Over the past year, we have been tracking the uptick in executive and regulatory actions affecting the labor and employment practices of government contractors.  Last Friday, the D.C. Circuit upheld one of those regulations.  The decision concludes the first skirmish in what promises to be a lengthy and high-stakes legal battle involving industry, Congress, and the Administration.

The Office of Federal Contract Compliance Programs (“OFCCP”), part of the Department of Labor, administers the regulations governing employment of individuals with disabilities.  OFCCP issued final regulations last year that expanded contractors’ affirmative action and reporting requirements with respect to qualified individuals with disabilities.  Contractors must now invite all applicants to self-identify (voluntarily) as having a disability, and they must collect and analyze the data from those self-identifications.  The prior regulation limited this exercise to those applicants to whom the contractor had offered employment.  In addition, the new regulations impose a 7% “utilization goal” for individuals with disabilities.  Although OFCCP insists that failing to meet the utilization goal will not lead to sanctions, the regulations require contractors to “develop and execute action-oriented programs” if they fall short of the 7% goal.

A construction industry trade association challenged the regulations.  It claimed that OFCCP exceeded its regulatory authority by expanding the self-identification mandate and acted arbitrarily and capriciously in setting the utilization goal.  Not so, held the court.  The unanimous three-judge panel applied the customary – and deferential – standard of review to agency rulemaking and concluded that the trade association identified “nothing in the rulemaking that suggests OFCCP flunked this highly deferential standard.”

Although this rule survived, opponents are already setting their sights on other regulations.  As we reported on this blog, some members of Congress have objected to the streamlined process the Labor Department used to prevent federal government contractors from discriminating on the basis of sexual orientation.  Neither the disability regulations nor the LGBT protections, however, impose as many burdens as other proposed and forthcoming labor rules.  Executive Order No. 13673 (“Fair Pay and Safe Workplaces”), for example, contemplates wide-ranging disclosure and data-collection obligations.  We expect the drafting process for its implementing regulations to begin in 2015.

The contracting community suffered a loss in the D.C. Circuit, but the ruling does not foreclose opportunities to shape – or to challenge – other new employment regulations.  “Now this is not the end.  It is not even the beginning of the end.  But it is, perhaps, the end of the beginning.”

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Photo of Jeff Bozman Jeff Bozman

Jeff Bozman practices with the Public Policy & Government Affairs and Government Contracts practice groups in Washington, DC.  He focuses on the defense and aerospace industry, and on the labor and employment laws that apply to government contractors.

Photo of Jennifer Plitsch Jennifer Plitsch

Jennifer Plitsch leads the firm’s Government Contracts Practice Group, where she works with clients on a broad range of issues arising from both defense and civilian contracts including contract proposal, performance, and compliance questions as well as litigation, transactional, and legislative issues.

She…

Jennifer Plitsch leads the firm’s Government Contracts Practice Group, where she works with clients on a broad range of issues arising from both defense and civilian contracts including contract proposal, performance, and compliance questions as well as litigation, transactional, and legislative issues.

She has particular expertise in advising clients on intellectual property and data rights issues under the Federal Acquisition Regulations (FAR) and obligations imposed by the Bayh-Dole Act, including march-in and substantial domestic manufacturing. Jen also has significant experience in negotiation and compliance under non-traditional government agreements including Other Transaction Authority agreements (OTAs), Cooperative Research and Development Agreements (CRADAs), Cooperative Agreements, Grants, and Small Business Innovation Research agreements.

For over 20 years, Jen’s practice has focused on advising clients in the pharmaceutical, biologics and medical device industry on all aspects of both commercial and non-commercial agreements with various government agencies including:

  • the Department of Veterans Affairs (VA);
  • the Department of Health and Human Services (HHS), including the Biomedical Advanced Research and Development Authority (BARDA), the National Institutes of Health (NIH), and the Centers for Disease Control (CDC);
  • the Department of Defense (DoD), including the Defense Threat Reduction Agency (DTRA), the Defense Advanced Research Projects Agency (DARPA), and the Joint Program Executive Office for Chemical Biological Defense (JPEO-CBRN); and
    the U.S. Agency for International Development (USAID).

She regularly advises on the development, production, and supply to the government of vaccines and other medical countermeasures addressing threats such as COVID-19, Ebola, Zika, MERS-CoV, Smallpox, seasonal and pandemic influenza, tropical diseases, botulinum toxin, nerve agents, and radiation events. In addition, for commercial drugs, biologics, and medical devices, Jen advises on Federal Supply Schedule contracts, including the complex pricing requirements imposed on products under the Veterans Health Care Act, as well as on the obligations imposed by participation in the 340B Drug Pricing program.

Jen also has significant experience in domestic sourcing compliance under the Buy American Act (BAA) and the Trade Agreements Act (TAA), including regulatory analysis and comments, certifications, investigations, and disclosures (including under the Acetris decision and Biden Administration Executive Orders). She also advises on prevailing wage requirements, including those imposed through the Davis-Bacon Act and the Service Contract Labor Standards.