Month / August 2012

by dietrichknauth

With New Rules In Limbo, OFCCP Ramps Up Vet Hiring Push

By Dietrich Knauth

Law360, New York (August 31, 2012, 6:11 PM EDT) — In lieu of new veterans hiring rules that have stalled during an ambitious regulatory push in the Office of Federal Contract Compliance Programs, the government is leaning on audits and more aggressive interpretations of current regulations to support its affirmative action policies, experts said.

The OFCCP has proposed new affirmative action rules for veterans that would require contractors to track those who apply for jobs and write reports explaining decisions not to hire protected veterans. But a regulatory logjam in the OFCCP has put the proposed regulation more than nine months behind schedule, and many experts wonder if the rules will be finalized before a November election that could change the OFCCP’s makeup regardless of whether there is a change in the White House.

In the meantime, the OFCCP is using audits to take a much harder look at contractors’ good-faith efforts at veterans outreach; expecting contractors to check back and evaluate the results of those efforts; and demanding information about how many applicants were referred by a particular job board or organization, how many applicants were interviewed and how many were hired.

“We’ve seen these changes over the last 18 months, and the changes are massive,” Mickey Silberman, head of the affirmative action and OFCCP practice at Jackson Lewis LLP, said. “OFCCP’s approach to good-faith efforts has changed in a fundamental way.”

Employers who appear to be going through the motions will face greater scrutiny during OFCCP audits, and the agency will issue technical violations to contractors that are found deficient in either outreach or recordkeeping, according to Silberman, who spoke about the issue during the 2012 Industrial Liaison Group meeting. To protect themselves, contractors should make more of an effort to track the number and quality of applicants referred by recruitment sources and stop using ineffective recruitment sources, Silberman said.

“It’s not about getting through the audit. The goal is to increase veterans’ employment,” Silberman said. “What’s the point of good-faith efforts if you don’t monitor their effectiveness?”

The OFCCP is focusing its efforts on affirmative action and applicants who are not hired in part because it is rarely able to substantiate claims of discrimination against veterans or disabled workers who have been hired, according to David Cohen of the Center for Corporate Equality.

OFCCP data shows that the agency has alleged discrimination against veteran or disabled workers just three times during 22,000 compliance evaluations conducted since 2007, Cohen said. And in 871 investigations initiated since 2004 as a result of disabled or veteran workers complaining to the OFCCP, it identified just 60 violations, he added.

In response to the OFCCP’s more aggressive audits, contractors should make efforts to improve their outreach to veterans, but they shouldn’t try to anticipate the stalled regulations and start asking applicants whether or not they are veterans, according to Jennifer Seda, an attorney at Jackson Lewis. Employers have no obligation to ask, and if they do, they could open themselves up to OFCCP scrutiny if they do not hire or interview veteran applicants.

“Until the regulations are passed, please don’t ask your applicants if they are veterans,” Seda said.

While Silberman and Seda both recommended that contractors do more to evaluate the results of their outreach efforts, they also said contractors should push back against another OFCCP attempt to use current regulations on behalf of veterans. The agency has adopted a more aggressive interpretation of a current rule that requires contractors to undertake a “thorough and systematic consideration” of “known veterans” for all positions, including new hires, promotions and retraining opportunities.

Even if no veterans apply for a position, the OFCCP has taken the position that contractors should look internally at their veteran employees, as well as applicants for other positions, to see if they are qualified and interested, which would put a large burden on some contractors and give veterans a kind of preferential treatment that runs counter to the philosophy of equal employment opportunity, Silberman said. Contractors should consider fighting the OFCCP on the issue — even if the legal fight costs more than a settlement — because it’s a fight they can win, he said.

“The EEO lawyers have a pretty good sense that this interpretation makes people uncomfortable, and it should,” Silberman said.

The new audit policies are, at least temporarily, taking the place of the proposed new rules that would require contractors to set hiring goals for veterans; compile additional data on hiring decisions, including reports to explain why qualified veterans not hired; and keep relevant records for five years. Contractors and their advocates, including attorneys with Littler Mendelson PC, the Association of General Contractors and the Equal Employment Advisory Council, argue that the rule creates enormous additional burdens on employers while not significantly increasing veterans’ rights or opportunities for employment.

“These regulations are not going to create revenue-generating jobs for veterans. They are not going to level the playing field for qualified veterans and ensure equal access,” Littler Mendelson said in response to the veterans rule. “They are going to create layers upon layers of overhead for companies ill-prepared to absorb these costs in the current economy.”

But despite contractors’ concerns about the proposed veterans rule, it is the most likely of several pending OFCCP regulatory changes to be finalized before the election, because of political support for veterans affirmative action. While other pending rules — including a proposal that would require contractors to work towards a goal of hiring disabled workers in 7 percent of its jobs — would likely be scrapped if President Barack Obama is not re-elected, the veterans rules have a chance to survive even if Mitt Romney becomes president, according to Silberman. And even if Romney wins, Obama’s OFCCP could still push them out as midnight regulations, he said.

“For all the proposals, they’d like to have something to show for it,” Silberman said. “This should have been an easy one. Everybody wins, and the administration gets to trumpet the fact that they’re helping veterans.”

