Banks and Credit Unions and VEVRAA/Section 503 Requirements

How banks and credit unions are covered by VEVRAA and Section 503 whereas their definition of a federal contract is different from that of the federal contractors who provide services to particular departments of the government i.e. Dept of Defense, IRS, Dept of Justice, Dept of Army, etc.

1. A bank is covered under VEVRAA if it has a single contract that meets the $100,000 threshold amount for coverage. Federal contracts held by banks and other financial institutions include, but are not limited to, agreements to serve as fund depository and agreements for federal share and deposit insurance.
2. Under Section 503, a Government contractor with 50 or more employees and a Government contract of $50,000 or more must develop a Section 503 affirmative action program. 41 CFR 60-741.40(a). The Section 503 regulations define a Government contract as "any agreement or modification thereof between any contracting agency and any person for the purchase, sale or use of personal property or nonpersonal services." 41 CFR 60-741.2(i). The term "nonpersonal services" as used in this section includes fund depository. 41 CFR 60-741.2(i)(4). Thus, the agreement to serve as a Federal funds depository is a "Government contract."
3. Under Section 503, however, all government contracts must meet the dollar threshold amount of $50,000 for coverage. Therefore, if you serve as a depository for Federal funds of $50,000 or more, or have an agreement valued at $50,000 or more to be an issuing and paying agent for savings bonds and notes, you would be obligated to develop and maintain a Section 503 affirmative action program.
4. Financial institutions with federal share and deposit insurance are considered to be government contractors within the meaning of the regulations implementing Executive Order 11246, as amended, the Vietnam Era Veterans' Readjustment Assistance Act of 1974 (VEVRAA), as amended, 38 U.S.C. 4212 and Section 503 of the Rehabilitation Act of 1973 (Section 503), as amended. These three programs enforced by the Office of Federal Contract Compliance Programs (OFCCP) require equal employment opportunity by government contractors.
5. The implementing regulations for Executive Order 11246 at 41 CFR 60-1.3 have consistently defined a government contract as any agreement or agreement modification between any contracting agency and any person for the purchase, sale or use of personal property or nonpersonal services. The term "nonpersonal services" includes, but is not limited to, the following services: utilities, construction, transportation, research, insurance, and fund depository. This definition thus explicitly includes agreements for insurance.
6. The implementing regulations for VEVRAA and Section 503, found at 41 CFR 60-250.2, 60-300.2 and 60-741.2, respectively, also define a government contract as any agreement or agreement modification between any contracting agency and any person for the purchase, sale or use of personal property or nonpersonal services. Like the Executive Order regulations, these regulations also state that the term "nonpersonal services" includes, but is not limited to the following services: utilities, construction, transportation, research, insurance, and fund depository. Therefore, financial institutions with federal share and deposit insurance are considered to be government contractors.

Types of federal share and deposit insurance are:

• FDIC – Federal Deposit Insurance Corporation (provides deposit insurance guaranteeing the safety of a depositor’s accounts in member banks up to $250,000 for each deposit ownership category in each insured bank)
• NCUA – National Credit Union Association is the independent federal agency created by the United States Congress to regulate, charter, and supervise federal credit unions -  NCUA’s standard maximum share insurance amount at $250,000. All deposit insurance resources reflect this higher level of coverage)
• NCUSIF – National Credit Union Share Insurance Fund (is the federal fund created by the United States Congress in 1970; insurance amounts as above – NCUA)

State chartered credits unions are privately insured and do not fall under the federal deposit and share insurance requirements.