On June 28, 2011, the Office of Federal Contract Compliance Programs (OFCCP) released a new directive specifically authorizing the use of Functional Affirmative Action Programs (FAAPs) and detailing applicable procedures.  While most covered contractors prepare affirmative action plans based on establishment, some contractors (typically, very large, multi-establishment companies) conclude that an affirmative action plans based on function or unit (such as sales, or R&D), which cut across establishments, more appropriately analyze the workforce.

For over a year, it was unclear whether OFCCP Director Shiu would allow the FAAP approach to continue, as she had suspended the ability of OFCCP to approve or renew an FAAP while she examined the concept.  Director Shiu has now concluded that an FAAP may be a useful way to organize workforce data, but she has made significant changes in the procedures for using one.

Perhaps most importantly, a contractor seeking to use an FAAP must obtain written approval from the OFCCP Director before developing the FAAP—no longer will FAAP approval generally be automatic.  Additionally, approval of the ability to use an FAAP will now expire after only three—instead of five—years, and renewal will need specific approval from the Director.  The renewal will require, among other things, that at least two functional units undergo a compliance evaluation during the three-year term.  Finally, a compliance evaluation by OFCCP may be triggered if an FAAP contractor fails to submit required annual updates to its FAAP agreement.