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GAO issues report critical of how OFCCP focuses its enforcement efforts, cites insufficient training

September 23rd, 2016  |  Cynthia L. Hackerott  |  1 Comment

The OFCCP’s process in selecting federal contractors for compliance evaluations, the agency’s primary tool for enforcement, is not designed to focus on contractors with the greatest risk of noncompliance, the U.S. Government Accountability Office (GAO) has concluded in a report that identifies multiple deficiencies in the OFCCP’s enforcement efforts. In the September 22, 2016 report, the GAO also found that the OFCCP lacks a mechanism to ensure contractors are voluntarily complying with nondiscrimination requirements by annually updating their Affirmative Action Plans (AAPs). Further, the OFCCP is not providing consistency in its enforcement efforts across its offices because it is failing to timely train new compliance officers and provide essential ongoing professional training for all of its compliance officers, the report concluded.

In addition, although regulatory requirements regarding contractors’ nondiscrimination obligations have changed—thereby requiring contractors to significantly adjust their policies, practices, and data collection systems in order to comply—the agency has reduced the outreach and compliance assistance efforts that can help contractors understand these changes and workers understand their protections. The report advises that, while enforcement has been the OFCCP’s predominant approach to achieving its mission, outreach, compliance assistance, and guidance in support of voluntary compliance provide important opportunities to extend the agency’s influence beyond the few contractors that are evaluated and help the OFCCP better achieve its mission.

Based on its conclusions, the GAO made six recommendations to the Department of Labor (DOL), including that the OFCCP develop a contractor selection process that reflects contractor noncompliance risk, develop a mechanism to monitor contractors’ compliance with AAP requirements, and review and assess the clarity of its contractor guidance. The DOL agreed with the GAO’s recommendations, the report notes.

Republican Congressman requested report. The GAO issued the 56-page report in response to a request from House Education and the Workforce Committee Chair John Kline (R-MN) and Workforce Protections Subcommittee Chair Tim Walberg (R-MI). The report opens with a letter addressed to the Congressmen which notes that “[S]ince fiscal year 2011, the OFCCP has changed its enforcement practices and updated its regulations to, among other things, reflect recently issued amendments to Executive Order 11246 that established new nondiscrimination requirements, and to increase contractors’ collection of data on workers’ and applicants’ veteran and disability status. Protected worker advocacy organizations have lauded OFCCP’s efforts and many of these changes. However, other stakeholders, including some in the federal contracting community, are concerned OFCCP’s efforts are imposing excessive compliance burdens on contractors, including what they perceive as overly broad and unnecessary document and data requests, as well as unreasonably numerous and lengthy compliance evaluations.”

What did the GAO analyze? In the report, the GAO notes that the OFCCP has jurisdiction over roughly 200,000 federal contractor establishments. The report assessed how the OFCCP conducts supply and service compliance evaluations, including the methodology, resources, and results, and evaluated the OFCCP’s outreach, assistance, and guidance efforts to assist contractors in complying with the requirements it enforces. To conduct this assessment, the GAO reviewed 6 years of OFCCP data—from fiscal years 2010 through 2015—on evaluations and enforcement, including the number of cases referred to the DOL’s Office of the Solicitor for administrative enforcement proceedings.

The GAO also analyzed both OFCCP Information System data and a nongeneralizable sample of 43 randomly selected files of compliance evaluation cases generally closed in fiscal years 2013 through 2015, ensuring representation from the six OFCCP regions and a variety of outcomes with respect to how cases were closed and types of violations identified. It reviewed agency policy, procedures, and operating plans used to conduct and oversee the compliance evaluation process and assessed them against standards for internal control in federal government. Further, the GAO interviewed a nongeneralizable sample of 24 contractor—4 in each of OFCCP’s 6 regions—with and without experience with a compliance evaluation; managers and staff in the OFCCP’s headquarters and all six regional offices; and representatives of 14 national organizations representing contractors interests and 13 civil rights advocates and organizations representing protected groups, such as veterans, individuals with disabilities, and working women. In addition, the GAO examined prior reviews of OFCCP by GAO, DOL’s Office of Inspector General, and others, and interviewed managers and staff in OFCCP’s headquarters, all six regions, and one district or area office in each region. The district or area offices were selected to reflect a range of workloads and geographic diversity.

