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November 4, 2008 DOL Home > ESA > OFCCP | ![]() |
Office of Federal Contract Compliance Programs (OFCCP)
OFCCP Directive Transmittal Number: 77-26/60-1 (Formerly 450a3)
Attached is the Office Federal Contract Compliance Programs' (OFCCP) decision regarding the right of the General Service Administration (GSA) to permanently retain certain documents, such as a contractor's Affirmative Action Compliance Program (AACP) and support data, obtained during the course of a compliance review. In addition to permitting the permanent retention of such material, the decision allows for the imposition of sanctions, such as provided in Section 209 of Executive Order 11246 and 41 CFR 60-1.26 upon a contractor's refusal to furnish the requested information. The general principles contained in this decision apply to all similar situations. Attachment U.S. Department of Labor Office of Federal Contract Compliance Programs In the Matter of St. Regis Paper Co. This is an appeal from a decision by the General Services Administration (GSA) to retain permanently certain documents submitted by the St. Regis Paper Company to GSA during the course of a compliance review of the company's Battle Creek, Michigan facility. In relevant part the facts are as follows: On September 1, 1976, the Field Director of Contract Compliance for Region 5 of the General Services Administration issued a notice to the St. Regis facility at Battle Creek advising the company that GSA intended to perform a compliance review. Pursuant to the procedures established in Revised Order No. 14 (41 CFR Part 60-60) supporting data necessary to perform a desk audit was requested. On September 28, 1976, St. Regis' Corporate manager for EEO, Michael A. Roberts, advised GSA that the company intended to deliver the data requested on September 1 to the GSA regional office and to provide a company representative to assist during the desk audit. Mr. Roberts stated that upon completion of the desk audit, the company's representative would return the data to Battle Creek where it would be available for the subsequent on-site review. Mr. Roberts advised GSA that this procedure would be followed to ensure the confidentiality of the material and to preclude possible disclosure of such information by GSA pursuant to the Freedom of Information Act (FOIA), 5 U.S.C. §552. On October 5, 1976, Willie O. Green, GSA's Field Director, rejected St. Regis' proffer. Mr. Green suggested instead that pursuant to 41 CFR §60-60.4, St. Regis should identify those portions of the data which the company believed were not subject to disclosure under FOIA, and that it should specify the reason why such information was not disclosable. St. Regis was advised that it was expected to comply with the September 1 request by October 7, 1976. St. Regis did not, however, comply with the request. Thereafter, a show cause notice was issued by GSA on October 14, 1976, on the basis of St. Regis' failure to comply with the September 1 request for data. The show cause notice advised St. Regis that it could be found nonresponsible to perform any Government contracts until the show cause notice was resolved. St. Regis, by counsel, requested that the Director of the Office of Federal Contract Compliance Programs (OFCCP) direct that a hearing be convened on the issue of retention of data by GSA pursuant to either 41 CFR §60-1.24 or 2.2(b), and that OFCCP assume jurisdiction over the matter pursuant to 41 CFR §60-1.25. On October 19, 1876, counsel for St. Regis reiterated his request for a hearing, but limited the request to a hearing pursuant to 41 CFR §60-2.2(b), claiming the question of GSA's permanent retention of contractor data raised substantial issues of law or fact as provided therein. Counsel also asked that GSA be directed by OFCCP not to find St. Regis nonresponsible on account of these outstanding issues pending their final resolution. Before OFCCP had an opportunity to respond to the St. Regis request, GSA and the company informally agreed to conciliate the issue relating to the show cause notice. The parties also agreed that St. Regis would not be found nonresponsible during the pendency of the show cause notice. St. Regis in turn asked OFCCP to postpone a decision on its request for a hearing. Subsequently St. Regis complied with the September 1, 1976, request for data. GSA thereupon advised St. Regis that such material becomes the property of the United States Government, and that it would be retained in the custody of GSA pursuant to Executive Order 11246, as amended, and 41 CFR Part 60-2. GSA then rescinded the October 14, 1976, show cause notice. On November 8, 1976, Mr. Roberts of St. Regis responded to the GSA letter in which the data supplied by the company was claimed as the property of the U.S. Government. Mr. Roberts stated that he found no basis in 41 CFR Part 60-2 for permanent retention of Federal contractor data provided pursuant to the requirement of 41 CFR Part 60-60. Mr. Roberts contended inter alia:
Mr. Roberts concluded that there is no basis for the Government's retention of such material since it is not necessary to GSA's determination of the acceptability of the Battle Creek facility's affirmative action program. On November 10, 1976, counsel for St. Regis advised OFCCP that the company had provided the material requested by GSA on September 1, 1976. Accordingly, he requested that a hearing be conducted pursuant to the provisions of 41 CFR §60-1.24(c) to determine the validity of GSA's position on the issue of permanent retention of data obtained for the purpose of conducting compliance reviews. Thereafter, counsel for St. Regis waived whatever right to a hearing that the company may have pursuant to 41 CFR §60-1.24(c) and agreed to submit its legal arguments in support of its position to the Director, based on the entire record of the case.
