DATE: November 20, 1995
CASE NO. 91-OFC-23
IN THE MATTER OF
OFFICE OF FEDERAL CONTRACT
COMPLIANCE PROGRAMS, UNITED STATES
DEPARTMENT OF LABOR
PLAINTIFF,
v.
FIRST FEDERAL SAVINGS BANK OF INDIANA
DEFENDANT.
BEFORE: THE SECRETARY OF LABOR
AMENDED FINAL DECISION AND ORDER
This case arises under Executive Order No. 11,246, as
amended, (E.O. 11,246 or the Order), 3 C.F.R. 339 (1964-1965),
reprinted as amended in 42 U.S.C. § 2000e note
(1988), Section 503 of the Rehabilitation Act of 1973, as
amended, 29 U.S.C.
§ 793, and Section 402 of the Vietnam Era Veterans
Readjustment Assistance Act, as amended, 38 U.S.C. § 4212
(the contract compliance laws). Plaintiff, the Office of Federal
Contract Compliance Programs (OFCCP), alleged that Defendant,
First Federal Savings Bank of Indiana, failed to submit an
affirmative action program (AAP) meeting the requirements of
Department of Labor regulations. 41 C.F.R. Parts 60-2, 60-250 and 60-741
(1994).
Defendant does not dispute the finding of the Administrative
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Law Judge (ALJ) that it did not develop a written AAP upon
becoming a covered government contractor and did not submit an
acceptable AAP when requested by OFCCP. Recommended Decision and
Order (R. D. & O.) at 15. See 41 C.F.R. §§ 60-
1.40; 60-250.5; 60-741.5; 41 C.F.R. § 60-1.43. OFCCP
concedes that Defendant corrected all the deficiencies in its AAP
before the Show Cause Notice was issued. R. D. & O. at 3. OFCCP
therefore does not seek debarment of Defendant, but prays only
for an order enjoining future violations and requiring Defendant
to submit periodic reports for two years showing that the
contract compliance laws and Department of Labor regulations have
been met.
Defendant excepted to the ALJ s recommended decision on
several grounds. As a threshold matter, Defendant asserts it is
not covered by E.O. 11,246 because its agreements to act as an
issuing agent for United States Savings Bonds and a depository
for federal funds are not "government contracts" within the
meaning of the Order and regulations. Department of Labor
regulations explicitly provide that "Government contract
means any agreement . . . between any contracting agency and
any person for the furnishing of supplies or services" and that
"[t]he term 'services' . . . includes . . . fund depository." 41
C.F.R.
§ 60-1.3. Defendant in effect urges me to ignore the
applicable regulations but I hold that Defendant s fund
depository agreement was sufficient to establish coverage.
Government agencies are bound by their own regulations.
SeeKolbusz-Kijne v. Technical Career Institute,
Case No. 94-LCA-0100, Sec. Dec. Jul. 3, 1995, slip op. at 6-8,
and cases discussed therein. Defendant's exception number 5 is
DENIED.
Similarly, I reject Defendant s argument that it is not
covered because these agreements did not include the equal
opportunity clause.[1] The regulations establish that "[b]y
operation of the [Executive] order, the equal opportunity clause
shall be considered to be a part of every contract . . . required
by the order and regulations . . . to include such a clause
whether or not it is physically incorporated in such
contracts . . . ." 41 C.F.R. § 60-1.4(e).
Most of Defendant s exceptions flow from the misconception
that the ALJ found it violated the contract compliance laws
because of the refusal to enter into a conciliation agreement
with OFCCP. Defendant offered instead to sign a "letter of
commitment."[2] See 41 C.F.R. § 60-1.33. Defendant
violated the contract compliance laws by "[i]ts complete failure
to have a documented AAP in place." R. D. & O. at 15. The ALJ
simply noted that OFCCP initiated formal enforcement proceedings
because the parties could not agree on the form of a settlement
document. Id. Where parties seek to resolve a dispute by
agreement, if one
[PAGE 3]
party finds the form or substance of a proposed agreement
inadequate, that party is free to reject the agreement and
litigate the matter. In this case, OFCCP refused to accept a
letter of commitment as the form of the settlement. It took the
position, as it had a right to do, that it would only enter into
a conciliation agreement.[3] Nothing in the regulations gave
Defendant the right to insist that the settlement take the form
of a letter of commitment. When Defendant refused to sign a
conciliation agreement, the matter went to a hearing where all of
Defendant s due process rights under the regulations were fully
protected. Defendant s exceptions 1, 2, 3 and 6 therefore are
DENIED.
Finally, Defendant claims the doctrine of laches barred
OFCCP from pursuing this action. The ALJ carefully addressed and
rejected this claim and I adopt the discussion of this issue.
