1979, the Equal Employment Opportunity Commission (EEOC) also published a proposal requesting comments on whether OFCCP's minority goals should be disaggregated. That is, whether there should be separate goals for each minority group. Also, as indicated above, the Department of Labor has analyzed those comments as well.

The comments received by EEOC supporting aggregation may be summarized as follows:

1. Because the construction industry's workforce is not stable due to the fact that "most of the workers are employed for a short duration, and only in specialized skills," separate goals would increase the administrative burdens involved in monitoring and reporting minority hiring and would raise construction costs. Some comments suggested that the paperwork involved would have its greatest impact on small contractors to whom it may be prohibitively expensive.

2. Where total or individual minority group populations are very small, it would be difficult to meet percentage goals. Furthermore, where the total onsite construction workforce is small, goals of less than one percent would be impossible to comply with; nevertheless, contractors would be cited for underutilization. In such instances, goals of less than one percent should be set for all minorities or for particular minorities.

3. Individual minority group goals would require contractors to overlook qualified members of one minority group to hire members from another minority group in order to meet specific goals. One comment described a hypothetical newspaper advertisement seeking members for specific jobs:

"Note, blacks need not apply, we have met our goals." Another comment noted "Substantial expense, wasted effort, and loss in productivity results from having to pass over presently available minorities possessing requisite skills simply to satisfy the goal for another minority group."

4. Contractors would have to incur the additional expense of recruiting and training members of specific minority groups in order to meet individual minority group goals.

5. Separate minority group goals would lead to divisiveness among the various minority groups. i.e., to the extent that a particular group believed its goal to be too low, any increases would be perceived as coming at the expense of another group in order that the overall minority goal remain equal to the minority percentage of the experienced civilian labor force. In this regard, some comments stated that only some minority groups would gain leaving others at a significant disadvantage.

The comments received by EEOC opposing aggregation may be summarized as follows;

1. Reporting minority hiring on an aggregate basis can give the appearance of full minority utilization when in fact some minority groups are being totally excluded or seriously underutilized. As a result, a particular minority group might have a disproportionately greater share of job opportunities relative to other minority groups, and the problems of smaller minority groups might be masked by a full utilization figure. In contrast, disaggregation would yield a more accurate data base for the identification of underutilization.

2. Contractors could freely engage in discriminatory practices targeted against particular minority groups and thereby favor or exclude members of a particular minority group and still meet the single minority goal. Disaggregation of goals would effectively reduce contractor opportunities to exercise discriminatory preferences.

In the discussion section below, we will take up the issues raised in these comments.

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Discussion

1. Some contractor associations objected to the use of SMSAs and EAs as the basic geographical units for establishing goals. As indicated above, the Executive Order mandates that the Department of Labor promulgate regulations to implement the affirmative action requirement of the Order.

Numerical employment goals have proven to be an effective method of achieving equal employment opportunity. Previous affirmative action requirements adopted by OFCCP for the purpose of placing employment goals on construction contractors left most construction work uncovered because the plans did not lend themselves to widespread use (see discussion of this point above). Moreover, the public hearings and other procedures utilized for the purpose of giving the public an opportunity to provide input did not always produce reliable data on which goals could be based. Consequently, additional research was required to produce the data on which such goals could be based.

The Department, in attempting to improve equal employment opportunity in the construction industry through employment goals, has used a number of different geographical units as the base on which the goals were established. These units have included cities, combinations of cities and counties, SMSAs and an entire state. In addition, and as stated in the Federal Register notice when the goals were proposed (44 FR 52348-52349):

The Department also examined the possibility of using other geographical divisions as goal setting areas. Principally, the Department examined the Federal Wage Survey Areas as a possible geographical base for setting goals. These are contiguous areas which cover the entire country and are based upon the commuting patterns of Federal employees. However, construction trades are not part of the survey and the areas reflect the commuting patterns of Federal employees who usually work at fixed locations.