St. Regis has made several arguments in support of its contention that neither Executive Order 11246, as amended (hereafter Executive Order 11246 or the Executive Order), nor its implementing rules and regulations authorize permanent retention of records and material submitted by a contractor for purposes of a compliance review. St. Regis' first argument is that Section 202(5) of Executive Order 11246 does not provide for permanent retention of information submitted by a contractor but, rather, provides only for inspection of such documents.(1) St. Regis contends that the terms "will furnish" and "permit access to" referred to in Section 202(5) are synonymous and contemplate only that relevant data will be made available to the compliance agency for its examination. It is an elementary rule of construction, however, that effect must be given, if possible, to every word, clause and sentence of a statute. U.S. v. Menasche, 348 U.S. 528, 75 S.Ct. 513 (1955). An Executive Order, just as a statue, should be construed to give effect to all of its provisions, so that no part will be inoperative or superfluous, void or insignificant. Sands, Southerland Statutory Construction, Vol. 2A, p. 63. Assuming that Section 202(5) were to be interpreted as St. Regis proposes, there would be no reason for using the separate terms "will furnish" and "permit access to" without changing its meaning. Accordingly, it is doubtful that the President intended his use of these terms to be regarded synonymously. Rather, the plain meaning of these words was intended. Webster's New World Dictionary, Second Edition, defines "furnish" as meaning "to supply, provide; give." The same source defines "access" as "the right to enter, approach, or use; admittance." Clearly, the President intended that Section 202(5) require contractors subject to the Executive Order to supply, provide or give the Secretary of Labor or the appropriate compliance agency all information and reports required by the Order and its implementing rules, regulations, and orders, and to permit representatives of such federal agencies to enter the contractor's premises to inspect, copy or transcribe its books, records, and accounts in order to determine whether such contractor is in compliance. To read Section 202(5) otherwise renders one part or the other superfluous and, therefore, contrary to elementary rules of construction. 1/ Section 202 (5) reads as follows: The contractor will furnish all information and reports required by Executive Order 11246 of September 24, 1965, and by the rules, regulations, and orders of the Secretary of Labor, or pursuant thereto, and permit access to his books, records, and accounts by the contracting agency and the Secretary of Labor for purposes of investigation to ascertain compliance with such rules, regulations, and orders. The second part of St. Regis' argument asserts that the President did not expressly authorize the permanent retention of such records and materials and, thus, no such authority can be implied. There is no merit in this assertion. The President has the constitutional authority to require that nondiscrimination and affirmative action contract provisions be made a part of all Government contracts. See Contractors Association of Eastern Pennsylvania v. Secretary of Labor, 442 F.2d 159 (3rd Cir., 1971) cert. denied 404 U.S. 854 (1971). He also has the authority to require such contractors to keep records and information relating to matters which are the appropriate subjects of governmental regulation, and the enforcement of restrictions validly established (Wilson v. United States, 221 U.S. 361 (1911); Davis v. United States, 328 U.S. 582 (1946) so long as the records or reports required by the Government bear some reasonable relationship to the matters under inquiry, (United States v. Morton Salt, 338 U.S. 632, 70 S.Ct. 357 (1950)). I(n Shapiro v. United States, 335 U.S. 1, at 32 33, (1948), the Court recognized that "there are limits which the government cannot constitutionally exceed in requiring the keeping of records which may be inspected by an administrative agency and may be used in prosecuting statutory violations committed by the record-keeper himself. But no serious misgiving that those bounds have been overstepped would appear to be evoked when there is a sufficient relationship between the activity sought to be regulated and the public concern so that the government can constitutionally regulate or forbid the public activity concerned, and can constitutionally require the keeping of particular records, subject to inspection by the Administrator." In this case, those "limits" haven not been exceeded by GSA. The material which GSA requested from St. Regis was required to be maintained under Executive Order 11246 and its implementing rules and regulations. (2) The second argument made by St. Regis is that Department of Labor regulations do not authorize retention by the Federal Government of records or materials submitted by a contractor in the course of a compliance review. There is no merit in St. Regis' argument. Executive Order 11246 has, in effect, been ratified by the United States Congress, and it has the force and effect of law. Contractor's Association of Eastern Pennsylvania v. Secretary of Labor, 442 F.2d 149 (3rd Cir., 1971), cert. denied, 404 U.S. 854, (1971); See also: Farkas v. Texas Instruments Co., 375 F.2d 629 (5th Cir., 1967), cert. denied, 389 U.S. 977 (1967). In addition, regulations issued by the Secretary of Labor pursuant to his authority under Section 201 of the Executive Order which are consistent with the purpose and intent of the Order also have the force and effect of law. Maryland Casualty Company v. United States, 251 U.S. 342 (1919); United States v. New Orleans Public Service, Inc., ____ F.Supp. ____ (E.D. La. 1974) 8 FEP Cases 1089, 8 EPD 9795. (appeal pending) (3) 2/ An examination of the material submitted to GSA by St. Regis under protest, without exception, is required by "Revised Order No. 4" to be included in an acceptable affirmative action program. For instance, St. Regis objects to GSA's permanent retention of the utilization analysis prepared for the Battle Creek facility. A utilization analysis is expressly required by 41 CFR 60-2.11. The remained of the material that St. Regis claims should be returned similarly is required to be maintained. 3/ The Secreatry of Labor has delegated his authority under Section 201 for carrying out the day-to-day responsibility of implementing Executive Order 11246 to the Director of OFCCP. See 41 CFR 60-1.2. St Regis also asserts that the Secretary of Labor's regulations do not permit compliance agencies to retain permanently information and records provided during a compliance review. St. Regis' interpretation of the relevant regulations is incorrect. Among the Secretary's regulations are the following:
(Signed) A. Diane Graham A. Diane Graham, April 1, 1977
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