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Senate Appropriations Committee rejects White House proposal to merge OFCCP into EEOC, calls on OFCCP to ‘right size’

September 11th, 2017  |  Cynthia L. Hackerott

The Senate Appropriations Committee has rejected the White House’s proposal to merge the OFCCP into the EEOC and has recommended OFCCP funding at a level significantly higher than the levels recommended by the Trump Administration and the House Appropriations Committee earlier this year. Nevertheless, the Senate Appropriations Committee recommended cutting the OFCCP’s budget, and “strongly urge[d]” the agency to “find efficiencies and cost savings,” instructing it to provide the Committee with an inventory of its current infrastructure and a plan to consolidate and “right size” the agency.

On September 7, 2017, the Committee approved, 29-2, the Fiscal Year (FY) 2018 Labor, Health and Human Services, and Education and Related Agencies Appropriations Bill. The bill calls for $103,476,000 in FY 2018 funding for the OFCCP. By comparison, the White House’s FY 2018 budget proposal, released on May 23, 2017, calls for $88 million in funding for the OFCCP. On July 19, 2017, the House Appropriations Committee approved its draft FY 2018 Labor, Health and Human Services, and Education funding bill which would allot the OFCCP $94.5 million.

In its report on the bill (at page 30), the Committee stated that it “strongly urges OFCCP to find efficiencies and cost savings, including the consolidation of offices, within its current budget structure. This should include a review of the current OFCCP office locations and infrastructure across the country and whether these offices align with current workload needs. OFCCP is directed to report to the Committee with an inventory of current infrastructure and a plan to consolidate and right-size the agency 180 days after enactment of this Act.”

The White House’s FY 2018 budget proposal also calls for the OFCCP to consider reducing the number of its field office locations. Its proposed funding level would include 440 full-time equivalent (FTE) employees, down from the current FY 2017 estimate of 571 FTEs.

The House Appropriations Committee report on its bill is silent as to the merger, instead focusing it comments (on page 12) on a Government Accountability Office (GAO) report issued on September 22, 2016, in which the GAO identified and discussed multiple deficiencies with OFCCP enforcement. Noting that the OFCCP accepted the GAO’s recommendations, the Committee instructed the agency to report to it on its efforts and the status of implementing each of the recommendations.

Congressional action necessary to complete proposed merger. The White House proposed the merger in its Fiscal Year (FY) 2018 budget, released on May 23, 2017, in which the Appendix section detailing the proposed DOL budget provides that the two agencies would work collaboratively to coordinate this transition to the EEOC by the end of FY 2018. Because the EEOC does not currently have the authority to do a number of things that the OFCCP does, Congressional action is an essential component of the merger. To that end, the

DOL’s budget justification as to the OFCCP calls on the agency to draft and review: (1) legislative proposals to amend the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) and Section 503 of the Rehabilitation Act (Section 503); and (2) a new Executive Order (EO) amending EO 11246. The OFCCP would also need to draft/revise its EO 11246, VEVRAA, and Section 503 regulations to implement the transfer of authority.

Outreach to business community lacking, expert says. From the start, the Administration did not engage in necessary outreach to the business community,” Mickey Silberman, a Shareholder with Fortney & Scott, LLC and Chair of the firm’s Affirmative Action & Pay Equity Practice Group, told Employment Law Daily on September 8. “And when the business community announced their opposition to the proposed merger, it went on life support. With the Senate Appropriations Committee’s clear rejection of the proposal, it’s now dead. Whether its buried for the remainder of Trump’s term is not certain, but I predict it will not be revised by this administration.

“OFCCP anticipated this outcome, announcing several times in the past few months it hopes to work with contractors in a more cooperative and productive way and will consider reforms to the agency’s structure and enforcement methods.”

‘Rugby scrum,’ over OFCCP’s fate continues. “The political Rugby Scrum over the fate of OFCCP is now operating at full power,” said John C. Fox, former OFCCP official and current President of Fox, Wang & Morgan, P.C., in comments to Employment Law Daily the evening of September 7. “Were the Senate Appropriation Committee’s budget proposal for OFCCP to be adopted, it would not be devastating to the agency, but would still render OFCCP too small, in my opinion, to be able to function as an effective federal agency.”

“The Senate Appropriation Committee’s $2 million reduction in proposed budget (from OFCCP’s last year’s approximately $105 million plus budget), combined with about $2 million of increased expenses at OFCCP (pensions and rent increases, etc), would mean a loss, in effect, of approximately 40 compliance officers,” Fox explained, noting that OFCCP compliance officers costs are about $100,000 per employee, or about 10 for $1 million. “Accordingly, OFCCP would shrink, under the Senate Appropriations Committee’s proposal, from 571 authorized positions (at the end of FY 2017) to approximately 530 or so authorized positions by the end of coming FY 2018.”

