The regulations implementing Executive Order 11246 permit federal supply and service contractors to develop affirmative action programs (AAPs) based on business or functional units rather than contractor establishments. These functional AAPs (FAAPs) allow a contractor to organize its AAP to reflect how the company operates functionally, and thereby may make it easier for contractors to organize and analyze data, identify issues, establish clear lines of responsibility for implementing its AAP, and monitor progress.
GENERAL
- What is a Functional Affirmative Action Program?
- What is the difference between an establishment and a functional or business unit?
- What requirements must a functional or business unit meet to be included in a FAAP?
- What are the required elements of a FAAP?
- What is the term of the FAAP agreement?
- Which OFCCP office will send scheduling letters for the compliance evaluation of a functional or business unit, and where will I submit the written FAAP and support data for my functional or business unit?
- How is a FAAP compliance evaluation different from an establishment-based compliance evaluation?
- Can OFCCP schedule a contractor for an establishment-based compliance evaluation after they submit a request for a FAAP agreement?
- Who should I contact if my company needs compliance assistance before, during, and after the FAAP request process?
- What are the possible advantages of developing a FAAP?
EDUCATIONAL INSTITUTIONS
- Are educational institutions eligible to apply for FAAPs?
- What compliance assistance is available to educational institutions interested in developing functional affirmative action programs?
FAAP APPROVAL
- How can covered contractors apply for the FAAP Program?
- How long does the application process take?
- How long does a new contractor have to implement the new FAAP?
FAAP MODIFICATIONS AND OFFICIAL CHANGES
- When is a contractor required to modify its FAAP agreement?
- What should a contractor with an approved FAAP agreement do if it undergoes an acquisition, merger, or major restructuring leading to changes to its approved functional or business units?
- How does a contractor modify its FAAP agreement?
- Is the contractor required to maintain prior year personnel data during a modification or elimination of its functional or business units?
- What should a contractor do when there is a change in a functional or business unit’s management official or the primary corporate contact?
RENEWING A FAAP
- What is the process for renewing a FAAP agreement?
- What if the contractor fails to make a renewal request at least 120 calendar days prior to the expiration of the existing FAAP agreement?
TERMINATING A FAAP
GENERAL
1. What is a Functional Affirmative Action Program?
As an alternative to developing establishment-based Affirmative Action Programs (AAPs), federal contractors can enter into an agreement with the Office of Federal Contract Compliance Programs (OFCCP) that permits the development of a program organized around functional or business units. For multi‐establishment contractors, Functional Affirmative Action Plans (FAAPs) can better align with the contractor's operations, enabling contractors to analyze significant business or functional units — such as a Sales Division or a Research and Development function — that span across establishments located in different states or regions. These FAAPs allow the contractor to examine whether its personnel practices and affirmative action efforts are sufficient to ensure equal employment opportunity for applicants and employees of a functional or business unit, rather than a particular establishment.
2. What is the difference between an establishment and a functional or business unit?
An establishment refers to a facility or unit that produces goods or services, such as a factory, office, store, or mine. In most instances, the unit is a physically separate facility at a single location, although OFCCP may consider several facilities located at two or more sites as a single establishment when the facilities are in the same labor market or recruiting area. A single establishment may contain several different functional units (e.g., a sales division, a research division, and a division of service workers).
A functional or business unit, on the other hand, is not generally defined by physical location, but rather refers to a component within an organization that operates autonomously in the ordinary course of the organization's business, potentially spanning several different establishments. A functional or business unit should also have identifiable personnel practices or transactional activities specific to the functional or business unit (e.g., applicant flow, hires, promotions, compensation determinations, terminations, etc.) that are distinguishable from other parts of the organization's business. Functions or business units are identified and defined based on the organization's existing business operations, personnel practices, and management structures.
3. What requirements must a functional or business unit meet to be included in a FAAP?
The functional or business unit must have at least 50 employees, have its own managing official, and have the ability to track and maintain its own personnel activity.
4. What are the required elements of a FAAP?
All FAAPs must include the required AAP elements outlined in 41 CFR 60-2, and if applicable, Subpart C of 41 CFR 60-300, and Subpart C of 41 CFR 60-741.
5. What is the term of the FAAP agreement?
FAAP agreements expire five years from the date of approval by the OFCCP Director.
6. Which OFCCP office will send scheduling letters for the compliance evaluation of a functional or business unit, and where will I submit the written FAAP and support data for my functional or business unit?
The OFCCP regional and/or district office where the FAAP compliance evaluation is scheduled sends the scheduling letter. Contractors must submit their FAAPs and support data to the office indicated on the scheduling letter within 30 calendar days of receipt of the scheduling letter.
7. How is a FAAP compliance evaluation different from an establishment-based compliance evaluation?
OFCCP conducts FAAP compliance evaluations in the same manner that it does establishment-based compliance evaluations. During FAAP compliance evaluations, OFCCP follows the compliance evaluation procedures identified in the Federal Contract Compliance Manual (FCCM). However, because functional units typically span several locations, a FAAP compliance evaluation may involve onsite visits to multiple locations.
