It is based on the belief that if there are no limits to what affirmative action means, it will always be possible to press employers to do more. Governmental officials also argue that the diversity and complexity of industrial relations systems and the desire to promote inventive approaches in this field mitigate against pinning down a specific set of steps that constitute an acceptable affirmative action program. But this is not the whole story. More is involved than the desire for creativity or differences among industrial relations systems. Many affirmative actions which employers could take embody highly controversial political ideas. A program to recruit and/or train minorities who otherwise would not qualify for entry-level jobs, in effect, may close out job opportunities for whites who would qualify and are seeking work. This kind of action is seen by those who oppose it as special preference, reverse discrimination, or "super rights" for minorities. On the other side, and just as forcefully, civil rights proponents argue that special preference policies such as these are fully defensible where government contracts are involved. The same kind of controversy, altough even stronger, arises with respect to proposals which encompass or border on quotas for the hiring of minorities. This occurs frequently in the construction industry where the essential civil rights issue is the often near-total lack of minorities in the skilled trades. These two issues, stronger enforcement and the imprecision of the affirmative action concept, are closely tied together. Those who plead for stronger enforcement must ultimately answer the question, what do you want to enforce? If their position is that test case enforcement actions should only be made in clear-cut instances where a contractor discriminates and it can be proven, this is much easier than enforcing the order by applying sanctions against employers who fail to live up to their affirmative action commitments. However, the former case could just as easily be treated by the Attorney General under Title VII. Clearly, if the contract compliance program is to achieve its stated goals, more must be done to penalize companies that practice outright discrimination. But a policy of vigorous enforcement also requires that action be taken against contractors who refuse to act affirmatively or fail to take this commitment seriously. Stronger enforcement of Executive Order 11246 for government contractors who fail to meet its affirmative action requirements could be carried out on the following basis. In all cases where contractors are found to have low-levels of utilization of minority group workers in relation to population, a post-review statement could be drawn up encompassing a combination of targets or objectives for the representation of minorities plus certain highly specific affirmative action measures. The affirmative actions under this approach would be spelled out in detail with the names and numbers of persons involved. Examples would be: to have named personnel recruiters on-the-scene for a stated period in minority group areas; to provide special pre-placement training for a given number of minority group workers in stated job categories; or to implement an in-plant skill enrichment program for selected minority group employees lacking formal requirements for advancement. At the end of a prescribed period, say six months, the contractor would be required to submit to the government either (1) new employment data indicating that the agreed upon employment objectives for minority groups had been achieved or (2) a detailed report showing that the specific affirmative action measures described in the post-review statement had been fully carried out. In effect, the employer would not have to submit proof that he has fulfilled his affirmative action pledges if he can prove instead that he has obtained results. If a contractor did not agree to this procedure or failed to satisfy either of these two criteria, a public announcement could automatically be made to this effect and a closed hearing could be held pursuant to the government's regulations under Executive Order 11246. For contractors with good equal job records, positive sanctions should be relied upon much more heavily. Successful completion of affirmative action programs agreed to under the procedures above, for instance, could be recognized by public merit awards. High achievement contractors in poverty areas could also be given some form of contract preference or bid-procedure preference as a means of providing more and better jobs for the disadvantaged. The contract compliance system lends itself very well to the use of contract preferences on a selective basis. Basic to the general conclusion of this chapter in favor of the stronger enforcement of Executive Order 11246 is the assumption that it is appropriate and worth a certain cost to assure that employers have a satisfactory equal job record as a condition of being able to do business with the Federal Government. This is the whole purpose of Executive Order 11246. A strong commitment to this purpose would require some measure of additional resources and personnel for the contract compliance program. Specifically, the agency responsible on a government-wide basis for the administration of Executive Order 11246 would need additional staff to develop and disseminate policy directives, to assist in the enforcement of the order in major cases, and to monitor contracting agency operations. Its role in