In November 2020, the Office of Federal Contract Compliance Programs (OFCCP) updated its race and gender, disability, and veterans’ regulations (41 CFR § 60, 41 CFR § 60-300 and 41 CFR § 60-741). These “Pre-Enforcement Notice and Conciliation Procedures” detailed what information the Agency would provide contractors under audit. The Agency said that such transparency is critical for efficient compliance audits. Contractors cheered a win-win.
In March 2022, OFCCP published a Notice of Proposed Rulemaking (NPRM) to rescind most provisions in the 2020 rule update. See Circa’s blog “Proposed ‘PDN Rule’ changes: OFCCP Makes an Expected About Face” for concerns about the OFCCP’s request.
OFCCP issued its updates to the regulations on August 3, 2023. Among other things, the final regulation rolls back the 2020 requirement that OFCCP present evidence supporting its Predetermination Notices (“PDNs,” outlining its preliminary findings) and Notices of Violation (“NOVs,” finding of discrimination or rules violations). It requires that contractors respond to a PDN in fifteen days. (Practitioners know that fifteen days is not enough time to respond. OFCCP will be receiving many requests for extension.)
The final rule approved in August 2023 is essentially the same as the proposed rule. Please read Circa’s blog noted above for an overview of the changes.
The OFCCP under Biden decided that the evidentiary standards in the 2020 update will slow down the audit process. The contractor community disagrees, maintaining that the new rules will slow things down. (More on this below.)
OFCCP stresses that it has chosen to keep “early conciliation” provisions from the 2020 regulation update. How is the contractor to come to terms with the Agency early in an audit if OFCCP will not detail why in its opinion the contractor is not compliant?
The rule change also allows OFCCP to add claims to an NOV that were not in the PDN. The contractor will have no chance to rebut the new findings before they are issued. This happened in the past, before the now-rescinded 2020 rule update. There is a good argument that this practice is not fair.
It took OFCCP only 18 months to conclude that the 2020 rule’s evidentiary standards are needlessly restrictive. This seems fast to come to such an important conclusion.
The 2022 NPRM does reference “time-consuming disputes with contractors over the application of the new requirements.” The OFCCP’s Ombuds annual reports state that concerns about “scope of review” make up only 9 of the 369 (2.4%) issues it handled in 2021 and 2022.1 One would expect that there would be some back-and-forth on such issues from time to time. Is that a good reason to get a useful rule?
OFCCP’s preamble to the 2023 rule relies heavily on comments filed by three civil rights groups supporting the changes. These groups do not practice in affirmative action. They supply no supporting details. Their statements are supposition unsupported by fact.
OFCCP received five comments from law firms, employer associations and practitioner groups. Among other things, they made the point that the rule change is an invitation to OFCCP to lose its way in long, vaguely defined audits that burn Agency and contractor time. Facts support this. From 2013 to 2018 the Agency ran under an open-ended audit process incorporating vague evidentiary standards. OFCCP’s closure rate declined during this period from nearly five thousand to less than one thousand audits per year. The comments protesting the 2023 rules changes detail that OFCCP taking returning to a “flexible” approach to audit management without set standards of review will make the Agency extraordinarily inefficient.
For all intents and purposes, OFCCP ignored comments filed by representatives of the contractor community. Without standards for issuing PDNs or NOVs, contractors may be left in the dark about why the Agency determines they are non-compliant. Case closure history proves that this lack of certainty slows down audits.
Practitioners need detail about OFCCP audit procedures sufficient to give them an idea of what to expect. Guidelines should be posted somewhere – if not in the Supply and Service regulations themselves, then perhaps in new Directives.
Now that the proposed changes are final, why is it important to mull over comments received – and ignored?
I once asked a baseball-fanatic friend of mine why baseball coaches argue calls with umpires so often. My friend said the coaches do not expect to change the umpire’s mind about the last call. The coach is arguing so that the umpire does the right thing on the next call.
So, OFCCP, Office of Management and Budget (OMB) and Solicitor of Labor (SOL): for the next rulemaking notice and comment, please notice the comments of those who practice affirmative action. Give their comments the weight they deserve.
The next ‘call’ for affirmative action will concern OFCCP’s radical revisions and expansions to the audit scheduling letter and itemized listing, now in review with OMB. See Circa’s blog outlining concerns with OFCCP’s request. Practitioners will have a lot to object to if the government doesn’t call that one correctly.
2 See Circa’s blog about the OFCCP Ombuds, OFCCP’s troubleshooter. “Scope of review” is broader than concerns over audit evidentiary standards. The Ombuds defines “scope of review” as contractor and/or contractor representatives’ disagreement “with the proposed focus of an OFCCP investigation, usually during the early stages of a compliance evaluation.”
