On May 7, 2014, the Office of Federal Contract Compliance Programs (“OFCCP”) issued a directive establishing a five-year moratorium on enforcement of certain affirmative obligations of TRICARE subcontractors—specifically, obligations related to affirmative action programs and recordkeeping under Executive Order (“E.O.”) 11246, as amended, Section 503 of the Rehabilitation Act of 1973 (“Section 503”), as amended, and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (“VEVRAA”), as amended.

The directive represents another episode in the ongoing uncertainty regarding OFCCP jurisdiction over healthcare subcontractors.  This step is largely a response to the dispute between members of Congress and the OFCCP, in which Congress sought to eliminate jurisdiction over TRICARE subcontractors through the National Defense Reauthorization Act.  Despite acknowledging that numerous members of Congress viewed the Reauthorization Act as having settled the issue, Secretary of Labor Perez nevertheless continues to assert jurisdiction “based on a good faith reading of the provision and its legislative history.” As a concession (and perhaps an effort to head off future congressional action that might be less open to creative interpretation), the OFCCP has decided to temporarily cease its enforcement efforts and instead engage in outreach and technical assistance to TRICARE subcontractors.

The OFCCP enforces E.O. 11246, Section 503, and VEVRAA, which collectively prohibit Federal contractors and subcontractors from discriminating in employment on the basis of race, sex, color, national origin, religion, and status as a qualified individual with a disability or protected veteran.  These laws also require Federal contractors and subcontractors to take affirmative steps to ensure equal employment opportunity in their workplaces, which can include implementing affirmative action plans and record-keeping obligations.  The OFCCP audits the employment practices of Federal contractors and subcontractors for compliance and investigates complaints of employment discrimination against such contractors and subcontractors.

The moratorium applies to health care entities operating as subcontractors under a prime contract between the Defense Health Agency (f/k/a the Department of Defense’s TRICARE Management Activity) and a managed-care prime contractor.  The moratorium also applies to TRICARE subcontractors that hold additional subcontracts under any Medicare program, the Federal Employee Health Benefits Program, or any other federal health program.  The moratorium does not apply to TRICARE subcontractors that hold other prime contracts with other federal government agencies or those that hold additional non-healthcare-related federal subcontracts.

The OFCCP will cease enforcing all obligations under E.O. 11246, Section 503, and VEVRAA, including affirmative action plan implementation and record keeping, with respect to TRICARE subcontractors, effective immediately.  All open compliance evaluations of covered TRICARE subcontractors will be closed within 30 days.  This moratorium does not extend to the OFCCP’s investigation of employment discrimination complaints, nor does it  apply to enforcement of more broadly applicable federal nondiscrimination laws such as Title VII of the Civil Rights Act of 1964 and the Age Discrimination in Employment Act.

During the moratorium, the OFCCP plans to engage in the following outreach and assistance initiatives:

1. Provide information, materials, and technical assistance training to TRICARE subcontractors on how to develop cost effective affirmative action plans and recordkeeping and applicant tracking systems;

2. Conduct regional and national webinars that cover OFCCP’s legal authorities, jurisdiction, and federal contractor and subcontractor obligations; and

3. Convene listening sessions to learn about the unique issues facing TRICARE subcontractors in order to provide relevant and targeted technical assistance under all of OFCCP’s legal authorities.

This moratorium provides breathing room for subcontractors who may have been unaware of or unclear on their responsibilities under the laws enforced by the OFCCP;  however, the five years will pass quickly.  TRICARE subcontractors should take advantage of this opportunity to understand their affirmative obligations and implement a robust compliance program.  To request updates regarding training events and technical assistance for TRICARE subcontractors, email the OFCCP at OFCCP-Public@dol.gov.