OFCCP Mandates Full Desk Audits In Every Compliance Evaluation
Recently, the Department of Labor's Office of Federal
Contract Compliance Programs ("OFCCP") issued Directive
295 (OFCCP Order No. 295 ADM Notice/Other (Dec. 16, 2010)), which
sets out new procedures for conducting compliance reviews of supply
and service federal government contractors. The new procedures are
known as Active Case Enforcement ("ACE"). ACE applies
only to supply and service contractors, not construction
contractors.
The directive replaces a 2003 directive that processed compliance
evaluations under an Active Case Management procedure. The
OFCCP's stated reason for rescinding the prior process is that
"it did not allow OFCCP to effectively use all of its
investigative tools." OFCCP Order No. 295, at 1
Effective January 1, 2011, all supply and service compliance
evaluations scheduled from the Federal Contractor Selection System
("FCSS") will be processed using the new ACE procedures.
One of the major differences under these procedures is that the
agency's review process will begin with a full desk audit. This
audit is supposed to analyze the target company's affirmative
action program to ensure compliance with Executive Order 11246,
Section 503 of the Rehabilitation Act, and the Vietnam Era
Veterans' Readjustment Assistance Act. The desk audit will,
among other things, seek to determine if there is adverse impact in
hiring, promotions, terminations, and compensation, and assess the
acceptability of each program. By contrast, under the 2003
directive, the agency conducted a full desk audit only if
indicators of discrimination were found during an abbreviated desk
audit, or in every 25th compliance review.
The ACE Procedures
The OFCCP generally selects companies for compliance evaluation
through the FCSS, a selection system that purportedly uses
"administratively neutral selection criteria." OFCCP
Order No. 295, at 4. There appear to be no changes to this
selection system under the new directive.
Once identified by the FCSS, the OFCCP uses a second selection,
pursuant to neutral selection criteria, to determine which type of
four possible investigative procedures to conduct: (1) compliance
review; (2) offsite records review; (3) compliance check; or (4)
focused review. In addition, to assist with "quality
control", every 25th federal government contractor will be
selected for a full compliance review, usually in the form of a
desk audit, an onsite OFCCP compliance officer visit, and possibly
an offsite analysis.
Whenever an onsite review is conducted, the agency also will be
reviewing the contractor's compliance with Executive Order
13496, which requires notification to employees of their rights
under the National Labor Relations Act.
A contractor that has undergone a compliance evaluation is exempt
from FCSS scheduling from undergoing another evaluation for 24
months after the date of closure of the compliance
investigation.
Increased Coordination With Other Agencies
The OFCCP also hopes to promote greater coordination with other federal and state agencies. When the OFCCP now selects a contractor for review, the agency will also contact the Equal Employment Opportunity Commission and the state or local fair employment practice agency to determine the nature of any existing complaints. During a full desk audit and compliance evaluation, the OFCCP will also now review the contractor's recent compliance history to determine if there are any "patterns of non-compliance."
The Practical Impact of ACE
The new ACE procedures will subject supply and service federal government contractors to increased scrutiny by the OFCCP. What used to be fairly routine audits by the OFCCP will now likely be significantly more rigorous, coupled with more onsite reviews than before. Since a full desk audit will be the first step of the new records review process, it is more important than ever for federal government contractors to ensure that any affirmative action program and supporting documentation are complete and accurate prior to submission to the OFCCP. Impacted companies may also want to consider conducting internal audits, appropriately protected by any applicable privilege or protection, to make sure affirmative action plans are up to date and to identify any pay differences that could raise questions of discrimination.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.