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Mandatory Subcontract and Purchase Order Language

Federal affirmative action regulations mandate that Federal contractors include an Equal Opportunity (EO) clause in all contracts, subcontracts and purchase orders.  The intent is to make the nondiscrimination and affirmative action provisions of Executive Order 11246, Section 503 of the Rehabilitation Act of 1973, the Vietnam Era Veterans’ Readjustment Assistance Act, and the Jobs for Veterans act flow down to all tiers of contractors.  Additionally, OFCCP’s new regulations require the use of specific, mandatory language.

To ensure compliance with these requirements, we recommend inserting the following paragraph into your subcontracts and the terms and conditions of your purchase orders.  The language must be in BOLD font.

This contractor and subcontractor shall abide by the requirements of 41 CFR §§ 60-1.4(a), 60-300.5(a) and 60-741.5(a). These regulations prohibit discrimination against qualified individuals based on their status as protected veterans or individuals with disabilities, and prohibit discrimination against all individuals based on their race, color, religion, sex, sexual orientation, gender identity or national origin. Moreover, these regulations require that covered prime contractors and subcontractors take affirmative action to employ and advance in employment individuals without regard to race, color, religion, sex, sexual orientation, gender identity, national origin, protected veteran status or disability.

This specific clause is only required in contracts that are entered into or modified on or after March 24, 2014.

Who is a Subcontractor?

OFCCP’s new VEVRAA regulations define subcontract as:

“any agreement or arrangement between a contractor and any person (in which the parties do not stand in the relationship of an employer and an employee)

  1. For the purchase, sale or use of personal property or nonpersonal services (including construction) which, in whole or in part, is necessary to the performance of any one or more contracts; or
  2. Under which any portion of the contractor’s obligation under any one or more contracts is performed, undertaken, or assumed.”

As an example, your cleaning service may not meet this definition unless part of your contract is to provide cleaning services to the government.  If you sell vehicles to the government, then your agreement with the company that makes the tires for the vehicle would most likely meet this definition of subcontract.

Additional considerations:

As noted above, the requirements of which clauses to include vary depending on the size of the subcontract or purchase order. Contractors may elect to include all of the above clauses in all contracts to provide blanket coverage.  It is also important to know that the absence of these clauses does not relieve a subcontractor of their potential affirmative action requirements.

While the regulations implementing Executive Order 11246 (41-CFR 60-1.4) must be referenced in the EO clause, there is no specific language that must be used.  The paragraph above follows OFCCP’s guidance by incorporating reference to those regulations along with the mandatory language from the VEVRAA and Section 503 regulations.

8 Responses to “Mandatory Subcontract and Purchase Order Language”

  1. Jennifer Arendes April 1, 2014 at 6:33 pm #

    Do subcontractors have to include the EEO language in contracts with their suppliers and vendors?

    • HudsonMann April 2, 2014 at 8:20 am #

      Hi Jennifer,

      Yes, if the subcontract meets the definition above, OFCCP would expect the EO Clause to be included. This applies to covered subcontracts at every tier.

      Thanks!

  2. Barry Fortsch October 31, 2014 at 2:15 pm #

    Is this language required on all contracts, subcontracts, and purchase orders or just those pertaining to federal entities.

    • HudsonMann November 3, 2014 at 9:08 am #

      Hi Barry,

      The language is required on all contracts, subcontracts, and purchase orders that are needed for the fulfillment of federal contracts or subcontracts. This can easily include contracts with private entities. Many companies choose to include the language in all of their contracts and purchase orders to ensure compliance. That course of action can be simpler than making a case-by-case determination on which contracts should include the language.

      Thanks!

  3. Joel Stanaszak February 19, 2015 at 2:26 pm #

    I am working on a job in which our company has to fill out an Affirmative Action Plan due to our number of employees and the cost of the project. But due to the fact we are subcontracting a small part of the project out to an IT controls contractor we were notified that we had to submit one for them to. But the subcontractor we are using only has 7 employees and was fine with filling out the E.O. 41 (874) -1 form but the E.O. 41 (874)-2 that requires 4 employee referral sources attached to their AAP, does that even apply to them? Or even filling out a AAP (Affirmative Action Plan) at all due to their size can they be exempt from this form. The job we are working on is in New Haven, CT.

    • HudsonMann April 15, 2015 at 10:57 am #

      Under Federal regulations a company with fewer than 50 employees would not need to have a written Affirmative Action Plan.

  4. SP February 24, 2015 at 10:12 am #

    If a company is using the EO incorporation by reference language above in all of its purchase orders, including those POs that are required and those that are not required to include the language, is it permissible to add: “Where applicable” at the beginning of the language, such that it will read: “Where applicable, this contractor and subcontractor shall abide by the requirements of 41 CFR §§ 60-1.4(a), 60-300.5(a) and 60-741.5(a) . . . .”?

    • HudsonMann April 15, 2015 at 10:52 am #

      While OFCCP’s regulations do not specifically allow for adding “where applicable,” it would probably still be found compliant as long as you include the full text of the EO clause afterwords. Our recommendation is to incorporate the language unaltered. If a subcontractor does not meet the thresholds that require them to develop an AAP, the inclusion of the EO clause will not automatically create that obligation for them.

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