OFCCP Issues Opinion Letter on Whether Pell Grants Trigger Federal Contractor Status for Colleges

In an effort to provide additional compliance assistance resources to contractors, the Office of Federal Contract Compliance Programs (OFCCP) issued Directive 2019-03 in late 2018. Under this Directive, OFCCP announced planned enhancements to its Help Desk as well as a process for issuing Opinion Letters that provide guidance on applying OFCCP regulations to fact-specific situations.1 While we wait for OFCCP to complete its planned Help Desk enhancements, the agency recently updated its website with an Opinion Letters link and issued its first Opinion Letter, dated May 20, 2019.

The Opinion Letter, titled “OFCCP’s Jurisdiction Related to Pell Grants,” provides guidance as to whether a college’s status as a conduit for Pell Grants makes it a covered federal contractor for the purposes of Executive Order 11246 (EO 11246), Section 503 of the Rehabilitation Act of 1973 (Section 503), and/or the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA).

Recognizing the difference between “government contracts” and “grants or other benefits under Federal financial assistance programs” and knowing that it has jurisdiction over covered federal contractors and subcontractors only, OFCCP had to determine whether Pell Grants were government contracts or grants. After reviewing the regulatory definition of a government contract2 and the Federal Grant and Cooperative Agreement Act (Grant Act),3 OFCCP determined that Pell Grants were grants because they involve the government transferring a sum of value to a recipient in order to further “a public purpose of support or stimulation” and not an agreement “for the purchase, sale, or use of personal property or non-personal services,” that would qualify for contractor status. Therefore, colleges that serve as conduits for Pell Grants are not covered federal contractors subject to EO 11246, Section 503, or VEVRAA.

It is important to note, however, that this opinion letter applies to Pell Grants only and therefore we recommend that post-secondary higher education institutions consider all of their potential agreements with the federal government when determining whether they are a covered federal contractor or subcontractor subject to OFCCP’s jurisdiction.


See Footnotes

1 See David Goldstein and Lance Gibbons, OFCCP Continues Efforts to Maximize Efficiency and Increase Transparency with Three New Directives, Littler ASAP (Dec. 3, 2018).

2 See 41 CFR §§ 60-1.3; 60-300.2; 60-741.2.

3 See 31 U.S.C. § 6301, et seq.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.