8. Can OFCCP schedule a contractor for an establishment-based compliance evaluation after they submit a request for a FAAP agreement?
Yes. Contractors can be scheduled for establishment-based compliance evaluations during the FAAP agreement approval process. Further, establishment-based evaluations scheduled prior to and during the FAAP approval process will continue after the FAAP agreement is approved. Contractors are only exempt from future establishment-based compliance evaluations once the FAAP agreement is signed and executed by the OFCCP Director.
9. Who should I contact if my company needs compliance assistance before, during, and after the FAAP request process?
To support the prompt, transparent, and consistent application of OFCCP’s FAAP policies and procedures, contractors who have or are interested in developing FAAPs are encouraged to contact OFCCP’s Functional Affirmative Action Program Branch for compliance assistance. You may contact the FAAP Branch via email at OFCCP_FAAP-UNIT@dol.gov or at (202) 693-1125.
10. What are the possible advantages of developing a FAAP?
Contractors may realize several advantages in developing functional affirmative action programs. FAAPs allow contractors more flexibility in structuring their affirmative action programs to better align with the way in which their organization operates. Further, FAAPs allow contractors to assign responsibility to the appropriate individuals for each functional or business unit within their organizations.
As it relates to educational institutions, the development of functional AAPs also provides the opportunity to conduct more meaningful analyses of personnel practices as they relate to specific functions (e.g., schools, departments, job functions, program areas, etc.) rather than analyzing the institution’s practices as a whole.
EDUCATIONAL INSTITUTIONS
1. Are educational institutions eligible to apply for FAAPs?
Yes. Educational institutions covered by Executive Order 11246 are eligible to request and, upon approval, develop functional affirmative action programs in accordance with 41 CFR 60-2.1 (d)(4). Developing FAAPs allows educational institutions the opportunity to organize their affirmative action programs by functional or business unit instead of by establishment. Educational institutions may choose to develop their FAAP by schools, job functions, departments, or other functional or business units applicable to their organization. For example, a university could develop a FAAP that covers professors and associate professors, and another FAAP for administrative staff.
2. What compliance assistance is available to educational institutions interested in developing functional affirmative action programs?
OFCCP’s Functional Affirmative Action Program Branch is available to provide compliance assistance regarding the FAAP program. Compliance assistance materials are available on the agency’s website, on the Functional Affirmative Action Program page. Organizations may also contact the FAAP Branch via email at OFCCP_FAAP-UNIT@dol.gov.
FAAP APPROVAL
1. How can covered contractors apply for the FAAP Program?
Contractors may apply for the FAAP program by submitting a written request to the OFCCP Director. This request must describe in detail how the proposed functions correlate to the contractor’s specific organizational structure. In addition, the request must include an organizational chart, specific information about the functional or business units, functional unit locations and addresses, the number of employees, a transition plan describing the process, and timeframes in which the organization will move from establishment-based AAPs to FAAPs, if applicable. The request must also include the name and contact information of the corporate representative who will be responsible for overseeing the request for a FAAP agreement. See Directive 2013‐01 Revision 3, Section 9(a), for a full discussion of the requirements for this submission.
OFCCP must receive the request for a FAAP agreement no later than 120 calendar days prior to the expiration of the current corporate headquarters' AAP, or within 120 calendar days from the award of the federal contract if this is a new contractor.
The contractor must submit the request electronically to the FAAP Branch at OFCCP_FAAP-UNIT@dol.gov. If a contractor is unable to submit the request electronically, it may contact OFCCP_FAAP-UNIT@dol.gov or (202) 693-1125 to discuss an alternative submission method.
2. How long does the application process take?
Generally, OFCCP will notify the contractor of its decision within 60 calendar days of the FAAP approval request if all the required information is provided. OFCCP may require additional time if more information is needed. Contractors must submit a complete application package as outlined in Attachment A of Directive 2013‐01 Revision 3 to initiate the FAAP application process. OFCCP will review application materials, perform background research, and may request a meeting with company officials to discuss the application and the company profile. Contractors must continue to develop, implement, and maintain AAPs at the establishment level until the FAAP agreement is approved.
3. How long does a new contractor have to implement the new FAAP?
Contractors have up to 120 calendar days following the effective date of its new FAAP agreement to implement the FAAP. The contractor must notify OFCCP when its FAAP is implemented by emailing their designated FAAP manager or the FAAP Branch at OFCCP_FAAP-UNIT@dol.gov.
FAAP MODIFICATIONS AND OFFICIAL CHANGES
1. When is a contractor required to modify its FAAP agreement?
A change that creates or eliminates one or more functional or business units requires a modified agreement. The process for modifying a FAAP agreement is described in FAQ #3 below.
2. What should a contractor with an approved FAAP agreement do if it undergoes an acquisition, merger, or major restructuring leading to changes to its approved functional or business units?
If the acquisition, merger, or restructuring creates or eliminates one or more functional or business units, a contractor must submit a modification notice, as provided in FAQ #3 below.