relation to the contracting agencies and in relation to other federal equal job policies, particularly Title VII of the Civil Rights Act of 1964, would also have to be clarified. Proposals to this effect are contained in Chapter 6. The discussion in this chapter of the contracting agency's role also highlighted issues of administrative structure. The limited resources in the contract compliance area and the large size of the government's procurement systems suggest that within the various contracting agencies emphasis be given to what was termed the multiplier effect to involve contract administrators on a systematic and routine basis in the implementation of Executive Order 11246. Besides these arrangements and important to their success, a clear channel from contract compliance personnel to policy-level officials is needed to prevent unsympathetic contract administrators from impairing the program. 57 While administrative structure is important, these issues must not be blown out of proportion. The research for this report uncovered a number of instances in which "reorganizational roulette" has undermined the efforts of contract compliance specialists. This chapter discusses three cases in which contract compliance offices have been moved within Federal agencies on close to an annual basis. Some opponents of recent reorganizations have complained about the use of this technique as a device for frustrating the compliance program. That is to say, if it gets too hot, it gets moved. We can only make the point that while location within an agency is important to program effectiveness, every effort must be made to avoid frequent relocations of ongoing programs and the resulting administrative turbulence and demoralization of compliance personnel. Finally, consideration must be given to compliance agency manpower levels and program coverage. The compliance programs of most agencies are restricted in the number of firms they can cover and the frequency of reviews because of limitations on the availability of personnel and funds. There are 268 more than half-time professional personnel for contract compliance in the various contracting agencies as of March 1967. If efforts are made (1) to institute new procedures to strengthen enforcement of the order, (2) to review regularly smaller contractors, and (3) to place greater emphasis on labor union compliance, a major increase in the number of professional personnel assigned more than half-time to contract compliance is clearly needed. APPENDIX U.S. COMMISSION ON CIVIL RIGHTS, Washington, D.C., April 1969. DEAR SIR: The Commission on Civil Rights is pleased to transmit to you the enclosed study on equal employment opportunity programs and activities of the Federal government. The study was prepared under the direction of Richard P. Nathan, then Research Assistant with the Brookings Institution, pursuant to contract between the Brookings Institution and the Commission. In the course of its own hearings and studies the Commission has considered in depth several of the subjects discussed in the enclosed report. Among these is the enforcement of Executive Order 11246, Parts II and III, which forbids discrimination by government contractors, and which is the subject of a pending Commission study. In the Commission's view, enforcement of the Executive Order has been seriously deficient, at high cost to the Federal civil rights effort. It is the judgment of the Commission that by continuing to contract with employers who practice discrimination, the Federal government not only fails to use a powerful, readily available mechanism to help end discrimination in private employment, but in addition spends public funds actually to subsidize such discrimination. The Department of Defense, Post Office, and the General Services Administration. The enclosed report was prepared prior to the implementation of the rules and regulations under which the Federal contract compliance program now operates, and prior to the problems and criticism which have beset the program in recent months. Because of this, and because of the importance the Commission attaches to the program, I am enclosing for your consideration as well (1) a recent letter from Dr. John A. Hannah, former Chairman of this Commission, to Secretary of Labor George P. Shultz, presenting the views of the Commission on the Federal contract compliance program, (2) a supporting staff memorandum, and (3) a copy of the testimony of the Special Assistant to the Staff Director, Commission on Civil Rights, before an ad hoc Committee of the House of Representatives. Sincerely yours, HOWARD A. GLICKSTEIN, Acting. U.S. COMMISSION ON CIVIL RIGHTS, Hon. GEORGE P. SHULTZ, Washington, D.C. DEAR MR. SECRETARY: As you may know, it has been my privilege to serve as Chairman of the U.S. Commission on Civil Rights since the Commission's establishment in 1957. One of the major responsibilities of the Commission has been to appraise Federal programs and policies to determine whether they are contributing to the goal of equal opportunity. In carrying out this responsibility the Commission has maintained a continuing interest and concern in problems of racial discrimination and inequity in the operation of the important programs administered by the Department of Labor. It seemed to me, at this point in time when you have assumed the responsibility of directing the Department, that it might be useful to share with you some of the concerns that our Commission has regarding one area of Department of Labor's