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Federal Interactions: Employee And Hiring Requirements

By law, federal contractors and first-tier subcontractors must promise to extend affirmative action programs and equal employment opportunity to minorities and women, veterans, and people with disabilities.

Steve Charles

The federal government wants to be assured that its contractors follow two basic human resources practices: that they don't discriminate, and that they pay nonprofessional service contractors doing work for the government as if they were actual government employees.

Here are just some of the ways the government tries to ensure those practices are followed.

By law, federal contractors and first-tier subcontractors doing federal business over varying (but low) dollar thresholds must promise to extend affirmative action programs and equal employment opportunity (EEO) to three groups: minorities and women, veterans, and people with disabilities. Contractors must include the EEO and affirmative action clauses in subcontracting agreements and in purchase orders at the same thresholds that apply to the prime.

Affirmative action plans are not quotas, nor do they require preferential hiring or promotion. In the context of practices required for doing business with the federal government, affirmative action means employment opportunity outreach and reasonable accommodation -- but not at the expense of hiring a more qualified individual.

The government requires, when applicable, written affirmative action plans for each company "establishment," meaning each physically separate office, store or factory, or a "functional" plan that covers multiple establishments, provided they all pertain to a single autonomous business unit that employs at least 50 people. Functional plans are good for three years at a time.

The Office of Federal Contract Compliance Programs (OFCCP) enforces EEO and affirmative action requirements, mostly through inspections done for contractors who meet the size and contract value thresholds. Companies and subcontractors that are the potential winners of any federal contract estimated to be worth $10 million or more are subject to a compliance evaluation by the OFCCP. Subcontractors are subject to OFCCP evaluation only if the subcontract is also worth at least $10 million.

Government contracts worth more than $10,000 should contain seven standard EEO clauses prohibiting the company from discriminating because of race, color, religion, sex or national origin. Primes are required to flow these clauses down to subcontracts and onto purchase orders worth more than the same threshold.

Firms with 50 or more employees that have a federal contract, subcontract or purchase order from a prime worth $50,000 or more also must have in place a written affirmative action program for minorities and women within 120 days of getting the contract. This is known as the 50/50 threshold. If you have a particular establishment with less than 50 employees, but your company falls above the 50/50 threshold, you can make a plan for that single establishment anyway, or roll up that establishment's plan into a program of the personnel function at the location that supports the establishment or in the program that covers the company official to whom the establishment reports.

If the percentage of minorities or women employed by your company is less than labor pool statistics suggest would be a reasonable level, your company must then establish a placement goal to measure progress in hiring, promoting or training minorities through proactive outreach. Setting up a placement goal is not an admission of discrimination.

All contracts, subcontracts, and prime purchase orders worth $100,000 or more also should include 11 EEO clauses regarding veterans. Veteran EEO requirements oblige companies to list employment openings available at the time the contract starts and that occur during its performance -- whether or not they are generated by the government contract itself, and even if they're at a different company location -- with a state workforce agency job bank or local-level equivalent. Positions for executive and senior management, those that will be filled internally, or those that will last three days or less are exempt from the listing requirement.

Companies affected by the veteran EEO clause must also prepare an annual report, known as VETS-100A, before the end of the federal fiscal year.

In addition, companies with contracts, subcontracts or a prime purchase order worth $100,000 or more that also employ 50 or more people need to set up a written affirmative action program for veterans within 120 days of a contract award.

All contracts, subcontracts and prime purchase orders worth more than $10,000 should include six EEO clauses for qualified people with disabilities. Firms that have a federal contract, subcontract or purchase order above this threshold also must take affirmative action to hire and promote qualified people with disabilities. Only companies with 50 or more employees and a contract worth $50,000 or more need to set up a written affirmative action plan (i.e., companies that meet the 50/50 threshold). As with the other affirmative action plans discussed so far, this plan must be in place 120 days after contract award.

As with veterans, the OFCCP has released a proposal that would require contractors and subcontractors to establish hiring goals -- in this case 7 percent. Like the veterans rule, it remains just a proposal as of this writing.

The preceding information was adapted and digested from the book "The Inside Guide to the Federal IT Market," published by Management Concepts Press. For more information, visit

Steve Charles is co-founder and executive vice president of immixGroup, which helps technology companies do business with the government. He is a frequent speaker and lecturer on technology and the federal procurement process. He can be reached at


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