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Despite $1 million cut in OFCCP budget, neither agency nor President seem daunted by Congressional criticisms

February 16th, 2016  |  Cynthia L. Hackerott

Under the Consolidated Appropriations Act of 2016 (CAA), signed into law by President Obama on December 18, 2015 (Public Law No 114-113), the OFCCP was allotted $105,476,000 for Fiscal Year (FY) 2016, which is a $1 million cut from the OFCCP’s FY 2015 budget. This cut reflects disapproval in the Republican-controlled Congress of the OFCCP’s current enforcement practices, including the agency’s use of statistics and what some view as an unnecessarily aggressive approach to audits of federal contractors. While this budget reduction will slow down the agency’s ambitious regulatory and enforcement agenda, neither the OFCCP nor the President appears to be daunted by these Congressional concerns.

Request for almost $8.7 million budget increase. Despite the cut to the OFCCP’s FY 2016 budget, the President’s budget proposal for fiscal year 2017 would increase the agency’s budget by $8.693 million. In his FY 2017 budget proposal, released on February 9, 2016, President Obama requests $114.169 million for the OFCCP which includes 615 full-time equivalent (FTE) employees. The FY 2017 request would keep the OFCCP’s current (FY 2016) level of 615 FTE employees, which is down from 620 FTE employees in FY 2015. The proposal includes an increase of $1.890 million for the creation of two Skilled Resource Centers for compliance officer training and $3.3 million for the continued modernization of the agency’s core Case Management System.

Statistics and “quotas.” In both the House and Senate Appropriations Committees Reports on the bill, the Committees used the politically charged term “quotas” in expressing concerns that the OFCCP “has lost its focus on identifying and addressing real employment discrimination,” and is instead focusing on “quotas” by overly relying on statistics/statistical analysis in evaluating contractors. The Senate Report (114-74, p. 29) asserts that “[s]trict and exclusive use of statistical significance tests effectively requires contractors to use a quota hiring system in violation of the Civil Rights Act to avoid adverse impact claims by OFCCP.”

In the OFCCP’s FY 2017 Congressional Budget Justification, the agency responds by stating that its “regulations neither create nor enforce quotas,” and that it “does not insist on quotas in entry-level hiring or any other cases.” Rather, according to the agency, “following Supreme Court precedents, OFCCP considers statistical evidence to determine whether there are statistically significant disparities based on race, sex, or national origin among individuals who are qualified and available for the positions under review.” Moreover, the OFCCP “would not pursue a matter solely on the basis of a statistical disparity where a contractor establishes a legitimate and valid explanation for that difference or where the contractor has established that the statistical disparity does not exist,” the agency maintains.

The agency asserts that during compliance reviews, it “not only performs quantitative analyses but also assesses a variety of other evidence.” In cases with potentially significant statistical disparities, “OFCCP investigators will review documents and interview managers and workers.” Further, the agency “requests and considers any information that contractors are willing to provide to explain a disparity in hiring rates or any other employment practice.”

“When contractors provide credible, legitimate, nondiscriminatory, and legally sufficient explanations for potential violations that OFCCP has identified, the agency will adjust its findings accordingly. This includes explanations that address portions of the violation or information that would properly mitigate some portion of the back pay owed to affected workers,” the agency notes.

Aggressive audit practices. The Senate Report also notes “reports that OFCCP is increasingly subjecting contractors to overly broad and unnecessary document and data requests as well as unreasonably numerous and lengthy compliance reviews.” Disagreeing, the OFCCP asserts that it “does not subject contractors to unreasonable or unnecessary compliance reviews or document or data requests. Contractors are selected for compliance evaluations based on a neutral selection process that uses multiple information sources and factors to develop a scheduling list.” Moreover, the audit scheduling letter and accompanying itemized listing of documents and data that contractors are required to submit have been approved by the Office of Management and Budget (OMB) in accordance with the Paperwork Reduction Act, the OFCCP notes, adding that during the course of an evaluation, contractors may be asked to provide additional information as needed.

“[O]ver the last five years, administrative law judges and courts have repeatedly upheld the validity and constitutionality of this process and OFCCP’s authority to obtain the information requested in compliance evaluations,” the agency points out. It cites the 2011 decision by the federal district for the District of Columbia in United Space Alliance v. Solis which states that submission to OFCCP investigations “is the price of working as a federal contractor.”

The House Report (114-195, p. 16) asserts that the “OFCCP should end its reliance on threatening sanctions, including debarment and the costs associated with an extremely drawn-out administrative litigation process, to induce contractors to waive their legal rights and to enter into conciliation agreements that are not justified by the evidence.”

Yet, the agency maintains that it “does not threaten contractors with debarment or other sanctions to induce them to enter into unjustified conciliation agreements”; rather, it “issues notices of discrimination violations only where there is an ample evidentiary record supporting findings of discrimination.” According to the OFCCP, when it “does issue a notice of violation, it attempts to negotiate a conciliation agreement and, as part of that negotiation, requests and considers any information that contractors provide.”

Finally the OFCCP says it “consistently seeks to resolve cases without litigation, a goal supported by the record. In FY 2015, OFCCP closed 518 cases with findings of violations but referred only 13 cases to the [Department of Labor’s] Solicitor’s Office for enforcement.”

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