However, when all objectives are considered (e.g., consistent, uniform and equal treatment of contractors which constantly compete against each other for contracts, uniform and broad protection of employees and applicants for employment, a uniform and reliable data base, and standards and methodologies which can be administered on a coherent basis), the SMSAs and EAs are the geographical units which possess the most positive characteristics and the smallest number of negative characteristics. SMSAs, for example, have been conceptually developed and defined by the Office of Management and Budget. These statistical areas (or geographical units) represent a reasoned judgment as to how metropolitan areas may be defined statistically in a uniform manner using data items that are: (1) widely recognized as indicative of metropolitan character (population, urban character, non-agricultural employment, population density, commuting ties); and (2) available from a body of Federal statistics which has been uniformly and simultaneously collected in all parts of the country, and processed and tabulated according to consistent standards. Thus, if a project is located within an SMSA, it can be concluded that a reasonable commuting area exists within that SMSA, and that goals based on SMSA statistics are accurate. Furthermore, the majority of the United States' population lives in the counties contained in the SMSAs. (For a more complete discussion of the underlying concepts and derivations of SMSAs, see "Standard Metropolitan Statistical Areas." Office of Management and Budget, 1975.)

The "Economic Areas" concept was developed and defined by the Bureau of Economic Analysis in the U.S. Department of Commerce. Economic Areas are viewed as centers of commerce and generally cover areas which include the places of work and residence for most workers. There are 183 such areas, defined along county lines, covering the entire country. Counties were assigned to these economic areas in accordance with commuting patterns based primarily on data gathered by the Bureau of the Census. (For a full explanation of the derivation of EAs, see "The BEA Economic Areas: Structural Changes and Growth 1950- 73," Survey of Current Business. November 11, 1975.)

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Those comments which contend that the proposed minority employment goals for SMSAs and EAs are too high because construction workers tend to travel from EAs and SMSAs to central cities and that minority workers will not travel to rural and suburban areas are not persuasive. Numerous studies have demonstrated that minorities tend to be concentrated in the central cities. Like other workers, minorities will travel to the areas where the jobs are generated and, according to data obtained from the Bureau of the Census, the construction jobs will be, for the most part, in the SMSAs and the suburban communities. That data, which reported the dollar value of building construction permits let by political jurisdictions across the country reveal that over 72 percent of the total dollar amount was for projects located outside of the central or core city. Based on the assumption that the greater the dollar value of the construction, the greater the number of jobs to be created, it is reasonable to assume that, with few exceptions, the number of jobs for minorities will be greater in these fringe areas, and the proposed goals should reflect this. In addition, it is a well known fact that construction workers follow the work, even if it means traveling long distances. There is no evidence that this traveling factor is different for minorities than it is for nonminorities. Indeed, there have been instances where minorities have moved to locations in order that they avail themselves of construction employment opportunities.

2. Contractors contended that the minority goals should be by individual trade/craft rather than a single goal for all crafts because to do otherwise ignores the unavailability of minority construction workers, both skilled and unskilled, and makes it virtually impossible for contractors to meet the goal.

After giving consideration to the use of individual craft/trade goals, the Department concluded that the "single goal for all crafts" concept reflects the relevant pool from which minority workers can be drawn, and offers a greater opportunity for minorities to work in all construction trades at this time.

Further, the Department of Labor has reviewed the data available on which individual trade/craft goals might be based and finds that they are seriously limited. The 1970 Census has some data on minority participation in the individual trades; however, it reflects pre-1970 employment practices of the construction industry which excluded minorities from working in many trades regardless of their skill. Individual craft data at the county level are unreliable because of the small population samples and the even smaller number of minorities employed in the trades. Such data, therefore, cannot provide an accurate basis for setting appropriate individual craft/trade goal levels.

Bearing in mind that the intent of the goals is an initial measure of the contractors' good faith efforts to increase the employment opportunities for minorities and women. and that many trades have minimal entry education and skill requirements, the single goal approach is appropriate and reasonable.