Welcome to the first edition of “The Fox OFCCP Report.” This will be a monthly column commentary on the latest developments at the Office of Federal Contract Compliance Programs (“OFCCP”).
While I have been a reporter and a news editor at various times in my pre-law career, I have never been a columnist. This will be a new venture for me.
A columnist is different from a news reporter in that s/he does not simply neutrally report the news. Rather, a columnist also has a point of view. My point of view will not be as Democrat or Republican or Libertarian or Green, or from any political point of view. Rather, my point of view will be that of a federal contractor advocate: What does OFCCP’s action (or failure to act) mean to the federal contracting/subcontracting community?
For my first column, I want to write about “the year that was” for OFCCP. What a whirlwind! Right? Calendar 2011 was the biggest period of policy change for OFCCP in its now storied 46 year history, even while the agency operationally stepped down the number of audits and also apparently shrank back pay collections from the levels in prior years.
Amid all the hoopla of new and far-ranging policy developments, the most important development at OFCCP in 2011, I thought, was the change of relationship between OFCCP and the contractor community. 2011 brought with it a return, after a hiatus of 30 years, of a clear and growing sense of “we-them” mentality (last seen in the Carter Administration) between contractors and OFCCP and as the institutional mentality at OFCCP became one of the “ends justifies the means”: we are doing a righteous thing here, so we can do anything we want to do. Ah, déjà vu all over again. This is very reminiscent of the administrative philosophy of the now discredited Nixon Administration (and later, and aberrational in the Reagan administration, of Ollie North who found that the Executive Branch of government could somewhat easily exercise power, even in the absence of legal authority to do so). When one assumes the “ends justifies the means”, the “Rule of Law” and Due Process gets trampled in the rush forward to perceived righteous action. And, indeed, even in those instances in which the end result may be correct and desirable, trampling the process also tramples important rights of contractors…and the precious relationships between OFCCP and the contractor community built over decades of time.
OFCCP punctuated the year with many exciting and thoughtful policy developments, including at least these major actions:
Throughout the year, OFCCP ran late (as every OFCCP Administration has before this one) on the “due dates” of its promised policy initiatives. This Administration is running much later and slower than prior Administrations (usually there is a 4-6 month lag between promised delivery date and actual delivery date in this Administration), primarily because it has bitten off so much to chew, it is (still) understaffed in Washington D.C. (in my view) and has many new employees still trying to discover how to navigate the truly and always confusing hallways of government. Thus, OFCCP also heralded in 2011 the following policy initiatives which did not occur in 2011, in fact, but which are nonetheless in the pipeline (and which I have not already discussed above):
All in all, 2011 was a very ambitious year for policy initiatives at OFCCP, as you can see from the above lists, and was the year of the single greatest change of OFCCP functioning in its history. OFCCP’s 2011 frenetic policy activity surpassed even the Carter Administration activity in the years following the October 1, 1978 “consolidation” of 11 federal agencies into the then “OFCC” (“Office of Federal Contract Compliance”) and forming what we today call the OFCCP (“Office of Federal Contract Compliance Programs”). What has been lost this year, however, is the trust and confidence many federal contractors had in OFCCP to announce policy changes transparently to them and to engage them in active debate about the pros and cons of proceeding in new directions—as each new OFCCP Director is wont to do. Contractors also were surprised that OFCCP continues to hold secret a June 4, 2010 Directive changing audits of Supply and Service contractors in a way which imposes great costs on them to defend the compensation paid to literally every employee in the contractor facility under audit. Both the stealth of the activity and the high costs ensuing from these new style “compensation drag-net” audits has very deeply troubled and offended the contractor community. On average, OFCCP’s compensation drag-net audits are now costing contractors on average between $30,000-$50,000 more to defend run-of-the-mill non-problematic audits than in the immediate past.
In addition, OFCCP’s “costs to comply” estimates for its VEVRAA and (recently) its Section 503 regulations have truly “ripped the fabric” of trust and credibility within the contractor community. Contractors have greeted with incredulity, fusing to anger and dismay, OFCCP’s cost estimates of $407 per contractor to comply with the proposed VEVRAA changes and $473 per contractor establishment to comply with OFCCP’s proposed Section 503 changes. I have rarely seen my e-mail server and Voicemail box fill up with as many inquiries from exercised contractors as they have in reaction to OFCCP’s publication of these projected compliance costs. The possible exception to that statement might have been the Clinton Administration’s efforts to impose the EO Survey on all contractors. Many contractors have concluded as a result of the vastly understated OFCCP compliance cost estimates that either OFCCP is just outright distorting the true costs or is terribly naïve about the true costs of private sector compliance. I think the explanation actually lies in a third direction: federal agencies, and OFCCP is no different, have grown accustomed over the last 20 years of feeding OMB pabulum cost figures acceptable to OMB in lieu of estimating true regulatory costs in the way that a cost accountant would measure them. And, for decades, this has sufficed. But now, in a challenged economy, contractors are not nearly so ready to just “look the other way” and accept uncritically the pabulum OFCCP is trying to feed the public. And adding fuel to that fire, contractors almost to a company, do not see the value of either set of proposed regulations. As a result, the exorbitant costs contractors have calculated to comply seem unnecessary and seem to be wasted money. More compelling proposals might have garnered OFCCP more tolerance on its costs, but the collision of high perceived costs in a down economy and proposals not compelling to address the challenge have left contractors in an ugly mood about OFCCP as the New Year dawns.
So, fasten your seat belts for another exciting year at OFCCP. The agency is not done yet with its ambitious policy agenda, as many 2011 initiatives will now go to final and other promised ones come (eventually) to fruition. And, it is an election year…which leads to some interesting timing.
PREDICTION 1: OFCCP will take the VEVRAA proposed regulations to final in the weeks before the November Presidential election.
PREDICTION 2: If President Obama loses in November, OFCCP will publish its Section 503 regulations in December. If The President wins re-election in November, OFCCP will relax, take its time and publish the Section 503 regulations in final in the winter of 2013 (and absent Republican control of both houses of Congress).
ENJOY the ride in 2012! Thanks. John
|THIS COLUMN IS MEANT TO ASSIST IN A GENERAL UNDERSTANDING OF THE CURRENT LAW AND PRACTICE RELATING TO OFCCP. IT IS NOT TO BE REGARDED AS LEGAL ADVICE. COMPANIES OR INDIVIDUALS WITH PARTICULAR QUESTIONS SHOULD SEEK ADVICE OF COUNSEL.|