To date, the Office of Federal Contract Compliance Programs (OFCCP) has issued nine new and proposed directives in 2018. While most of the directives have been covered in prior articles, this article will provide more insight into the directives issued in September, as well as a few observations and an overview of what we have seen from OFCCP so far in 2018 under the Trump administration.
2018 OFCCP Recap
With the flurry of directives being issued, it is important to note that the directives provide guidance only to OFCCP and contractors on OFCCP’s policy on enforcement and compliance. Unlike regulations issued by agencies, directives do not create any legally enforceable rights or obligations, but they do provide insight into the agency’s areas of focus and methodology in enforcement. Accordingly, while contractors and compliance officers alike welcome guidance and direction, directives do not provide contractors with legally enforceable audit methods or parameters.
Under the Trump administration, there have already been a few shifts. First, Ondray Harris was originally appointed to be director of OFCCP. However, he resigned after a few months of service, and Craig Leen has assumed the role.
Before Leen became the acting director of OFCCP, there were some distinct changes in OFCCP policy. First, OFCCP published Directive 2018-01, regarding the use of predetermination notices (PDN), in February 2018. PDNs are used for preliminary findings of discrimination in audits, and are reviewed by the regional solicitor and national office prior to issuing to contractors. What does this mean for contractors? It means that prior to issuing a PDN, a local office has to defend its findings to the national office before it can move forward. As a result, audits in which a PDN is issued are more likely to have support from the national office and be considered legally prosecutable than in prior years. This directive also requires contractors to respond quickly or face a Notice of Violation. Thus, many local offices appear to be using PDNs as a tool for early settlement.
In May 2018, OFCCP issued Directive 2018-02, which extends the 2014 moratorium on enforcement for TRICARE and Veterans Affairs Health Benefits Program providers through May 7, 2021.
Leen became acting director in August 2018 and quickly issued additional directives. In August, OFCCP issued five directives: 2018-03, 2018-04, 2018-05, 2018-06, and 2018-07.
Directive 2018-03 relates to faith-based organizations, and essentially directs staff to familiarize themselves with court cases and legal precedent surrounding the legal protections for organizations and individuals exercising religion. The directive notes that compliance officers must consider these legal precedents when processing complaints or providing assistance.
In Directive 2018-04, OFCCP states that starting in Fiscal Year 2019 (October 1, 2018), the agency would focus only on three areas of compliance: Executive Order 11246, which addresses minorities and women; Section 503 of the Rehabilitation Act of 1973, which addresses individuals with disabilities; and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA), which focuses on protected veterans. The directive also states that it will notify contractors regarding which area will be the focus of such audits, which will include an on-site investigation. While OFCCP is still developing processes and a list of frequently asked questions (FAQs), it is unlikely it will start the focused reviews in 2018. As of October 10, 2018, OFCCP still has not updated its website with FAQs on this point.
Directive 2018-06 addresses the development of a recognition program for contractors who excel at providing equal employment opportunities. One of the benefits would be a moratorium on audits for recognized contractors. Last month’s OFCCP Digest provides additional information relating to the program.
Directive 2018-07 relates to OFCCP’s affirmative action program (AAP) verification initiative. Specifically, this directive addresses concerns that noncompliant contractors are getting a “free ride” and develops a process for annual AAP compliance certification. OFCCP will develop “information technology to collect and facilitate review of AAPs,” which was a concern specifically mentioned in the Government Accountability Office’s (GAO) 2016 report regarding improving federal contractor nondiscrimination compliance. The directive also states that OFCCP will conduct compliance checks to verify the current AAPs and, in audits, will provide extensions only for the supporting data of an AAP.
Since then, OFCCP has issued directives relating to transparency and Ombud Service as well.
Directive 2018-08 deals with ensuring transparent compliance evaluations. OFCCP has frequently been criticized about its lack of transparency and consistency in audits, as well as between offices. In order to address these criticisms, the agency has held listening sessions and town halls, and reached out to stakeholders regarding the concerns and potential solutions. Under the direction of Leen, the agency has begun to issue directives to remedy contractors’ concerns about transparency.
Directive 2018-08 attempts to clarify expectations and provide a road map for how compliance officers will handle audits. The directive notes that OFCCP will grant extensions for desk audit submission only in “extraordinary” circumstances. Currently, contractors are required to submit AAPs within 30 days of the request. Contractors may be granted a 30-day extension for the support data if the request is prior to the deadline to submit the AAP. A Notice to Show Cause (NSC) will be issued if the contractor’s AAPs are not submitted in a timely manner. Contractors will have 30 days to provide OFCCP a justification for the untimely submittal. In contrast, currently, OFCCP may issue two NSCs for denial of access before proceeding to enforcement. OFCCP’s goal is to close desk audits within 45 days. If it reaches this goal consistently, we may see an increase in the number of audits due to OFCCP’s increased efficiency.
The directive also states that OFCCP must limit its data requests before concluding a desk audit. Post-desk audit data requests must include the “basis for the request, be reasonably tailored to the areas of concern, and allow for a reasonable time to respond.” As many contractors know, this is a significant change from OFCCP’s prior practices.
OFCCP will also notify contractors of “preliminary indicators” of discrimination found in its investigations. This should help contractors address any potential areas of concern and shape the narrative provided by the contractor, and it could allow the contractor to identify additional information to disclose that will alleviate OFCCP’s concerns. This should create a more interactive process that may result in fewer findings against contractors.
OFCCP has also committed to providing contractors with status updates every 30 days. If a matter needs to be conciliated, OFCCP appears to be committed to collaborating with contractors during this process, including involving statisticians and solicitors in such discussions. This would represent a dramatic shift in how OFCCP handles conciliation. The involvement of statisticians and solicitors may provide a clearer picture as to whether there are issues OFCCP is likely to enforce through the solicitor’s office, which could potentially result in more settlements.
Directive 2018-09 also relates to transparency and calls for the implementation of an Ombud Service. OFCCP has developed an Ombud Service to assist contractors with concerns related to audits and other issues with any local offices. These individuals who are set to be hired by the national office are tasked with interacting with contractors and national and local offices to ensure that audits are moving forward pursuant to the expectations outlined in the directives. According to the directive, an Ombud should do the following:
The creation of the Ombud Service is another effort to further mitigate concerns and foster trust in the contractor community. However, time will tell whether it will have its intended effect. Nonetheless, this is a change in direction from prior OFCCP initiatives and is a promising development in the contractor community.
Memorandum of Understanding with NILG
At the end of August, the National Industry Liaison Group (NILG) and OFCCP executed a memorandum of understanding (MOU) regarding establishing a collaborative relationship to promote voluntary compliance. OFCCP committed to attending NILG meetings and answering questions by various contractors. Notably, OFCCP also agreed not to hold such questions against an inquiring company or use it as a basis to initiate an audit, which was a feeling shared by many contractors. The MOU specifically states:
OFCCP has been busy this year as it attempts to reshape the agency and address concerns advanced by stakeholders and the GAO report. If OFCCP continues in this direction, the landscape for contractors should be clearer, which may lead to a truly collaborative relationship between contractors and OFCCP. Such a relationship will allow the true purpose of OFCCP to be realized: to ensure employees are a part of a diverse and inclusive environment free from discrimination.