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The White House has released the President’s fiscal 2026 budget proposal, along with a technical supplement appendix with detailed budget estimates. Of particular interest to federal contractors, the proposal seeks to “eliminate OFCCP” while transferring the agency’s remaining enforcement authority to other agencies.
The proposed elimination of OFCCP is not necessarily unexpected, as President Trump tried but failed to convince Congress to transfer OFCCP’s authority to the EEOC in his first Administration. The arguments this time around are a bit different, especially after President Trump issued Executive Order 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.” Among other actions, EO 14173 revoked Executive Order 11246, which was enforced by the OFCCP and had required qualifying federal contractor employers to prepare affirmative action plans to prevent sex and race discrimination in their workplaces for the past 60 years.
EO 14173 did not change federal contractor non-discrimination requirements for individuals with disabilities and most veterans under Section 503 of the Rehabilitation Act, and Section 4212 of the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA), respectively. Those enforcement authorities are currently vested in the OFCCP.
However, the President’s budget states that EO 14173 permanently removed “the primary basis for OFCCP’s enforcement authority and program work,” and proposes to transfer VEVRAA authority to the Department of Labor’s Veterans’ Employment and Training Service (DOL-VETS), and Section 503 authority to the EEOC.
Note that this is still just a proposal at this stage. Congress must approve the President’s budget, and if recent budget processes are any indication, that is not necessarily a certain victory. Furthermore, if these transfers of authority are to take place, they will likely take some time to execute. It is important to remember that the Rehabilitation Act and VEVRAA are laws passed by Congress, and both statutes grant enforcement authority specifically to the Department of Labor. Transferring VEVRAA authority from OFCCP to DOL-VETS can likely be done by administrative fiat, because both are offices within DOL. However, transferring Rehabilitation Act authority to the EEOC would likely require Congressional action to either amend the Rehabilitation Act or approve the President’s reorganization proposal.
What this means for federal contractors, particularly those with pending (and currently suspended) audits, remains to be seen. However, it's important for federal contractors to remember that they are currently required to certify compliance with Section 503 and VEVRAA – including OFCCP’s current regulations - as part of existing federal contract representations and certifications. Thus, federal contractors should continue to comply with all Section 503 and VEVRAA requirements, including by preparing annual affirmative action plans for individuals with disabilities and protected veterans. As always, we will continue to monitor for further developments.
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