Published by Law360

by dietrichknauth

Solar Could Win Big In Army’s $7B Energy Buy

By Dietrich Knauth

Law360, New York (August 17, 2012, 9:17 PM EDT) — Solar power companies are well positioned to compete for U.S. Army energy contracts worth $7 billion over the next 10 years, considering the solar-friendly terrain around bases and the attractive pricing of renewable energy projects as utility-scale development slows and competition for projects increases, experts say.

The U.S. Army issued its formal request for proposals for the energy contracts on Aug. 7, outlining a plan to hand out so-called indefinite delivery, indefinite quantity contracts companies that meet the qualifications to provide renewable power on military bases. Once the pool of contractors is selected, the winners will compete for individual task orders to build specific projects, signing power purchase agreements that could last 30 years.

In its request for proposals, the Army plans to buy a mix of solar, wind, biomass, geothermal and other renewable power, although its requirements could favor solar over others, with wind potentially being a runner-up, according to experts.

“Solar and wind will probably dominate the response,” said Jeffery Atkin, head of the solar enery team at Foley & Lardner LLP.

Solar has a few advantages over wind for the miltary’s purposes, starting with its smaller footprint and the fact that many Army bases are located in flat, sunny areas. Wind power requires more land and would need to be transported over larger distances, and an expiring tax credit for wind energy production could lead to higher prices that make wind projects less competitive, experts said.

“Solar would probably have more opportunities than wind, simply because there are operational issues associated with wind projects that can make some base commanders nervous,” including the increased land use and the potential for wind turbines to interfere with flight training, said Amy Koch, the regulatory team leader for Reed Smith LLP’s energy and natural resources industry group.

Wind power could suffer another disadvantage because of uncertainty surrounding the production tax credit for wind. Based on the Army’s reverse auction approach, wind developers might be less viable or reluctant to bid, because without the tax credit, their prices will go up, according to Joel A. Goldberg, a partner at Porter Hedges LLP.

“The tax credit is sort of in limbo,” Goldberg said. “It expires at the end of the year, and in an election year there’s a lot of uncertainty about where that is going.”

On the other hand, the Army’s RFP could throw a lifeline to the wind power industry if the tax credit is not extended, Iverson said.

“With the expiration of the wind PTC, this RFP may spur new development in the sense that it may open new markets to the private sector that offer higher wind regime sites that will increase productivity and revenue, and help off-set the loss of the PTC, thus making wind project profitable in a PTC-less era,” Iverson said.

Solar developers were also helped by lowered energy thresholds for proposed projects in the final RFP, compared to other industries and the initial draft released in March. While the draft RFP required potential contractors to propose 10 projects, including at least three that would provide 4 megawatts or more, the final RFP allowed solar energy companies to drop that threshold to at least three projects of 2 MW or more.

“This was an important change to expand the list of potentially qualified solar offerors,” said Bruce Iverson, a senior project manager at TRC Companies Inc., which provides engineering, consulting and construction services to the energy, environmental and infrastructure markets.

The timing of the RFP will also allow the Army to take advantage of maturing technology and a lull in development that will maximize competition and help drive its prices down, according to Atkin.

Demand for new projects is low because most of the utility-scale purchasers have already made their investments in renewable technology — in part because they wanted to get started to take advantage of the expiring 1603 Treasury Grant program, which covers up to 30 percent of an eligible renewable project’s construction costs through grants instead of tax credits, according to Atkin.

“We’ve seen the prices just continue to drop and drop, and most of the major buyers of these clean energy projects are not as aggressive in buying right now,” Atkin said. “There will be very high interest in this RFP, and there will be a lot of competitors.”

Geography will play a key role in determining the technology that the Army chooses for individual bases as well. In many cases, biomass could also be in a good position because its smaller footprint allows for easier on-base production than wind or solar, while geothermal opportunities could be available only on a limited number of bases, according to Goldberg.

“It really depends on where these bases are and what kind of spaces are available,” Goldberg said.

While biofuel’s smaller footprint could play to its advantage, the Army RFP’s insistence on proven power production could still make wind and solar technology a better fit, because of recent technological advances made by private developers, according to Atkin.

“The industry has been well seeded and grown in,” Atkin said of wind and solar. “This will certainly help maintain the momentum that’s built up over the past couple of years.”

While the Army is relying on proven technology for power production, the RFP could spur innovation in other areas, such as energy efficiency and smart grid technologies, such as technology that would automatically adjust a base’s energy use to reduce power at times when prices are the highest, Koch said.

“Where they may push the envelope a little bit is in their smart grid needs, and smart grid issues are going to be part and parcel of some of the upcoming task order RFPs,” Koch said. ”It is possible that they may be a bit more flexible as far as not requiring fully commercialized technology for smart grid because that is more of an emerging area.”

While some politicians have criticized the military for buying alternative energy at higher prices than traditional fuels, Atkin said that the long-term agreements contemplated in the RFP will help shield the Pentagon from volatile energy prices and could save money in the long run.

“They’re locking in their power price for 20-plus years, reducing the risk of price escalation,” Atkin said. “When we look back at this in 20 years, it will probably have turned out to be a pretty good deal.”

Published by Law360