September 28, 2011

OFCCP V. MANHEIM AUCTIONS, INC. – PART 2

by Art Gutman Ph.D., Professor, Florida Institute of Technology

In a DCI Client Alert published on June 21, 2011, I reported ALJ Alan L. Bergstrom’s ruling in
OFCCP v. Manheim Auctions Inc. [DOL OALJ, No. 2011-OFC-00005, 6/14/11]. The case involved the parent company Manheim Auctions Government Systems LLS (MAGS) and its subsidiary Manheim Auctions Inc. (MAI). As reported in that alert, MAI has more than 50 employees, but no federal contracts, whereas MAGS has federal contracts, but less than 50 employees (the threshold number for submitting to OFCCP jurisdiction). The question was whether MAI and MAGS are a “single entity” for purposes of OFCCP jurisdiction. Bergstrom ruled that MAI has a degree of “common ownership” over MAGS since they share common directors and officers, and therefore, that both companies must file EEO-1 reports.

In a more recent development, Manheim Entities (i.e., MAGS and MAI) agreed to a consent decree to be disbarred rather than submit to OFCCP jurisdiction. The consent decree was signed on September 13, 2011 and can be viewed here. The decree, in part, states:

[T]he Manheim Entities and their officers, agents, employees and purchasers agree not to bid for, knowingly enter into, knowingly perform work, or knowingly provide services necessary to any future Government contracts or subcontracts, except as otherwise provided for in the Consent Decree below.

The exception is that the order can be lifted if MAGS and MAI agree to submit to a full compliance review.

Since April 2007, Manheim Entities has held 18 government contracts with federal agencies such as the General Services Administration (GSA), the US Postal Service, the Drug Enforcement Administration, the US Marshall Services, and the Army/Air Force Exchange Services. Contracts with the GSA and Marshall Services alone are estimated to generate income in excess of $200,000 per year. As far as I know, no company has ever agreed to stop vying for federal contracts in exchange for escaping from OFCCP jurisdiction.

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DCI Consulting is a risk management human resources consulting firm strategically located in Washington, D.C.

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