Weaknesses in compliance evaluations impact effectiveness of enforcement. There are weaknesses in the OFCCP’s process for selecting contractors for compliance evaluations that make it challenging to know the extent to which EEO requirements are followed, the GAO notes. The OFCCP conducts evaluations for about 2 percent of federal contractor establishments annually, and since 2010, about 78 percent of evaluations found no violations and about 2 percent had discrimination findings. However, when the OFCCP selects contractors for evaluations, it does not use a generalizable sample that would allow for conclusions about the federal contractor population. Therefore, it does not have reasonable assurance that it is focusing its compliance efforts on those contractors with the greatest risk of noncompliance, the GAO concluded. Moreover, because the OFCCP distributes its scheduling list—or assigns compliance evaluations to OFCCP district or area offices—based on the number of compliance evaluation officers located in each district and the physical address of the contractor establishments, there may be geographic imbalances in the way establishments are selected for review. In addition, some contractors reported inconsistencies among the OFCCP’s regional and district offices in the way compliance officers interpret the legal requirements enforced by the OFCCP, and these inconsistencies may be exacerbated by lack of training, the GAO concluded.

Production of AAPs. During evaluations, the OFCCP requested and reviewed documents related to contractors’ equal employment efforts, including their AAPs. In 2015, close to 85 percent of evaluated contractor establishments did not submit their AAP within 30 days of the OFCCP’s request and were granted extensions in some cases, the GAO found. This finding, the GAO reasoned, suggests that the OFCCP processes do not ensure that all contractors are complying with their obligation to complete and annually update an AAP.

Decrease in compliance assistance and outreach; improvement needed. Since 2012, OFCCP’s outreach and compliance assistance activities to assist contractors and other stakeholders, such as protected workers and industry groups, have declined as the agency refocused its activities on enforcement, and some stakeholders said guidance could be clearer. Outreach activities, such as community group presentations and job fair participation, decreased more than 80 percent from 2012 to 2014. Some stakeholders told GAO that workers, applicants, and contractors may benefit from more outreach activities. OFCCP’s compliance assistance activities, such as seminars, for contractors—are down 30 percent since 2012. Many contractors told GAO they do not feel comfortable contacting OFCCP for assistance and hire third party support to help comply with federal nondiscrimination and affirmative action requirements. While contractors generally found OFCCP guidance helpful, both stakeholders and contractors said the guidance could be clearer to help them understand the requirements. Without clear guidance, contractors may not be able to understand their equal employment obligations.

Expert commentary on GAO recommendations. John C. Fox, a former OFCCP official and current president of Fox, Wang & Morgan P.C. in Los Gatos, California, shared his insights on the GAO’s six recommendations with Employment Law Daily. The following is a listing of the GAO recommendations, along with Fox’s insights regarding them.

(1) GAO: To ensure that federal contractors are complying with equal employment opportunity requirements, the Secretary of Labor should direct the Director of the OFCCP to make changes to the contractor scheduling list development process so that compliance efforts focus on those contractors with the greatest risk of not following equal employment opportunity and affirmative action requirements.

Fox comment: “The GAO’s suggestion to design a new audit selection system is long overdue. The current OFCCP audit selection system dates back in design and function to 1982 when Robert Gerlerter, a senior OFCCP Policy Branch Manager, and I designed and deployed the system still in place at OFCCP today with only a few modernizing adaptions. The OFCCP has not changed the basic simplistic design I conceived over a two-day period over 30 years ago. I had intended the audit system to remain in place as an emergency ’stop-gap’ selection tool for, perhaps, two years until OFCCP could design a more thoughtful and well-designed audit selection system. The current system merely compares the employment of minorities and women in the (now) ten EEO-1 categories and selects for audit the [g]overnment contractor with the fewer minorities and women employed within the contractor’s same industry (measured by NAICS code) and in the same general geographical location. OFCCP observed deficiencies in this system by the late 1980s. Nonetheless, the system—then called EEDS (Equal Employment Data System) and now called, since the [George W.] Bush Administration, the FCSS (Federal Contractor Selection System)—has endured under these two different names over the years because no Administration could conceive of and design a better one.

