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DOL OALJ: OFCCP had jurisdiction over firm that provided legal services to Energy Department

A law firm, who provided legal services to the U.S. Department of Energy (DOE) was subject to Office of Federal Contract Compliance Programs (OFCCP) jurisdiction, an Labor Department Administrative Law Judge (ALJ) has ruled (OFCCP v O’Melveny & Myers LLP, DOL OALJ, No 2011-OFC-00007, October 31, 2011). The firm was required to submit to an OFCCP compliance audit because: (1) the provisions of its contract with DOE explicitly required it to comply with the laws enforced by the OFCCP; (2) the firm provided “nonpersonal services” under the contract; and (3) the firm’s obligation to permit the OFCCP’s compliance review was not moot.

Effective October 7, 2001, the firm, O‘Melveny and Meyers LLP, entered into a contract with the DOE under which it agreed to provide legal advice and assistance in connection with the DOE‘s divestiture of the Elk Hills Naval Petroleum Reserve. From January 2007 through April 2011, the firm provided legal services under the DOE contract on that case, which was pending before the DOE’s Office of Hearings and Appeals (OHA). On January 9, 2009, OFCCP sent an audit scheduling letter to the firm’s Washington, D.C. office initiating a compliance review and requesting a copy of the defendant‘s Affirmative Action Plan and other specified supporting documentation. The firm refused to provide these documents, asserting that it did not hold a qualifying government contract subject to the OFCCP’s jurisdiction.

After numerous unsuccessful subsequent attempts to obtain get the firm to submit to the audit, the OFCCP filed an administrative complaint alleging that the firm violated its obligations under Executive Order (EO) 11246, Section 503 of the Rehabilitation Act of 1973 (Rehab Act), and Sec. 4212 of the Vietnam Era Veterans‘ Readjustment Assistance Act (VEVRAA), when it failed to produce documents requested by the OFCCP and refused to permit the OFCCP access to its Washington, D.C. office for an onsite compliance review. The parties filed cross-motions for summary judgment.

Contract provisions. The ALJ sided with the OFCCP, granting the agency’s motion and denying the firm’s. The ALJ concluded that the DOE contract, via inclusion by reference to several provisions of the Federal Acquisition Regulation (FAR), explicitly required the firm to comply with EO 11246, the Rehab Act, and VEVRAA, and thus submit to the compliance review. The firm asserted that the relevant contract provisions applied only to entities holding a government contract, and that the mere inclusion of these provisions within the DOE contract was not sufficient to render the firm a government contractor because the firm lacked the the requisite government contract. However, the ALJ pointed out, the firm never asserted that the DOE met one of the specified exemptions listed in the relevant FAR provisions, nor was there any evidence indicating such was the case.

The firm also asserted that the DOE contract contained a provision that was clearly inapplicable to the firm’s services under the DOE contract. Specifically, the firm cited a FAR provision incorporated in the DOE contract, which referred to taxes and contracts performed in U.S. Possessions or Puerto Rico, and was irrelevant to the services the firm provided under the DOE contract. But, the ALJ said, such an argument disregarded the DOE contract‘s explicit warning that “the rights and obligations of the parties to the contract shall be subject to and governed by . . . such provisions, representations, certifications, and specifications, as are attached or incorporated by reference herein . . . .” Accordingly, the ALJ found that this single inapplicable provision did not nullify the remaining FAR provisions incorporated under the DOE contract.

Nonpersonal services. The firm maintained that they did not hold a “government contract” because the legal services they provided were not “nonpersonal services.” OFCCP regulations define a “government contract” as “any agreement or modification thereof between any contracting agency and any person for the purchase, sale or use of personal property or nonpersonal services.” OFCCP regulations do not define nonpersonal services, but rather provide only a nonexclusive list of examples of nonpersonal services, such as utilities, construction, transportation, research, insurance, and fund depository. The firm argued that because legal advice is not listed as one of the examples of nonpersonal services and because the services it provided under the DOE contract were not analogous to any of the listed examples of of nonpersonal services, it did not hold a qualifying government contract.

In response, the OFCCP asserted that the nonpersonal services listed in the regulations are explicitly non-exclusive, and should not be constructed to be representative of any particular type of service, since they are so different from each other that it is difficult to categorize them together by type. The ALJ agreed, writing that nothing in the relevant regulations‘ reference to “nonpersonal services” excluded the work that the firm performed under the contract, and thus, the firm’s interpretation was “unduly restrictive.”

Mootness. The issues presented in the case were moot, the firm argued, because it had not performed any work under the DOE contract since July 2010, and it was unlikely to perform any additional work before the contract expired on October 6, 2011. Citing a 1984 Labor Department administrative decision in OFCCP v Loffland Bros. Co, the ALJ explained that an entity which has completed its obligations under a government contract but violated EO 11246 or its implementing regulations during the performance of the contract is considered a contractor for purposes of the enforcement provisions of the Executive Order and regulations. The firm was performing work under the DOE contract when the compliance review was initiated on January 9, 2009, and the firm‘s obligation to perform work under the contract continued until October 6, 2011. Therefore, even though the DOE contract had expired, the firm was required to permit the OFCCP to conduct its compliance review, the ALJ wrote.

Accordingly, the ALJ ordered the firm to, within 30 days of her order: (1) provide all documents requested by the OFCCP in the January 9, 2009 scheduling letter; (2) permit the OFCCP access to its facilities if requested; and (3) otherwise allow the OFCCP to conduct and complete its compliance review.