responsibility that we have studied extensively over the years-the Contract Compliance program. I will outline in this letter some ways in which we believe the Department's performance can be improved. As you know, Executive Order 11246 places responsibility for the administration of Part II (nondiscrimination in employment by government contractors and sub contractors) with the Secretary of Labor. Although contracting agencies are primarily responsible for obtaining compliance, they are required to follow the rules of the Secretary and to cooperate in every respect. It is this leadership role with which we are concerned. The potential impact of the requirements of Executive Order 11246 as a force for equal employment opportunity has been and is now enormous since it has been estimated that nearly one third of the nation's labor force is employed by government contractors. A large proportion of the largest industrial employers are government contractors. It is well documented that the nonwhite labor force continues to face a serious disparity in the rate of unemployment, and, even where employment is available, promotional opportunities often are unequal. Vigorous implementation of the Executive Order will go a long way toward alleviating these problems. In the past year the Office of Federal Contract Compliance has made several significant steps forward in this program. In May, OFCC resorted for the first time to the debarment sanction, commencing proceedings to debar five contractors from further government contracts for noncompliance with the Executive Order. Other important advances have been the requirement for written plans of affirmative action, and requirements for nondiscrimination in testing and other screening procedures. These policy advances should be implemented aggressively in the future. OFCC's program, however, badly needs strengthening. The inadequacy of the contract compliance operations of the individual contracting agencies must be attributed, in significant part, to the failure of OFCC to set minimum standards for the agencies' programs with respect to staffing, enforcement procedures, and substantive requirements. Staffing. In a Commission on Civil Rights hearing in Alabama last spring, we learned that the General Services Administration has one field investigator to cover contract compliance throughout its Southeast region. This is a hopeless task. While the Department of Defense provides eleven investigators to review compliance for a much larger number of contractors in substantially the same seven State area, the head of the Defense Department's compliance operation testified that he has informed his supervisors that he cannot do an adequate job without six to seven times his present staff. In a Southwest hearing held by the Commission last December in San Antonio, we learned that the Treasury Department has three staff persons responsible for compliance by 12,000 financial institutions. The central policy staffs which have overall responsibility for the compliance programs of the Department of Defense and the General Services Administration also are inadequate to provide effective control and leadership. It is the responsibility of OFCC to exercise its leadership by making clear its position on minimum staffing needs for effective agency compliance programs to contracting agencies and to follow up on this matter with the Bureau of the Budget. Enforcement Procedures.-In the Alabama hearing we found that in the two and one quarter years preceding the hearing, only 8 percent of Defense Department's contractors in the Southeast region had been subject even to a single on-site compliance review. The significance of this emerges from the fact that noncompliance was found in an estimated 85 percent of these reviews. In the great majority of reviews the investigator reported that a follow-up review, to check subsequent compliance, was necessary; yet in only 10 percent of these cases was any follow-up review in fact made. At the same time, we found that neither the Department of Defense nor the General Services Administration had any system in general use for monitoring current complaince through special periodic current activity reports from contractors. Even the system for informing compliance officials of the contractor facilities for which they are responsible was found to be inadequate. We learned that, in its Southeast region alone, the Department of Defense contract compliance authorities have responsibility for thousands of subcontractor facilities which do not appear in their contractor listings. The General Services Administration, similarly, has an inadequate reporting system, with the result that facilities estimated to number in the thousands for which the General Services Administration has compliance responsibility are unknown to its compliance officials. It appears to us, that if the Department of Labor is adequately to discharge its supervisory responsibilities, it should make clear its view of these deficiencies, and establish procedural standards for the agencies to follow. Substantive Requirements.