“OFCCP has been working for the last several years to convert its audit selection tool to cause it to base decisions wholly on the compensation paid minorities and women. OFCCP published this announcement in its ill-fated Equal Pay Report proposed Rule (which OFCCP withdrew last December 2015). However, the EEOC has now championed the same idea in its currently pending EEO-1 proposal to collect pay data from all employers which file EEO-1 reports. Bottoming OFCCP audit selection decisions on compensation data broadly reported by EEO-1 category, without refinement for job title and shift information, is another colossally failed architectural design. Many Government contractors so commented to the EEOC in response to its proposal. [ELD note: The EEOC published its original proposal to add the collection of summary pay data to the EEO-1 Report in the Federal Register on February 1, 2016 (81 FR 5113- 5121), and a revised proposal was published in the Federal  Register on July 14,  2016 (81 FR 45479-45497.)]

“Studies of past violation trends is the best predictor of future violations coupled with ‘Quick-in’/’Quick-out’ audit diagnostics similar to the ‘Tiered Review’ strategy  the Clinton Administration successfully inaugurated in 1996. Surprisingly, the Obama Administration discarded the Clinton Administration ‘Tiered Review’ audit model in favor of what has turned out to be a deeply failed ‘Deep Dig’ strategy finding no more and no fewer alleged discrimination occurrences than  ‘Quick-in’/’Quick-out’ audits. ‘Deep Dig’ audits, however, take many years longer  to accomplish than ‘Quick-in’/’Quick out’, and they cost both OFCCP and contractors much more to complete and exhaust both contractors and OFCCP personnel with no greater reward for the taxpayers or applicants and employees. ‘Deep Dig’ audit strategies simply mean fewer audits, more cost and less back pay collections.”

(2) GAO: To ensure that federal contractors are complying with equal employment opportunity requirements, the Secretary of Labor should direct the Director of OFCCP to develop a mechanism to monitor AAPs from covered federal contractors on a regular basis. Such a mechanism could include electronically collecting AAPs and contractor certification of annual updates.

Fox: “The GAO recommendation for OFCCP to annually collect AAPs and annual certifications of annual updates is an old idea every Administration since 1972 has considered and rejected. But, the concept, as modified as noted below, has great merit. OFCCP’s regulations at 41 CFR Section 60-2.31 have required such annual reports and summaries since 1978. However, OMB [(the Office of Budget and Management)] has never authorized such extensive and burdensome data collections and no Administration has thought it had sufficient personnel to even review the hundreds of thousands of detailed reports which would consume tens of millions of pages of space and which would annually flood into OFCCP. Accordingly, no Administration has thought this idea sufficiently important to push the issue with OMB.

“The modification which would ease the burden on contractors and allow OFCCP an instant and digital diagnostic of potential contractor discrimination would be to cause contractors to annually deliver digitized copies to OFCCP of the Disparity Analyses for hires and promotions they develop as part and parcel of each Executive Order 11246 AAP. Contractors would not like this idea, but it would be VERY effective to allow OFCCP to better target contractors with potential problems for audit. OFCCP does not need or want the Affirmative Action portions of the AAP, just the discrimination diagnostics contractors already are required to prepare BUT NOT SEND TO OFCCP except in OFCCP’s (currently) only 2,000 audits per year.”

(3) GAO: To ensure that federal contractors are complying with equal employment opportunity requirements, the Secretary of Labor should direct the Director of OFCCP to make changes to the current scheduling list distribution process so that it addresses changes in human capital and does not rely exclusively on geographic location.

Fox: “The GAO is right. OFCCP no longer needs to audit based on where OFCCP has brick and mortar district offices. Given the change in 1996 to no longer require onsite audits to occur in each and every OFCCP compliance review, and given the practice which has emerged in the last 10 years for OFCCP to come onsite in only about 5 percent of OFCCP audits, OFCCP could audit from any location. Indeed, most OFCCP audits are conducted by phone and via e-mail today. Accordingly, because of the advent of remote office technology and the infrequency of onsite audits, OFCCP should now audit based on the location of the contractors which are highest on OFCCP’s audit priority list regardless of where OFCCP is geographically officed.

“Correspondingly, the same forces operating to free OFCCP to audit wherever it determines to be the best audit sites irrespective of the presence or absence of an OFCCP local district office, also opens the path for greater specialization within the agency and to consolidate all OFCCP personnel into perhaps 6-10 offices and close perhaps 40 existing brick and mortar office locations.  Former OFCCP Chicago Regional Office Administrator Sandra Zeigler came to this same conclusion 10 years ago, consolidated district offices into her Chicago Regional Office and saved almost $1M in payroll and travel/training expenses per year by not staffing 6-10 District Director positions in the Chicago Region.”