Reduction in OFCCP offices. “Currently, OFCCP’s employees are spread across approximately 59 brick and mortar offices, including a Headquarters Office (National Office) in Washington D.C., 6 Regional Offices, 49 District Offices and perhaps 3 Area Offices (which operate without an on-site manager),” Fox noted. “That would leave fewer than nine OFCCP employees per office, on average. Currently, most District Offices are already between one-third and one-half empty as the agency has stair-stepped down annually in headcount over the last 8 years from 785 authorized positions in the first year of the Obama Administration to the current 571 authorized positions.”

Number of on-site audits down. “The GAO has recommended for years consolidating offices since OFCCP no longer automatically comes on-site to audit covered government contractors,” Fox continued. “Indeed, OFCCP currently only comes ‘on-site’ to a contractor’s establishment to audit in about 3-5 percent of the agency’s increasingly fewer audits (perhaps only 1,000 or so audit completions by the end of this FY 2017, down from the 4,000-5,000 per year only a few years ago.). The resulting thirty to fifty OFCCP on-site audits we expect to see reported in this FY 2017  (or even 250 on-site audits per year) hardly justifies having dispersed OFCCP offices throughout the United States and the concomitant leasehold expense.”

Operating changes have reduced travel needs. “[In addition], OFCCP must travel from its existing dispersed offices to contractor sites to conduct audits in over half of their existing on-site audits, so the advantages of ‘offices near the contractor’ have now been overtaken by the change in OFCCP’s operating philosophy (in 1996 in the Clinton Administration) to no longer automatically and routinely go on-site in each and every OFCCP audit, and by advances in technology,” Fox observed. “Rather, OFCCP today carries out most audits (about 95-97 percent depending on what year one examines) via telephone and via e-mail without any on-site presence at the contractor’s establishment. As a result, there is a strong operational argument to consolidate OFCCP offices, as the Senate Appropriations Committee is urging OFCCP to do, with its shrunken budget. However, there is an even more compelling argument to immediately close all OFCCP District and Area offices, and to perhaps close all OFCCP Regional Offices, too, and thus, house all OFCCP personnel in one office in the Washington DC area. Standing against that common sense operational and budget result is the political issues of Members of Congress losing federal investments in their states and cities and the hardship to the over 500 OFCCP employees who would have to either move, quit or be fired.”

Hashing out the differences between the House and Senate bills. “Given the rumors of the last several days coming out of The White House that President Trump may delay a threatened federal government shutdown on October 1 in hopes of negotiating by December 1 an agreement to fund the building of ‘The Wall’ on the Mexican border, it appears that a two-month Continuing Resolution might soon be in the offing as of October 1,” Fox said. “If that were to occur, the Senate and the House would have an additional two months to hash out their large differences in approach to OFCCP’s budget and future direction. The Senate Appropriations Committee’s proposed OFCCP budget is approximately $9 and a half million higher than the House’s proposed budget for coming FY 2018 ($103,476,000 versus $94,000,000). That approximately $9 million difference represents another 90 lost OFCCP positions. However, if the House and the Senate were to ‘split the baby in half’ and agree upon a $99 million budget for OFCCP (or about a $6 million loss from OFCCP’s current over $105,000,000 funding level), OFCCP’s FY 2018 headcount would shrink about 60 heads from its current 571 authorized level to about 510 authorized positions, nationwide. At that level, OFCCP is approaching an average of only about 8 employees per office. While one could operate an agency that small in size, the number of audits would shrink drastically since a large Headquarters staff is necessary to hire and train compliance officers, do the accounting and bookkeeping and carry out a regulatory agenda. If the OFCCP were to shrink to below 550 employees in size, nationwide, not only would office closures/consolidations be absolutely necessary, but the idea of merger suddenly becomes much more tantalizing to OFCCP personnel in need of quality and continuous training and supervision.”

Difficulty of winding down the OFCCP. According to Fox, “[t]he federal government does not ‘sunset” agencies or federal programs well. What we are witnessing is the writhing of an anguished Congress struggling to find a way to wind down OFCCP in a graceful and orderly way. There will be little agreement among principals about the ‘right way’ to wind down OFCCP, even while all recognize that it must be done and is being done, little by little: death by a thousand small lashes….like watching a mortally wounded Titanic sink under the waves….in ultra-slow motion.”

[Wolters Kluwer Note: For an in-depth discussion of the merger proposal, see the September 8 post on this blog.]