On November 13, 2012, the Office of Federal Contract Compliance Programs (“OFCCP”) filed a motion before the Department of Labor’s Administrative Review Board (“ARB”) asking it to reconsider its decision in OFCCP v. Florida Hospital of Orlando. As we previously reported, on October 19, 2012, the ARB found that the OFCCP did not have jurisdiction over a federal contractor based solely on its participation in TRICARE, but the ARB left open whether certain TRICARE arrangements could be covered by OFCCP’s jurisdiction under the first prong of the subcontractor definition.
In its motion for reconsideration, the OFCCP argued that the ARB left unanswered the “critical issue” of whether the National Defense Administration Act (“NDAA”) precluded OFCCP from asserting jurisdiction over TRICARE subcontractors on the basis of the first prong of the subcontractor definition (i.e., whether the TRICARE subcontractor’s services were “necessary” to the performance of the contract). The OFCCP announced in its briefing its intent to continue to serve audit notices on TRICARE subcontractors until ARB rules on this issue. The OFCCP specifically stated that “the only way OFCCP can obtain a ruling on the [open] issue[s] is to continue to notice TRICARE network providers for compliance reviews where” the first prong of the definition of subcontractor is at issue. It also indicated that it would be “forced to bring another enforcement action against one or more TRICARE” contractors in order to have this issue answered.
In short, if the ARB denies OFCCP’s motion, OFCCP will aggressively seek a test case that requires ARB directly to address whether TRICARE subcontractors are covered by OFCCP’s jurisdiction if their services are necessary for the performance of the prime contract. TRICARE contractors should prepare for pending OFCCP audits of their establishments, which had been placed on hold until the resolution of the Florida Hospital case, to be reopened in the near future.