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GAO report highlights work needed to improve targeting of OFCCP enforcement, Jackson Lewis expert notes

November 3rd, 2016  |  Cynthia L. Hackerott

“OFCCP has some work to do,” in light of a recent report by the U.S. Government Accountability Office (GAO) that identifies multiple deficiencies in the focus and consistency of the agency’s enforcement efforts, Mickey Silberman, a Principal in the Denver, Colorado, office of Jackson Lewis P.C. recently told Employment Law Daily. If the OFCCP can do a better job at identifying non- compliant federal contractors for evaluations, that will lessen the audit burdens on compliant ones, he pointed out.

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. It 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. Further details on the report are available here.

Audit selection and procedures. 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 GAO report concluded.

“The heart of GAO’s review was OFCCP’s switch in December 2010 from Active Case Management to Active Case Enforcement, which resulted in fewer but more comprehensive audits,” Silberman, Chair of the Jackson Lewis’ Affirmative Action & OFCCP Defense Practice Group and the Co-head of the firm’s Pay Equity Resource Group, noted.

OFCCP Directive 2011-01 (originally numbered Directive 295), dated December 16, 2010, outlines the OFCCP’s Active Case Enforcement (ACE) procedures which replaced the Active Case Management (ACM) procedures implemented by the Bush Administration in September 2008 (via Directive No 285). Under ACE procedures, full desk audits are performed in every compliance evaluation. In contrast, the previous ACM procedures set forth an abbreviated desk audit process that sought to quickly close reviews where there were no indicators of systemic discrimination (i.e., 10 or more potential victims). ACE procedures require that, for quality control purposes, every 25th federal contractor establishment selected for audit will undergo a full compliance review (which includes the full desk audit plus an onsite evaluation). Under the rescinded ACM procedures, absent any indicators of discrimination, full desk audits were performed only in every 25th review and onsite evaluations only in every 50th review.

“The GAO’s primary conclusion is despite the intensity of these audits, OFCCP is ineffective in identifying problematic contractors,” Silberman said.

In the GAO’s view, the core problem is the “’weakness’” of the audit selection process, which is bound by 4th Amendment limitations,” Silberman explained. “The factors in the OFCCP selection algorithm aren’t specific enough.”

“Given these limitations,” he continued, “OFCCP is unable to quantify the extent to which federal contractors are noncompliant, and [the agency] does not have reasonable assurance that it is focusing its efforts on those contractors at greatest risk of not following equal employment opportunity or affirmative action requirements.”

Thus, “OFCCP is in a difficult position. It’s bound by the 4th Amendment and limited resources to auditing only a fraction of contractor establishments selected via administratively neutral criteria. Compliant contractors would like to see OFCCP do a better job of targeting problematic contractors but, like the Fair Pay & Safe Workplaces rule, [the OFCCP’s audit selection procedures are] casting a very wide net,” he observed.

AAPs. The GAO report also found that the OFCCP lacks a mechanism to ensure contractors are voluntarily complying with nondiscrimination requirements by annually updating their written Affirmative Action Programs (AAPs).

“OFCCP notes that 85 percent of [written AAPs] are not timely submitted.  That suggests to GAO that contractors are not maintaining current AAPs,” Silberman said. “One of GAO’s recommendation is that all federal contractors electronically submit annual AAPs to OFCCP to ensure plans are developed annually as required,” he added.

“It seems likely this could happen, but the devil is in the details,” he continued. “Does this include data or only the AAP narrative text or just a certification?  And if data is submitted what will OFCCP do with it?”

Inconsistent enforcement across regions. “The GAO report also notes a well-known “secret”:  there are notable differences in how audits are conducted from region to region and district to district,” Silberman observed.

This lack of consistency in enforcement across OFCCP regions is due to the agency’s failure to timely train new compliance officers and provide essential ongoing professional training for all of its compliance officers, the report concluded.

“GAO notes a lack of training and turnover as causes but there is also the issue of how much authority compliance officers actually have these days and the complexity of the issues, particularly pay issues,” he noted.

Outreach. “Another significant aspect of the GAO report is the analysis of OFCCP’s compliance outreach efforts to assist contractors,” he said. “The report concludes OFCCP is not doing enough to assist contractors and believes doing more would be beneficial.”

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 states.

“Compliance assistance is a valuable tool in OFCCP’s box,” Silberman acknowledged, “but it may not get to the root of tailoring OFCCP efforts to identify contractors with compliance issues such that burdens on compliant contractors are reduced. “