R. D. & O. at 6-7. Defendant s exception number 4 is DENIED.
OFCCP excepted to one aspect of the R. D. & O., the finding
that Defendant did not violate section 503 by failing to assure
that the lessor of office space to Defendant provide parking
spaces for handicapped employees. The ALJ held that as a lessee
Defendant could not control the actions of its lessor with
respect to common areas such as parking. R. D. & O. at 15. I
agree with OFCCP that the building owner is a subcontractor
because it supplies services necessary to the performance of
Defendant s government contracts. 41 C.F.R. § 60-1.4;
OFCCP v. Coldwell, Banker and Co. Case No. 78-OFCCP-12,
Sec. Dec. Aug. 14, 1987, slip op. at 7-8. Defendant had an
obligation to assure that its subcontractors complied with the
requirements of section 503, 41 C.F.R. § 60-741.4(f), and by
failing to make efforts to obtain handicapped parking spaces
Defendant violated that obligation.[4]
Accordingly, for the reasons discussed above, and with the
one modification described above, I adopt the ALJ s recommended
decision and order.
Defendant, First Federal Savings Bank of Indiana is
ORDERED:
To cease and desist from violating Executive Order
No. 11,426, Section 503 and Section 402 by failing to maintain
and update a written Affirmative Action Program in accordance
with the implementing regulations at 41 C.F.R. Chapter 60;
For a period of two (2) years from the date of this
decision, to file such reports as are necessary to assure the
Office of Federal Contract Compliance Programs that the Defendant
remains in compliance with its obligations. Said reports shall
be filed at such times as requested by the Office of Federal
Contract Compliance Programs, provided: that the Defendant shall
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be given no less than fifteen days to respond to such a request,
that no more than one (1) such request shall be made every six
(6) months; and
If the Defendant fails to comply with this Order, all of its
federal and federally-assisted contracts and subcontracts, with
the exception of Federal deposit and share insurance shall be
cancelled, and First Federal Savings Bank of Indiana, its
officers, subsidiaries and successors shall be ineligible for the
award of any government contracts or subcontracts with the
exception of Federal deposit and share insurance and First
Savings Bank of Indiana, its officers, subsidiaries and
successors shall be ineligible for extensions or modifications of
any existing government contracts or subcontracts with the
exception of Federal deposit and share insurance until Defendant
has satisfied the Secretary of Labor that Defendant is in
compliance with the provisions of Executive Order No. 11,246,
§ 503 of the Rehabilitation Act, § 402 of the Vietnam
Era Veterans Readjustment Assistant Act, and all rules,
regulations and orders issued respectively thereunder, which have
been found to have been violated in this case.
SO ORDERED.
____________________________
Secretary of Labor
Washington, D.C.
[ENDNOTES]
[1] In fact, the agreement under which Defendant became a fund
depository explicitly required it "[t]o comply with . . . Section
202 of Executive Order 11246 . . . and the regulations
. . . at 41 CFR Chapter 60 . . . Section 503 of the
Rehabilitation Act of 1973 . . . and the regulations . . . at 20
CFR Part 741 [where the Section 503 regulations had previously
been codified] . . . and Section 503 of the Veterans Employment
and Readjustment Act of 1972 [the predecessor to Section 402 of
the Vietnam Era Veterans Readjustment Assistance Act]."
Defendant s agreement to become an issuing agent for U.S. savings
bonds contained a similar clause. P (Plaintiff s Exhibit)- 2.
[2] When OFCCP found violations of the contract compliance laws
and regulations through a compliance review, it notified
Defendant of the violations and stated that a written
Conciliation Agreement was required to correct the violations.
P - 9 Defendant refused to sign a conciliation agreement because
it "could . . . give rise to further opportunities for
individuals who . . . might wish to bring litigation against the
institution." P - 17.
[3] The only difference between a conciliation agreement and a
"letter of commitment" lies in enforcement where there has been a
violation. Under a conciliation agreement, a contractor has 15
days to respond to a letter notifying it of alleged violations of
the agreement. If the contractor has not demonstrated compliance
within 15 days, OFCCP may initiate enforcement proceedings
immediately without issuing a show cause notice or engaging in
conciliation. 41 C.F.R. § 60-1.34(a). When OFCCP alleges a
violation of a letter of commitment, a 30 day show cause notice
must be issued and efforts must be made during that period to
resolve the matter by conciliation. 41 C.F.R. § 60-1.34(b);
60-2.2(c). In either case, the contractor is entitled to a
hearing in which it has a full opportunity to defend against
OFCCP s charges.
[4] At Defendant s request, the owner of the building provided
handicapped parking spaces before the hearing in this case. I do
not reach the question of what action would have been required if
the building owner had not promptly complied with Defendant s
request.