-Though OFCC has required that contractors prepare written plans of affirmative action, no meaningful guidance has been given regarding their content. The failure of OFCC to provide guidance on the substance of affirmative action requirements has given rise to the use of vague or otherwise ineffectual standards by the contracting agencies. For example, a booklet recently published by the Defense Contract Administration Services, entitled "Nondiscrimination in Employment," which appears to be the principal Department statement on standards for compliance, fails to state any requirements at all. Instead, the booklet lists "actions or practices which a contractor might undertake in support of the equal employment opportunity program." Further, the booklet states that "the absence of any of these factors (including desegregated facilities and the elimination of other forms of discrimination) does not necessarily establish a condition of noncompliance." This uninformative and even misleading exposition of substantive compliance standards is an inadequate substitute for the guidance which it is OFCC's responsibility-perhaps its most important responsibility-to provide. The Comptroller General has observed that companies cannot equitably be asked to bid on federally assisted construction contract unless they were first informed about the affirmative action obligations which will run with the contract. Requirements for compliance in federally assisted construction should be standardized along the lines of the developing programs in Cleveland and Philadelphia. In addition to the need for clear OFCC guidelines for the agencies' compliance programs, OFCC should continue to involve itself in specific compliance issues as it has done in the past. But here, too, OFCC activity needs strengthening. For example, when the Commission's Alabama hearing last spring uncovered serious problems of discrimination in Alabama facilities of the American Can Company, a General Services Administration contractor, OFCC became involved in their resolution. But apparently by reason either of hesitance to exercise its supervisory authority, or of inadequate resources with which to do so. OFCC permitted GSA to adopt an enforcement course which was clearly inadequate. In the same way, OFCC should be given the resources to monitor agency performance to ascertain how policies set out by OFCC are being implemented. For example, the Alabama hearing disclosed that OFCC's directive creating a program of preaward compliance reviews by the agencies-potentially a most effective method for obtaining compliance-was not being carried out by the Department of Defense, in that 40 to 50 percent of the supposedly "preaward" compliance reviews in the Southeast region in fact were being conducted some days or weeks after award of the contract. For all these reasons, it seems to us to be vital that OFCC assume its full responsibilities under the Executive Order and be given the resources which it needs to do so. An effective compliance program will be possible only under the energetic leadership of OFCC. It is not likely to spring from the independent efforts of the contracting agencies themselves. An OFCC Senior Compliance Officer told us at our Alabama hearing that, "ninety-five percent of the contracting agencies' staff and attention and desires are aimed at awarding contracts. (It is therefore necessary) to overcome this built-in resistance that we find in every contracting agency." Federal agencies are loathe to upset their relations with contractors. Effective enforcement might result in the disqualification of low bidders or other preferred contractors, or cause delays in the letting or performance of contracts. This is one more reason why a truly effective compliance program will be possible only when the Department of Labor fully discharges its leadership responsibilities arising under the Executive Order. The other Commissioners and I, as well as the Commission's staff, are available to assist you in every possible way, within our limited resources, and I hope that you will call upon us. Sincerely, JOHN A. HANNAH, Chairman. STAFF MEMORANDUM In support of the views expressed in Chairman Hannah's letter of February 4, 1969 to Secretary of Labor George P. Shultz regarding the Federal contract compliance program, this memorandum briefly outlines the basis in law and in public policy for the principal substantive requirement of the Federal contract compliance program-that Federal contractors adopt plans of affirmative action which break down barriers to equal employment opportunity and achieve results in terms of fair and equal employment for minority persons. I. Executive Order 11246,' issued by President Johnson on September 24, 1965 was the eighth in a series of Executive Orders which for the past 27 years have required Federal contractors to practice nondiscrimination in employment. The requirements of this Order was essentially the same as those of its immediate predecessor, Executive Order 10925,2 issued by President Kennedy on March 6, 1961. The Attorney General of the United States on September 26, 1961 issued an opinion upholding the authority of the President to issue Executive Order 10925.3 In his opinion, the Attorney General first noted the unbroken series of Execu tive Orders on this subject, and then went on to observe: "It is well settled that, in the exercise of its power to 'fix the terms and conditions under which the Government will permit goods to be sold to it' the United States may take into consideration, and implement, the public policies of the United States." 994 With respect to the place of nondiscrimination in the public policy of the United States, the Attorney General stated: "The public policy of opposition to discrimination because of race, creed, color, or national origin is fundamental in our constitutional system, and has been repeatedly applied by the courts and 13 CFR 1964-65 Comp., p. 339. |