(4) GAO: To ensure that federal contractors are complying with equal employment opportunity requirements, the Secretary of Labor should direct the Director of OFCCP to provide timely and uniform training to new staff, as well as provide continuing training opportunities to assist compliance officers in maintaining a level of competence to help ensure quality and consistency of evaluations across regions and district offices.

Fox: “GAO’s recommendation that OFCCP improve its training is very appropriate. OFCCP training materials are currently very poor and Compliance Officers are at a very low ebb in training, especially as to discrimination law. Recently, I have deposed investigators under oath in OFCCP litigation in cases making major claims of unlawful employment discrimination. I found that they have never been trained in discrimination law, never trained in investigations, recordkeeping of their audit files, statistics, and/or evidence or in interview techniques. The lack of training is a long-standing problem exacerbated by very high turnover, inadequate training materials, and insufficient funds to properly train OFCCP’s workforce.”

(5) GAO: To ensure that federal contractors are complying with equal employment opportunity requirements, the Secretary of Labor should direct the Director of OFCCP to review outreach and compliance assistance efforts and identify options for improving information provided to federal contractors and workers to enhance their understanding of nondiscrimination and affirmative action requirements to ensure equal employment opportunities for protected workers.

Fox: “GAO’s recommendation that OFCCP extend more training to contractors concerning outreach and recruitment will fail so long as OFCCP continues to engender distrust in the contractor community about the audit selection system OFCCP uses. Contractors are afraid that if they raise their hand in the crowd, OFCCP will audit them since their question infers a lack of knowledge and a consequent lack of compliance. Instead, contractors rely upon resources they trust including their HR consulting firms and law firms, trade associations and member-driven groups ([such as] DirectEmployers/Industry Liaison Groups (ILGs) , etc).”

(6) GAO: To ensure that federal contractors are complying with equal employment opportunity requirements, the Secretary of Labor should direct the Director of OFCCP to assess existing contractor guidance for clarity to ensure that contractors have information that helps them better understand their responsibilities regarding nondiscrimination and affirmative action requirements to ensure equal employment opportunities for protected workers.

Fox: “OFCCP has poor trainers and cannot teach what they do not yet themselves understand. Contractor reaction to OFCCP training Webinars the agency offers to the public is uniformly poor, coast to coast.  As a result, ILGs rarely invite OFCCP personnel to train at their monthly and quarterly conferences.  OFCCP personnel, themselves, reportedly often drop off quickly in droves from OFCCP National Office-sponsored webinars because agency personnel widely view their fellow employees as poor trainers.

“To make GAO’s otherwise well founded recommendation effective, OFCCP would have to first: hire persons knowledgeable about:

(a)  discrimination law,

(b)  how private sector employers operate (too many OFCCP personnel—especially in its senior ranks in Washington D.C.—have never worked in the private sector and do not understand employment systems private companies deploy, let alone in the hundreds of existing and emerging markets); and

(c) training investigators (most of OFCCP’s trainers are just out of college or law school, have not been trained to teach and have little experience in either teaching or public speaking).

Finally, OFCCP would also have to write entirely new training materials.”

Responses

  1. Alicia Wallace says:

    September 26th, 2016 at 2:49 pm

    Good comments. I think training is the key and having senior compliance officers work with junior compliance officers is crucial. It’s extremely hard to audit a fortune 500 organization when the person “leading” the audit has less than 3-5 years of work experience themselves. In addition to technical assistance I think it’s also crucial that OFCCP continue to provide guidelines and be more transparent as to what compliance looks like. Organizations are left to interpret regulations through law firms and other experts, during audits there are extensive data requests many times which are not relevant to any specific identification of problem areas. Last but not least rather than continuing to audit the same contractor database, OFCCP should identify federal contractor that have never been audited and have millions of federal contracts. It appears that contractors in specific industries bare more of the burden than others who are awarded the same dollar amount of contracts. Many changes recommended by the GAO may be a welcomed breath of fresh air for the federal employees working at OFCCP who seem burnt out and are expected to do more and more without proper guidance, staff or training.

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