3. How does a contractor modify its FAAP agreement?
To modify a FAAP agreement, a contractor must submit a modification notice electronically to the FAAP Branch at OFCCP_FAAP-UNIT@dol.gov. If a contractor is unable to submit the notice electronically, it may contact OFCCP_FAAP-UNIT@dol.gov or (202) 693-1125 to discuss an alternative submission method.
The modification notice must include a description of and the reason for the change. If functional units were added, the contractor’s notice must state when the new FAAPs will be in place. If functional units were removed, the contractor must identify where those employees will be covered in the new FAAP structure. If there was a merger, acquisition, and/or downsizing, the contractor must provide OFCCP the name of the newly merged or acquired company and the contractor’s plan to incorporate the former company’s employees into its AAP structure. Any resulting functional or business unit name change, managing official changes, employee counts, and addresses due to the creation or elimination of a business or functional unit should be included in the modification notice and provided in MS Excel or CSV format. For a full discussion of the procedures for modifying a FAAP agreement, see Directive 2013-01 Revision 3, Section 9(b).
4. Is the contractor required to maintain prior year personnel data during a modification or elimination of its functional or business units?
Yes. Contractors must preserve any record made by the contractor for one or two years, depending on the size of the contractor’s workforce, from the date that the record is made. See 41 CFR 60-1.12; 41 CFR 60-300.80; 41 CFR 60-741.80. Such records include, but are not limited to, those pertaining to recruitment; hiring; promotion; compensation; termination; and data analysis as they apply to each functional or business unit, including identification of units that have different personnel or compensation practices.
5. What should a contractor do when there is a change in a functional or business unit’s management official or the primary corporate contact?
Contractors must notify OFCCP of any changes in the primary corporate contact listed in the FAAP agreement within 60 calendar days of a change. The notification must also include the name, address, and email address of the new primary corporate contact.
The contractor must submit the notice electronically to the FAAP Branch at OFCCP_FAAP-UNIT@dol.gov. If a contractor is unable to submit the notice electronically, it may contact OFCCP_FAAP-UNIT@dol.gov or (202) 693-1125 to discuss an alternative submission method.
RENEWING A FAAP
1. What is the process for renewing a FAAP agreement?
If a contractor wishes to renew the FAAP, the contractor must submit a renewal request at least 120 calendar days prior to the expiration of the existing FAAP agreement. The request must include a FAAP Renewal Certification describing whether there were any changes in the primary corporate contact or management official(s) since the last annual notice. It must also certify as to whether there were any changes to functional units or structure that created, eliminated, or changed one or more functional units since its last notice to OFCCP. The certification must also state that the contractor wishes to continue to operate under a FAAP structure.
If there were changes that resulted in the addition or elimination of functional or business units, the contractor is required to submit a written statement providing the rationale for the changes. The statement must include updated information regarding employee counts, facility names, and facility addresses included in each functional or business unit. OFCCP will review the information and confirm that the changes meet the FAAP criteria. OFCCP will work closely with the contractor’s designated representative to ensure timely and proper processing of the renewal request.
If the contractor has at least one federal contract or subcontract of $150,000 or more, the contractor must provide updated information concerning at least one federal contract or subcontract of $150,000 or more, identifying the name of the federal contracting agency, the contract number, the contract period, and the name of the prime contractor if the contractor is a subcontractor. If the contractor does not have at least one federal contract or subcontract of $150,000 or more, the contractor must provide updated information concerning at least one federal contract or subcontract of $50,000 or more, identifying the name of the federal contracting agency, the contract number, the contract period, and the name of the prime contractor if the contractor is a subcontractor.
The renewal request must be submitted electronically to the FAAP Branch at OFCCP_FAAP-UNIT@dol.gov. If a contractor is unable to submit the request electronically, it may contact OFCCP_FAAP-UNIT@dol.gov or (202) 693-1125 to discuss an alternative submission method.
2. What if the contractor fails to make a renewal request at least 120 calendar days prior to the expiration of the existing FAAP agreement?
Generally, the failure to make a timely renewal request will cause the FAAP agreement to expire at the end of its five-year term. The contractor is then required to develop establishment-based AAPs and may be scheduled for compliance evaluations under the Federal Contractor Selection System. In the event OFCCP is unable to make a decision on a timely submitted renewal request before the agreement expiration date, the contractor will continue to operate under the existing FAAP agreement until its request is approved or denied. OFCCP may request additional information on the contractor’s structure and the contractor’s renewal materials during this renewal process.
TERMINATING A FAAP
1. How can my company terminate its FAAP agreement?
Contractors who wish to terminate their FAAP agreement must submit a 90-day written notice with a brief explanation of the reason(s) for the termination and the effective date. All employees must be covered by an establishment-based AAP no later than 120 calendar days from the contractor's notification of termination.
The termination notice must be submitted electronically to the FAAP Branch at OFCCP_FAAP-UNIT@dol.gov. If a contractor is unable to submit the request electronically, it may contact OFCCP_FAAP-UNIT@dol.gov or (202) 693-1125 to discuss an alternative submission method.
The contents of this document do not have the force and effect of law and are not meant to bind the public in any way. This document is intended only to provide clarity to the public regarding existing requirements under the law or agency policies.
Last updated on September 21, 2022